Greetings, welcome to the TPG RE Finance Trust fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Ginsberg, Vice President, Secretary, and General Counsel. Thank you, Deborah. You may begin.
Good morning, and welcome to TPG Real Estate Finance Trust conference call for the fourth quarter and full year 2022. I'm joined today by Doug Bouquard, Chief Executive Officer, and Bob Foley, Chief Financial Officer. Doug and Bob will share some comments about the quarter, and then we'll open up the call for questions. Yesterday evening, we filed our Form 10-K and issued a press release and earnings supplemental with a presentation of our operating results, all of which are available on our website in the investor relations section. I'd like to remind everyone that today's call may include forward-looking statements which are uncertain and outside of the company's control. Actual results may differ materially. For a discussion of some of the risks that could affect results, please see the risk factors section of our 10-K.
We do not undertake any duty to update these statements. We will also refer to certain non-GAAP measures on this call. For reconciliations, you should refer to the press release and our Form 10-K. With that, I will turn the call over to Doug Bouquard, Chief Executive Officer of TPG Real Estate Finance Trust.
Thank you, Deborah. I appreciate it. Good morning, and thank you all for joining the call today. The real estate market continues to adjust to a myriad of challenges and opportunities. On one hand, tighter financial conditions, reduced liquidity, and greater dispersion of risk appetite across property types and markets have put pressure on values. On the other hand, a strong labor market and resilient economy continues to support a positive outlook on the long-term fundamental real estate valuation. Fortunately for TRTX, we identified and began to prepare for tightening financial conditions during the first half of 2022 as we bolstered our liquidity profile and increased our selectivity for new investments. For TRTX, this past quarter was no different in that we continued to selectively invest with a cautious eye on liquidity while proactively risk managing our existing portfolio.
In 2022, TRTX originated or acquired $1.7 billion in new loans, approximately 80% of which were multifamily, industrial, or self-storage, three sectors we continue to target given their long-term fundamental tailwinds. In addition, we have been very disciplined on the nature of our financing. 65% of our 2022 investments were financed on a non-mark-to-market basis. Furthermore, over the past year, we strategically increased our multifamily and industrial exposure by 62% while reducing our office exposure by over 32%, which is the greatest year-over-year reduction of office exposure amongst our peers. In the aggregate, loan principal payments for the year 2022 equaled $1.5 billion, and our repayments attributable to our office loans comprised 44% of that number.
While we continue to acknowledge the dislocation of lending markets and pressure on value within certain sectors and geographies, particularly office properties, you can see from our quarter-over-quarter CECL reserve reduction of approximately $11 million and stable portfolio risk ratings that we have anticipated these challenges and are actively working to address their impact on our portfolio. We continue to work collaboratively with our borrowers to maximize shareholder value. Our strategy for resolution remains the same. Whether we modify, extend, or foreclose, our focus is to maximize shareholder value in the most efficient manner possible given the facts and circumstances presented. From a liquidity perspective, we continue to risk manage from a position of strength. Our year-end liquidity exceeded $590 million. For new investments, we have substantial liquidity via four main sources. Number one, the A-note market.
Number two, existing series CLO reinvestment capacity in both FL4 and FL5. Potential new public and private series CLO transactions. Our existing secured credit facilities. Over the past year, as a testament to the diversity in our funding sources, we have executed on each of the four aforementioned financing options, all while maintaining an industry-leading debt cost of funds of 203 basis points over the applicable benchmark rate across our liability structure. Our team's investing and asset management experience benefits from two distinct attributes. Number one, a leadership group with an average of 25+ years of experience investing across multiple economic cycles, combined with, two, full integration into the broader TPG Real Estate ecosystem with an oversight of $20 billion of AUM across multiple investment strategies.
Given the disruption in real estate markets, being aligned with a leading global alternative asset management firm, combined with tremendous information flow from a broad-reaching real estate equity and credit platform, allows TRTX to prudently navigate the current market. I'm incredibly excited about the prospects for TRTX. We have been front-footed in acknowledging the stress in real estate markets while positioning ourselves to benefit from an attractive lending environment. This proactive approach will serve our shareholders well as the current cycle evolves.
