Acres Commercial Realty Corp (ACR) 2015 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Resource Capital Corp. Q4 2015 earnings conference call.

(Operator Instructions)

I would now like to turn the conference over to Mr. Jonathan Cohen, President and CEO, please go ahead.

Thank you. Thank you for joining the Resource Capital Corp. earnings conference call for the fourth quarter and year-ended December 31, 2015. I am Jonathan Cohen, President and CEO of Resource Capital Corp. Before begin I would like to ask Purvi Kamdar, our Director of Investor Relations, to read the Safe Harbor Statement.

Thank you, Jonathan. When used in this conference call, the words believes, anticipates and expects and similar expressions are intended to identify forward-looking statements. Although the Company believes that these forward-looking statements are based on reasonable assumptions, such statements are subject to certain risks and uncertainties which cause actual results to differ materially from those contained in the forward-looking statements.

These risks and uncertainties are discussed in the Company's reports filed with the SEC, including its reports on Forms 8-K, 10-Q and 10-K and in particular Item 1A on the Form 10-K reported under the title Risk Factors. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update any of these forward-looking statements.

Furthermore certain non-GAAP financial measures will be discussed on this conference call. Our presentations of this information is not intended to be considered in isolation or the substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with generally accepted accounting principles can be accessed through our filings at the SEC at, www.SEC.gov.

And with that I'll turn it back to Jonathan.

Thank you, Purvi. First a few highlights from the fourth quarter and the year-ended December 31, 2015.

Adjusted net income was $13.7 million for the three months ended December 31, 2015 or $0.43 per share. Normalized AFFO was $15.4 million or $0.49 per share for the quarter which I'll discuss in more detail shortly. Net interest income increased by $5.2 million or 23.9% compared to the fourth quarter of 2014 and by $4.4 million or 19.7% compared to the third quarter of 2015.

Between August and December 2015 we have bought back approximately 6% of our outstanding shares. During 2015 we originated $744.2 million in new commercial real estate loans. During the fourth quarter of 2015 we originated $255 million in new commercial real estate loans including future funding commitments.

Book value per share was $17.63 as of December 31, 2015. We payed common stock to cash dividends of $0.42 and $2.34 per share during the quarter and the year.

With those highlights out of the way, I will now introduce my colleagues. With me today are Dave Bloom, Head of Real Estate; David Bryant, our Chief Financial Officer; and Purvi Kamdar, our Director of Investor Relations.

While our commercial real estate business continues to perform well we are cognizant of the overall market and economic landscape in which we operate. There are global economic headwinds that impact the United States but the real estate market remains in our opinion generally strong, demand remains robust, and occupancies -- at least in our portfolio, remain high.

Our core real estate lending business is doing quite well. Our real estate team has done a tremendous job both in growing commercial real estate loan originations and accessing term financing in various forms. We have accomplished this impressive growth without sacrificing credit quality, which remains excellent in this portfolio.

Our commercial real estate business helped drive an increase in our net interest income by over 26% in comparison to the year ended December 31, 2014. Sequentially, commercial real estate lending had total net interest income of $20 million for the fourth quarter, a 19% increase over the third quarter of 2015. We also grew assets under management in our commercial real estate loan portfolio by 23% year-over-year even after record payoffs of $381.6 million -- I meant to just say assets in our commercial real estate loan portfolio.

Our normalized AFFO was $0.49 and our adjusted net income was $0.43 for the fourth quarter. $0.35 of our normalized AFFO was contributed by our CRE commercial real estate lending business, adjusted net income and normalized AFFO reflect in our opinion a transparent look at what the quarter's net income and AFFO would have been if not for certain items, almost all of which were unrelated to our commercial real estate business and do not represent our expected ongoing operations.

As we have previously indicated we believe that Northport, our middle-market lending business, is ultimately not optimized by being a REIT subsidiary. The business continues to perform well and we are proud of the profitable growth to scale in just over two years.

We are continuing to explore several ways in which we can give it a better structure outside of REITs. When we do that the capital currently allocated to Northport will be redeployed into our core commercial real estate business.

I will also note that our quarter and year were negatively impacted by PCM, our residential mortgage business. We have made substantial investment in growing PCM, the footprint and upgrading its infrastructure.

These investments impacted our income and AFFO negatively. However, that is largely complete and we do expect PCM to be profitable in 2016.

