Apollo Commercial Real Estate Finance Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 31, 2024

Key Takeaways

  • Positive Sentiment: Following the Fed rate cut, ARI reported a surge in financing activity, deploying over $1.1 billion in new vintage loans and funding an additional $500 million on previously closed transactions year to date.
  • Negative Sentiment: ARI incurred a $128 million realized loss on its senior hospital loan portfolio after the operator filed for Chapter 11, with ongoing bankruptcy proceedings, partial asset sales, and legal challenges to a Massachusetts eminent-domain taking.
  • Negative Sentiment: For Q3, ARI reported a GAAP net loss of $95 million (–$0.69/share) versus distributable earnings of $44 million ($0.31/share), driven primarily by the Massachusetts healthcare loan resolution.
  • Positive Sentiment: At quarter end, ARI’s $7.8 billion loan portfolio yielded 8.5% unlevered, and the company saw robust activity with $953 million of repayments and $597 million of new loan commitments in Q3.
  • Neutral Sentiment: The board declared a Q3 dividend of $0.25 per share, citing watch-list impacts, while estimating a potential $0.40–0.60 per share uplift if nonperforming capital is redeployed.
AI Generated. May Contain Errors.
Earnings Conference Call
Apollo Commercial Real Estate Finance Q3 2024
00:00 / 00:00

There are 10 speakers on the call.

Operator

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.

Operator

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. In addition, we will be discussing certain non GAAP measures on this call, which management believes are relevant to assessing the company's financial performance. These measures are reconciled to GAAP figures in our earnings presentation, which is available in the Stockholders section of our website. 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.apollocraft.com or call us at 212-515-3200.

Operator

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

Speaker 1

Thank you, operator, and good morning and thank you to those of you joining us on the Apollo Commercial Real Estate Finance 3rd quarter 2024 earnings Call. I am joined today by Scott Weiner, our Chief Investment Officer and Anastasia Moranova, our Chief Financial Officer. Before I speak about ARI's results this quarter, I wanted to provide a brief market update and reiterate where we have been focusing our efforts with respect to ARI. Overall, the real estate market is showing signs of renewal with the benefit of the recent Fed interest rate cut leading to increased transaction volume and the continued strength of the economy providing additional confidence to investors which is being reflected in the marketplace. As such, we have seen a notable uptick in financing opportunities.

Speaker 1

While spreads have tightened from the wider levels seen in 2023, the lending environment remains favorable with opportunities to deploy capital into loans secured by properties at reset valuations with lower detachment points generating attractive risk adjusted returns. This has enabled ARI to be on offense. With the $1,700,000,000 of loan repayments we have received year to date, we have committed to over $1,100,000,000 of new vintage loans over the past 9 months in addition to deploying over $500,000,000 of capital into fundings of previously closed loans. Beyond investing capital into new transactions, we remain highly focused on proactive asset management and seeking resolutions on our focus loans with the ultimate goal of maximizing recovery value and converting underperforming capital into higher return on invested equity opportunities. While we still have work to do, we have defined pathways for our remaining nonperforming loans in REO assets and we are actively pursuing resolutions.

Speaker 1

Shifting to the senior loans secured by a portfolio of hospitals. As we indicated on our prior earnings call, the operator of the hospitals filed for Chapter 11 bankruptcy in May 2024. The loan remained current through the end of Q3. However, since ARI had placed the loan on non accrual status, debt service payments received in the Q3 were used to reduce the carrying value. Before seeking to recover value from the real estate, ARI and the additional Apollo affiliated co lenders received a guarantee payment from the borrowers, which was used to partially reduce the outstanding balance of the loan.

Speaker 1

Subsequently, 5 of the 8 hospitals were sold to new operators with ARI and the Apollo co lenders receiving the proceeds from the sale. 2 of the 8 hospitals were closed, a decision made by the Commonwealth of Massachusetts and ARI and the Apollo co lenders are working through plans to maximize the recovery value on the underlying real estate. Lastly, the largest hospital in the portfolio was taken by the Commonwealth of Massachusetts through eminent domain. ARI and the Apollo co lenders are in process of using available legal remedies to challenge the eminent domain action in the Massachusetts court system. Pending the outcome of that legal process, the lenders have reserved all rights available to challenge the eminent domain valuation if needed and if successful ARI anticipates it could recover additional value.

