SLR Investment Corp. (SLRC) Q2 2016 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Second Quarter 2016 Solar Capital Limited Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would like to introduce your host for today’s conference, Mr. Michael Gross, Chairman and Chief Executive Officer. Sir, you may begin.

Thank you very much and good morning. Welcome to Solar Capital Limited’s earnings call for the quarter ended June 30 2016. I’m joined here today by Bruce Spohler, our Chief Operating Officer; and Rich Peteka, our Chief Financial Officer. Rich, before we begin, would you please start off by covering the webcast and forward-looking statements?

Of course. Thanks, Michael. I’d like to remind everyone that today’s call and webcast are being recorded. Please note that they are the property of Solar Capital Limited and that any unauthorized broadcasts, in any form, are strictly prohibited. This conference call is being webcast on our website at www.solarcapltd.com. Audio replays of this call will be made available later today as disclosed in our earnings press release. I would also like to call your attention to the customary disclosures in our press release regarding forward-looking information. Statements made in today’s conference call and webcast may constitute forward-looking statements, which relate to future events or our future performance or financial condition. These statements are not guarantees of our future performance, financial condition or results and involve a number of risks and uncertainties. Actual results may differ materially as a result of a number of factors, including those described from time to time in our filings with the SEC. Solar Capital Limited undertakes no duty to update any forward-looking statements, unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website or call us at 212-993-1670. At this time, I’d like to turn the call back to our Chairman and Chief Executive Officer, Michael Gross.

Thank you, Rich. Our second quarter 2016 fiscal results can be summed up with one word: growth. We grew net investment income by 15%, net asset value by 2% and our comprehensive investment portfolio by 11%. This growth reflects our strong credit performance and the robustness of our diversified origination platform. Importantly, we feel confident about the trajectory of this trend. For the quarter ended June 30, 2016 net investment income per share totaled $0.46. The sizable increase in NII from Q1 was partially attributable to one-time portfolio company event as well as our acquisition of a life science portfolio from Capital One. During the quarter we increased our run rate net investment income per share to approximately $0.42 and we expect to reach the mid 40s as we achieve portfolio growth through our life sciences, SSLP and Crystal Financial platforms with their expected return in the low to mid teens. Our net asset value accretion to $21.51 resulted from increases in the fair value of our investments as well as an excess of net investment income over our quarterly distribution. Also, supporting our net asset value uptick was the absence of any credit issues across our portfolio. In fact, the dollar driver [ph] watch list meaningfully declined in the quarter. Furthermore we continue to have no direct exposure to the energy or commodity sectors. Finally, through another quarter of continued low sponsor backed middle market new issue volume, we originated $170 of new investments predominantly through our ownership of SSLP and our life science lending business which included the $74 million portfolio acquisition from Capital One. As Bruce will detail, during the second quarter, SSLP achieved sufficient size and diversification to warrant in current of leverage. Subsequent to quarter end, we drew on our new SSLP credit facility to fund new investments. At June 30, our net leverage was 0.63 times. Including full leverage capacity at SSLP, we have an additional $450 million of investment capacity subject to borrowing base limitations. Our near term focus is to grow Crystal Financial and life sciences as well as utilize our SSLP credit facility to ramp up portfolio and increase our return on equity. Post the strong quarter of origination, our comprehensive portfolio which includes our ownership of SSLP and Crystal Financial full portfolio now stands at $1.72 billion, it is 93.3% senior secured and 91.8% floating rate. In the expected prolonged low interest rate environment, we believe our recurring high income portfolio presents an attractive investment opportunity. Furthermore, we believe its predominantly floating rate nature provides investments as a hedge against rising interest rates. Additionally, our senior secured position [indiscernible] capital structure provides protection should economic conditions deteriorate. Looking forward we are encouraged by the continued strong credit quality of our portfolio and we are confident we’ll continue to over earn our $0.40 per share quarterly distribution 2016. Over the medium to long term we anticipate growth in both net investment income and net asset value. And once we believe we've achieved a sustainable level of net investment income that exceeds the distribution, we will increase our quarterly payout. At this time, I’ll turn the call back over to our Chief Financial Officer Rich Peteka to take you through the financial highlights and then Bruce will walk through more portfolio detail.

