Apollo Commercial Real Estate Finance Inc (ARI) 2014 Q1 法說會逐字稿

Thank you, ladies and gentlemen, and welcome to the Apollo Commercial Real Estate Finance Inc. first quarter 2014 earnings conference call. (Operator Instructions)

I'd like to remind everyone that today's call and webcast are being recorded. Please note that they are the property of Apollo Commercial Real Estate Finance Inc., and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call your attention to the customary Safe Harbor disclosure in our press release regarding forward-looking statements.

Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections.

We do not undertake any obligation to update our forward-looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.ApolloREIT.com. or call us at 212-515-3200.

At this time, I'd like to turn the call over to the Company's Chief Executive Officer, Stuart Rothstein.

Thank you, Operator. Good morning, and thank you for joining us on the Apollo Commercial Real Estate Finance first quarter earnings call. Joining me this morning in New York are Scott Weiner, our Chief Investment Officer, and Megan Gaul, our Chief Financial Officer, who will review ARI's financial results after my remarks.

Not surprisingly, given the modest, but continued, recovery in the overall economy, and the continued low interest rate environment, the commercial real estate market has had a healthy start in 2014. The US commercial real estate transaction volume reached $61 billion in the first quarter, which was a 61% increase over the same period a year ago, and on a global basis, transaction volume topped $130 billion, a 23% increase over Q1 2013.

Operating fundamentals have continued to improve, with occupancies and rents continuing to rise. Further supporting the recovery in operating fundamentals is the relative lack of development across most property types and markets. The dearth of development is a trend that has been ongoing for approximately 10 years and the lack of new supply, combined with the strong fund flows into the sector, continues to be a powerful factor supporting underlying asset values.

Given that ARI has now been public for approximately 5 years, it is worth commenting on where the CRE financing market stands today versus when the Company first came public. Clearly, the market has recovered and in most respects, there is a fully functioning commercial real estate finance market. While not at the peaks we saw in 2006, 2007, the CMBS market has continued to recover and most expect volume to top $100 billion this year.

In addition, insurance companies, money center banks, as well as newly created REITs and other private finance companies, are actively looking to grow their commercial real estate debt books of business. As a result, there is clearly more competition today than in 2009 and owners and acquirers of assets are benefiting from lower rates and more aggressive leverage levels.

From ARI's perspective, the fiercest competition witnessed is for conduit eligible loans, a market in which the Company has never participated. There is also increased competition in the market for senior and junior mezzanine loans, which we fully expected would occur at this point in the recovery cycle, but to date, we would generally describe the competition as rational.

It is also worth noting that as of yet, we still have not seen a significant proliferation of commercial real estate CDOs in the mezzanine space. We monitor this closely, as these types of vehicles were very instrumental in the mispricing of risk and the over-leveraging of assets that contributed to the 2006, 2007 bubble in commercial real estate financing.

At ARI, the focus, first and foremost, is to compete based on the broad commercial real estate finance platform we have built at Apollo. That platform has created best-in-class relationships with brokers, senior lenders and borrowers, and has cemented a reputation for being a reliable counterparty that is highly thoughtful around underwriting, pricing and structuring. The success of the platform is evidence by the over $7 billion of transactions Apollo has completed for ARI and other non-overlapping vehicles since 2009.

At present, ARI's global pipeline is robust and in all cases, the investments being pursued remain consistent with the Company's credit-first philosophy. This approach is evidenced by the three transactions totaling $240 million that ARI has completed to date in 2014, which included $80 million home loan for the construction of condominiums in Bethesda, Maryland; $106 million first mortgage secured by a geographically diverse portfolio of 229 single-family and condominium vacation homes; and a $54 million mezzanine loan for the acquisition of an existing commercial building in London that is expected to be redeveloped into residential condominiums. Each of these [bespoke] transactions was with strong sponsors and is expected to provide ARI with an attractive risk-adjusted return.

As I just mentioned, one of ARI's initial transactions this year represented the Company's first investment in Western Europe. Over the past year, Apollo has completed over $500 million of commercial real estate debt transactions in the United Kingdom. This mezzanine loan was presented to the Company through an existing Apollo client.

We are cautiously optimistic about our ability to find additional transactions for ARI in Europe. And to support that effort, we are adding commercial real estate debt-focused investment professionals to Apollo's existing team of real estate equity investment professionals located in London. In addition, as many of our co-origination partners in the United States are active in Western Europe, we are aggressively pursuing those relationships to source transactions through their origination channels.