Speaker 1

Turning now to the portfolio, at quarter end ARI's portfolio was comprised of 45 loans totaling $7,800,000,000 During the quarter, there was continued sales momentum at 111 West 57th Street with 4 additional units going under contract and a few additional contracts out for signature. Assuming all of these contracts under contract close, we expect net proceeds of approximately $55,000,000 in the next few months, which would reduce the outstanding balance on the senior loan to approximately $60,000,000 In addition, during the quarter, the retail component at the building was leased to the British auction house Bonhams, which is expected to open in the second half of twenty twenty five. Another achievement to note in the REO portfolio is that the 51 storey multifamily tower we are developing in Brooklyn, which topped out during the quarter and we continue to make good progress on construction. Before I turn the call over to Anastasia, I want to address ARI's dividend. As I have stated previously, when the Board sets dividend policy, a number of factors are taken into consideration, including the sustainable level of operating earnings, the current loan portfolio is expected to produce, the achievable risk adjusted returns on equity ARI can generate when we invest in capital, and the appropriate level of leverage utilized in achieving underwritten ROEs.

Speaker 1

The Board's decision to set the Q3 dividend at $0.25 per share of common stock reflected the impact to operating earnings from ARI's remaining watch list loans as well as anticipated declines in floating interest rate benchmark as indicated by the forward curve. As we continue to get capital back from resolution on the focus loans, ARI will be able to redeploy capital into investments resulting in upside in operating earnings potential. We estimate that if we were able to reinvest equity tied to non performing loans and REO into newly originated loans, there is an additional approximately $0.40 to $0.60 per share of annual operating earnings uplift. With that, I will turn the call over to Anastasia to review ARI's financial results for the quarter.

Speaker 2

Thank you, Stuart, and good morning, everyone. ARI reported distributable earnings prior to realized loss of $44,000,000 or $0.31 per share of common stock for the 3rd quarter. GAAP net loss attributable to common stockholders was 95,000,000 dollars or negative $0.69 per diluted share of common stock. This net loss amount includes $128,000,000 realized loss incurred in connection with the resolution of the loan secured by the portfolio of hospitals in Massachusetts. As we disclosed in our Q2 filing, the amortized cost basis of this loan as of June 30 was 342,000,000 dollars Following up on Stuart's remarks about the developments with the loan during the quarter, we received about $55,000,000 of proceeds from the guarantee payment, the sale of other collateral and interest cost recovery proceeds, all of which were applied against the amortized cost basis of the loan.

Speaker 2

The loan was extinguished as of the end of the quarter and we retained we reflected retained assets of 160,000,000 dollars comprised of a receivable from the Commonwealth of Massachusetts for the eminent domain taking of 1 of the hospitals and deeds in escrow for the remaining 7 hospitals. The proceeds from sale of 5 hospitals was then distributed on October 1. Subsequent to the sale of 5 hospitals, ARI is retaining the deeds to the 2 closed hospitals and a promissory note from a BBB plus rated company for the total amount of approximately 60,000,000 Our portfolio ended the quarter with a carrying value of $7,800,000,000 and the weighted average unlevered yield of 8.5%. During the quarter, we committed $597,000,000 across 2 new loans and 1 refinancing transaction. We also funded an additional $93,000,000 for previously closed loans.

Speaker 2

It was an incredibly robust quarter for loan repayments. We received $953,000,000 of proceeds from full and partial loan repayments, the amount which exceeds 1st and second quarter combined repayments by over 190,000,000 dollars With respect to risk ratings, the weighted average risk rating of the portfolio at quarter end was 3.0, unchanged from the previous quarter end year end. During the quarter, a €200,000,000 loan secured by a portfolio of office assets in Germany was moved to a risk rating of 4. The loan remains current on interest payments. However, the sponsor has indicated that the leasing of the assets was taking longer than anticipated.

Speaker 2

We are in the process of working with the sponsor to extend the loan and make some additional changes to the structure, which includes the sponsor investing additional equity into the transaction. Our total CECL allowance was relatively flat quarter over quarter. As of September 30, it's equated to $381,000,000 which represents $2.74 per share of book value. The general CECL allowance decreased by $1,000,000 quarter over quarter, primarily due to repayment activity outpacing loan originations during the quarter. As a result, our general CECL allowance was at 49 basis points and our total CECL allowance stood at 4.64 basis points of the loan portfolio's amortized cost basis as of September 30.

