Apollo Commercial Real Estate Finance Inc (ARI) 2015 Q3 法說會逐字稿

I would 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 Incorporation 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 would 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 would 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 ARI third quarter 2015 earnings call. Joining me this morning is usual are Scott Weiner, our Chief Investment Officer; and Megan Gaul, our Chief Financial Officer, who will review ARI's financial results after my remarks.

ARI had a record quarter, reporting operating earnings per share of $0.53, our highest to date and a 20% increase over the same period last year. During the quarter, ARI committed to over $331 million of new commercial real estate loans, funded an additional $155 million for previously closed loans, and grew the investment portfolio to over $2.3 billion.

2015 has been ARI's most active year since the Company's inception, having committed to more than $1 billion of commercial real estate debt transactions year-to-date. The breadth of transactions closed, the performance of the investment portfolio, and the strength of the current investment pipeline demonstrate the depth and quality of our platform.

During the quarter, ARI closed five new commercial real estate debt transactions, which had a weighted average IRR of 14% and were all floating rates. Net capital deployment for the quarter totaled $189 million as ARI also received $135 million of loan repayments.

Subsequent to quarter end, ARI received payment of one our first New York City condominium developments loans for a property in Tribeca. On the $60 million investment that we made, ARI realized over a 15% IRR and a 1.6 times multiple on our invested capital.

At quarter end, our commercial real estate debt portfolio totaled $2.3 billion and generated a leveraged weighted IRR of 13.9%.The credit quality of our portfolio remained stable. We continue to actively monitor our condominium construction exposure.

At quarter end, we had approximately $400 million in net condo exposure spread across six investments. Based upon appraisal, the weighted average loan to net sellout value on these investments is approximately 56%.

In addition, in those projects that are actively in the process of selling units, which include properties in New York City and suburban Washington DC, we have been pleased with both the pace of sales to date and the price per square foot achieved on sales, relative to our underwritten expectations.

Our largest of these loans is the $325 million mezzanine loan we originated to finance the construction of a residential condominium tower on West 57th Street in New York City. At the time we originated the loan, we syndicated $50 million of our exposure to another vehicle managed by Apollo, and we indicated at the time our desire to further reduce our exposure through further syndication.

At present, we have now reached an agreement to syndicate an additional $200 million of the loan to a single investor fund managed by Apollo, which we expect will be completed prior to year end. Our maximum exposure to this loan will therefore be $75 million. The loan's appraised loan to net sellout value is less than 50%, and we have underwritten this transaction to generate an IRR of approximately 16%.

Commenting quickly on our construction loan exposure, the largest of our construction loans in the portfolio is $165 million First Mortgage loan, for the retail component of a mixed-use lifestyle center in Cincinnati, Ohio. The center recently had its grand opening in October and is approximately 80% leased, with a strong roster of tenants. This transaction was underwritten to generate at levered IRR of 14%, and performance to date has been consistent with underwriting.

Turning now to capital raising. We are extremely pleased to end the quarter with the announcement of $350 million private offering, to an affiliate of the Qatar investment authority, comprised of $150 million of common stock at a net price of $17 per share, and $200 million of preferred stock with an 8% coupon. Given the underwriting fees we have typically paid to execute secondary transactions, the net price of $17 per share on common stock implies roughly a $17.65 to $17.70 gross price, had we done an underwritten deal, and the preferred is at an all-in coupon that is 50 basis points to 75 basis points tighter than our prior preferred.

We have long talked about the benefits to ARI of operating within the broader Apollo platform. This competitive advantage was clearly evident with the execution of this transaction. Apollo and QIA have a long-standing relationship, and this offering grew out of a broader dialogue between Apollo and QIA with respect to their desire to expand their commercial real estate footprint in the United States.

Apollo's commercial real estate debt group has invested on QIA's behalf over the past few years, and we believe their investment in ARI is a further endorsement of their belief in the quality of Apollo's platform. This transaction was very significant for ARI, as it provides the Company with the capital needed to fund our active pipeline, as well as provide dry powder for the next several quarters.