Finally, ARI's investment in KBC Bank Deutschland is on track for closing in the second half of 2014 pending final regulatory approval. And we expect this investment also will be beneficial in the efforts to expand ARI's European commercial real estate lending business.

Rounding out ARI's investment activity year-to-date, the Company deployed approximately $25 million of equity into $123 million of legacy CMBS formerly rated AAA. ARI financed the balance of its purchase using a new $100 million term repurchase facility. As we have demonstrated previously , from time to time, we do identify CMBS strategies in which we believe the risk is not being adequately priced.

Coupling the ability to identify these assets with our ability to source and structure matched term financing, we are able to execute on these strategies, which we believe will generate attractive risk-adjusted returns for ARI. The newly purchased CMBS have been unwritten to generate an IRR of approximately 17%.

In general, we are extremely pleased with ARI's progress year-to-date and we continue to see ample opportunities in our core businesses.

At this point, I would like to turn the call over to Megan to review our financial performance.

Thank you, Stuart. I want to remind everyone that we have posted our supplemental financial information package on our website, which contains detailed information about the portfolio as well as ARI's financial performance.

For the first quarter of 2014, we announced operating earnings of $14 million or $0.37 per share, as compared to $12 million or $0.39 per share for 2013.

Net income available to common shareholders for the first quarter of 2014 was $15.7 million or $0.42 per share, as compared to $10.1 million or $0.33 per share for 2013.

A reconciliation of operating earnings and operating earnings per share to GAAP net income and GAAP net income per share can be found in our earnings release contained in the Investor Relations section of our website, www.ApolloREIT.com.

Turning our attention to our portfolio, as of March 31, the amortized cost of ARI's investments totaled $844 million. The portfolio has a levered weighted average underwritten IRR of 14.1% and a weighted average duration of 3.2 years.

Importantly, due to proactive asset management, the credit quality of our loan portfolio remains stable.

GAAP book value per share at March 31 was $16.21, which was a slight increase from $16.18 at December 31.

As a reminder, we do not mark our loans to market for financial statement purposes and currently estimate that there's another $0.10 per share of value when the loans are marked to market, and estimate our market value per share to be $16.31 at March 31.

With respect to repayments, in the first quarter, we received a $15 million principal repayment from mezzanine loans secured in New York City. The Company realized a 14% IRR on this investment.

To fund our recent investment activity, during the first quarter of 2014, the Company completed a $144 million offering of 5.5% convertible senior notes, which have a 5-year term. We are very pleased with this attractively priced offering, as we believe it demonstrated ARI's ability to access diverse capital sources. As we grow our business, we continue to explore several strategies to more effectively use leverage to fund new investments, while maintaining relatively low overall leverage.

At March 31, our debt to common equity ratio was 0.5 to 1, and our fixed-charge coverage was 5.1.

During the quarter, we also amended our repurchase facility with Wells Fargo. We extended it for a term of 1 year and lowered the pricing to LIBOR plus 80 from LIBOR plus 105.

We believe our business model remains favorable in this interest rate environment and are confident ARI is well positioned if interest rates rise.

In addition to the minimal use of leverage, 54% of our loan portfolio had floating interest rates at March 31.

Finally, as indicated in our press release, the Board of Directors announced a common share dividend for the second quarter of $0.40 per share. This is the 16th consecutive quarter of $0.40. Based on yesterday's closing price, ARI's stock offers an attractive 9.4% yield.

And with that, we'd like to open the line for questions. Operator?

Thank you. (Operator Instructions) Our first question comes from Dan Alcher of FBR. Your line is now opened.

Thanks, good morning. And appreciate your taking my call. I was wondering if we could talk a little bit about Europe. Can you talk maybe a little bit particularly (inaudible) because the sponsor you worked with on this deal, or on your future transactions that you're looking at, who do you think the sponsors are going to be? Because it certainly feels like there's an increased private equity presence in the space or maybe some opportunistic hedge funds or the like. But it doesn't seem like the sponsors on that side are really going to be the banks or maybe the insurance companies.

(Inaudible)?

Sure, well, I think it depends on how you define sponsor. We generally define sponsor as the borrower. So on this --

I'm sorry, I'm sorry. I said sponsor; I meant partner, I apologize.