Speaker 2

Moving on to the right hand side of the balance sheet. During the quarter, we upsized our secured credit facility with Goldman Sachs, providing an additional $315,000,000 of capacity. We continue to see ample liquidity for our secured borrowings as banks show a continued preference to lend to counterparties such as ARI as opposed to directly to the real estate given the better capital treatment. Our debt to equity ratio at quarter end was 3.5 times. And as a reminder, we have no corporate debt maturities until May 2026.

Speaker 2

The company ended the quarter with over $300,000,000 of total liquidity comprised of cash on hand, undrawn credit capacity on existing facilities and loan proceeds held by the servicer. ARI's book value per share, excluding general CECL allowance and depreciation, was $12.73 which reflected $0.93 from the realized loss on Massachusetts Healthcare loan. And with that, we would like to ask the operator to open the line for questions.

Speaker 1

Thank

Operator

you. Our first question comes from Doug Harter with UBS. You may proceed.

Speaker 3

Thanks. Hoping on the Massachusetts loan, if you could just let us update us as to where it stands today, how much collateral and against how many properties are kind of still on the books today?

Speaker 1

Yes. So Doug, we have the 2 hospitals that were closed are still on our books and then we took back a $41,000,000 loan against one of the hospitals that was sold. The borrower on the $41,000,000 loan is LifeSpan, which is a BBB plus rated company, I believe. So we've got Well, just

Speaker 4

to clarify, it's not actually against the loan, it's just actually a full faith and credit of Lifespan, who's a large not for profit hospital operator affiliated with Brown University, it's a BBB plus credit. So it's not a mortgage loan or securities, it's just full faith and credit of a rated investment grade entity.

Speaker 1

So there's $60 plus 1,000,000 of assets on the book still, two properties that we need to figure out how to monetize value and the note.

Speaker 3

So that the properties would be $20,000,000 or so of that $60,000,000 and then the note is the other 40,000,000? Okay. Yes. And then I think that TEX had said you had received a guarantor payment I guess before all of that. I guess how much was that and what I guess was that paid by the borrowing entities beforehand?

Speaker 1

We're not at liberty to disclose the specific amount and yes to the second part of your question.

Speaker 3

Okay. And then you talked about a German office downgrade. Just give us a little more detail on that? Yes.

Speaker 1

It's a Berlin office asset. It's a lease up play. Our co borrower and an equity sponsor are 1 in the same, and I'm pretty sure they're a company you follow as well. They're a little bit behind pacing from a lease up perspective, so it'll take a little longer. We're still accruing interest.

Speaker 1

We are still expecting to recover full value as evidenced by the fact that we didn't take any reserve, but things are just going slower than we would have hoped from an underwriting perspective.

Speaker 3

All right. I appreciate the answers. Thank you.

Speaker 5

Sure.

Operator

Thank you. Our next question comes from Rick Shane with JPMorgan. You may proceed.

Speaker 6

Hey, guys. Thanks for taking my questions. Really, two topics. In terms of the Massachusetts properties, I'm assuming that one of the challenges in terms of resolution will be the very specific nature and sort of challenge of converting that type of property. How do you think about that?

Speaker 6

Does that presumably that sort of limits potential outcomes and potential other parties stepping in?

Speaker 1

I would say at this point, given the work we've done from an appraisal process and also sort of very early days of thinking about alternative uses, I would say we feel confident in the $20,000,000 or so of value that we're carrying on our books, and we're grinding through it. But I would say we feel good about the ability to ultimately achieve the value that we're carrying it out on the balance sheet.

Speaker 6

Got it. And thank you. Alternative uses was the phrase I was apparently struggling to find this early in the morning. Second question, look, you've talked about the improving opportunity, the deal flow picking up. Can you give us a sense both in terms of where specific areas where you have appetite, but also given some of the challenges that you faced your ability to take advantage of those opportunities?