Following the offering, ARI now has an equity market capitalization of approximately $1.4 billion. As we indicated in our release, we used a portion of the capital to pay down our JPMorgan facility and consequently, our debt-to-equity ratio stood at less than one times at quarter end, or approximately. 9 times. As stated previously we believe ARI can operate comfortably with a debt-to-equity ratio of 1.3 to 1.5 times, so we have the capacity to add incremental leverage to our balance sheet as we grow the portfolio.

Subsequent to quarter end, ARI closed one additional mezzanine loan totaling $55 million, and has funded an additional approximately $50 million for previously closed transactions. We have a very active pipeline of transactions we are pursuing, and we continue to identify commercial real estate debt investments that offer ARI attractive risk-adjusted returns.

Before turning the call over to Megan, I wanted to comment on our approach to declaring the fourth-quarter dividend for this year. During the first quarter of 2015, based on our confidence in the Company's platform and the expectation of growing operating earnings, the Board of Directors raised ARI's common stock dividend 10% to $0.44 per share on a quarterly basis. Our financial results year-to-date has affirmed the board's decision.

Given the strength of our results to date and our previously stated goals to establish a consistent quarterly dividend that is covered by operating earnings and meets the REIT requirements, we've agreed with our Board to review and declare the fourth-quarter dividend closer to year-end, when we have more clarity on 2015 operating and taxable earnings, as well as more clarity on our forecast for 2016. Therefore, we anticipate the fourth-quarter dividend will be declared in mid December, and with that I will turn the call over to Megan.

Thank you, Stuart. Good morning everyone. ARI had a very strong quarter of financial results across all operating metrics. For the third quarter of 2015, the Company announced operating earnings of $31.7 million, or $0.53 per share, representing a per share increase of 20.4% as compared to operating earnings of $20.8 million, or $0.44 per share for the third quarter of 2014.

Net income available to common stockholders for the same period was $23.5 million in 2015, or $0.39 per share, as compared to $17.3 million or $0.37 per share for 2014. The Company reported operating earnings of $80.3 million, or $1.42 per share, for the nine-month ended September 30, 2015, representing a $14.50 per share increase, as compared to $52.8 million, or $1.24 per share for 2014.

Net income available to common stockholders for the nine-month ended September 30, 2015, was $70 million, or $1.24 per share, as compared to $55.1 million, or $1.30 per share for 2014. Reconciliation of operating earnings to GAAP net income can be found in our earnings release contained in the investor relations section of our website apolloreit.com.

I wanted to highlight one thing with respect to our operating results. Operating earnings in Q3 benefited from the impact of several early loan repayments. And therefore, we received approximately $1 million in prepayment fees during the quarter. GAAP book value per share September 30, was $16.35, a slight decline from last quarter driven by the unrealized marked market loss our CMBS portfolio.

As a reminder, we do not mark our loans to market for financial statement purposes and currently estimate that the fair value of our loan portfolio on September 30 was approximately $16.2 million greater than the carrying value as of that date. As of September 30, 75% of the loans in our portfolio have floating interest rates and we continue to position the portfolio to benefit from an increase in short-term rates.

We anticipate that if LIBOR were to increase 50 basis points, our portfolio would generate an additional $0.08 in operating earnings annually. With respect to ARI's leverage, as Stuart mentioned, the Company ended the quarter with. 9 times debt-to-equity ratio. We continue to have excess capacity on our JPMorgan facility, as well as our previously announced FHLB facility.

Additionally, our G&A expenses continue to remain low. Annualized G&A as a percentage of common book value was 47 basis points at the end of the third quarter, which continues to be one of the lowest among ARI's peer group.

Finally, I want to highlight our attractive dividend yield. Based on Thursday's closing price, ARI stock offers an attractive 10.4% yield and for the first nine months of the year, ARI had a 93% dividend payout ratio.

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

(Operator Instructions)

Dan Altscher, FBR

Stuart, I want to follow up a little bit about your last comment around the dividend and try to read through what you're trying to say. It seems like core earnings are tracking in excess of the dividend right now, clearly. How closely is core earnings tracking taxable income? Is there a potential for a special at the end of the year? Or is it gearing up more towards maybe a potential hike for next year?