Thank you. Bob, please go ahead.
Thanks, Doug. Good morning, everyone, thanks for joining us on this morning's call, especially those of you with school-age children trying to enjoy a school holiday week. First, our operating results. GAAP net income for the fourth quarter was $32.6 million or $0.42 per diluted share, reflecting the benefit of rising benchmark rates on net interest margin, which increased $4.7 million or 16% quarter-over-quarter. Higher benchmark rates and a balance sheet that is 100% rate sensitive are strong tailwinds for net interest margin and net earnings. Distributable Earnings was $23.3 million or $0.30 per share, a quarter-over-quarter increase of 53% due to net interest margin expansion and a decline in loan write-offs in comparison to the prior quarter. Credit performance will be the key determinant of distributable earnings in future quarters.
Our dividend coverage was 1.25x for the quarter and 1.17x for the year. Book value per share increased quarter-over-quarter by $0.20 to $14.48 per share on the strength of a CECL reversal of approximately $11 million and distributable earnings that outstripped by $0.06 per share, our dividend per share of $0.24. Our CECL reserve declined by approximately $11 million. At quarter end, our reserve rate was 395 basis points as compared to 390 basis points for the prior quarter. We continue to thoughtfully utilize the TPG ecosystem, our ample liquidity, our 74% non-mark-to-market financing base, and our highly experienced investment, capital markets, and asset management teams to support opportunistic lending and preemptive asset management to drive value creation and earnings for our shareholders.
Regarding liquidity, we had $590.9 million of it at year-end, including $231.7 million of cash, $297.2 million of CLO reinvestment cash, plus undrawn capacity under our credit facilities. Two of our three CLOs are open for reinvestment, FL4 through March of 2023 and FL5 through February of 2024. These term non-mark-to-market, non-recourse liabilities with a weighted average credit spread of 180 basis points are immensely valuable to us in supporting new loan investments, optimizing our current financing arrangements, and sustaining or boosting investment-level ROE. $67.4 million of our year-end CLO reinvestment cash has since been utilized across seven different investments.
Unfunded commitments under existing loans were $426.1 million, or only 7.8% of our total loan commitments, which is comparable to prior quarters. This low level reflects our historical discipline in targeting bridge and light transitional loans with quick-to-complete business plans and small proportions of deferred fundings. Regarding credit, rising rates continue to pose a headwind to all property types. A muted pace of return to office remains a sustained challenge to the office sector. Nonetheless, our weighted average risk rating remained unchanged quarter-over-quarter at 3.2, and the dispersion of ratings across our portfolio was largely unchanged. Measured by amortized cost, 75% of our loans were rated three or better, 20% were 4s, and 5% were 5s.
Our CECL reserve declined by approximately $11 million or 5%, due primarily to $336.5 million Of par repayments plus the conversion to REO of one office loan, all of which enabled reserve releases. Our general reserve decreased by $23.2 million due to par loan repayments in the general reserve population and the reclassification of one office loan to the specific reserve. This was offset by the model-based impact of higher short and long-term interest rates, worsening macroeconomic factors, and a challenging operating and valuation environment for commercial real estate. Our specific reserve, covering four loans, increased by $12.2 million due to macro and asset-specific factors and a one loan change in the composition of the specific reserve loan population.
The office loan converted to REO in early October was by mid-November sold to an investor at a price roughly equal to its carrying value. We recovered 95% of our UPB as compared to our carrying value net of CECL at the prior quarter end of roughly 85% of UPB. We provided to the purchaser $59 million of first mortgage financing on market terms, that loan is term financed on a non-mark-to-market basis. Our new borrower invested $29.3 million of fresh cash equity to acquire the property. Our asset management team delivered an excellent result here after multiple quarters of thoughtful work. Rate caps are another popular topic.