Speaker 1

Yes, I'll start and I'll work backwards and maybe then Scott could chime in as well. Look, I think the ability to take advantage is purely driven based on our continuing to get repayments, right? There's not a lot of other available sources of capital right now as one thinks about the capital structure. So the short term ability to take advantage is tied to continued repayments. And obviously, the improving market is reflected in the fact that we received more repayments in the 3rd quarter, just under $1,000,000,000 than we received in the 1st 2 quarters of the year combined.

Speaker 1

And then the next really available source of capital for us will be recovering the capital whether it be on the continued sales of units at 111 West 57, the sale of some ROE, the resolution of some of the other focus loans, all of which, A, afford us the ability to take advantage of the opportunities in the market and B, should lead, as I mentioned in my remarks, to earnings uplift as we put capital to work in a more productive fashion. I'll let Scott, if he wants to spend a few minutes, just talk about what he's seeing in the market, comment on the market overall.

Speaker 4

Yes, I would say in both the U. S. And Europe, the markets are functioning. I would say acquisition activity is picking up as the bid ask between buyers and sellers has shrunk. And it's really across all the major food groups.

Speaker 4

I think you can see from the transactions we've closed, we've done some industrial, we've done some senior living in the UK, we've done multifamily hotels. So it's really all the major food groups. I would say one of the beneficiaries of the sort of the capital markets being fully functioning is that the CRE CLO, which we don't really take advantage of obviously, but the corollary of the warehouse financing market is also very strong. So the banks a lot of banks have chosen to get their real estate exposure for a variety of reasons to the warehouse business. So we find that while maybe spreads have come in a little bit on the whole loan side, the financing is very attractive for us, so we can get to the levered returns we're looking for.

Speaker 4

So it's really across all, I would say, regions and property types that we're seeing good deal flow.

Speaker 6

Terrific. Thank you guys very much.

Speaker 5

Thanks, Ray.

Operator

Thank you. Our next question comes from Stephen Laws with Raymond James. You may proceed.

Speaker 7

Good morning. Can you help me reconcile a couple of numbers? I think the math on was 342 and you took a loss of 128 and received proceeds of 133. So I think that's a delta of like $80,000,000 Maybe the carrying value of $20,000,000 on the 2 remaining assets is part of that $80,000,000 But can you help me close the gap there on what I'm missing reconciling the 342 down to the different components?

Speaker 1

Yes. Here's how I think about it, which is so let's start with the 342. There was roughly $55,000,000 was comprised of a combination of guarantee payment, some other reserves that we held, as well as the fact that we used the Q3 interest to pay down the loan as opposed to take it into income. So that was about $55,000,000 in total. We are holding about $61,000,000 of asset between the 2 vacant assets and the note to lifespan that Scott and I commented on earlier.

Speaker 1

And then there's about another $100,000,000 of proceeds from asset sales less some expenses incurred in getting this all done. So I sort of think about it in those three buckets, which gets you from like $342,000,000 to 128.

Speaker 7

Great. That's helpful. Thank you, Stuart.

Speaker 1

Yes, sure.

Speaker 7

The court process, I think I read in the Q that maybe it's on the docket for February as far as the first step. And I think it was mentioned expedited, I believe was the word. But can you talk about how that process may go and timeline? I know it's early and hard to predict that stuff, but any comments around that?

Speaker 1

Yes, look, timeline is always tough to predict. I think as I articulated it I tried to articulate in my comments, I would guess think about it as a 2 step process. I would say step 1 is we are fighting the concept of eminent domain as an available strategy in this situation. We'll either be successful or not successful on that. And then if we're not successful on that, then step 2 is a process to sort of battle over value, right?

Speaker 1

And just to put that in context, the Commonwealth took the asset for $21,000,000 and the asset is on the tax rolls and an assessed value of $200,000,000 But if we need to go down the path of fighting the value through the court process, Scott can correct me, but I think that is potentially a 2 to 3 year process.

Speaker 7

Great. That's helpful. I appreciate your comments on that. And then away from that loan, it seems like really solid pipeline. You're doing a lot more originations in most peers.

Speaker 7

Repayments remain elevated as well. So you did have a little runoff. So can you talk about your outlook kind of on your net portfolio size as you look at upcoming repayments and think about your capital deployment? Or maybe ask another way, do you think leverage kind of hangs flat here? Or do you think you experienced some net portfolio growth maybe over the next 12 months?