Okay, sure. I'll address both. I think on the sponsorship side, this one was a large international developer Stuart mentioned had recently done another large transaction in London, which we financed. It was really a new relationship that had developed from that previous financing. And I think it'll be borrowers or be people like that, as well as opportunity funds who we do a lot of business with here in the States and other folks, other institutional owners of real estate.

I also think there's opportunities to buy existing portfolios in partnership with other parts of Apollo. For example, we have a very large business in Europe that buys [some of the] non-performing commercial real estate loans. But as part of those portfolios, they're generally more performing loans. And so we could buy those loans with leverage and get to our returns.

As far as partnering our co-origination, all the deals we've done to date in Europe, which are substantial -- we have in excess of $500 million of mezz in the UK, with some more deals in closing. All those deals, we have partnered with large banks. We have a very good relationship here in the States, which expanded over to Europe. So I think that would be -- if you talk about co-origination, it would be similar to the models here, where we're working with banks who are either looking at loans for their balance sheets or for securitization.

The deal that we just announced actually was with a European bank who the firm has a very good relationship with. We have not transacted with them in the States because they're a European bank, but it was -- we knew both. We knew the sponsor and then we had a relationship with that bank, so it was a nice deal. And we think we can do a lot more with this European bank now that we've done our first deal with them.

Great, that's a great answer, very comprehensive. Maybe just switching gears also to the CMBS side, I understand this is maybe a little bit more opportunistic or whenever the market feels like they're not recognizing value. So how do you define that in terms of IRR potential and also the 17%, is that the hurdle rate, or is it just a feel of where spreads are wider and you just feels like everyone does not want to be in the market? How do you quantitatively and qualitatively view the opportunity there?

Look, for ARI or other accounts, we're in the CMBS market every day. And we manage anywhere from $2 billion to $3 billion worth of bonds, depending on how we're invested at any one point in time, some on an unlevered basis, some on a fully levered basis. For ARI, broadly speaking, on a pure IRR basis, we're certainly looking for things that are in a -- call it low to mid-teens return basis. But clearly, that's not the only factor we consider.

We do a fairly detailed loan-by-loan analysis when we're looking at bonds and certainly, factor in the perceived risk when we're considering making an investment. But I think ARI gets the benefit of a dedicated CMBS team that's in the market every day. And we have the ability, when we see what appear to be bonds that meet the return hurdles from ARI's perspective, to do the deep underwriting that's required.

I think the other thing that is maybe somewhat under-appreciated, but every time we've done it, whether it's CMBS transaction for ARI, we've done it in such a way that we matched up term financing. So unlike those in the resi mortgage REIT space or others, we're not generating the leverage returns by using 30-day repo.

We're being fairly thoughtful about the weighted average duration of the bonds and then using our relationships with various bank lenders to structure term repo that approximates that weighted average duration of the bonds, which we think is very important in taking some of the volatility out of the trades that we make on behalf of ARI.

And --

Sorry, go ahead.

To Stuart's last point, it's not a trading strategy. Obviously, we actively manage and monitor the bonds. If there's an issue, we can sell them when we show the IRR because it's based on holding it to our expected repayment, which for these bonds, is 3 to 4 years. And as Stuart said, we have financing to take us through that period, actually , even with some cushion. So what we also like about it is the high IRR, but it's also a longer duration deal.

And as Stuart mentioned, with the financing also comes hedging, so we're buying fixed-rate bonds and then normally, repo is floating rate. But we hedge that and so we also take out of the mark-to-market equation general interest rate movement. So it's really just the spread in the underlying bonds. And obviously, as those get shorter, that spread volatility continues to decrease.

So are you looking at just the super-seniors or looking at maybe the juniors or the mezz of the AAA stack?

We look at really all of them in different vintages. As Stuart said, these are all formerly rated AAA. So we look at both. We have historically done [8-2s]. Those are very short, which are the most super-senior we have a levered AM strategy on. Then we also pursue the levered AJ strategy. This one is a combination of AJs and AMs if we can find one that works our yield.

Great, thanks so much.

Thank you. Our next question comes from Jade Rahmani of KBW. Your line is now opened.

Yes, thank you. This is actually Brian [Thomasal] in for Jade. Thanks for taking my question. Talking about the deal flow, it seems like a lot of the recent originations have been first mortgages. I know you were talking about seeing a pickup in competition on the mezz side.

