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STARWOOD PROPERTY TRUST, INC. (STWD) Q3 2018 Earnings Conference Call Transcript


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Starwood Property Trust, Inc. (NYSE: STWD)
Q3 2018 Earnings Conference Call
Nov. 9, 2018, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the Starwood Property Trust Third Quarter 2018 Earnings Conference Call. At this time, are participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Zach Tanenbaum, Head of Investor Strategy.

Zach Tanenbaum -- Head of Investor Strategy

Thank you, Operator. Good morning and welcome to Starwood Property Trust's earnings call. This morning, the company released its financial results for the quarter ended September 30, 2018, filed its 10Q with the Securities and Exchange Commission, and posted its earnings supplement to its website. These documents are available on the Investor Relations section of the company's website at www.starwoodpropertytrust.com.

Before the call begins, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on management's current expectations and beliefs, and are subject to a number of trends and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. I refer you to the company's filings made with the SEC for a more detailed discussion of the risks and factors that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. The company undertakes no duty to update any forward-looking statements that may be made during the course of this call.

Additionally, certain non-GAAP financial measures will be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP can be accessed through our filings with the SEC at www.sec.gov.

Joining me on the call today are Barry Sternlicht, the company's Chief Executive Officer and Chairman; Rina Paniry, the company's Chief Financial Officer; Jeff DiModica, the company's President; Andrew Sossen, the company's Chief Operating Officer; and Adam Behlman, the President of our Real Estate Investing and Servicing Segment.

With that, I'm now gonna turn the call over to Rina.

Rina Paniry -- Chief Financial Officer

Thank you, Zach, and good morning, everyone. Our core earnings for the third quarter totaled $148 million, or $0.53 per share. This is after a $0.01 on extinguishment of debt and a penny of GE-transaction-related expenses. I will discuss both of these a little later. I will begin this morning with our largest business, which we have renamed the Commercial and Residential Lending segment. During the quarter, this segment contributed core earnings of $111 million, or $0.40 per share. On the Commercial Lending side, we originated $1.1 billion of loans, with an average loan size of $138 million. We funded $1.2 billion, of which $1 billion related to new loans, and $156 million related to preexisting loan commitments. We received $393 million of repayments, and $321 million from the securitization of senior loan interests, which allowed us to optimize yields on certain of our loans. Our commercial lending book ended the quarter at a record $7.5 billion, with an LTV of 62.5%.

Also in this segment is our nonqualified mortgage, or non-QM, business. As a reminder, these loans are high FICO, low LTV loans that do not qualify for agency financing, and therefore carry higher coupons. Our non-QM loans have an average 64% LTV, 724 FICO, and a weighted average coupon of 6.3%. During the quarter, we completed our first securitization, selling $384 million of these loans, retaining $45 million of subordinate security, and recognizing a core gain of $4 million. While the transaction qualified as a sale for GAAP purposes, we consolidated the related trust on our balance sheet under the VIE rule. After the sale and new purchases of $241 million, our non-QM loan book was $627 million, with net equity outstanding of $194 million.

I will now turn to our new segment. As we previously announced, during the quarter, we closed on the acquisitions of GE Capital's project finance debt business. This business will be reported in a new segment which we refer to as the Infrastructure Lending Segment. The $2 billion purchase price included $1.6 billion of loans and investment securities, which we intend to hold to maturity, and $320 million that we have current bids for and expect to sell in the near future. 97% of these assets are floating rate, and are financed with four-year floating rate debt totaling $1.5 billion as of September 30th. Subsequent to quarter end, we acquired $147 million of additional loans from GE, which were subject to a delayed closing. Because the transaction closed on September 19th, our P&L for the quarter reflects only 12 days of operation. The $6 million GAAP loss that we recognized this quarter was primarily driven by $6.9 million of transaction expenses. $3 million of these expenses related to an unused bridge commitment fee that we expensed for core earnings.

I will now turn to our property segment, which contributed core earnings of $32 million, or $0.12 per share. During the quarter, we acquired the last property in our second affordable housing portfolio in Florida for $33 million. In connection with the closing, we issued 425,000 OP units. There are an additional 1.9 million OP units that we expect to issue in the fourth quarter. These relate to contingent purchase price considerations for certain property task abatements that have now been realized. With this last purchase, we now own 59 affordable housing communities, totaling over 15,000 units. All of the wholly owned assets in this segment continue to perform well, with blended cash-on-cash yields increasing to 11.4%, and weighted average occupancy remaining steady at 98%. The increasing yields from last quarter's 10% was mostly driven by changes in Florida property tax law, which provides tax abatement for affordable housing properties. As a result of this new legislation, we expect to see an ongoing $6.9 million annual reduction to property taxes in our Woodstar portfolio. As a reminder, this portfolio is financed with debt containing an average remaining duration of 12 years, at a weighted average fixed rate of 3.8%.