Speaker 1

I think in terms of getting repayments back, putting capital to work, I think leverage stays roughly the same and portfolio size doesn't bounce around too much. I think where it potentially grows is when we start taking or receiving back some of the equity over time on what we would call the focus assets or the REO assets that are levered below where we're carrying those focus assets and that will give us the ability to grow the portfolio with a modest uptick in leverage just because we would be taking things that are for the most part unlevered and using our typical type of leverage on a loan to sort of put that equity to work productively.

Speaker 7

Great. Appreciate the comments this morning, Stuart. Thank you. Thank

Operator

you. Our next question comes from Harsh Amnani with Green Street. You may proceed.

Speaker 5

Thanks for taking the question. Maybe just following up on that train of thought, repayments have of course been extremely healthy throughout the year, outpacing most of our expectations. Given what rates have done early in the Q4, how are you seeing those trend? And do you expect the end of the year to be just as strong as the Q3?

Speaker 1

Given what we're hearing from borrowers now, again, I think Q3 was elevated in some respects just given timing of when things were happening visavis the underlying loans. But I would say, given current dialogue with borrowers and what we're seeing in the market, I would say everything we are expecting to happen in the Q4 or early in the Q1 still seems to be very much on track.

Speaker 5

Got it. That's helpful. And then maybe on the other side of that, right, originations have as a result also been strong. And so it seems like about 20% of the loans in the portfolio now come from like newer vintage loans, 'twenty three and 'twenty four. And it seems that's also sort of resulting in a decrease in your general CECL reserve.

Speaker 5

Is that sort of an indication of a belief that perhaps the bulk of credit issues are now known and outside of that you feel more comfortable around the portfolio and prospects going forward?

Speaker 1

Look, I don't want to misspeak, but certainly we feel as if we've identified our specific credit issues today. CECL is a process. It's a math

Speaker 8

exercise in some respects, but

Speaker 1

we feel like we've got our arms around those things that are quote unquote on the focus list. And generally speaking, feel pretty good about the portfolio, but for those specific assets that we commented on or responded to questions

Speaker 5

on. Appreciate the color. Thanks. Thank

Operator

you. Our next question comes from Jade Rahmani with KBW. You may proceed.

Speaker 9

Thank you very much. Looking at our model, interest expense came in a little bit higher than I was expecting, $134,000,000 from about $128,500,000 last quarter and the debt balance on average didn't change. Could you talk about what drove that since interest rates declined during the quarter?

Speaker 1

Anastasia, do you want to try and cover that now or circle back afterwards, whatever works best for you?

Speaker 2

We can circle back later.

Speaker 9

Thanks. On 111 West 57, can you give any update on sales, how things are going in terms of recent activity, market color and also proceeds expected? And in addition, any comments on the retail lease and what's going on there?

Speaker 1

Yes. So working backwards, the retail lease is done to bottoms. The auction house, they are going through getting their space ready and they expect to open in the second half of twenty twenty five and they've taken the full retail space done. So that's I think that's a good achievement. It's done.

Speaker 1

It will create a better feel around the building overall. So we're excited to get them opened on the marketing and sale of units. Foot traffic has been a pleasant surprise, maybe not a surprise, given the switch in sort of sales and marketing organization, but there's been a noticeable uptick. There's 4 units under contract that I mentioned. If they all get to the finish line, which we expect they will in the next few months, that's about $55,000,000 of net proceeds, which will reduce the senior loan outstanding to about $60,000,000 There's a few other contracts out for Signature.

Speaker 1

We'll see if those deals make or not. And then I would say there is active interest on a few other units, just based on revisits and people that have come back to look at units. But overall, the tone feels pretty good, and we're encouraged by what we're seeing. But it's all about making deals at this point.

Speaker 9

And if the senior loan gets paid down to that level or perhaps even below, do you think that the deal structure gets reconstituted again or you expect just to carry mezzanine loan and that will be what happens thereafter that just proactively gets paid down?

Speaker 1

My expectation is that senior held by a third party will ultimately get paid to 0 and then after that every dollar comes to us.