So is that what have been driving these increased originations on the first mortgage side? And do you think you'll continue to look towards these types of first mortgages or do you plan to remain on the mezz space?

This is Scott. I think we're going to continue with what we've been doing. So where we can find interesting transactions with good risk-adjusted yields, we'll do them. So back in 2009, we did a whole bunch of first mortgages because that made sense at 8%, 9%. Then we've done mezz and CMBS and I think if we look at the pipeline, quite honestly, it's a combination.

We have a hotel that's an acquisition where we're doing a first mortgage. We have a hotel where we're doing a B note. And both are cash flowing. We have another for-sale project that we're working on that would be a whole loan. So I think it just really varies.

Some of the first mortgages work on an unlevered deal basis. Generally, the ones [where] you're changing use, whether -- generally in the for-sale area. And then we have other first mortgages where we would use one of our leverage facilities to get the yield up.

Look, again, we closed three loans year-to-date. The pipeline is fairly robust, but I wouldn't draw any conclusions about any shift in strategy or shift in available deals just based on the small sample size in the first couple months of the year.

Okay, great, thanks. Then on the yield side, where have you seen loan yields trending year-to-date, particularly post-quarter end? Are you seeing spread compression on the first mortgage side?

I'm not sure it's quarter-end deal. I think -- and "The Journal" had an article about it this morning; you can read about it in "Bloomberg." Look, commercial real estate is certainly a favored asset class and I think there's multiple types of deals. So I think if you're -- you sort of alluded to -- I think if you're looking at quote, unquote, "stabilized cash flow-ing properties," you can do long-term fixed rate with any of 40 conduit lenders that are out there right now.

If you want to maximize leverage and (inaudible) out in the mid-4s, if you want to be an insurance company [bar] and maybe take a little less leverage, you're probably in the low 4s or even sub-4. Then, look, there's a huge floating rate market. You can do banks at LIBOR [150]. The larger banks are all growing. Or you can do CMBS if it's a little more leverage or maybe hospitality.

Then when you go more to transitional loans, [you have] voracious appetite from other mortgage REIT debt bonds. We have spent some time in that space. I won't say -- we're certainly not the most active in the space. Empty office buildings and things like that aren't really an area that we've focused on. And then obviously, there's a more kind of redevelopment, construction stuff.

So overall, as Stuart said, a fully functioning market. Leverage is certainly back, which allows, I would say, the yield on the empty office building loans to have come down, as people can put leverage on those . Just overall, people are finding commercial real estate to be an attractive asset class and good relative value versus other classes, such as high yields and bank loans.

Okay, great, thanks. Then shifting gears lastly on one last thing -- on the German bank deal, how should we think about the economic impact of that on the income statement? Will you be using the equity method to book earnings? Will that trigger REIT taxable income or will it end up depending on the type of revenue that you ultimately recognize?

Megan, do you want to answer it?

Yes. We will be using the equity method, but it will be based on a fair value of the bank each quarter. So we're picking up our percentage of that fair value. And the taxable income, there will be taxable income to the extent that we receive distributions, so not related to that fair value adjustment.

So with the fair value, you'll be booking gains on the income statement?

Yes, unrealized gains and losses as the fair value (inaudible).

If the fair value in the investment changes, then to the extent we receive distributions, if it's distributions from earnings, that will drive taxable income, but you're receiving cash commensurate with what you receive. To the extent you're receiving distributions that are not earnings, it's treated as return of capital for tax purposes.

Do you expect, at least initially, operating losses?

No.

(Inaudible). Okay, great. Thank you for answering my questions.

Our next question comes from Joel Houck of Wells Fargo. Your line is now opened.

Good morning and thanks for taking my questions. I just wanted to focus a bit on ARI's liquidity position, given you put out or funded $160 million after the quarter. Obviously, you had a lot of cash at the end of March from the convert. Can yon maybe just walk us through the pro-forma liquidity position, given the subsequent investments and how you think a capital deployment plays out the balance of this year? Thanks.

The balance of this year is sort of a question in terms of pipeline and how much we ultimately find that we want to do . Putting that aside for a minute, I think in light of what we've just done, we do have the ability to finance some of what has just closed, which probably gives us $50 million to $60 million of capacity, so to speak, to the extent we finance what we've just done.

