Zachary Halpern: I can jump in on that one. This one is Zach. Yes, that asset sold well above our loan basis. A quick resolution there.
Crispin Love: Okay, great, thank you. Appreciate you taking my questions.
Operator: Thank you. Next question will be from Steve Delaney at Citizens JMP. Please go ahead.
Steven Delaney: Thanks, hey good morning everyone. And well congratulations on a really solid quarter and a challenging environment that we have. So look, I know this is early, you hiked the dividend back in the third quarter, but very solid coverage here, and we’re hearing of some nice recoveries here in the first quarter. Jim Flynn, what do you think would be in your mind, and I guess, more importantly, the Board, what do you want to see to have the confidence to make any further increase in the dividend during 2024? Thank you.
James P. Flynn: Thanks, Steve. Good to hear from you. So there’s a number of things here. Obviously, we’re talking to the Board. We feel good about our liquidity position relative to our size, including those recoveries, as you noted. We feel confident in the earnings. So there’s a lot of positives there. I would say, in discussions with the Board we’re looking at the broader market and what we’d like to see is see how the next quarter or two goes in terms of what’s the macroeconomic environment looks like, are we going to continue to see improvement or more importantly, stability. That’s really what I would say the focus is, do we have stability. The capital markets have been a bit spotty. We’d like to see some more transactions than we are working to that end and looking at our own refinance activity and what we could do at the corporate level and what we might be.
So all of those things, as we expect them to play out or hope our view our base view would be that things do continue on the trajectory. And as we get clarity on those issues, I think that will help guide the dividend discussion with the Board. But I would say from a corporate standpoint, taking a look at the market as a whole, having some concern about some of the maturity issues, maybe less so on the multi side, certainly, there’s a lot coming up. I think a lot of loans will extend. Just what kind of stress the market sees, what kind of stress we see from some of our peers perhaps in some of the other asset classes and making sure that we’re in a position to manage any of those issues or kind of macroeconomic stress that comes up. And if things continue on the base path that we are projecting then we’re going to be looking at maybe using some of that incremental cash to make new investments.
There are ample opportunities to diversify a little bit from bridge loans in the multifamily space, whether that’s some of the [indiscernible] capital available out there, whether that’s looking at participating in some construction activity in the areas that are seeing for which will be almost everywhere, no deliveries over the next after 2025. So there’s some opportunity there, we could make some new investments as well. But right now, we think that it’s prudent to maintain our liquidity position and ensure that the market is — continues to move in the right direction. If it does, I think we’ll be continuing to discuss with the Board.
Steven Delaney: That’s a very helpful overview, Jim. And it looks like you guys do have a lot of optionality moving forward, especially if we do, in fact, see lower rates sometime here in the next couple of quarters. Thank you all for the comments. Nice job.
James P. Flynn: Thanks, Steve.
Operator: Thank you. Next question will be from Matthew Erdner at JonesTrading. Please go ahead.
Matthew Erdner: Hey, good morning guys. Thanks for taking the question. Do you know what percentage of the loan portfolio extends or is fully extended through 2024 because the average weighted term is 13 months, so just what’s your expectation for payoffs this year?
James P. Flynn: So there’s very few, and Zach, you can pull that one. Very few are at the extended maturity in 2024, fully extended, I mean. We’re still anticipating about 30% payoffs, which is, frankly, a bit high, I think, relative to where the market is, but that is a function of the portfolio being more seasoned than it’s been over the past several years as we’ve seen fewer payoffs. So we’ve seen loans move further down further along their path on their business plan. And I think that the — you’ve seen a lot more activity of kind of the neutral or modest cash in refinancing or per financing in the market overall. And so we’ve — we think we’re going to be at that number, 30% was kind of a normal number from 2016, 2017 through 2020 plus some years even higher.
So we do think we’re going to end up in around that percentage. But again, I think the reason is less about in the past, it was kind of assets basically being flipped into a new sale or a new owner because values were going so much higher so quickly. I would say here we’re in an environment where a lot of owners are either looking to sell and recover some equity or to a cash in refi because their relative optimism on significant rate drops has become muted. And so there’s a little bit more of a settling into the current environment. Zach Halpern, I don’t know if you have… [Multiple Speakers]
Zachary Halpern: Yes. I can jump in with a little context there. We do have one asset that is near its final maturity. This is an asset that we previously addressed on the call. I assume that you guys have asked us to CRE CLO data and such. And as you review those, you would see that that asset has received a substantial pay down. And so we do expect that asset to refinance near term. Aside from that, we don’t have any assets in — that had their final maturity in 2024. Keep in mind that is past initial maturities or upcoming maturities. There are also extension fees if the borrowers choose to extend, which Lument Finance Trust will benefit from that as well.