Commercial real estate lending has always been the principal business of Resource Capital Corp. As we move ahead we intend to emphasize that even more. Ultimately we expect the capital currently allocated to non-real estate credit will be largely reallocated to commercial real estate lending.

As primary capital achieves scale and profitability it will be well positioned to be viewed on its own. We think that the clarity and focus will greatly benefit Resource Capital Corp. and help to narrow or eliminate the difference between actual value of the Company and the value the market has placed on it.

Today we repurchased over $30 million of common stock since mid August. We reiterate our target of purchasing at least $40 million more of corporate securities during 2016. Our book value is $17.63 per share.

We originated approximately $255 million of commercial real estate loans for the quarter, $744 million for the year, over $1.5 billion during the last two years, and net growth of our commercial real estate loan portfolio of $872 million over the last two years. We ended the quarter with $119 million of liquidity. We remain steadfast in our commitment to maximizing shareholder value.

Please note that between dividends and re-share repurchases we've returned over $102 million to our shareholders during 2015. We are also reiterating our guidance of at least $2.65 per share of AFFO and at least $1.60 per share of GAAP net income for 2016.

Now I will ask Dave Bloom to review our real estate activities.

Thanks very much, Jonathan. Resource Capital Corp.'s committed commercial mortgage and CMBS portfolio has a current balance in excess of $1.95 billion in a diverse and granular pool.

RSO's commercial portfolio is comprised of 88 individual loans with an aggregate committed balance of approximately $1.8 billion, and this comprised of 99% self originated whole loans and 1% mezzanine loans. The underlying collateral base securing RSO's commercial mortgage portfolio continues to be spread across the major asset categories in geographically varied markets with a portfolio breakdown of 42% multifamily, 21% office, 19% retail, 16% hotel and 2% other, such as mixed-use deals.

During 2015, RSO originated $744.2 million of new loans inclusive of future funding commitments across 36 separate loans. In the fourth quarter we closed $255.1 million of new loans. The vast majority of which were put under application by about October 1.

I note the third quarter cutoff for the majority of our origination activity last year because by that time we noticed a significant mispricing of risk in the market and chose to take a much more measured approach to new loan originations as the market recalibrated. Over the summer of 2015 the CMBS market following high-yield and other credit markets begin widening in an impactful way. Despite real estate fundamentals remaining in general largely in check, the CMBS market remains volatile for any number of reasons -- and for any number of reasons spreads continue to increase.

To be very clear we do not originate loans that are intended for a CMBS exit, but we do term finance our portfolio through lines of credit from our commercial banking partners as well as through the issuance of CRE-CLOs. While CRE-CLOs are very different from CMBS transactions the AAA tranches of both types of deals are compared to each other and the dislocation in the CMBS market has impacted the CRE-CLO market as well. To date we have term financed approximately $1.5 billion of collateral in four separate CRE-CLO transactions since December of 2013.

Our most recent transaction in this market, RSO 2015-CRE4 closed in August of 2015 in the midst of the CMBS widening, but it pricing in-line with our February 2015 transaction. Our CRE-CLOs have a weighted average cost of LIBOR plus 170 [bps] and a weighted average leverage of 76%. It is also of note that RSO's offerings into this market have been very well received with consistently market-leading pricing and 38 different investors having participated in our offerings.

Regardless of the state of the CRE-CLO market we have ample term financing capacity and very strong relationships with our commercial banking partners. These term financing vehicles are not subject to general capital markets, based margin calls, for repricing risks. RSO originates, underwrites and asset manages all of our own loans and we are not dependent on the capital market's execution to match fund our collateral.

While we have confidence that the CRE-CLO market will again start to function efficiently, until such time we will continue to originate new loans and term finance this loan production on our bank issued term financing facilities. The general pullback in the commercial mortgage market has provided pricing power for well-established, national bridge lending platforms such as ours.

Since our conscious decision to pause in the fourth quarter of last year the commercial mortgage market has broadly reset. While we have always remained keenly focused on credit and priced above many other market participants, our locked-in term financing facilities provide us with an opportunity to remain in the market and take advantage of wider spreads and even stricter asset specific metrics and structures.

We continue to see a great deal of new lending opportunities but are being extremely selective about new originations and are pacing to close the current quarter with between $60 million and $100 million of new loans while we anticipate ramping up as the year continues. Having recognized peak production levels in our origination efforts over 2014 and 2015 we have grown our commercial mortgage portfolio and net interest margins generated therefrom in a meaningful way. Our primary focus remains, as always, on credit.

