Welcome everyone to the Blackstone Secured Lending Fourth Quarter and Full Year 2022 investor call, hosted by Michael Needham, Head of Investor Relations. During the presentation, your lines will remain on listen only. If you require assistance at any time, please key star zero on your telephone and the coordinator will be happy to assist you. If you wish to ask a question, please key star and one on your telephone keypad. Now I would like to hand over to Michael. Please go ahead.
Thank you, Colby. Good morning and welcome to Blackstone Secured Lending's fourth quarter call. Earlier today, we issued a press release with a presentation of our results and filed our 10-K, both of which are available on the shareholders section of our website, bxsl.com. We will be referring to that presentation throughout today's call. I'd like to remind you that today's call may include forward-looking statements which are uncertain and outside of the firm's control and may differ materially from actual results. We do not undertake any duty to update these statements. For some of the risks that could affect results, please see the Risk Factors section of our most recent annual report on form 10-K. This audio cast is copyright material of Blackstone and may not be duplicated without consent. I'll turn the call over to BXSL's Co-Chief Executive Officer, Brad Marshall.
Thank you, Michael Needham, and good morning, everyone. Joining me today are interim CFO Kevin Kresge and our newly appointed Co-CEO, John Bock. I, as well as many others on this call, are quite familiar with John's impact on the BDC industry as both a top-ranked equity research analyst and BDC executive. John is an exceptional thought leader in the BDC space, as well as a longtime friend. I'm thrilled to have this partnership as we continue to expand our business. Turning to this morning's agenda, I'd like to start with some high-level perspectives before John and Kevin go into detail of our portfolio and fourth quarter results. Turn to slide four. BXSL reported another excellent quarter with significant growth in investment income, higher net asset value, and strong credit performance.
Net investment income, or NAI, increased 13% quarter-over-quarter to a record $0.90 per share, which represents a 14% annualized return on equity. This powerful performance reflects the quality and strength of our well-sourced portfolio. At year-end, 98% senior secured, 47.5% loan-to-value, with zero investments on non-accrual, and only 1% of our assets marked below 90. Our net asset value, which increased to $25.93 from $25.76 the previous quarter, also reflects the portfolio's strength. As a result, I'm thrilled to report that BXSL has raised its regular quarterly dividend by 17% to $0.70 per share beginning in Q1 2023. That represents a 10.8% annualized yield for shareholders based on the higher fourth quarter NAV of $25.93 per share.
This marks the third time in the last a year and a half that we've raised our regular dividend, which we believe represents the highest dividend yield for any listed BDC with a predominantly first-lien senior secured portfolio. Since we IPO'd in late 2021, we've increased our regular dividend by 40%. Later in the call, John will speak to the durability of that higher dividend, which remains very well covered by our fourth quarter net investment income of $0.90 per share. Slide five provides additional highlights on our portfolio activity and strong liquidity position. Fourth quarter sales and repayments were $219 million, offset by $177 million of new investment fundings, which remains below historical levels.
Our weighted average yield on debt investments increased from 9.1% last quarter to 10.7% at quarter end, driven by higher base rates. We closed out the year with $1.1 billion in liquidity. Turning to slide six. We ended the year with $9.6 billion of investments and leverage of about 1.34x, which was effectively flat quarter-over-quarter. Importantly, the ending yield on our 98% floating rate debt portfolio expanded approximately 350 basis points over the last 12 months, with more potential upside from here. Turn your attention to slide seven. Here we outline BXSL's strong NAI per share growth. We've illustrated how interest rates could impact the year-end portfolio. You can see that if we apply 12/31 rates to that portfolio, NAI jumps to $0.96 per share.
This transition to increasing base rates has continued since year-end. Looking at this chart, I think markets and investors understand that base rates could drive up NAI. Today, I'd like to dive into just one of the tools that is available to and unique to Blackstone that informs our view on macro conditions. As many of you know, Blackstone's position as the world's largest alternative asset manager allows for distinctive and differentiated insights gained across our portfolio of businesses in private equity, in credit, and real estate. Within Blackstone Credit alone, we have over 3,100 companies across our liquid and private businesses. As debt originators, we often receive real-time information from our companies and have direct access to sponsors, management teams, and market participants.