We require our borrowers to purchase rate caps. At quarter end, roughly 90% of our loans, measured by loan commitment amount, had borrower-owned rate caps with a weighted average strike rate of 2.71%. By comparison, current term SOFR is 4.56%. Regarding the loan portfolio, for the quarter, we received repayments in full of $294.4 million and a near record $1.3 billion of full repayments for the year, of which 38% were office loans. That excludes partial repayments of $209.5 million, of which $176.7 million related to office loans. As Doug mentioned, year-over-year, our office exposure declined by 32% to 29% from 42% of our portfolio.
We do believe higher rates and challenging real estate fundamentals are likely to slow repayment speeds in 2023. Our $1.7 billion of 2022 investment activity reflects our view since mid-2022 that the lending market is quite attractive, offering lower advance rates, excuse me, wider spreads and lower attachment points. For 2023, our investment stance remains opportunistic. We intend to match our investment volumes to loan repayments. We remain laser-focused on low-cost, non-mark-to-market, non-recourse term funding. At year-end, 73.5% of our secured financing was non-mark-to-market.
For the full year, we arranged $1.8 billion of non-mark-to-market term debt capital, including $1.1 billion of CLO funding via our fifth CLO, $726.3 million, excuse me, of non-CLO term financing, which was a mix of note-on-note, syndicated senior loans or A-note financing, and included several new counterparties. We continue to collaborate with TPG's capital markets franchise to mine existing and new capital relationships to form term non-mark-to-market accretive financing. We also added during the year a $250 million secured revolving credit facility, which we later upsized to $290 million. Our leverage remains modest. Our total debt- to-equity ratio was 2.97x to 1x, down from 3.13x to 1x at the previous quarter end.
We remain in compliance with all of our financial covenants. With that, we'll open the floor to questions. Operator?
Thank you. We will now be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. We have a first question from the line of Stephen Laws with Raymond James. Please go ahead.
Yeah. Hi, good morning.
Morning.
Doug, maybe start, you know, with the four loans that have a specific reserve. You know, can you give us an idea of, you know, current thoughts around resolution timeline for those and maybe any additional details? I think it was mentioned in prepared remarks there was one new office loan that had a reserve move from general to specific. Some color around that loan as well, please.
Absolutely. You know, right now we're carefully evaluating the most effective path towards resolution. You know, that may take the form of a loan sale, that could you know, take the form of, you know, foreclosing and then owning that asset. Generally speaking, we're gonna be thoughtful in terms of maximizing recovery. Given our collective view on, you know, the fact that the office market doesn't seem to be getting better anytime soon, we expect to be, you know, resolving these as quickly as we can while maximizing shareholder value.
Great. You know, maybe shifting to run rate EPS, Bob. You know, as I think about kind of where we move, you know, I think in the Q or in the K, it's a little over $1 million of prepayment income in Q4. You know, portfolio was down a touch, but I think in your prepared remarks you mentioned, you know, kind of flat outlook as originations match repayments and then maybe some benefit from increasing rates. You know, can you maybe give us any other considerations we need to think about as we look at a run rate EPS, you know, before any write-offs or realized losses occur?
Stephen, I think you've hit the principal topics. You know, MG&A is pretty level. Clearly, higher rates and rising rates are helpful to NIM, we would expect a little more expansion there. I think the volume of one-timers that you referenced is, you know, I would say unusual. We typically don't have a lot of them. We had one loan for the quarter just ended that repaid a little sooner than we expected. That was, you know, only $1.4 million. I think that what we envision is a pretty stable, you know, NIM outlook. The question will be credit, which you alluded to in your comments.
Great. Well, appreciate the comments this morning. Yeah, congrats on a nice quarter. Obviously, the market was impressed with the results, as was I. Thanks for your time.
Thanks, Stephen.
Thanks, Stephen.
Appreciate it.
Thank you. We take the next question from the line of Rick Shane with JPMorgan. Please go ahead.