Our core lending philosophy still places the ultimate premium on asset quality location and business plan with a significant focus on sponsor experience and financial strength. This quarter I'm again pleased to report that the entire commercial real estate loan portfolio is performing with no defaults. The positive performance of our portfolio is a daily reminder that validates the credit-first approach to our lending and the selectivity we apply to markets, asset classes and sponsors in our origination process.

We remain cautiously optimistic about fundamentals but are constantly studying markets and asset classes and remain on the lookout for markets and transactions that we feel are out passing normal sustainable growth. With that I will turn it back to Jonathan and rejoin you for Q&A at the end of the call.

Thank you, Mr. Bloom, now I will ask Dave Bryant, our Chief Financial Officer, to discuss our financials.

Thank you, Jonathan. Resource Capital Corp. declared and paid a cash dividend for the fourth quarter of $0.42 per common share, bringing the 2015 total to $2.34.

Our adjusted funds from operations or AFFO for the quarter was $11.3 million or $0.36 per share. In determining AFFO for the fourth quarter there were several non-cash adjustments that netted to approximately $10.4 million and cash adjustments of $415,000. Also as Jonathan mentioned we presented a reconciliation from net income to adjusted net income to reflect what we perceive as our ongoing operating results.

The adjustments included provisions and mark-to-market adjustments in our middle-market loan segment, provisions and impairments in our legacy, CLO and commercial finance segment, loan indemnifications and age receivable write-offs in our residential mortgage lending segment, and mark-to-market adjustments related to share based compensation. As a reminder all per share amounts stated take into account the month before reverse stocks split effective on August 31 as though it were in effect for the full year and all periods presented.

We passed all of the interest coverage and over-collateralization tests in each of our securitizations that require such tests. Including our two legacy real estate CDOs and one remaining bank loan CLO. Our three most recent securitizations in real estate are subject only to over-collateralization tests, which we have passed.

Each of these structured finance vehicles did very well and produced healthy cash flow to us in Q4. We now have total capacity of $650 million on our real estate term facilities and availability of $425 million at December 31. We saw a robust new home loan production from our origination team continue in Q4, again totaling $255 million for the 12 months -- for the quarter, I'm sorry -- and $744 million on a trailing 12 months basis and $1.5 billion on a trailing 24 months basis. And this core business is providing us with certain benefits. First, we have a strong track record with the credit quality on our originated commercial real estate loans which now comprise 99% of our current portfolio.

Second, we have weighted average LIBOR floors of 0.36% on $1.5 billion of loans, of which $1.1 billion are in our four real estate securitizations and have terms remaining -- ranging from two to five years and have a weighted average floor of 30 basis points. This means that incremental increases in LIBOR do not have a negative effect on earnings and any potential new LIBOR increases are in fact accretive to earnings.

In Q4 we booked provisions for loan losses of $6.1 million. Virtually all of this charge is a result of increased provisions on our commercial finance and middle-market segments. It is worth noting that our directly originated middle market loans have been performing well and the vast majority of this adjustment was related to secondary syndicated bank loan purchases.

We ended the period with $41.8 million in commercial real estate loan allowances, $1.7 million in commercial finance allowances, and $3.9 million in middle-market allowances. In terms of delinquencies, only one bank loan in our commercial finance segment, $1.5 million is delinquent out of a portfolio of $136 million.

All of our $379 million of middle-market loans are current, and as Bloom mentioned, each of our 90 real estate loans are current with respect to debt service payments due. Our leverage increased modestly to 2.3 times at December 31.

When we treat our trust issuances which have a remaining term of 21 years as equity, our leverage is 2.1 times. With regard specifically to real estate leverage we ended Q4 at 2.5 times on our entire portfolio, which includes cash earmarked for new real estate loan originations. We continue to focus on getting our real estate equity allocation increased to a minimum of 75%.

Overall weighted average cost of capital from all sources was 5.09% as of December 31. We ended the December quarter with GAAP book value of $17.63, down from $17.95 per share at December 30.

We had earnings of $0.03 and saw an accretive benefit of $0.13 per share from our share repurchase plan. We paid dividends of $0.42 per share and lost $0.11 due to declines in securities mark-to-market and picked up $0.05 from marks on our interest rate hedges.

