Release Date: February 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Ivan, are you seeing institutional money coming into the distressed bridge loan space, and is it necessary for resolving issues in the next one to two years? A: Ivan Kaufman, CEO, explained that there is a pause in the market due to recent rate increases, but there is demand for assets transitioned to new sponsors. However, assets requiring significant work are more challenging, and the market's future activity will depend on interest rate movements.
Q: How do you expect the modified loans from last year to perform in 2025, and are they reliant on interest rate changes? A: Ivan Kaufman noted that bridge loans are short-term and often modified in high-rate environments. The modifications are based on the sponsor's ability to inject capital and improve asset performance. Most modifications have been successful, but some may still face challenges.
Q: Can you clarify the impact of nonaccrual loans and PIK income on the quarterly earnings guidance of $0.30 to $0.35? A: Paul Elenio, CFO, stated that the $0.03 to $0.05 legal and consulting fees are annual, and the drag from nonaccruals is due to $819 million of loans earning zero. The guidance includes PIK income, which is expected to be similar to previous quarters.
Q: What is your confidence in the book value, and would you consider using liquidity to buy back stock if it drops below book value? A: Ivan Kaufman expressed confidence in the book value, citing a strong track record in managing distressed loans. Paul Elenio added that while book value might decrease slightly, it is not expected to be significant. They are focused on growing the business and managing legacy issues.
Q: Can you provide an update on the DOJ and SEC investigations, and do legal fees related to short seller reports include those investigations? A: Ivan Kaufman stated that they do not comment on regulatory inquiries. The elevated costs are due to increased compliance and auditing efforts, and they are working hard to manage these expenses.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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