And there is the potential that we will get some partial repayment back on a couple of things that we've done, which would be another, call it, $10 million to $15 million. So let's say there's somewhere between $60 million to $70 million liquidity available just sitting here today. Obviously, how long that lasts or what the plan is for that liquidity, ultimately depending on what we see in the pipeline and what we think we can close.

As I commented earlier, the pipeline deal is pretty robust right now. We're obviously somewhat sensitive to wanting to time the need for capital with the deployment of capital. And what we may do beyond the liquidity I just described is really somewhat dependent on the mix of assets and some other things we're working on that might allow us to add a little bit more leverage to the Company.

Okay, great. Thanks, Stuart.

You're welcome, Joel.

Thank you. Our next question comes from Charles Croson of Barclays. Your line is now opened.

Hi, guys, thanks for taking the questions. Can you hear me okay?

Yes.

Great, thanks. I'm filling in for Ross today. Just a couple of quick ones since mine mostly were already asked. Just piggybacking on the last one though, you've already done well over $200 million that you had marked in the pipeline for May. Can you kind of [tease] out a little bit more on what's in the pipeline now in terms of what sort of financing you're looking for that? Whether it's another convert or possibly doing a corporate level revolver? Just trying to get some more details on those.

Yes, look, I think from the debt side of our balance sheet, we continue to think in terms of when we do first mortgages, there's ample asset level financing available either through our existing JPMorgan facility or an expansion of that facility or similar type facility.

In terms of the extent our pipeline is more focused on, call it, mezz or [prep] equity or B note type of transactions, we've not used asset-specific leverage against those deals. We've done, obviously, one perpetual preferred; we've done the convertible preferred.

We've had discussions around corporate revolvers, using the borrowing base of everything that's not financed on an asset-specific basis. And I would say to date, the execution in the convertible preferred market, such that we did earlier this year, was more attractive. That being said, we're still having some fairly active discussions on opening up some additional leverage opportunities for the Company.

Okay. All right. That's helpful, thank you. Then just one last quick one here on the competition side. I know you said that there's more coming into the mezz side. What does that look like, you would say, over the next 3 years or so as banks and other financial institutions become a little bit more spread out and such in lending? Where does that go for you in terms of how you lend out? Essentially what I'm asking is that you -- what does the competition look like in 3 years (inaudible)?

Look, I'm not sure any of us have a perfect crystal ball. I think in my earlier comments, clearly, we expected competition . Even before we went public, there were a number of private vehicles, mostly in fund format, that were active players in the mezzanine space and we certainly expect that to continue. Obviously, now, we've got more public vehicles in the space.

To me, I think when I made the comment that competition right now is rational, I think it's rational in the sense that by and large, the capital that we're competing with is still trying to earn nominal returns similar to what we're trying to earn for ARI. Nobody, in a meaningful way, is overusing leverage to generate the returns we're trying to get.

My comment earlier on the proliferation of commercial real estate CDOs in 2006, 2007, being a major part of the problem. It's something we monitor closely because if you look at what happened in that timeframe, people got very comfortable with the notion of taking risk that used to earn 10%, 11%, 12%, 13% nominally. And all of a sudden, pricing at L-plus 300 and 400 because they could generate returns using 3 or 4 turns of leverage through a commercial real estate CDO.

I know there's been a few right now that have been done. They've been more on transitional loans; they've been more on bridges to Fannie or Freddie takeouts. I'd be very happy not to see those type of vehicles come back in a meaningful way.

I'm not sure I'm smart enough to know what it's going to look like 3, 4, 5 years from now. But I think to date, there's clearly competition on any given deal. There might be someone who's willing to go a little wider on [crow's feet] or a little tighter on spread or move a little bit more in terms of deal terms.

But we never entered the business expecting there wouldn't be competition. So at least right now, I think it's a fully functioning market. I think there's capital available, but given the relationships we've got, and given our ability to move quickly, we feel pretty confident about our ability to compete in this environment.

Okay. Okay. That's very helpful. Thank you for taking the question.

Sure.

Thank you. Our next question comes from Rita [Shane] of JPMorgan. Your line is now opened.

Wow, I've had my game changed this morning. It's Rick still. Anyway, my questions were related to the residential deal you guys did this quarter. I'd just like to get a little bit of sense of -- I'm assuming this is working with some of the players out there that are buying equity in homes in distressed situations or in turnover situations, and you're providing financing there, if you could just verify that?