Without being overly specific, there are some book tack differences. I guess you and I could debate whether they are material or not; and you also probably know that the REIT rules give you a little bit of flexibility with respect to when dividends are paid and what tax year they apply to. I think our bias at a high level is not to do special dividends, but to do consistent quarterly dividends. But ultimately we need to meet the requirements for this year and then plan for next year. So I think we'd like another, call it six weeks, of full information on how we are doing this year, as well as a little further clarity on what next year looks like, given what we're working in the pipeline right now. But ultimately if we could figure out a way to do it, we would rather do it through a sustainable quarterly increase as opposed to a special dividend.

That's clear.

I was hoping you can give an update on the exposure out in the North Dakota region. Any updates there in terms of occupancy, rental growth, or something? There's been some articles to suggest that the region's been having a little bit of trouble. Any kind of update would be, I'm sure, helpful to everybody.

Yes, I will let Scott comment.

Obviously, there's been a lot in the news. I would say, on the deal-specific, we are still based on the current rent, we're approximately at ten debt yield. Occupancy is around 80%, but we are clearly seeing pressure on rents. So rents are rolling down; so we do anticipate that 10 debt yield going lower.

But there are new leases being signed, there are people there, people obviously within the oil industry and others. A lot of infrastructure is still being put in place. They are talking about building a new airport and obviously roads and retail. So I would say, yes, there's definitely near-term pressure on rents. As the same time, the municipalities in and around our property are focused on the people who did permanent investments in terms of residential and other property types.

So there is now finally talk of closing the man camps, which are supposed to be closed by the summer, which will then obviously create more demand. But it's a deal we obviously are carefully watching with a well-regarded private equity sponsor and substantial equity. So we still are at a basis below replacement costs. We've had substantial amortization through cash flow sweeps scheduled and obviously we'll continue to watch the deal.

I imagine you're still pretty comfortable with where your basis sits and it sounds like you are. Have you thought about trying to maybe sell that exposure to somebody else? Or someone who's maybe a little bit more opportunistic if that's the way we want to think about it? Or simply just having some sort of hedge, like an oil hedge or something against that, that would potentially protect against any sort of downside scenario?

We obviously always look at all options. In my experience, when you try and hedge things that aren't necessarily correlated, it ends up going badly. I remember people trying to hedge CMBS at S&P Options, so I'm not really sure I want to be making a bet on oil prices. I think we continue to look at it and say it's multi-family, people are living there. Obviously there's been some public trades on where suburban multifamily is trading. We are at a basis that's better than that. We can argue as what the discount of a multi-family in the shale region versus some other suburban multi-family.

We also think this is the low point. Obviously, the man camps closing should help rents and occupancy. So everything's on the table, so if someone came to us and wanted to buy the loan, certainly we would talk about it. But at this point, it's not a distress position; it's cash flowings performing; we continue to amortize down.

I just had one additional question on the relationship with Cutter: Obviously they came in like pari-passu; it seems like with everybody else; there's no governance or board seats or anything like that, but was there any level of information that those folks received -- nondisclosure agreements or any deeper looks into the books that was provided to them making that investment?

No.

Steve DeLaney, JMP Securities

Congratulations on a great quarter.

Megan, thank you for the disclosure of the $1 million item. We were trying to figure out where we were $0.02 light and I think you just nailed it for us.

The follow-up is, what percentage of your loans have some form of exit or prepay fee or yield maintenance with however you might structure it? Is this something, as we model out prepays, which will certainly come -- is this something we should keep in mind? It would help to know if Tribeca was a one-off, or there's some structural fees at the backend and other deals.

It's Scott, I'll take that.

I would say generally all our deals have some level of [call] protection or lockout or yield maintenance. Certain deals have exit fees that we amortize over the expected time. As the portfolio obviously has grown, there's always obviously deals coming and going. It's tough to peg an exact number on it. In my mind, I do think, yes, every quarter there will probably should be something.

We're amortizing them over the life of the loan. It's really just the function of it being moved up.

Think about it this way Steve: every deal that has either an upfront fee or an exit fee like that, gets straight-lined over the life of the loan. I think the point Scott was trying to make is that as the portfolio gets bigger, there are more and more situations where borrowers will come to us and ask for something, whether it is get out of the loan earlier, maybe extend in addition for whatever it might be in those situations, create potentially the chance to generate one type, either one-time income or accelerate income that was being amortized over a longer period of time. But it's pretty hard to know what it's going to look like on a quarterly basis and certainly from a modeling perspective. We take a fairly conservative view when thinking about what the upside from that might be.