With respect to the securities buyback program, we used nearly half of the $50 million authorized by the RSO Board by year end. In January and February we have since purchased 356,000 common shares at a weighted average price of $11.27, and this early 2016 activity is approximately $0.07 accretive to book value since year end.

Our real estate lending platform remains centered on underwriting and originating high quality credit which is combined with conservative use of leverage. We look forward to further implementing the stock buyback plan in 2016 as liquidity allows us and as we continue to trade well below book value on our common and preferred stock.

We had a relatively low leverage and are substantially match funded with non-recourse floating rate term financing on the vast majority of our lending platform. We anticipate recycling capital from our legacy real estate CDOs and one legacy bank loan CLO over the next 12 months, each of which will provide a substantial cash upon liquidation. We can deploy these proceeds into higher return on equity investments as these CLOs have been substantially delevered.

Our selective reuse of this recycled capital is helping us to cautiously grow our real estate portfolio and improve core earnings quality with the utmost focus on credit. With that my formal remarks are completed, and I hand the call back to Jonathan Cohen.

Thank you, Dave. We understand that this is a turbulent market but we have always maintain a consistent focus on credit quality, high underwriting standards and vigilant management of our investments. Our leverage remains low and we have an experienced and dedicated management team that will carefully monitor our risk. While continuing to look forward to a stable dividend.

We thank you for your continued support, and with that I will open the call to any questions.

(Operator Instructions)

Jade Rahmani, KBW.

I was wondering on the current environment if you can comment on how it is impacting borrowers. Are you seeing any increased urgency to lock in financing at available terms, or are you seeing increased caution from borrowers?

This is Dave Bloom, it is very interesting. We are, we are seeing borrowers certainly with increased urgency but realizing some of the market volatility and putting a premium on certainty of close, which is I think one of the points that I focused on before, and certainly willing to pay for that.

I think we are net beneficiaries of urgency there and there are others who are I think pausing but as loans are coming due, there are people who are steering clear of the CMBS market, who we are also looking at a number of very stable assets that are pricing at today's wider levels. I think there is an active lending market and we continue to be very selective notwithstanding urgency put out by borrowers.

Can you quantify the magnitude to which you have adjusted pricing and also on the borrower side, can you comment on the magnitude of any cap rate changes that either use underwritten or you think that borrowers are incorporating?

I would rather not comment on how much we have increased our spread because it is a competitive world out there for the kind of assets that we are looking at and hopeful to lend against, but I can say it's definitely widening, and I think you're seeing that across the whole market, but I do not feel comfortable talking about quantities at this point. I'm sorry what was the second part of your question?

On cap rates, are you either in the loans or doing underwriting higher cap rates, and can you quantify the magnitude, or are borrowers pricing in -- maybe you can quantify the extent to which you think cap rates are rising.

Again it's absolutely market specific, we are, we always model deals for refinancing so what we're finding is that we are stressing cap rates in a fairly healthy way to make sure that we are absolutely covered to our attachment point, and it has certainly taken sponsors some time to adjust to it, but in loan sizing they're certainly in these situations, cash and refinancings, which is really what we would anticipate to continue for a while.

And I would add just globally from our entire real estate business including our equity business that sellers, not us in this case but anecdotally, sellers that have not adjusted their cap rates, that has not happened yet and it's still an incredibly competitive marketplace.

Can you just comment on quarter over quarter commercial real estate credit quality in the portfolio? Are there any changes in perhaps your watch list, just how did the risk rating migration change sequentially, and are you seeing any evidence of a pickup in credit deterioration?

Quite to the contrary, the fourth quarter we saw a record payoffs, things are transacting, it was a, if the market was certainly choppy, things -- we saw deals go at incredibly tight cap rates, and so our watch list has remained exactly the same, but we have seen sponsors continuing to hit their plans.

As we talk about, isolated dislocation in the CMBS, market there are other drivers there. There is people trying to ramp risk -- pools compliant with risk retention, Reg A -- AB 2 issues that are starting to be anticipated. Real estate fundamentals as we are seeing them, like I said remain largely in check and that record amount of payoffs we saw in Q4 bears that out.

One last one, turning to profitability I think you guys introduced two new earnings metrics, taking a step back if you were to factor in deferred financing costs, a reasonable expectation for normalized loan losses, what kind of core ROE do think that the book -- the overall portfolio or perhaps just the commercial real estate finance portfolio is generating after factoring in interest expense management fees and corporate expenses?

