Q4 2023 Earnings Summary
Reported on Feb 18, 2025 (After Market Close)
Pre-Earnings Price$11.05Last close (Feb 29, 2024)
Post-Earnings Price$11.05Open (Mar 1, 2024)
Price Change
$0.00(0.00%)
- Borrowers are successfully managing upcoming interest rate cap maturities, with most replacing caps without significant issues, reflecting strong borrower relationships and a high-quality loan portfolio. Management reports that "the majority of the conversations have been very positive" regarding cap replacements.
- Share repurchases at significant discounts to book value in the fourth quarter were highly accretive, generating $1.32 of book value per share during Q4. Management is focused on optimizing ROE, and plans to return capital to shareholders through continued share repurchases and eventually reinstating dividends.
- Management is confident in the recovery of principal balances on higher-risk loans, even for those categorized as risk ratings 4 and 5. They reported that one such loan was resolved in Q1 with full principal recovery. Additionally, the company plans to monetize certain investments, use the gains to offset NOLs, and reinvest capital into the loan portfolio, aiming to achieve an earnings available for distribution (EAD) that supports a 10% dividend at book value, which would be competitive in the market.
- Loans rated 4 or 5 increased to 11 loans representing 16% of the loan portfolio's par value, up from 8% in the previous quarter, indicating deteriorating credit quality in the loan portfolio.
- Uncertainty in the timing of monetizing certain investments, as the company has no visibility on when these assets will be converted into cash, which could delay capital redeployment and earnings growth.
- The company has not provided guidance on when it will reinstate dividend payments, suggesting that dividends may not occur in the near term, which could be a concern for income-focused investors.