Thank you, Michael. Solar Capital Limited’s net asset value at June 30, 2016 was $908.8 million or $21.51 per share compared to $890.6 million or $21.08 per share at March 31. At June 30, our investment portfolio had a fair market value of $1.48 billion in 74 portfolio companies across 30 industries compared to a fair market value of $1.34 billion in 56 portfolio companies across 30 industries at March 31. At June 30, 2016 the weighted average yield on our income producing portfolio measured at fair value decreased slightly to 10.2% versus 10.3% at March 31. However the weighted average yield on a cost basis improved to 10.5% at June 30 versus 10.1% at March 31. For the three months ended June 30, investment income totaled $41.4 million versus $34.0 million for the three months ended March 31. Net expenses totaled $21.8 million for the three months ended June 30 compared to $17.1 million for the three months ended March 31. The increase in expenses for the three months ended June 30 was primarily related to higher management and performance based incentive fees as well as higher interest expense on a larger income producing investment portfolio. In addition, other general and administrative expenses included non-recurring costs related to the acquisition of the life sciences portfolio from Capital One. Accordingly, the company’s net investment income for the three months ended June 30, 2016 totaled $19.5 million or $0.46 per average share versus $16.9 million or $0.40 per average share for the three months ended March 31. Net realized and unrealized gains for the second quarter 2016 totaled approximately $15.6 million versus a net realized and unrealized gain of $11.3 million for the first quarter 2016. Ultimately the company had a net increase in net assets resulting from operations of $35.2 million or $0.83 per average share for the three months ended June 30. This compares to a net increase of $28.2 million or $0.67 per average share for the three months ended March 31. Finally, our Board of Directors declared a Q3 distribution of $0.40 per share payable on October 4, 2016 to shareholders of record on September 22, 2016. With that, I'll turn the call over to our Chief Operating Officer Bruce Spohler.