This results in market views that are core to our investment process. We use data and technology to integrate it into our portfolio decisions. One differentiated resource we want to share is our CEO survey from our Blackstone portfolio companies, which can offer unique insights. First, while those responding CEOs ranked slowing economic growth as the top macro issue they face, Blackstone's private equity companies saw year-over-year revenue growth in the fourth quarter. Most of these CEOs expect near-term revenue growth to stay healthy. Second, responding CEOs indicated that inflation is decelerating in major categories: wages, raw materials, energy, and pricing. Lastly, a sign of confidence in the operating environment is a management team's willingness to invest in projects for growth and efficiency.
What's interesting is that a majority of the CEOs expect to maintain or increase their level of investment, with the largest areas being software, technology, and services to improve productivity. This also supports BXSL's thematic industry selection in these areas. To be sure, despite the slower overall inflation, certain inflationary pressures remain. For example, some cooling in the labor markets and base effects have helped to moderate wage pressure, but it remains well above levels considered consistent with the Fed's inflation target. We think that supply-demand imbalances in the labor markets will cause the Fed to keep rates higher for longer. Today's economy simply has more, many more job openings than there were before the pandemic. The vast majority of responding CEOs expect their company's employment levels to be flat or positive.
This muddling along in the economy should keep credit performance generally strong, particularly for those managers capable of underwriting large-scale businesses. Before turning it over to John and Kevin, let me leave you with a final overarching thought. When we created BXSL and BCRED, our non-traded BDC, we told investors that we would lead the market with best practices, including lowering our fees so we could bring a more defensive portfolio that would protect capital in more challenging market conditions, yet still deliver attractive returns. That philosophy continues to serve us well. We operate at a cost structure about 30% lower than that of our listed peers. We amortize OID over the life of the loan, and we don't scrape upfront fees for fund assets to the manager. That's because that's something that we believe runs contrary to true investment-investor alignment.
Most importantly, that alignment comes with the benefit of Blackstone's differentiated scale. Across our platform, the benefits of that scale abound, but especially in uncertain economic environments when our portfolio management and Blackstone Advantage teams can, I believe, add significant value. Recall, we have an internal Blackstone team of 112 people who work with our portfolio companies, including over 20 professionals in or affiliated with Blackstone Credit. This team not only takes an active role in watching over our companies, initiating ongoing discussions with our sponsors, but also adds value to our portfolio companies by giving them access to Blackstone's operating resources to drive both revenue and cost synergies that are significant to the portfolio company and the private equity sponsor.
For example, in 2022 alone, the Blackstone Credit Advantage team was able to reduce portfolio company costs by $66 million across the Blackstone Credit platform, bringing almost $250 million in savings since the inception of the Blackstone Advantage program. Through these cost-saving initiatives alone, the team has added more than $3 billion of enterprise value to the Blackstone Credit portfolio, a significant benefit for our sponsors. In addition, across the full Blackstone portfolio, companies have generated over $500 million in revenue from cross-selling to one another. The scale and impact of what we sometimes call the Blackstone economy, in which the portfolio companies across our credit platform are meaningfully engaged, differentiates Blackstone Credit and can be especially impactful in a slowing economy.
The impact of this specialized team and its end investor benefit is immense, and we believe entirely unique to the Blackstone Credit Group. We also expect it to be a major differentiator of our platform and performance over time. With that, I will turn it over to John to speak about the portfolio.
Thank you, Brad, and good morning, everyone. I can't tell you how much I've looked forward to walking through the strength and stability of the BXSL portfolio with you. The best place to start is to tell you very briefly why I chose to join Brad and the team at Blackstone Credit. I'm sure you all see, as did I, the immense scale and broad capabilities that Blackstone brings to private credit markets. Yet what surprised me, and it may also surprise you, is how Blackstone pairs the power of its unique scale with world-class shareholder alignment to drive attractive performance and investor returns, and Brad alluded to this. This isn't something I take for granted.
BXSL's fee structure is materially lower than the average publicly listed BDC. BXSL also has a performance fee look back mechanism, the management team has regularly demonstrated an industry-leading ability and willingness to align with shareholders. I've spent my entire professional career in BDCs and private credit, early on as a sell-side analyst before I became an operator and chief executive. When BXSL was formed in 2018, Brad Marshall stated that Blackstone would lead the BDC market with best practices. In my professional opinion, they've done exactly that. I'm thrilled to join the team to be here today and join my colleagues. That's actually a perfect segue into the portfolio. Remember, Blackstone's decision to focus on shareholder alignment upfront allowed BXSL to build a more defensive portfolio that better protects shareholder capital in more challenging market conditions.