Also contributing to the increase in cash yields this quarter is the renewal of a 50,000-square-foot lease in Dublin. The renewal reflects a 37% rent increase and a 14-year remaining term. Occupancy for our Dublin portfolio remains high, at 99.7%. Collectively, the properties in this segment and in our Investing and Servicing segment, totaled $3.5 billion on an undepreciated basis, representing 22% of our total undepreciated assets of $16.2 billion. These assets carry $270 million, or $0.98 per share, of accumulated depreciation. As we have proven in the past, we are able to sell properties in excess of our purchase price, and we believe there is continued appreciation in our property book. As a result, GAAP book value is not a relevant metric for us. At a minimum, adding back $270 million to our GAAP book value arrives at purchase price. Any gains on these assets would suggest an add-back in excess of this amount.

I will now turn to our Investing and Servicing segment, which contributed core earnings of $60 million, or $0.21 per share, to the quarter. We saw higher income levels over last quarter in both our servicer and CMBS portfolio, which was offset by lower income at our conduit. The lower income at our conduit. The lower income from our conduit was simply a function of timing, as we had one securitization for $224 million flipped into October. During the quarter, we securitized $172 million of loans in one transaction.

I will conclude my remarks with a few comments about our capitalization and dividends. We extended our credit capacity during the quarter by $3.2 billion. For our infrastructure loans, we entered into a new $2.1 billion facility to finance both the funded and unfunded portions of the acquired portfolio. For our commercial loans, we upsized two of our lines and added two lines, for a total of $1.1 billion. We ended the quarter with $4.7 billion of undrawn debt capacity and a net debt-to-undepreciated equity ratio of 2x. As we discussed with you last quarter, our 2019 convertible notes entered their open redemption period on July 15th. During the quarter, we settled $236 million principal of notes with a combination of cash and stock. Total consideration paid to redeem the notes was $266 million, consisting of $21 million in cash and the issuance of 11.2 million shares. In connection with these redemptions, we recognized a core loss of $2.5 million, representing the proportionate share of the settlement premium paid in cash. Subsequent to quarter end, we settled another $28 million principal amount of notes, with $5 million in cash and the issuance of 1.2 million shares.

For the third quarter, we have declared a $0.48 dividend, which will be paid on January 15th to shareholders of record on December 31st. This represents an 8.8% annualized dividend yield on yesterday's closing share price of $21.73.

With that, I'll turn the call over to Jeff for his comments.

Jeff DiModica -- President

Thanks, Rina. We're excited about both our financial achievements this quarter and the closing of the GE Energy infrastructure finance business. The infrastructure finance business further diversifies our company, giving us another attractive risk reward cylinder in which to invest our equity capital, and following in the footprints of the successful launch of our residential lending platform a year ago. The integration of the infrastructure lending business is going well, and our new team is building a robust pipeline that we expect will deliver low double-digit levered yields going forward. This new lending vertical is uncorrelated to our other core businesses, and gives us even more flexibility to invest our equity into the best available investments across the commercial, residential, and now infrastructure businesses.

As most of you know, the bond markets have apparently put substantially more value on our multi-cylinder business model than the equity markets have, as reflected in our outsize dividend yield. Moody's placed us on watch for upgrade in the quarter, which would provide the potential to lower our borrowing cost through an improved credit rating. Our last unsecured debt issuance came right on top of investment-grade pricing, while our equity yield simply does not reflect the diversity of our platform. That said, we will continue to strive to build a generational enterprise able to prosper in any market environment.

You will not that our leverage ratios are higher this quarter as a result of the purchase of the energy infrastructure portfolio and the continued growth in our high FICO, low into value residential book. Our leverage, especially our on plus off balance sheet, which adds back structural leverage created by senior mortgage sales, is still significantly below our peer group. We intend to continue to run our entity leverage below that of our peers, despite adding high quality, higher leverage verticals. We will do this by continuing to take less asset-level debt in both our loan book and our equity book.

After settling the bulk of our January 2019 maturity convertible bonds with shares in the open window this quarter, we have the capacity to execute our business plan. We also have ample unencumbered assets allowing us the ability to opportunistically create cash, either by issuing more debt or by selling equity assets, and thereby taking some of our large embedded gains and increasing our book value and earnings power going forward.