Thanks, everybody, for taking my questions. Hey, Bob, can you talk a little bit about the mechanics of the general CECL reserve? I know that a lot of it's data-driven by historical information. I think everybody uses Trepp. Would love to think about some of the inputs that could change because that's, that is, I assume, fairly backward-looking and think about some of the macro inputs and overlays you put on top of that and how we could think about that evolving over the rest of the year.
Sure. Thanks for the question, Rick. It's a good one. I would start by reminding all of us that, you know, CECL, which came into effect a little more than three years ago at the beginning of 2020, is intended to cause registrants to record reserves that reflect the expected loss over the life of each loan. It's really a prospective view of the world, not an historical one. While historical data is useful and informative, and you're right, we subscribe to a data service, as do many of our public peers, that provides historical loss data on more than 125,000 loans extending back to the late 1990s. You know, the real issue or the real important inputs are things like loan-to-value and debt service coverage.
The amount of equity that a borrower has in a loan, and then a number of macro inputs, including short and long-term rates, GDP growth, unemployment and so on. You know, a company's forward view, as expressed through their forecasting tool, whether it's a loss- given- default model or they use the WARM method, which some companies do, is, in my view, a bigger driver of establishing the general reserve than our historical data sets.
Got it.
Which is perhaps one of the reasons why, you know, in the old days, it was about building reserves, and it was more historical. I think what you're seeing in the new CECL order is that certainly we, I can't speak for others, you know, we're focused on what do we think is going to happen in the future, and our objective is to fairly state a CECL reserve based on that. Which is, I think, one of the reasons why you saw our CECL reserve, frankly, be larger sooner than some of our peers. Thanks for your question, though.
Yeah. Thanks. Just pull the thread a little bit further. As you know, we have a pretty broad coverage universe, and we're dealing with a number of companies who have adopted CECL reserving. In consumer finance land, the key macro number that everybody focuses on is unemployment. Typically, we'll get updates on companies' unemployment outlooks and how that impacts their CECL reserve. Is there something that we should be asking for updates on that is as sort of focused as unemployment for you? Or how should we think about what changes you've made to your economic outlook this quarter?
Well, I think that, you know, for consumer finance-oriented companies, employment is clearly an important driver. I think for commercial real estate lenders, we're probably as a sector, more focused on things like GDP growth and rates. I mean, rates are an important driver of short-term issues like interest coverage and clearly have an influence over time on cap rates, which influence, you know, refinancing or sales exits for any lender. So in my view, you know, those are probably the factors that people should focus on more clearly, and that information is, you know, available to all of us on this call every day on Bloomberg.
Got it. Okay. Terrific. Thanks, Bob.
Thanks, Rick.
Thank you. We take the next question from the line of Steve Delaney with JMP Securities. Please go ahead.
Thanks. Hello, Doug and Bob, and congrats on a strong report. As Stephen Laws mentioned, nice to see the market reward the shares this morning. Congrats on that.
Thank you.
You know, the portfolio walk that you provide us on page 9 is very helpful. The drop, you know, about, you know, $300 million or so, actually closer to $400 million. You mentioned the office loan that went to REO and was subsequently sold. Was that a big piece of that shrinkage, if you will, in the loan portfolio in the fourth quarter?
Well, from a purely numerical standpoint, it reflected about $89 million of commitment.
Okay.
What we would call about $81 million of net exposure. It was, you know, meaningful, but not the whole story. There were other important repayments, and Doug can elaborate more on that REO conversion and sale in particular. There were several other sizable loans that repaid, you know, including the largest loan, I think, that repaid in the fourth quarter was a $113 million four-rated hotel loan in Southern California. I think Doug's better equipped to.
Sure.
Address, you know, the drivers behind that migration.
Yeah. And Doug, the reason-.
Apart from-
Yeah. The reason I asked was your initial comment. You know, when I saw the decline, I was wondering if there's sort of a managed reduction in the portfolio for risk management and building liquidity. You said... I took your comments, Doug, to say pretty much going forward, we should expect that repayments come in and that there are attractive opportunities to put that money back to work. I came in thinking that...
Yeah.
Maybe there's a shrink strategy, and now I'm hearing more clearly that it's more of a stability approach.