Let's outline what a defensive portfolio looks like. Jump to slide eight. Let's start with seniority. 98% of BXSL investments are in first-lien senior secured loans, and over 95% of those loans are to companies owned by private equity firms or other financial sponsors who have access to additional equity capital to support their companies. The portfolio is highly equitized with an average loan-to-value of 47.5%. It's not just that we're senior in the capital structure. More importantly, we're focused on senior with companies of the right size in the right industries. Focusing on size, our portfolio companies have an average EBITDA of $167 million relative to $116 million as of 4Q 2021, and we continue to orient the portfolio to larger, more durable businesses.
Furthermore, recent data from Lincoln suggests that companies with greater than $100 million of EBITDA grew more than two times that of companies with less than $50 million of EBITDA in 2022 through Q3. Slide nine focuses on our industry exposure, where we believe investing in better companies in better neighborhoods drives strong returns over time. This means focusing on key sectors with low default rates and lower CapEx requirements, such as software, healthcare, professional services, which account for over 36% of the investment portfolio. Diving into portfolio quality further, jump to Slide 10. Here we compare the BXSL portfolio to the Lincoln International Private Markets database. Many of you know Lincoln as a leading valuation provider to the private credit and BDC space as they value or review over 5,000 private credit investments each quarter.
Lincoln, in partnership with several faculty members of the University of Chicago Booth School of Business, created the Lincoln Senior Debt Index, the leading private credit index which allows investors and managers to truly drill down into a loan-level performance data for the entire private credit marketplace. This is an extremely valuable index. In comparing BXSL, you can see that our weighted average EBITDA of $167 million is double the Lincoln market average of about $78 million. EBITDA growth for our portfolio companies is also double that of the Lincoln benchmark. Importantly, on profitability, our portfolio companies have EBITDA margins that are 35% higher. Now let's talk about interest coverage because interestingly, this is a stat that gets widely shared on other listed BDC earnings calls, but the way it's calculated by BDC managers varies widely.
In some cases, certain sectors or types of loans are excluded. In other cases, managers exclude negative EBITDA companies, both decisions that obscure the averages and leave investors looking for better transparency. When we calculate interest coverage, we include all private company EBITDA, including companies that have borrowed on a recurring revenue loan. Some managers exclude these types of loans or underperforming loans from their metrics. We do not. Next, we compare our portfolio to the Lincoln database, which we believe is most representative proxy for the entire credit market. We currently sit at a last twelve months average interest coverage of 2.3x today, which is slightly higher than the market average of 2x via Lincoln. This difference remains resilient with interest rates at December 31st levels through the portfolio.
When you run that through the portfolio, that brings our average interest coverage to 1.7 times versus the private credit markets of 1.4. We attribute this stability to our focus on larger, more profitable, higher growth businesses. Yet we also hear from our investors and other market participants that it's less about averages, particularly averages that are obscured by exclusions, and more about the tails. Namely, the percent of one's portfolio below an interest coverage ratio of 1x on a forward basis using higher rates. If we flow through the December 31st spot rates, we can see that BXSL would have roughly 8% of its portfolio with an interest coverage ratio below 1 compared to the Lincoln Private Credit Markets database, which have more than twice that amount. A very stark difference.
For those reasons, I think we're positioned better than the private credit market. Further, we don't believe that less than 1x coverage in our portfolio driven by higher rates directly translates to potential credit losses for companies where fundamentals and the outlook remain healthy. Really, we believe that the market's right. Averages will not tell the story of direct lending performance. The tails will. We seek to limit our tail risk through our focus on better, larger businesses in more resilient sectors, and we continue to see favorable results. Blackstone's also built its conservative credit culture on a foundation of structural protections for investor capital. We do this while focusing on larger deals.
Note that when Blackstone leads or co-leads, the vast majority of our deals have structural protections against asset stripping and collateral release to prevent any shifting of assets out of our collateral package, and almost none allow for uncapped EBITDA add backs, all materially better than the leveraged loan market. Let's turn to amendments. We work with our portfolio companies constructively in the regular course. To provide an idea of scope of the 23 amendment requests we received in the quarter, 56% of those were related to M&A or add-on activity, and 43% were related to SOFR, rate hedging, or other technical adjustments. We did not have any companies that need immediate interest, principal, or covenant relief in the quarter.
To be clear, should our companies face more challenging times, we have a large operational team, as Brad mentioned, that can help them reduce expenses, improve operational efficiencies, or source new revenue channels. We believe our portfolio and scale set BXSL apart from the rest of the private credit field. Our dividend increase further reflects our confidence in the future. Jump to slide 11. As Brad mentioned, we elected to raise our dividend by nearly 17% from $0.60 to $0.70 per share, with a current dividend yield at NAV of approximately 10.8%. The absolute dividend level generates what we consider to be an attractive return. I also wanna highlight how Blackstone's shareholder-aligned approach allows us to pay this elevated distribution even in a lower rate environment.