In our Commercial Lending segment, through three quarters, our core bridge lending Bus has already originated more loans than we did in all of 2017, which similar optimal IRRs and LTVs. We had a few loans expected to close in Q3 flip into Q4, and we expect to announce a robust Q4 well in excess of this quarter's closing. We expect to have originated over $6 billion worth of bridge zone by the end of the year, which will be up 50% versus 2017, and almost 100% versus 2016. Our ability to finance ourselves at the best rates in the market has allowed us to earn the same IRRs we have always earned on similar low-risk, low-leverage deals as we have since inception.

We have built a large team in London and have seen an expanded pipeline of opportunities in beer-drinking Europe, and are adding staff to explore other international opportunities. In many circumstances this year, we have sold mezzanine tranches that are junior to us on a larger origination, giving up spread, but keeping us lower in origination LPV and improving the safety of our portfolio. We have also done a good job this year refinancing deals on our books as spreads have tightened. And given our improved borrowing spreads, we've been able to do so without giving up total return.

As for credit, the LTV of our book remain consistent at 62.5% this quarter. Please note that the retail exposure in our loan book is only 2% of our portfolio, and will be less than 1% in 2019, when we expect our Paripaso 40% loan-to-cost senior loan on the very successful American Dream Project to pay off. We continue to make positive progress on our Upper West Side New York City condo loan that we discussed last quarter. As part of our recent modification to extend the loan, we were able to negotiate a recourse agreement with the borrower, which should ensure we are fully sold out in 2019. Since the modification, six units have already closed or are under contract.

We have focused our financing strategy on lowering our warehouse line cost, issuing unsecure debt well inside our peers, and scouring the market for A-note partners. As Rina said, we now have more capacity with more lenders at tighter spreads than ever before. We were prepared to issue a single-asset, single-borrower floater to replace existing warehouse financing on eight loans in our book, but got an overwhelmingly better financing quote to leave those assets on our warehouse line, so we did. As we have been consistently saying, we expect line pricing to continue to improve significantly from here. We also executed two single-asset, single-borrower deals, one on a hotel portfolio that increased our IRR by 360 basis points to 14.9%, and increased our equity out from $75 million to $100 million, and a second deal that allowed us to sell a subordinate mezzanine tranche, significantly reducing our LTV without sacrificing yield on our equity. We will continue to look for opportunities in the large business book to do similar financings going forward.

We reengineered every CLO that has been done, and may look to execute a transaction in the coming quarter, though we will not report to you, like others, that our financing cost is the day one cost of funds, because that would be untrue. As floating rate loans pay off, your borrowing costs inevitably increase, as your cheapest AAA bonds are paid down first. But if timed right, we could possibly print a non-recourse financing at similar lifetime pricing to our lines today.

As we told you was our plan, our residential lending business had its first successful securitization in the quarter, and we intend to continue to securitize our originations consistently in the coming quarters, locking in matched term financing and mid-teens returns on high-FICO, low-LTV paper. S&P gave our residential platform a higher rating than any non-bank in the country in our inaugurational operational assessment this year. We have added multiple counterparties to directly originate more volume at better pricing levels and IRRs. We remain optimistic that we will be able to accretively grow this vertical in the coming quarters and years, which, along with our property sales, has combined to offset the historical contributions of our 1.0 special services.

Our property portfolio continues to perform exceedingly well. As we told you was our plan, we have sold three of the 23 assets in our Bass Pro portfolio at significant gains, and expect to sell four more assets accretively in the very near future, leaving us with 16 retail assets and an equity investment of approximately $130 million, versus the peak equity investment of $294 million, and a mid-teens IRR over 300 basis points in excess of our original target. Rina mentioned that tax abatements that have added significant revenue and equity value to our stable Florida multifamily portfolios, which now account for over half of the very substantial gains in our property segment. We realized $3.5 million annual tax savings on our first multifamily homes alone, which, at a 5.25 cap rate, results in incremental value of $63 million to this portfolio alone. Subsequent to quarter end, we also refinanced our Dublin portfolio at any amazingly low 1.9% fixed rate for seven years, significantly increasing our cash return.

In RIS, we are proud to have added 11 new servicing assignments in the quarter, which we expect will add significant revenue to our servicer in the years to come. Subsequent to quarter end, we took advantage of the tightest spreads we've seen post-crisis to tactically trim our CMBS book, leaving it 10% smaller than it has been in years. We think there will be a great opportunity to reinvest in new securities with the lowest LTVs and the best collateral we've seen since well before the downturn.

In closing, we look forward to seeing many of you at our New York City Investor Day, which is scheduled for December 14th. In addition to keynotes from Jim Grant of Grant's Interest Rate Observer and from Barry, we look forward to the opportunity to walk you through each of our business lines in great detail, and for the first time, give you asset level valuations on our property book, which continues to perform tremendously well. Please reach out to Zach for more information or to register.