The second is that we talked about syndicating a portion of this -- basically, half of this transaction. Is there any income that we should anticipate related to the syndication as we're thinking about second quarter numbers?

Sure, and this is Scott. To answer your question, this is not the single-family for rent business. This is actually a luxury destination club company that has been around. So these are single-family home and condos at prime resort and CBD destinations around the world, multi-million-dollar properties where you pay a corporate membership, kind of an initiation fee, if you will.

And then you pay a per diem when you go and stay at these properties and very -- and there's somewhat cost for different resorts or other type destinations, whether it be down in Sea Island, Georgia, or Hawaii or other vacation destinations, as well as major cities where people would vacation.

Got it. That explains some of the geography that was throwing us off in terms of (inaudible).

Right, so from our perspective, Apollo's perspective, it's somewhat of idiosyncratic loan. It was a large loan, so it didn't necessarily fit nicely into one particular bucket, whether it be CMDS. It didn't really work for the bank loan market. We looked at it as a very attractive risk-reward, given first mortgages. We also have a corporate guarantee from the parent who has other assets.

From a side perspective, it was too big for ARI. While we will lever it, we do look at the total exposure. So we felt the $100 million plus or minus was the right size. So there's other entities of Apollo that also given what the return was on the asset, liked it. So we just did -- it's pari passu participations. Everyone is equal so there's no scraping, if you will, or other income. We own our piece. We can finance our piece, etc. (inaudible) there.

That was a perfect clarification. Thank you.

Thanks.

Thank you. Our next question comes from Jade Rahmani of KBW. Your line is now opened.

Hi, thanks for taking the question. I just wanted to ask on the dividend if you could discuss your current thinking. I think in the past, you've said when fully levered, you'd achieve core earnings of $0.40. I wanted to see if you could provide any thoughts on when you think that takes place.

Also, do you think the dividend was set at a time where yields in the market were generally higher than currently, and so could warrant adjustment? And I would note that since book value has modestly declined, due to the payment of the dividend, the ROE hurdle that you need to achieve on incremental investments has modestly increased, actually. I wanted to get your thoughts on that.

So I think -- let me see if I can cover all that. I think in terms of the dividend, when we sit down with the board and review the quarterly dividend and get approval for the quarterly dividend, ultimately, while the analysis is a quarterly analysis, it's also an annual analysis.

So you can infer from our keeping the dividend at $0.40 for this quarter, the expectation, on a full year basis for this year, given the numbers we're look at right now, given what we expect to do from an investment perspective, both in terms of volumes and the returns we expect to achieve, we're feeling comfortable at $0.40 a quarter. But more importantly, feeling comfortable at $1.60 on an annual basis. So that really was what drove the dividend.

In terms of returns that are achievable and what that means for the dividend level, it's something we talk about on a fairly regular basis. If you look at the capital we put out both last year as well as the early part of this year, the returns we're achieving are as good, if not better, than what we've done previously.

So despite the returns on again, conduit eligible first mortgages coming in pretty noticeably, we have still been able, in the asset classes that we focus on, to generate the returns that we think are necessary to pay the dividend or earn the dividend that we're currently paying, and still feel positive about that.

Obviously, it's something we will continue to look at as the market evolves. I think the real challenge on the dividend, over the last few quarters, hasn't been one of achievable returns. It's really been one of capital efficiency and just some drag in between identifying deals, getting deals closed and managing the risk of never being in a situation where we've signed up a deal and then not being able to close that deal, which would be far more damaging to our business long term. And it's a risk we just can't have happen.

So I'd say right now, Jade, I think we still see a lot of interesting things to do at expected returns that would support the business and financial model as it exists today. And my guess is you and I might have this conversation again in future quarters. But I look to the dividend at $0.40 that we set this quarter and that is, in many respects, predicated on what we believe is achievable for the full year this year, which is called $1.60, if not a little better.

Great, thanks for that. On the originations quarter to date -- I apologize if you already said this -- but did you say how much was actually closed versus funded so far in the quarter or is the number you gave funded?

Yes, both of the two deals we announced were fully funded at closing.

As were the CMBS that we invested, yes.

Okay, great. Well, thanks very much. Appreciate the color.

Thanks, Jade.

Thank you. And at this time, I'm not showing any further questions. I'd like to turn the call back to management for any closing comments.

Thanks, everybody, for participating this quarter and we will talk to you again next quarter. Thanks, Operator.

Thank you, sir. Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day.