Many of you are familiar with the concept of BDC math, which essentially asks this: at what spread over the base rate must a BDC lend to generate the dividend they promise investors? As you might expect, that answer can vary widely depending on the BDC. Higher cost BDC fee structures characterized by higher base management fees, higher incentive fees or OID scrape, that requires such BDCs to originate at a wider spread on assets, which may be associated with higher risk loans in order to meet the dividend obligation.
At today's base rates, we estimate BXSL at our future fee structure of 1% and 17.5% incentive with a full look back, would need to originate at approximately SOFR plus 400 to meet its dividend obligation before prepayment fees, well below the current investment opportunity set and all else equal as of December 31st. Let's say base rates were to fall to 2%. BXSL would need to originate or invest at roughly a SOFR plus 600 level to meet that same return, all well within the strike zone of private credit across cycles. As compelling as math may be, I wanna leave you with a somewhat philosophical view of our approach to dividends. We believe the best dividend policy can support both a steady and stable distribution and long-term NAV growth.
We believe BXSL's low fee shareholder-aligned approach does exactly that. With that, I'll turn it over to Kevin to go over the financials.
Thanks, John. I'll start with our operating results on slide 12. In the fourth quarter, net investment income was a record $144 million or $0.90 per share, which was up 34% year-over-year. Our revenues were up $59 million or 31% year-over-year, with combined fee and dividend income flat quarter-over-quarter. Payment in kind or PIC income declined to $10 million from $11 million last quarter and represented less than 4% of total investment income. Net expenses were up just $25 million compared to last year's fourth quarter, driven largely by interest expense. GAAP net income in the quarter was $122 million or $0.76 per share, up from $0.73 per share a year ago. This despite $22 million of unrealized losses this quarter.
These unrealized markdowns resulted in a $3 million capital gains incentive fee reversal or $0.02 per share benefit to NII this quarter. Turning to the balance sheet on slide 13. We ended the fourth quarter with $9.6 billion of total portfolio investments, of which approximately 98% are floating rate at a weighted average yield of 10.7%. This compares to $5.5 billion of outstanding debt, weighted average cost of just 4.3%. The spread between our floating rate assets and low cost, mostly fixed rate liabilities, provides the company with the potential for additional earnings growth if rates continue to rise. As a result of strong earnings in excess of the dividends in the fourth quarter, NAV per share increased to $25.93, up from $25.76 last quarter.
Next, slide 14 outlines our attractive and diverse liability profile, which includes 58% of drawn debt in unsecured fixed rate bonds with a weighted average interest rate at less than 3%. Which we view as a key advantage in this rising rate environment. Additionally, BXSL ended the year with $1.1 billion of liquidity in cash and undrawn debt. We believe this provides us with significant flexibility and cushion. Our ending debt to equity ratio was 1.34 times, in line with last quarter. Importantly, we ended the year with no assets on non-accrual and maintained our three investment grade corporate credit ratings. Additionally, we have a low level of debt maturities over the next few years, with just 6% of commitments maturing prior to September 2024, and an overall weighted average maturity of nearly four years.
Moving to an update on our share repurchase program, which has been accretive to shareholders. As you may recall, BXSL instituted a $262 million share buyback program at the time of our IPO. In 2022, we repurchased 11 million shares at a weighted average price of $23.97, representing an 8% discount to current net. One of the largest executed share repurchases in BDC history. In keeping with our focus on shareholder alignment, I am also happy to report that the BXSL board has approved an additional $250 million discretionary share repurchase program. Our management team will continuously monitor investment opportunities in the direct lending marketplace as well as in our own shares.
In closing, we believe BXSL is very well positioned to generate earnings in excess of our dividends as rates on our 98% floating rate investments continue to reset higher. As Brad mentioned, we estimate our fourth quarter NII per share would have been $0.06 higher, or $0.96 total, if the average base rate was hypothetically at December 31st levels for the entire quarter, all else being equal. There's additional upside potential from here, given the recent 25 basis point Fed rate hike, with the potential for more increases in the future. We remain positive about the outlook given our best-in-class origination and portfolio monitoring teams, our strong defensive portfolio designed to protect capital in times of stress, and the earnings upside potential as a result of rising rates. With that, I'll ask the operator to open it up for questions. Thank you.