With that, I'll turn the call to Barry.

Barry Sternlicht -- Chief Executive Officer and Chairman

Thank you, Rina. Thank you, Jeff. Good morning, everyone. I want to take a step back and talk about our company, and it's eighth year, I guess, of its life, maybe ninth. This has become a very big company, and I'm really proud of what we've built. I'm excited about the business. And I think one of the things that continues to strike me is odd is I think shareholders should want to diversify the business. And so, that's what we've set out to build, a company that can deploy capital in many different businesses successfully so they never have to force-feed capital into one and at lower returns. And in my experience, which is now nearly 30 years investing in the property market, we've always changed geographies as their classes, divisions in the capital stack, as we saw risk and reward changing, and that led to a better than 20% return on what's now more than $30 billion of invested capital over the story of the capital's life.

So, we're in many businesses. We're in the large loan business, which is our core business, and this will be our best year ever. We'll, as Jeff said, originate more than $6 billion in loans. And I'm guessing that an investment could maybe kill another $3 billion of loans. So, we're very picky, and we'd rather give away the outside to preserve what we've always said we'd be, which is stable, consistent, and predictable. We have a really fun conduit business that's midmarket, and makes money, and consistently made money. It lost money, I think, in one quarter. I think it was a penny -- through already four credit cycles since we've been public. They had an off quarter. They'll have a good quarter this quarter. We have a CNBS trading book, which is backed by unparalleled information from our servicer, which allows us to cherry-pick buying securities, and knowing when to sell securities has been a consistent performer for us. We obviously have our special servicer, which has become a bit of, I guess, an anathema to the market, but it is a really valuable source of information. And 1.0 is in its tail end, but 2.0 is built, and we continue to participate buying additional strips. We started what's become a pretty successful residential lending business knowing that special servicing 1.0 fees would be tailing away. We completed the securitization we promised we would, and the ROEs are higher than our large loan book. The credit rating on the loans, underlying loans, is terrific. And we'll continue to build that business, and it will contribute, we hope, ten of millions of dollars to our profits.

One thing we have done is take advantage of our special servicing platform and exercise our sale value purchase options. I'll get to that in a second. The equity book, our property segment, is nothing short of spectacular, and we'll talk about, on our Investor Day, the extraordinary embedded gains in our portfolio. And we're trying to figure out, and we debate every day, whether we should realize them. But one thing you can know for sure, we have an 11.4 cash yield, cash-on-cash yield on our equity deployment, which is nearly a quarter of the company. And most multi-family REITs traded 20x EBITDA, and we have an unbelievable portfolio of multi-families with fixed rate debt at low coupons for more than a decade. And now, we've added the GE infrastructure lending business, which we're really excited to grow, which will be uncorrelated to everything else we do, which is the reason we did it. And while it complicates us, it builds us into a company -- you should think of us as a non-bank bank, not as a real estate lender, per se. And we'll continue to do stuff. We bid on and lost the GE healthcare lending business. That turned out to be a mistake, and Bank One bought it, and then volumes originations has doubled what we underwrote. So, we're excited to get into this business, and we think it will produce returns consistent with other business lines we have with a totally different correlation.

So, I'm super excited about our businesses. I'm super excited about our time. I think we have the best team we've ever fielded across multiple product lines. We have incredible talent in the company, incredibly stable. Rina, Jeff, Andrew, Adam, Zach are best-in-class in their jobs, as are our originators and our conduit leaders. I'm super excited about the data we have and the unprecedented access to that data and ability to use it to invest capital wisely. I'm really excited about our cost capital in the debt markets. I mean, our capital is approaching investment-grade. I'm excited about the global platform that originates deals for us. We originated loans and have a robust pipeline in the UK and other markets in Europe. We're gonna expand to other regions of the world.

I remain startled by our LTV. I can't believe in year nine, eight, nine, whatever this is, of our company, we're still in the 60% LTVs on a loan book as large as ours, and on the underlying risk profile, those loans reflected in that LTV. I'm pretty excited about our ROE as a firm. I'm excited about our risk model. We've never deviated from match funding our deals. We've basically match financed. And we could find other ways to do this. When you sell an A-note, you never have to worry about getting back the line, the note. You're just exposed for the retained paper, where if you use a warehouse facility, which many of our peers do, if something goes wrong, you're gonna be depending on the warehouse line. That is an un -- you don't see that risk, but we do. I'm really excited about rising rates, which actually help our earnings per share, and they create this optionality in our servicer. So, rates go up, they skyrocket, they're gonna be allowed to stress, we're gonna make a lot of money. And that's unique to our company.