No, it's definitely more of a stability approach. I think we're just, you know, trying to strike the right balance of, you know, one foot on gas, one foot on brake in terms of originations and repayments. Look, I think that we've been, you know, I think very front-footed. I think, as I'd mentioned in my remarks, I mean, we've had the, you know, the largest year-over-year reduction in terms of office exposure relative to all of our peers. I think we've been really front-footed and one, and then two, I think, you know, from a liquidity perspective, you know, we are investing from a position of strength right now. I think given our ample liquidity and our various sources of financing.
That really does allow us to take advantage of right now, which actually is a very attractive lending market. Just even in the, you know, in the past, you know, since the quarter began, for example, we basically have about $123 million of new financings in the queue, one of which is closed, the other which is under term sheet. You know, in terms of kind of like, you know, playing offense, we are definitely out there, you know, quoting and taking advantage of what we think is a pretty attractive lending market.
Very interesting to hear you comment on A-notes. I don't recall hearing any of your peers mentioning, you know, those senior participations. Obviously it's a product that's been out in the market forever. It's interesting, and I guess, you know, banks are certainly part of that, I guess, as well, maybe as insurance companies. Is the current sort of the resetting of interest rate levels? Is this a matter of absolute return being so much more attractive on an A-note today than it was before the Fed started tightening?
Yeah. I mean, I think if I had to kind of loosely bucket or I'll call it the three main sources of financing liquidity, that being A-notes, our existing secured credit facilities, and then series CLOs, generally speaking.
Sure.
Right now, the most attractive area for us from a borrowing perspective is likely within the A-note market. We actually forged some new relationships over the past two quarters with some, you know, some banks that are, you know. Again, generally speaking, is where we are finding that, you know, the sort of best available rates is within that bank market. I think that's really driven by two reasons. One is the, you know, direct lending market has slowed.
Right.
Number two, you know, banks are generally under certain amounts of capital pressure. In these instances, of an A-note financing with us, they view it as a way for them to still deploy, you know, capital at attractive terms, but not be the, you know, direct lender, but rather be a, you know, lender to a lender. I think part of that is, you know, a bit of risk aversion on the side of the banks. As we sort of like work our way to the other buckets, you know, we still have, you know, ample capacity within our, you know, existing secured credit facilities.
On the series CLO market, which is, you know, I think very transparent in terms of where cost of funds are, that's probably the least attractive path right now in terms of public series CLO executions. You know, what we have done and what we did execute in Q3 of 2022 was what we would describe as a private series CLO, where we basically had, you know, a bank provide financing that I would say has series CLO-like structural enhancements, but technically it's just in the form of a loan. Again, I would say, you know, I highlighted in our remarks that, you know, we've been able to find liquidity in really all three of those.
You know, the fourth that I mentioned was, you know, which again, is a huge advantage for us, is that we still have reinvestment capacity within two of our three series CLOs.
Correct.
That's really like, you know, what allows us to be out there, I would say, you know, actively quoting, knowing that, you know, on the back end, we really have a variety of options in terms of available financing.
That's great color on financing and the A-notes. Thank you very much. Appreciate it.
Sure. Thank you.
Thank you. We take next question from the line of Eric Hagen with BTIG. Please go ahead.
Hey, thanks. Good morning. I hope you guys are well. A couple follow-ups on the, on the reserve and just the credit in general. Can you say how much of a general reserve you're holding against the risk rated four loans that are on the watch list? I'm hoping that you can give some detail on a few of the larger risk four loans, like a few of the ones that you show on page 15 of the deck. Like, how strong is the debt coverage in those assets currently? Like, what are the conditions that have driven them to show up on that list? What are the-.
Yeah, sure.
Conditions that can get them to migrate to a five. Yeah, thanks.