Thank you, Rich. I’d like to begin by providing an update on the credit quality of our portfolio. Overall, the financial health of our portfolio companies remained sound with the trends of continued modest growth and deleveraging continuing during the second quarter. On average, the most recently reported organic LTM revenue and EBITDA for our portfolio companies in which we hold debt securities, were each up over 7.5% year over year. When measured at fair value, the weighted average interest coverage for our portfolio companies was 2.8 times at June 30, up slightly from Q1. And at the end of Q2, the fair value weighted average EBITDA for our portfolio companies was just under $95 million. Also, at June 30, the weighted average investment risk weighting of our portfolio was just under 2 when measured at fair market value based on our one to four risk rating scale with one representing the least amount of risk. Measured at fair value, 99.9% of our portfolio is performing. On a cost basis, our one legacy investment on non-accrual accounted for just under 60 bps of the entire portfolio. Excluding this one legacy asset, Direct Buy, our portfolio is performing well. On a current cost basis, the weighted average yield on our income producing portfolio was 10.5% at June 30, up from 10.1% for the prior quarter. Our average mark on our income producing debt investment as a percentage of par increased to 97% in Q2 due to a combination of mark-to-market appreciation, resulting from the rally in the liquid credit markets as well as fundamental improvement in a couple of specific credits. We continue to believe that there is additional NAV upside as our loans that are marked below par due to technical factors are repaid in full. Now I’d like to provide some color on the composition of our comprehensive investment portfolio, which includes Crystal Financial’s portfolio of asset based loans as well as our ownership of distressed senior loans held within SSLP. At the end of the second quarter, our $1.7 billion comprehensive investment portfolio included 100 distinct issuers across 37 industries, with neither energy nor commodities on that list. The average investment per issuer is $17 million or 1% of comprehensive portfolio. Our largest single investment is 3.2%. Measured at fair value, 93 plus percent of our portfolio consisted of senior secured loans. Remainder of the portfolio was comprised of 4.5% subordinated debt and 2.25% equity and equity like securities. At June 30, approximately 92% of our income producing portfolio was floating rate when measured at fair value. Before I turn to our investment activity, I’d like to provide a brief update on our strategic initiatives. During the second quarter, SSLP funded just over $41 million of new stretch senior loans, bringing our total portfolio to approximately $134 million. Additionally, as Michael mentioned, we closed an initial $200 million revolving credit facility for SSLP. The facility carries an interest rate of LIBOR plus 2.50% with no LIBOR floor, and a final maturity of five years. Since the end of the second quarter we have begun to draw on the facility and expect to fund new investments in SSLP through the use of this facility in order to generate an expected low to mid-teens return on Solar’s equity as we ramp this JV. Turning to life sciences. During the second quarter, our platform originated close to $97 million of investments and experienced repayments of $9.5 million. As we discussed on our last earnings call, early in the second quarter we completed the purchase of Capital One healthcare financial solutions portfolio which Capital One had acquired from GE back in 2015. Our life science team had originated these investments while employed by GE. The approximately $74 million par value portfolio that we purchased is comprised of senior secured first lien loans to 14 different borrowers with an average loan balance of just over $5 million. The portfolio is well diversified across drug discovery, healthcare, information technology, medical devices as well as diagnostics sub-sectors. We expect mid-teens IRR on the acquired portfolio. As a result of the acquisition of this portfolio, as well as additional direct investment by our life science team, the portfolio totaled just over $225 million fair value at the end of Q2. The average all-in yield, excluding potential exit and success fees as well as any potential future warrant gains is 11.7%. The blended IRR on our realized life science investments to date is just over 20%. Portfolio acquisition accelerates the ramp towards our initial $250 million targeted life science portfolio. In addition, it enhances Solar’s position as a leader in life science venture lending. Now let me turn to Crystal Financial, our stretch first lien asset based lending platform. Crystal’s loans have collateral coverage and tight covenant which provide a differentiated and extremely attractive risk return profile when compared to the cash flow lending business and has a low correlation to the traditional cash flow credit markets. The asset diversification, differentiated growth opportunities and countercyclical nature of Crystal's investment strategies are highly complementary to the rest of the Solar’s lending platforms. For example, during the second quarter, Solar and Crystal collectively committed approximately $60 million to an asset based DIP credit facility for Aeropostale. Crystal’s strong reputation as a lender to the retail industry coupled with its ability to bring together a like minded syndicate of lenders positioned us well to lead this financing. The investment carries an expected return of 10.6% yield to maturity. At June 30, Crystal had a diversified portfolio consisting of approximately $517 million of funded senior secured loans across 30 issuers with an average exposure of approximately $17 million. During the second quarter, Crystal funded new loans of approximately $64 million and experienced repayments totaling just under $50 million. All of Crystal’s investments are floating rate senior secured loans. For the second quarter, Crystal paid Solar Capital a cash dividend of just under $8 million, resulting in an 11.5% annualized cash-on-cash yield, consistent with the first quarter. At June 30, the company's net leverage was 0.9 times. Now I would like to turn to our second quarter portfolio activity at Solar. During the second quarter, including through our ownership of SSLP, Solar originated approximately $170 million of predominantly senior secured floating rate loans across 23 portfolio companies. Investments repaid during the quarter totaled approximately $37 million resulting in net portfolio growth of just over $135 million. During the quarter we originated a stretch senior first lien secured loan to support the merger of Pet Supermarket and Pet Valu which became the third largest pet retailer in the U.S. As a reminder, Solar is an incumbent lender to Pet Supermarket which is owned by Roark Capital. Solar's commitment totals $35 million. Solar’s sister fund Solar Senior also participated in this transaction as did our strategic partner Voya, resulting in a combined commitment of $65 million. Leverage through our investment is 4.9 times and the yield on the investment is just under 7%. The acquisition of Pet Valu created a significantly larger company with over $110 million of EBITDA, almost tripled the cash flow from our original investment while being priced just under our original 7% yield. We also originated a stretch senior secured term loan for CIBT, the largest provider in the highly fragmented travel document process servicing industries. Solar has been a junior capital provider in average original [ph] buyout of CIBT back in 2011 and were repaid in 2013. Solar’s current commitments total just over $21 million. Solar Senior also participated in this transaction, resulting in a total commitment across the Solar platform of just under $30 million. Leverage to our investment is 4.4 times and the loan carries a yield to maturity of 6.6%. Now let me touch on our one meaningful repayment during the quarter. In conjunction with the sale of the company, Solar was repaid on our remaining $11.3 million of our initial $21.5 million investment in The Robbins Company. In addition to receiving our full principal, we earned an exit fee which resulted in an IRR to realization of just over 20%. Looking forward we expect to be repaid at par on our $48 million investment in WireCo during the second half of this year. Our pipeline across our diverse origination businesses remains robust. We anticipate additional growth in our proprietary -- in our portfolio via these proprietary channels in the second half of 2016. Now I'd like to turn the call back over to Michael.