Got it, and that may be the best way. It's not bad to have a Penny Goodie there every now and then. That color is helpful and we will consider that.

Scott, shifting to you. Obviously CMBS spreads -- I'm not going to say they blew out because that sounds like a hedge fund would express it. Lets just say they widen materially in the third quarter. And I half expected to see you add to your CMPS positions in the quarter. So given that you did not, does that tell us that you're maybe concerned that spreads won't recover, or even blow out further? Or is this just a function of your liking the opportunities and loans better than CMBS? Thanks for any color you can give me there.

For us, we're not a trading operation, or hedge fund for that matter. For us, the CMBS was a point-in-time investment where we liked the credit and we could put in place match term funding through the term repo. So for us it's never been a strategy to buy when we think spreads are going to tighten or use short-term repo -- that's not just our philosophy.

We obviously are active in the CMBS market; we spend a lot of time for other vehicles that we manage in the single asset space and looking at deals. But from an ARI perspective, spreads coming and going, it doesn't really give us opportunity. If there was, I would say, a major displacement of shorter-term CMBS, where again we could put on term financing, that would be attractive. But the spreads moving out a little bit is not something that we would look to do. Over time, you will continue seeing -- absent some major happening in the market, you will continue to see CMBS as a percentage of the portfolio will continue to shrink as the CMBS we own pays down and the loan book grows.

Got it, so you're not playing for nickels and dimes, but if we had a market event, especially given your new home loan bank relationship, which could give you match funding, you might be opportunistic --

Yes, we have the expertise. We are in the market but not something we're doing. We're also not a conduit lender, that's not a business that we've ever liked. So we are a portfolio lender, [buying] role. Obviously we can always sell things we need to, but we are not tied at all to the CMBS market. We did have a little mark-to-market, as Megan said. No (inaudible) -- just shorter-term stuff that moved out a little bit and we would think over time will move back the other way.

Thanks, Scott. Stuart, one final thing to wrap up with you. So your business model is working very well, no obvious obstacles that we can see right now, other than obviously, we always have to be careful about credit. But I'm wondering as you're preparing your 2016 game plan if there's anything new that you might put in the playbook that you would be willing to comment on at this time?

Really for us it's more of the same, Steve. I think we like the playbook right now. I think our traction with lenders and intermediaries in the market has only gotten stronger over time.

And I think we are pretty happy with the state of the pipeline today broadly. I would say, we are always open to new ideas and being inside Apollo, there is always dialogue going on, but broadly speaking, I think we feel pretty good about the playbook as it stands heading into 2016.

We like being a performing lender, no aspirations to be an equity vehicle. We like the space. We like the geographies. We're in major markets in the United States. We continue to look at opportunities in Europe. We obviously have exposure in London and the United Kingdom. So I think you'll see more of the same -- more floating rates versus mortgages, more mezzanine loans. That's really the core business.

Thank you all for the comments, and go Mets.

Jade Rahmani, KBW

Wanted to ask if there's been any spread widening on the target portfolio lending investments that you're seeing since August? And if you're seeing any spillover from CMBS into the back market?

I wouldn't say, really, spillover from CMBS and, I know it's not a huge market, but there are some folks in our space who finance themselves through the CLO market, which is still small but that also widens. I would say, surely the insurance companies, the banks on the cash flowings have benefited from the CMBS market widening. I think in our space, it's still really the spoke solutions in terms of what we're trying to do for people. It's really just a matter of, everyone has a view of the appropriate risk-adjusted returns and just finding deals that work.

I wouldn't say necessarily CMBS. Credit overall has widened. So I do think certainly we all are aware of what's happening in energy and pharmaceuticals and stuff like that. So I do think a lot of us sit within organizations that are across sectors. So I think we all kind of think that and so if someone was going to round up or round down, you may be rounding down in terms of spreads and I think maybe philosophically that made spreads go a little wider for us in the quarter, just because I think people kind of took a view of more macro stuff. But it wasn't specific, BBB-minus CMBS is here; thus my [med] spread is there. I think it was just more of a feeling of, the world's a little choppy; if anything it should go tight or go wider, so if I'm going to bid this deal, I'll bid it a little wider. And sometimes you get hit and sometimes you don't in terms of from a borrower perspective.