Sure. I think providing some context, generally speaking, on four and five-rated loans is important, just given, you know, where we are in the economic cycle. Then, I'll turn it over to Bob to perhaps provide a little bit more, you know, context relative to your question. You know, to speak generally, you know, 4-risk-rated loans typically are assets where we either have some concern over the performance of the collateral or there could be a technical default. The really overarching principle is that, you know, we don't view there to be significant risk of principal loss. Whereas within the five-rated bucket is where we do acknowledge that there is risk of principal loss. So I think those really are the two kind of guideposts.
In terms of trends, I think that it is worth highlighting that within the four-rated population, just over the past three months, two of the four-rated loans that we had actually paid off. 1/3 of the four-rated loans went to a five. So I think that's, like a pretty good proxy for, you know, fours are not necessarily earmarked as, you know, kind of headed towards a five. Recent data suggests that, you know, two of our last three four-rated loans that were resolved just paid off at par.
That was one hotel loan, and that was one office loan, onefour of which that paid off in Q4, and the other which just paid off in Q1.
Eric, with respect to your specific question, we don't disclose more to our peers, with respect to the general reserve individual reserve amounts per loan. The pronouncement and the guidance isn't drafted in that way. We pool loans in accordance with the guidance and then establish reserves accordingly. Unfortunately, we can't provide to you that specific of an answer. Clearly, you can see what the reserves are with respect to the four specifically identified loans. Not loan by loan, but in the aggregate. That's clearly disclosed.
Yeah, no, that's helpful detail. I appreciate that. You guys mentioned the goal of reinvesting what comes back to you through repayments. Can you talk about how the current environment allows you to maybe negotiate better loan terms than you were getting, say, a year ago? Like, where would you see that show up in the kind of value of-
Yeah.
Of what you're putting on today?
Yeah, sure. I mean, I think that, you know, it's gotta start from the top. I mean, first of all, you know, spreads are generally wider. It obviously varies, I would say, by property type. To kind of bucket the loan in sort of two universes. I would say within multifamily and industrial is where we're generally seeing loan spreads, you know, approximately 75 basis points- 100 basis points wider than a year ago. I think as you get into hotel, particularly, you could probably see loan spreads over 100 basis points to 150 basis points wider. For example, we just closed a hotel loan in the beginning of the first quarter, which, you know, is priced at SOFR+ 510 at, you know, an approximately 60% loan-to-cost loan.
new acquisition where, you know, we're getting paid SOFR 510, I think is, you know, relatively attractive. That loan probably would've been, you know, somewhere in the mid-to-high threes about a year ago. That's sort of the comment on spreads. you know, in terms of structure, you know, the short version is that, you know, simply put, there's just fewer lenders competing for those loans. we feel like we have more leverage to kind of, you know, gather more and more structural features. I would say specifically around, you know, cash flow triggers, debt yield triggers, and really any other, you know, covenants is where we just have on the margin more leverage to, you know, protect our balance sheet.
Again, I think it's very case specific. You know, from a leverage perspective, just I would sort of view it as you have, proceeds are down anywhere from 5%-15%, and then loan spreads are probably wider 100 to 150 basis points. That's probably the simplest way to describe the current market.
That's really helpful. That's it for me. Thank you.
Thank you, Eric.
Thank you. We take our next question from the line of Arren Cyganovich with Citi. Please go ahead.
Thanks. you had some loans look like they matured in January and February. I apologize if you've already addressed this. how are those moving there? I think like four and five rated loans. you know, how are you handling those situations?
Well, we've had a couple of scheduled maturities as you can see in the mortgage schedule. We had one office loan in Southern California, four rated, which repaid, I think in earlier this month in February. We had one or two loans that extended, the borrowers, you know, satisfied the conditions precedent to an extension, so they generally extend for one year. Then we had one or two loans with shorter term extensions, where either the borrower's working on an exit strategy or we're working with the borrower in a collaborative but commercially reasonable way to extend the loan. Again, only on terms that make sense for the company and its shareholders.
Yeah, look, and I think on that point, you could probably look to the, you know, the asset that was resolved in December, which, you know, Bob provided some context for during his remarks as, I think, a very good proxy for our ability to asset manage in this market. You know, that was an asset that ultimately went into default. We foreclosed. Relative to our carrying value of approximately $0.85, we ultimately recovered approximately $0.95 through, you know, through a sale, you know, to a, you know, to a local buyer. I called that out because I think it really highlights, number one, the sort of pace at which we resolved that loan.