Thank you. Everyone, if you wish to ask a question, please key star and one on your device. The first question is coming from the line of Finian O'Shea, Wells Fargo. Please go ahead.
Hi, everyone. Good morning. Appreciate the color there on the interest coverage of the portfolio. What are the interest coverage ratios you're seeing today in the market for new deals?
Thanks, Fin. Interest coverage is in line with kind of where the existing portfolio is. Said differently, the capital structures are being set up with a little bit less leverage today given where rates and spreads are in this environment. You know, a lot of deals that we're looking at are around 2 x coverage, stepping down a little bit to the extent that, you know, base rates get into the low to mid 5s.
Okay. That's helpful. Thanks so much.
The next question is coming from the line of Casey Alexander, Compass Point. Please proceed.
Hi, good morning. First of all, welcome to Mr. Bock, to the Blackstone management team. We're happy to see him there. I have two questions. First of all, I appreciate your thoughts around the dividend and around the base dividend. Based upon where your earnings power is, currently, the base dividend doesn't even come close to satisfying the RIC requirements for required distributions. How do you plan to, do you have a formalized process that you're thinking about for distributing the additional income that you expect to earn over and above the base dividend? Some BDCs have offered a formula that they would use. How do you guys think about managing that RIC requirement and handling the extra income over and above your current base distribution?
Thanks, Casey. This is Bock. I'll start with really kind of our focus on what we believe truly drives long-term value. Our view is those BDCs that institute steady and stable growing base dividends and have a level of NAV growth associated, those are generally the types of BDCs that generate the best valuations. You could expect to see clearly while we have a raised dividend, there's going to be a level of earnings excess. That level of earnings excess enters dividend spillover and grows NAV. To the extent that we start to approach a level of special that's going to be required as a result, we'll deal with that as we come to it. We find that there's more value as it relates to NAV and the compounding inside, given a small cost of excise tax of 4%.
Over time, as you start to see, the market opportunity grow and BXSL grow along with it, you can easily manage a number of those payouts to drive long-term return.
All right. My second question is, appreciate the information that you gave on slide number 10. The types of companies that fit the fundamentals that you are lending to also are, you know, have deal sizes that are well in excess of the average size in the marketplace. You know, given co-investment privileges, does Blackstone have deep enough pockets that have co-investment privileges to be able to absorb those entire deals? Would you think more in terms of partners on some of those deals? How do you kind of contour managing the deal size that comes with those types of characteristics?
Yeah, Casey, it's Brad. I'll take that. If you look at our private portfolio, about 80% of the deals that we do are the sole or lead lender. I think once a deal gets above, you know, $2 billion, it requires us to bring in partners. As you kind of exceed, you know, a certain size, we are gonna be co-investing alongside others, which is, you know, partly why our fee structure is so attractive, right? If other managers are coming in alongside of us in those deals, you know, the best ROE for investors for those types of deals, those large deals, is to invest through BXSL just because of the fee structure that John went through.
All right, great. I'll thank you for taking my questions. That's my two. I'll hop back in the queue, and if I have more, I'll jump back in later.
Thanks, Casey.
The following question is coming from the line of Robert Dodd, Raymond James. Please go ahead.
Hi, guys. Yeah, welcome, John. On going to that slide because it's really interesting. The data on slide 10. I mean, John, you talked about at December spot rates, you have 8% of the portfolio under 1 times interest coverage. December is not peak, though. Have you looked at what the proportion or indeed your proportion versus the Lincoln proportion would be under one at peak rates, which are, you know, maybe 100 basis points higher even than December?
Yes. If you start to look forward, let's say 5%, you'll notice that that ratio still stays very, very close. For Blackstone, you'll see a level of stability in our portfolio given where we focused. For the market, if you move forward, you start to see that tail increase over 20%. Our goal is to give you a view of what we see as of 12/31 and then continue to adjust to what's factually there, because who knows where rates will be arbitrarily. That's really where it will trend. We believe that's an important item to focus on, because truly it is what sits in the tails and how you manage it, Robert.
Absolutely.
Rob, maybe just add to that, 'cause, you know, we clearly, you know, run all the, you know, different interest rate environments through our portfolio. I think I mentioned this before, but we have one of the largest portfolio management teams in the industry. This is a big part of what we do. We run it through our models, 'cause what that does is it creates the conversation with the sponsor to figure out a game plan to the extent they're gonna be close. If you kind of look, you know, forward into kind of peak rates, what you'll find is the comp... Remember, we look at, you know, coverage on an LTM basis.