I think if you allocate the capital from our other businesses, which we are in the process of doing, over to commercial real estate you would get to that net income number of at least $1.60. Just to remind you, the deferred financing is only in the AFFO not in the net income.

Steve Delaney, JMP Securities.

There were a number of what we hear -- credits holding up very well in the CRE book, and there were a number of credit charges in the fourth quarter. You outlined them pretty clearly in the press release and remarks. I am a little confused and would ask for your help in understanding a little more about the nature of the $2.7 million provisions and impairments in commercial finance. Could you help break that down as to exactly what types of assets those charges were against?

Steve, you are talking about the provisions that we took in the quarter, let me give you a complete general break down of the total so we do not miss anything. We had, there were $6 million in the period, about $4.7 million of that came from our middle-market segment, $3.9 million of which was an election to go to the lower of cost or market on that portfolio.

You went from cost to market it sounds like.

Yes. Most of that. $3.9 million. There was $1 million charge in our legacy bank loan portfolio for one position that went bankrupt and it is in default, and then there was approximately $300,000 of miscellaneous charges in a legacy leasing portfolio that we have.

I'm trying to get to this $2.7 million in commercial finance. I am missing something. I got all the middle-market, so I guess commercial finance, the $2.7 million would have included the $1 million write off of a legacy bank loan right?

Right.

What else would have been in there? You mentioned something about legacy CLOs I think in your comments.

There was a charge in our legacy CLOs, but that is what we just talked about in terms of the $1 million, that was the one bank loan.

The one bank loan, got it.

Then there was a charge, an impairment charge of $1.5 million that was taken on our legacy CLO management business. Basically I think the $2.7 million is combining those items.

That was the piece we were missing right there.

What happened there was, one of the CLOs that we manage was called early and the intangible asset had to be accelerated.

Jonathan, we all know the primary capital residential investment, I mean that business can be extremely profitable and we may see a little bit of a refinancing wave here in the first part of 2016. I guess, the issue with that is, you are trying to present yourself primarily as a commercial real estate finance company and because that is consolidated, it does add a lot of noise.

You're consolidated because you are assumed the majority owner, any thoughts to add partners or restructure that in a way that you would be able to account for it on say the equity method, which would leave you with an economic interest but would really clean up your financials, any process as to where that is going long term?

Thanks Steve, as I said in my comments, we think it is very close to standing on its own and I think I quote, unquote said, It will be well positioned to be viewed on its own. I think that as we get it to profit, back to profitability which we were profitable about nine months ago, we added a lot of people to expand operation, markets changed a little bit, we're getting back to that profitability, as is it is profitable which we expect in the next, in fact it may have been profitable in February. We don't know, but given the amount of activity it did, but really on an ongoing basis starting in June, we will be looking to have it viewed on its own and we do not want to really expand on that much but you can take from that what you will.

My final thing, I look at the guidance for AFFO that you affirmed today of $2.65, and obviously that will probably be incrementally increasing quarter to quarter, but it would average about $0.66 which is 35% higher than the normalized AFFO of $0.49 in the fourth quarter. Had we think about that as far as the two or three key drivers that are going to cause AFFO to go up so much in 2016? I recognize --

Remember that in there is some cash gains on the extinguishment of debt that is flowing through, so I really would not look at although it will be $2.65, it will be number probably north of $2 but not $2.65. There will be other gains in there that will be, although they will go on for a while -- so we really look at it that we've keyed our dividends to be somewhere right around net income.

That helps a Jonathan, so while $2.65 is projected to be the number, I think I'm hearing you say there are going to be some special recognitions that you would not consider normal, so $0.66 average is not necessarily normal run rate.

Yes, that is why we set the dividend to $1.68, we feel good about that. It maintains book value while giving us the ability to buy back our shares at a massive discount. We should grow book value and increase profitability for those who remain in the stock.

That's very helpful, thank you.

Dan Altscher, FBR.

I just wanted to clarify just quickly on Steve's last question regarding the guidance, the $1.60 and the $1.65, those guidance is based upon the new adjusted EPS and the normalized AFFO, or are those kind of a stated?

I am sorry, that is actually EPS.

So the $1.60 is the GAAP expected EPS?

That is your just normal GAAP EPS. The reason we normalized and we just felt like there were so many one-time accounting issues that had come up that were hitting the business that were in core. We wanted to be transparent to the marketplace. It is not our intent at this point to have that as a new metric that we use.