Number two, you know, obviously we were, you know, pleased at the relative resolution proceeds when compared to our carrying value. I would sort of use that as a relatively good proxy for how we, how we expect to be asset managing, you know, loans that sit within our five-rated bucket.
Okay, thanks. I guess with the extensions, what do the sponsors, generally, you know, do? They put cash in? Or how do they achieve that kind of amendment? I would suppose that, you know, if that's the case, then that would be a generally a good sign that the sponsors are, you know, still willing to stick with the properties.
Yeah, I mean, you know, as I mentioned in my remarks, you know, we are working collaboratively with all of our borrowers. Where I would say our sort of general, you know, approach has been, you know, modifying and extending. We're not gonna give that out for free. That's almost always gonna come with some amount of, you know, either pay down and/or increase in terms of economics. Generally speaking, if we are gonna be modifying, extending, you know, we do wanna see substantial equity coming in from the borrower, you know, to basically get our basis down and also show their commitment to the asset.
Got it. All right, thank you.
That can take many forms. For example, for the year just ended, I think across the portfolio as a whole, our borrowers infused roughly $200 million of fresh cash. you know, some in the form of principal payments, some replenishing interest reserves, some of it, you know, buying the caps that they're required to buy typically in our loans in order to extend them. For the majority of the loans that are coming due, we're seeing borrowers step up and support, but the form of that support is clearly situation specific. frankly, last thing, some loans, borrowers just, you know, they qualify for the extension by right, and it extends.
Okay, thank you.
Thank you.
Thank you. Take next question from the line of Don Fandetti with Wells Fargo. Please go ahead.
Yes. As you think about office, you know, Doug or Bob, if there's, let's just say, there's a soft landing, when do you think you'd have some sort of visibility on the risk of the office portfolio? You know, would it be sorta mid this year, you feel like you could kinda bracket the risk? Or is this a situation that is just gonna play out over, you know, a year plus?
Yeah, I mean, that's a great question, and I think it really kind of goes back to our approach. You know, we're solely focused on maximizing shareholder value. That may take the form of, anything, again, that could be a modification, that could be a principal pay down, that could be an extension, that could be a note sale, that could be us, you know, foreclosing. The reason why I highlight that myriad of paths is we're just solely focused on maximizing shareholder value. I think, you know, from a timing perspective, we are, I would say, pursuing all of those paths with a general eye on the fact that our view is that office is more likely to not improve in the near term.
On the margin, we are trying to move quickly, and that's why I again, I would sort of go back to, you know, Park Central, the, you know, the asset that we resolved in Q4 as, I think, a very good proxy for, you know, our ability to asset manage and the pace at which we do it. You know, that was basically all kind of transpired within one quarter. I do acknowledge that some assets may take longer than just within a quarter to resolve, but we're generally speaking, you know, we've been, I think, very front-footed relative to competitors. And I think that we will be able to quickly resolve, while maximizing shareholder value.
Got it. The buyer of that office property, you had mentioned was a local buyer. What's their sort of business plan? What did they see that the other borrower, you know, was unable to execute on or handle?
I should have been more clear, which is that, you know, the buyer itself has experience across the U.S. and happened to know that market very well. I would say, you know, the principal strategy for the buyer was just to focus on leasing up the space. I think, you know, the prior owner had frankly lost some momentum on that front. This is a good example where, you know, you have a new buyer coming in with 30, you know, approximately $30 million of fresh cash equity behind us. With that cash equity infusion, they're basically focused on leasing up the remaining space in that office asset.
Okay, thanks.
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I'd like to turn the floor back over to Doug Bouquard for closing comments. Over to you, sir.
Yeah. again, just wanted to thank everyone for taking the time this morning, and look forward to keeping you updated over the next few quarters. Thank you very much.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.