Thank you, Bruce. In spite of the slowdown earlier this year in the traditional sponsor finance business we benefited from our diverse lending platform to achieve 11% portfolio growth in the quarter. Our $1.72 billion comprehensive portfolio provides us with a great foundation for over earning our current quarterly distribution on a recurring basis. In the coming quarters we expect to continue to ramp SSLP and our life science lending portfolio. We believe these two entities [ph] should provide us with the best risk reward in today's investing climate. Additionally, Crystal Finance remains well positioned to continue to generate an attractive return on our equity investment. Although it's early in the second quarter BDC earnings season, we expect to be one of only a few to have meaningfully grown our net investment income year to date. For the remainder of 2016, we expect to meet or exceed our current estimated quarterly run rate net investment income of $0.42. Once we believe we have achieved a sustainable level of net investment income in the mid 40s we will increase our quarterly distributions. As evidenced by our low non-accrual rate as well as our stable net asset value per share, our overall credit performance has been strong. Our shareholders have reaped the benefit of our disciplined, patient underwriting. For those investors who bought in at our IPO six and half years ago we provided approximately 78% total return or approximately up 13% annualized return based on last night’s closing share price. While we are pleased with our recent share price performance, we believe the future is even more promising given the earnings power of our current portfolio and capacity for future growth. At 11 o'clock this morning we will be hosting an earnings call for the second quarter results of Solar Senior Capital or SUNS. Our ability to provide traditional middle market in the script financing through this vehicle continues to enhance origination team’s ability to meet our client's capital needs and we continue to see benefits of the value proposition in Solar Capital deal flow. Thank you for your time. Operator at this time we will open up the line for questions.

[Operator Instructions] And our first question comes from Ryan Lynch from KBW.

Good morning and thank you for taking my questions. First one, you guys had some technical portfolio depreciation in the third and fourth quarter of last year. And since then in the first quarter -- second quarter you guys had some portfolio appreciation, some reversions, some of technical markdowns. Bruce, I believe you said there's still some technical upside in some of your loans from technical markdowns that you've taken -- would you be willing to quantify how much upside do you think or in your portfolio of loans, if they get repaid at par, how much technical upside are in those loans?

Yeah, I think we just look at pull to par across the portfolio is probably approximately another $0.50 a share. Obviously the timing is little unit uncertain in terms of when you get repaid but that’s where we see full value.

And then I know it's still early on with the ramping up of your senior loan fund with Voya. But have you guys had any further discussions around Voya and your guys' willingness and ability to -- willingness and ability to potentially expand you guys’ equity commitment from that $325 million level.

The current commitment to the platform for Solar is $300 million and for Voya it’s $25 million but be mindful that Voya also will invest on their balance sheet along side the initiative. Both we and Voya are very pleased with the program as well as the program over at Solar Senior in flip. So they’ve already expressed an indication and willingness to grow that.

And then just one more – on you guys leverage target, you guys have kind of historically talked about a 0.75 debt to equity kind of target range. That target has been in place for several years. Certainly you guys' portfolio has changed over several years from being more in kind of mezzanine subordinated debt versus now today you guys are definitely more in senior secured loans. So that that 0.75 debt to equity kind of target, is that something that you guys still stand by or are you guys willing to potentially go little higher than that now you guys -- your portfolio composition is a little more senior secured paper versus where it was a few years ago.

Look, I think with the current regulatory portray of 2 times, but I think you always want to have a cushion – you always want to have a cushion because there could be market disruption where you’re forced to mark to market your portfolio because of technical moves to marketplace. So we wouldn't really go beyond 0.75. Where we are getting beyond that is through our off balance sheet vehicles with both [ph] Crystal potentially so that's -- we get closer to one to one leverage when we look through those facilities.

And our next question comes from Arren Cyganovich from D.A. Davidson.

Thanks. Just following up on the SSLP contribution. I am wondering if you could talk a little bit your expected pace of investments over the next year or so? Do you expect a quarterly increase in contribution to your NII from that and then what the targeted leverage would be for that vehicle.

So couple things, I mean the targeted leverage is 2 to 1. As you know when you open these facilities which is part of the reason why we've delayed opening until just recently, when you open these credit facilities you need a certain amount of equity pre-funded after which you start to fund with predominantly credit drawn into the revolving credit facility afterwards you start to grow pro rata with that 2 to one. So what you'll start to see is we're going to be drawing out the fund -- the next round of investments and then we'll get to a point where we will start to be in that 2 to 1 ratio and we'll start to draw pro rata and fund equity pro-rata. I think the pace is -- still unfortunately won’t be consistent quarter to quarter but if that issue goes, we still have a nice pipeline there and expect to continue to ramp it over the next four quarters.