So the adjusted is not a new metric, it is just kind of a one-time, we'll see it today but not going to see it next quarter?

Exactly. Unless there is something that we feel like we have to tell you about on the positive or the negative side so that you can get a sense of what our core recurring businesses is.

And similarly with the AFFO guidance of $2.65 that is the stated AFFO and not the normalized, which is also one of these things where we have a normalized number this quarter but we will not see that again next quarter?

Exactly, that is the stated AFFO.

Okay, got it, that's helpful. Related to maybe something that you mentioned the PCM, I think there was in the press, or in the script something about Northport also, about maybe achieving some shrinkage there or monetization or having a kind of wind down, can you just give us a little bit more color as to what that is or what you mean by that and when that might really be achieved?

We are seeing that book shrink a little bit so far, and it will in our plan shrink more over the next what I will call one month to six months, you will see it continued shrinkage of the book in our plan.

This is probably a question for Dave Bloom, can you just give us an update on your tax exposure, particularly the multifamily that's out in Houston, and if there are any updates at the property level on occupancy or rental growth or anything that is relevant there?

All of the properties are performing above pro forma. We had a sale, one of the properties traded in the fourth quarter, paying us minimum interest and an exit fee.

Again the type of properties that we have focused on there and certainly it has held up, has been in-fill, value add B multifamily deals, where there is still significant demand for people to work in the medical center and other service to businesses where we are certainly not talking about anything else, but these are very nice communities and they are performing very well.

Also maybe an update, you mentioned also in the script some commentary about the CMBS and CLO market, wondering if you maybe had a sense if the market is open to day to you if you wanted to go out there and issue a financing, would that be open, what maybe -- an all-in financing cost or maybe just the AAA's might look like right now?

I would be reticent to speculate in that regard. It is one of the ways that we finance our portfolio but we have a history dating back since inception to make sure that we have more than adequate term financing from banks as well so we are not dependent on capital markets. Those who have gone have needed to go because they have had 364 day facilities and they were forced into the market.

As I said there is a correlation between AAA's in both. We're seeing stability in CMBS AAAs which over time will give us a level, but it's clearly not a market that we feel forced to go out and test.

I guess maybe the running assumption right now is that we should be expecting to use the term facilities as a financing mechanism for now while the market remains kind of not there?

I would say we are wary of the market, that we could always use the market if we wanted to use it, but we did not see any need. And I would say that would be a good assumption, probably we will reevaluate that on an ongoing basis and it may be different in March, it may be different in April, May, June, July and we may see a good opportunity and take it.

George Bahamondes, Deutsche Bank.

May I just say G&A jumped about $3 million quarter over quarter, can you touch on why that happened?

We had some charges that took place in our residential mortgage lending segment that are in a sense nonrecurring, and they were in the reconciliation that we presented from net income to adjusted net income. They totaled about $2.3 million, and then we had some additional charges in our corporate portfolio that were seasonal, and then also some legal fees there as well, a few hundred thousand.

Jade Rahmani, KBW.

I was wondering if you could comment on REXI's having said it's exploring strategic alternatives, specifically as one option that management might consider a potential internalization transaction with RSO?

Our lawyers have told us we cannot comment on that so I apologize about that, but we are just not allowed. I just want to make sure that the audience knows that the impairments that we have had in the dribs and drabs were all in the non-commercial real estate business and were isolated to small positions that unfortunately due to accounting or due to other reasons had to be marked down. And Jade, I'm sorry, I can't comment on that.

Jennifer Wong, LDR Capital Management.

We see that -- and appreciate that you have been actively buying back the common shares, just wanted to hear your thoughts on your, on what you would like to do with your preferreds which are also trading at pretty big discounts to your par value.

We actually didn't buyback as much as we wanted to in the fourth quarter, and that is due to the fact that a lot of people set on loans that we had already committed to before the end of the year in all of our businesses, that is a traditional thing that happens. You will see us as we said buying back $40 million -- at least $40 million in our plan today subject to liquidity etc.

In corporate securities, they may or may not include preferred stock. We obviously feel like that is an area that is super cheap as well as our common stock.

I'm showing no further questions at this time. I would like to turn the conference back over to Mr. Cohen for closing remarks.

Thank you very much for your support, we really appreciate it. Any questions that one might have please contact Purvi Kamdar at the Company, and we're happy to answer accordingly. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Have a great day, everyone.