Speaker 9

Okay. I wanted to ask a broader question just about Apollo and Atlas, the securitization business. Is that providing any benefit in terms of deal flow or perhaps ability to participate in buying subordinate tranches of securitizations or perhaps even selling senior assets or carving out parts of the portfolio? Any color you could provide on that would be great. Thanks a lot.

Speaker 1

Scott, do you want to comment? You want me to comment?

Speaker 4

Yes, I'll comment. I mean, look, I think Atlas, which is the former Credit Suisse business, has been a great addition for Apollo overall. And within CRE, we had a very good relationship with the CS business and the team prior to the takeover, if you financers that provide a warehouse line. So a couple of things, I would say just more people speaking to more clients about real estate is only good. And given they're not in the direct lending business with their relationships, they have been able to make introductions to us and help us source business overall.

Speaker 4

On the financing front, they continue to be a financer of ARI, which we disclosed. So they've been a good we obviously put them in competition against our other lenders, but they've been constructive on the lending front. Away from that, we're not really looking to do any kind of B pieces or buying of securitizations in ARI. So that part of their business is not born fruit. But I would say overall, it's been a net positive for us, yes.

Speaker 1

Thank

Operator

you. Thank you. Our next question comes from John Nickadimos with BTIG. You may proceed.

Speaker 8

Hi, everyone. Thanks so much for taking my question. Notice that both of your originations in the quarter were on real estate in the UK. I was just curious if there's anything in particular you're currently particularly intrigued about within that country right now or did the timing just sort of happen to work out that way? Thanks.

Speaker 1

Yes. Look, John, it was go ahead, Scott.

Speaker 4

No, I was going to say, look, we've been we've had a presence in Europe and the UK specifically where we're headquartered for well over a decade. We are certainly one of the larger both non bank and bank lenders here. So we see an incredible amount of deal flow. And I think again, a beneficiary of really being no CMBS market here. And also, while the banks are more functioning than they are maybe in the U.

Speaker 4

S. In terms of being active lenders, we still kind of can win a lot of business based on uncertainty and ease of execution. And it cuts both ways. I mean, one of our larger repayments was a large hotel portfolio that we had done that got paid off. So it kind of cuts both ways.

Speaker 4

There is more activity going on. And while we are deploying capital, there's also loans that are getting repaid. But we were constructive on retail here, logistics, what they call multifamily PRS, student housing, hotels as well. So continue to be actively looking at deals. And UK and Europe, we've been active on the continent as well as you know.

Speaker 8

Great. Thanks so much. Appreciate that color. And then last one for me and a little more broad speaking here. We heard last week from one of your peers that wider market value recovery could translate into some of their impaired assets.

Speaker 8

Is that something that you and the team view as a possibility for any of your watch listed loans going forward or just sort of taking it day by day, quarter by quarter for the time being? Thanks.

Speaker 4

Yes. I mean, I would certainly say, the answer is yes. I mean, one of our properties is a retail property. Clearly, retail has shown to be a strength coming out of COVID. Those properties that have survived the e commerce and so ours is an open air retailer with lots of F and B and experiential.

Speaker 4

So I think we both benefited from increased leasing activity and sales, but also I would say more stability to cap rate and financing. So that's one asset in particular. Also same thing on the hospitality side where we own 2 hotels, again financing readily available at attractive rates and cap rates have stabilized. So yes, I would say certainly the macro environment is helping on that front. 111, as Stuart said, is really more geared toward the high net worth, ultra high net worth.

Speaker 4

So they're kind of in their own world, if you will, and that continues to make progress as well.

Speaker 8

Great. Really about that.

Speaker 4

And then, Massa, I'd say the last one would obviously be our Brooklyn multifamily deal, which is benefiting in all sides, New York City multifamily continues to be strong, rents keep going up, vacancy extremely low, Brooklyn in particular continues to do great. And then clearly New York City multi as an asset class for investors, lots of liquidity, lots of trading and so feel very good about the cap rates on that asset when we're ready to exit that hopefully next year.

Speaker 8

Really appreciate it. Thank you.

Operator

Thank you. I would now like to turn the call back over to Stuart Rothstein for any closing remarks.

Speaker 1

Thank you all for participating. Obviously, as always, Hillary, Anastasia, myself or Scott, if needed, are available after the call for questions. But appreciate everybody taking the time this morning. Thank you.

Operator

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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