I think on the margin, Jade, from a competition perspective -- and trust me there's plenty of competition out there -- but I think we've always had in real estate, when the corporate markets or the high yield markets get too tight, you tend to get guys poking around real estate looking for higher return. I think the backup in the high-yield market, given energy and pharmaceuticals, certainly gives those who are more traditionally focused on those markets plenty to do over there. And on the margin, you might have a handful of folks who were interested in mezz when they couldn't find anything else to do, who were less interested these days because they've got plenty to do given their core focus.

In terms of borrower sentiment, regarding pricing in the market, potential choppiness in the commercial real estate market, are you seeing any changes? In terms of your overall investment outlook, is there any change there?

It is still a very bottoms-up approach for us deal by deal and market by market. New York City hotels are a perfect example -- across our portfolio, both ARI and other vehicles, we have a lot of New York City exposure. We've certainly seen a softness in the market, which has been well-reported with the recent others. But we still did an acquisition financing this quarter on New York City hotels. So we obviously built that into our underwriting. But we were still willing and able to do it and there was still a buyer of a hotel who put a lot of equity behind us. There's really no red-zoning for us, kind of looking on a deal-by-deal.

In terms of activity, there still is plenty of equity looking at various deals. We still do a tremendous amount of acquisition financing, occasionally refinancing, but it's still a lot of acquisitions. So I would still say there's a lot of money looking at commercial real estate as an attractive asset class.

Also on the debt side, you'll see all the reports, the insurance company originations are up, the banks are up. I think the lending markets are hitting on all cylinders. They're still, I would say, maintaining some level of discipline. Clearly portfolio lenders maintaining a higher level of discipline than a securitization lender, just given one holding on their books and one selling it. We see plenty of guys who are selling stuff and then turning around and going and buying, going to buy things, so we really haven't seen people wholesale exiting markets or exiting properties. It just might be their business plan was achieved; they want to monetize some gains and they turn around and go buy something else.

In terms of quarterly capital deployment for pace of originations, do you think $200 million per quarter is a reasonable assumption? It's been somewhat lumpy sometimes around capital issuance, but it seem like you guys have adequate capacity for that.

It's always going to be lumpy, but I think as a general starting point, I think that number makes some sense. Could be $300 million one quarter, could be $150 million another quarter, but I think that's a reasonable estimate.

And in terms of prepayment expectations for the balance of 4Q -- and also I think referring to the slide where you provide fully extended maturities -- I would anticipate a higher prepayment amount than what you show in the full extensions. Are there additional loans that could prepay or repay in the fourth quarter aside from what you've received so far?

A bunch of our condo transactions are closing condos, so we'll get some repayments from that, but I'm thinking of the portfolio and what we're anticipating and I don't think we're thinking really any large repayments, again absent some repayments from individual condos, it was for the remainder of the quarter.

Rick Shane, JPMorgan

Strategically, you are very flexible in terms of being able to either participate in the first lien market or the mezz market, which differentiates you somewhat from your peers. I'm curious, given what we're seeing in the low markets, in the primary markets, if you have a strong view right now. Obviously over the last 18 months, the mezz portfolio has been growing pretty fast. I'm curious if you're seeing a shift in terms of risk-adjusted opportunities.

I think the last quarter was pretty emblematic of what we're doing. We're doing both. We're doing first mortgages. We're doing mezz and the mezz is on cash-flowing properties as well as development. The first mortgages, obviously for us to hit our yield, needs to be in some level of transition. The cash-flowing market, where you have the banks, insurance companies, CMBSs, is not really market for us or our brethren, so it needs to have some level of transition. So we're seeing and doing it all, no real shift.

Philosophically, when we do a whole loan, we do look to hold the whole loan and use our financing. We're really -- to date, I don't think, ongoing, the business of taking something down and trying to sell that A note; if we're going to just do the mezz, we'd rather partner with the bank upfront and work with them on that as opposed to taking that extra risk of taking something down and trying to have to sell it.