If we look at the companies that would step into kind of the less than 1x, they're actually outperforming the rest of the portfolio. We feel good about the quality of those companies that would approach or be less than 1x in a higher rate environment because of the momentum that they have on a forward-looking basis to performance.
I appreciate that, Brad. That's exactly related to the follow-up question, which is, to your point, like, just under 1 x interest coverage doesn't really. That doesn't cause a default event, right? It has to be a combination of factors. Either you're under one and the EBITDA is shrinking or the business is broken or something like that. If I look at slide 10 in the middle, you know, LTM EBITDA growth, you're at 17%, credit market at 9, so roughly 2x again. What percent? For the tail, what percent of the portfolio, for example, has negative EBITDA growth? you know, because that's where the problems are gonna come from more than the interest expense, right?
It's if the EBITDA is having a problem or any other way you could break out the tail of the portfolio for us from some of those other metrics.
Or maybe asked differently, interest rates alone don't cause companies to default. Good companies will manage through a higher interest rate environment, quite well, especially given the vintage of BXSL's portfolio companies. To answer your question, Robert, about 20% of the companies that are close on interest coverage, have been performing in line or below expectations.
Got it. I appreciate that. Thank you.
Just a quick reminder, everyone. If you wish to ask a question, please key star and one on your telephone. Thank you. The next question is coming from the line of Ryan Lynch, KBW. Please go ahead.
Good morning and welcome, John, to Blackstone.
The first question I had, kind of following up on the whole interest coverage discussion. I really appreciate the details you guys gave in your prepared remarks as well as, some of the details in the slides. I just think it would be helpful when you think about the portfolio, 8% falling below 1% interest coverage, which it sounds like that's, you know, pretty significantly better than most of your peers. I would just love to hear, you know, if that does occur, what are some of the remedies that you all can do to kind of ease the stress of those companies? I would assume that the easiest one is trying to get the private equity sponsor to inject more capital into that business.
Assuming that does not occur, what are some of the remedies that you can do and proactively make to allow those companies to transition through this kind of period of high interest rates?
Yeah. Thaqnks, Ryan. A couple things. One, half those companies of the 8% are companies that have negative EBITDA by design. These kind of recurring revenue loans, so it's a small portion of our portfolio, but their capital structures were set up with that in mind. With the rest of the portfolio companies, there's a couple things. One, when we have these conversations with the sponsors, what they say when we run our models and we show them, you know, what we think interest coverage is, their reply is typically, one, they can cut costs in order to improve cash flow and service their debt. Two, they can inject equity as you suggested.
As I said, you know, interest rates won't cause a good company to default, so they will support their companies. Third, you can pick some of your interest rate, which I'm sure you'll see more of across the industry, as this year evolves. Then you have maybe the fourth mechanism is most companies have, you know, revolvers they can use to as long as it satisfies their, you know, their covenants, to fund any kind of slight misses in cash flow. Those would be kind of the four primary areas. Again, we've had all these conversations with all these companies within our portfolio companies that even get close.
So far the sponsors seem incredibly supportive, given what I said earlier, which is, if you're a good company, transitory issues like rates, like inflation, does not cause a company to default.
Yep. Okay. That makes sense. Just the other question I had was, I may be wrong in this, but I thought your guys target leverage range was around 1.25. You guys have been running, you know, not materially above that, but closer to 1.30, you know, in the 1.30s for the last several quarters. Did you guys change where you guys expect to run, or is there ever a point where you guys wanna reduce that down to 1.25-ish?
Ryan, remember in the quarter we bought back another $47 million of stock, and we invested actually about $175 million. Those two things alone, which entirely in our control, took leverage above 1.25 times target. If we remember last call, I said we had about $800 million of pay downs coming. $200 million roughly we saw in the fourth quarter. We have another line of sight over the next couple quarters to additional pay downs. That's informing kind of our buyback, our investment pace, and we take a longer term perspective on leverage. You're not wrong, in that our target is closer to 1.25 times.
Okay. I mean, that makes sense, you know, kind of moving it around a little bit when there's good opportunities and line of sight.
Yeah.
Share reports. I just wanna make sure that the long term didn't change. That's all for me. I appreciate your time.
Yeah. No worries. All right. Thanks, Ryan.
Now I would like to hand the call over to Michael for closing remarks.
Great. Thanks everyone for joining. Our team's available for any follow-up should you have them. Otherwise, we'll speak to you again next quarter.