And then with respect to Crystal, it looks like the net income has been exceeding the dividend payments up to Solar for the past few quarters just carries – if there's going to be a catch up there, there's some sort of a difference between taxable following conversion, something that is actually sent up to Solar.

So we try to smooth it out, as you know Crystal has short duration assets, portfolio churns pretty quickly two years ago, I think 80% of the portfolios turned in one year. And so they generate a lot of income from upfront fees and prepayment fees, relative to coupon payment like the rest of our platform. So we try to smooth it out and we'll look appropriately in the right time when to increase our distribution there.

And our next question comes from Christopher Testa with National Securities.

Just on -- I know you started taking leverage on the facility and the joint venture. Can you give an indication on when you expect to take up the 299 of commitments and you have a timetable and an estimate for that?

No, we really don't. I think that will happen over the next couple of quarters here. But be mindful that the 200 is just the opening size, that facility is expandable, and we will expand it as we increase our equity funding. Again we’re trying to match fund that can be as efficient as possible – the usage, and not incur use fees and so forth.

And just to be clear, I mean that you're targeting 1.5 debt to equity, so that facility you likely would increase $600 million or so with $900 million in assets.

Yes, assuming the full 300 committed is funded.

And just with the $15.7 million unrealized appreciation how much of that was technical in nature versus company specific marks?

I’d say the majority of it is technical, there is some – we mentioned WireCo is being repaid and I think $48 million position, makes up about 5 points on that that was a couple of points. But it was more across the platform. Crystal was up a little bit as you know. But I look at Crystal as more technical.

And I just would like your outlook on sponsor finance and M&A volume for the middle market for the second half of the year. It seems that [Alvia] multiples have come down a bit back to Earth, do you see that sort of picking up, have you seen it quarter to date?

I think what we have seen is a little bit more activity but a continuation of the trend where sponsors are focusing on add-on acquisitions, we touched on Pet Supermarket where one of our existing portfolio companies is making an add-on acquisition. So CIBT is a result from an add-on acquisition. So we're seeing a lot more sponsors trying to grow through acquisition, buy down their original acquisition multiple of the platform, and that's where most of the activity appears to be at the moment.

And our next question comes from Mickey Schleien from Ladenburg.

Just a couple of questions. Michael, I think you mentioned a run rate NII for the quarter of $0.42 versus the $0.46 that was reported, is the $0.04 difference due entirely to The Robbins Company prepayment?

Effectively, yes.

And I noticed in the subsequent event section that Solar bought out management shares of Crystal. I'm interested in understanding why that occurred, is the management leaving or are you incentivizing them in a different fashion in the future?

Fair question. It's more technical in nature, the motivation behind it is by having Solar owned a 100% rather than 99.9%, or in this case it was about 98%. It allows us as a platform to leverage Crystal’s origination and invest alongside Crystal cross the platform. It’s a 40 Act nuance but owning a 100% is more flexible than owning anything under 100%.

The exempt -- we have to invest across the platform only applies to 100% owned businesses. So the 2% management owned – so management staff are not leaving. We love management, they’ve done a great job. And they are taking a large part of what they are getting back from our buyout and they're going to market buying Solar stock.

And additionally, you should know that the way the incentive program works there for the team is that a large part of their incentive compensation is also through deferred comp into Solar stock as well as the initial buy in.

[Operator Instructions] And next question comes from Jonathan Bock from Wells Fargo Securities.

It's always a pleasure when I can follow Mickey and also join the mutual admiration society based on your results. So a couple things, to continue based on Mr. Schleien’s line of questioning. Could the Aeropostale deal have been done if you did not buy out management’s equity in Crystal?

The answer is yes, because we invested across Solar and Crystal which is a subsidiary of Solar. What it opens us up to do is to also look at Solar Senior participating, we could not have invested in Solar Senior. You can invest down but you cannot specify.

And ABL DIP facility into Aeropostale at 10.6% we think is also senior secured SUNS risk but we couldn't capitalize on that.