A housekeeping issue: you talk a little bit about the $130 million repayment that you've received this quarter. I didn't hear it -- did you mention if there was going to be a pre-payment fee on that, so we get our models [cleared] up.

We basically said there was $130 million prepaid in the third quarter, which it did have a prepayment fee. There were fees associated with, which Megan commented on; and then we mentioned that after the quarter, there was a $60 million paydown, which was really mentioned because it was one of our larger condo exposures, so we wanted to let people know that, that was put away at a very attractive return. But there's no material prepayment fee associated with that.

I thought the $130 million was post-quarter. I must have misread it.

No.

Mike Levine, Oppenheimer

Congratulations on a good quarter.

I hopped on late so I was just going to ask about the state of the market, because obviously people seem to be getting increasingly concerned and I know the last couple of questions have all been on that. I just wanted to get your thoughts. But did you want to add anything

Can you say that again, Mike? You broke up.

I hopped on late. I was going to ask you guys your thoughts on the market. People seem to be getting more and more concerned that we're in the later innings of this cycle.

At a high level and as a firm, we're both in the real estate equity business and the real estate credit business. And it's very much bottoms-up, deal-by-deal driven. I think what's fueling the debate right now is that there is clearly a disparity between public market pricing as evidenced by the equity REITs, which are trading at discounts to perceived private market valuations for the first time in quite some time. And I think obviously those that read Green Street or other industry pieces are trying to figure out which is right: the private markets or the public markets.

Generally speaking, I would say that in the markets we're operating in, operating fundamentals continue to remain pretty positive; funds flows and level activity remain pretty positive, and that's important to us if you think about our lending business effectively being a derivative business to transaction activity. We are not Pollyann-ish about thinking that trees grow to the sky, and on every deal we're going bottoms up. And certainly, relative to the equity that's going into any transaction, making much more conservative assumptions about occupancy levels, rent growth, sell-out values, ADR levels -- whatever operating metrics you want to use for a particular asset. So I would say there's still a lot of activity in the market, there is still a lot for us to look at.

And I would say the pipeline that we have today, at least at a high level, would indicate to me that there is still a lot that we will end up doing that seems to meet our definition of attractive risk-adjusted returns. But we certainly read everything that is being written about the market these days, both pro and con. And I think that's just one input into our bottoms-up underwriting.

But I would say there hasn't been any noticeable shift in the market other than probably the gapping out that we've seen in CMBS spreads, which one could argue is more about what's going on in credit in general, as opposed to being specific about real estate.

(Operator Instructions)

Dan Altscher, FBR

I wanted to follow up on something.

We talked a lot about the banks and insurance companies -- or you talked a lot about the banks and insurance companies and where they currently stand. GE Capital, now that they are out of the business or in some new form, if you will -- can you comment a little bit, if had you seen them prior, does their going away really mean anything for you guys?

Haven't really competed with them. I would say they were kind of an odd spot in the market, where they do higher leverage than your traditional bank or insurance company, but price it much tighter than your debt fund. So I would say, overall from a market perspective, I would say it's probably good -- well obviously, always one less competitor is good -- but they really did take advantage of their size and cost of funding to be an anomaly in the market, where if they wanted something or something fit for them, they did it. Because, again, most people, the banks and insurance companies would generally have their leverage limit price very tight. Other folks will price higher and do more leverage and they were kind of a hybrid. So all in all -- good. I think that people that were there are dispersed; different shops have picked up different people. To me, it can only be a positive that one large group is out of the market, but they were not a group that we competed against.

Jade Rahmani, KBW

In terms of the fourth quarter, given the timing of the capital raise and the full preferred equity dividend, do you think that it's reasonable that 4Q earnings will exceed the $0.44 3Q dividend?

We're comfortable with that, yes.

In terms of the North Dakota exposure -- the $55 million in the slide deck -- is that the fully amortized remaining exposure?

It started at $58 million and it's now down to about $54 million.

Finally, are there any nonperforming loans in the portfolio at this point? Or any delinquencies that we should know about?

No.

At this time I'm showing no further questions. I would like to turn the call back over to Mr. Stuart Rothstein, CEO, for closing remarks.

Thank you, Operator, and thanks everybody for participating.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may all disconnect. Everyone, have a great day.