And then as we take a moment to understand your thinking and I know Michael, you and Bruce have outlined this, and you certainly outlined in your commentary on the call, you’re in a fairly enviable position with the dividend yield that you do have, not in that it needs to necessarily be increased. But it gives you the cost of capital to chase the true strong risk adjusted returns that are available instead of forcing us into the wrong part of the capital stack at the wrong time. So you’ve outlined your desire to build spillover income and you're kind of weighing that versus a dividend increase that you can see over time. Give us some context over the cost of capital that you're looking at to originate new investments and whether or not the dividend necessarily has to be increased in order to continue to generate very very good returns for your clients who based on the stock price are certainly -- certainly happy in terms of the way things have moved?

As you know, with us it’s always a balancing act. I think that we see targeted earnings potential once we fully ramp these various strategies, that will be closer to approximately $0.50 and I think relative to today's $0.40 there's clearly room to have both spillover and sustainable earnings that more than cover a dividend that’s higher than today’s.

And then if we think about the number of strategies that you've got, generally speaking with a focus on true first lien type of risk that you're putting on, walk us through the competitive dynamic that you enter in with sponsors the first versus ‘other’. Because right now you're more geared to attack the first lien, the first lien stretches and the unitranche than you've ever been. And what I'm kind of interested in understanding is the competitive dynamic on how much is actually out there relative to how much has been out there in the past, and also what sponsors are looking at versus a first lien stretch versus a first lien mezz or first lien second option?

Sure. I think two seconds of history, the advent of the stretch senior loan has really evolved over the last several years, in part because I think the volatility in the liquid credit market, the borrowers and the sponsors have begun to value the certainty, it’s a competitive market for them to try to win an acquisition that they want versus some of their P/E peers and showing up with fully committed capital, no flex on pricing or structure or terms has become a valued competitive advantage. And I think as we've seen some of the dislocation over the last several years whether it was Greece, whether it was Brexit, whether it was Russia moving into Crimea, you’ve seen periods of volatility where the markets have pulled back for short periods of time in each case so far. And the sponsors are there in the middle of an auction that’s taking a three months process, they can’t handle that volatility. So the value of the unitranche is going up, stretch senior and the other thing that has happened is they moved up in terms of the size. So a typical unitranche that used to be 20 million, 25 million of EBITDA, $100 million loan is now going up to $50 million to $100 million. You saw recently Thoma Bravo announced a $1 billion unitranche deal for it going private. So I think what's happened is the need to have scale in terms of our balance sheet and I'm sure you've heard it from our peers that [indiscernible] who are big players in this asset class is very very valuable and so for the moment moving more towards a club market on some of these larger unitranche deals which again historically has been where we prefer to play whether we're doing first lien, second lien or mezzanine, our average EBITDA up at $95 million, we like these large businesses. And so the fact that they're looking for stretch senior is something that we see as a real competitive advantage and it is a real strategic push for us. It is still competitive obviously, Jonathan, but there are only a handful of people who can really play there. So it’s less competitive than the broader sponsor business.

And then if we think about these initiatives, the one question that always lingers in the back of the folks’ mind is how you're going to judge fresh equity capital or the use of fresh equity capital to the extent that you trade in excess of book value, right? And so I understand that we can punt the question until it happens but many times managers that give a sense of equity discipline or focus often can appreciate or benefit from share price appreciation because managers or investment managers believe that discipline is instituted and no one is just going to hit the bid the minute it gets to book. Michael outlined, and Bruce outlined how you look at new equity capital and whether or not it's needed as you look at these new initiatives growing forth because that's the one variable that investors really always want when it deals with a BDC to get a better handle out?

Sure, great question. So first of all, as you know we always think as equity holders first, given how much stock that Bruce and I and the rest of the team own and continue to buy with our deferred comp plan. So we think about stock appreciation as the number one priority for the business. So anything we do can get in the way of that. As Bruce laid out, we have the capital in place, the financing in place, the platforms in place to kind of get from our $0.42 to about $0.50 a share. We would not raise equity if it slowed our ability to get that to potential share. If we felt it could accelerate it or it could be put into a position to exceed it. You'll see us do that. Those are really the primary criteria. End of Q&A

And at this time I'm showing no further questions. I would like to turn the call back over to Mr. Michael Gross for any closing remarks.

Just want to thank everybody for your continued support and being patient with us to allow us to execute our program. We look forward to talking to those of you who are involved on the SUNS call in twenty minutes. Thank you.

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