So, what am I not excited about? I'm really not excited about our stock price. What I thought would be good for our business is our scale. We still remain, I think, 1.5x the size by market cap of our nearest competitor. But scale in this business should help our credit statistics. It'll help our credit ratings. And if we can become investment grade, we have a virtuous cycle to originate paper, tighter spreads, financed cheaper than anyone else, and continuing dramatic ROEs, which are tremendously high, given the risk we're taking. And I also feel like, when I look at our stock price, you might look at -- the uninformed or financially illiterate might look at our book value. Our book value's declining, the stated book value. But if you take the undepreciated book value, that would be significantly higher. Rina, I think it is in the financial statement. And then, if you do your job, you should look at the value of our equity assets. Because if you add that, the stock is -- book value is north of $20.00 a share. So, all of your models, which show an embarrassing lack of sophistication, do not take into account the fair value or the liquidation of our company. So, don't run your models. Look at the business we've created and figure out what we might be worth, because this is a business that can take money and generate superior returns on capital and superior risk-adjusted returns on shareholder value.

So, I look forward to our Investor Day, probably like I haven't looked forward to anything in a while. And December 14th, we hope you will all join us, and bring your friends and retail investors, who will love our absolutely outrageous dividend. It is hard to grow this enterprise and want to sell stock when the underlying book value or share value of our assets is as high as it is and the dividend yield is where it is. The risk profile of this company, which warrants us six dividend yields out of nine, or eight, nine, whatever it is. And we're gonna have to figure out over time how to position ourselves to capture the underlying value of the enterprise, because if you can give us a dollar, we continue to earn 11, 12-the percent on that dollar, with this risk closed off. We outperform every hedge fund in the United States that I've seen, more or less, given the risk that we're taking. So, it's an incredible company that we've built, and I'm super proud of the board and our team, and with that, I'm gonna knock it off and go take a drink. Thank you.

Jeff DiModica -- President

Operator, we'll turn it to questions.

Questions and Answers:

Operator

At this time, we will be conducting a question and answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would 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 * key. One moment, please, while we poll for questions.

Our first question comes from Doug Harter, Credit Suisse. Please proceed with your question.

Doug Harter -- Credit Suisse -- Analyst

Thanks. Trying to tie together, Barry, your comments about the cost of equity capital and the strong origination growth you've seen across your segments, I guess, how do you view your ability to sort of maintain that, and how much liquidity do you have for growth from here, or at what point would you kind of want to or need to slow down that pace kind of with the current cost of equity capital?

Barry

Let me -- we have like $4.7 billion of debt capacity. And I guess one of the things that I think Jeff mentioned is that we can always sell stuff to generate more additional case. And you look at our asset base, we've got stuff everywhere and in every business, so we can sell a loan. And what you're seeing us do, in the past -- first off, I should have mentioned this, that we're doing the opposite of adverse selection. We're selling our worst assets first and keeping the best assets that we want. And that was our business plan. And we'll generate mid-teens probably IRRs overall in that portfolio. And you know, we mentioned last earnings call, the bonds have traded up in that trade, and it's doing fairly well.

Jeff DiModica -- President

The term loan is still at par today, and it was at 91 when we underwrote the trade.

Barry

So, it's our job to find anomalies in the credit markets. We have one retail exposure to those energy projects. Now they're called American Dream. And I think our loan is 40% LTV, and I think we're getting L800 on it.

Jeff DiModica -- President

A little less.

Barry

A little less on leverage, and we apply corporate debt, and we're earning 12 on a 40% LTV. That's our job. We're supposed to find holes in the credit market to deploy capital with stupid risk-adjusted return. And we've consistently done that for nine years. This isn't a rookie outfit. So, I'm really happy with our loan book, and I'm really happy with the pipeline. And years ago, we made a switch in management or origination team, and we were doing a lot of construction loans, a lot of really large construction loans centered in New York City, and I was having heartburn. So, our quality -- while we still like that business and think we generate really good -- by definition, if you get the asset back, you're getting a discount, replacement in cost. We're cognizant not to overload our book with construction loans, and we're avoiding markets that we consider overbuilt or at risk. And there's a lot of good ones, though. There's a lot of interesting deals to be done. I could knock more of them down than we do. Because our construction financing remains difficult to get at this moment in time. Jamie Diamond recently said that while they talked about deregulation, it hasn't yet really impacted the commercial bank. The tone has changed, but the actual regulations haven't. The implications and application, they still have the high-value real estate, whatever that was called. What was it called?

Jeff DiModica -- President

HVCRE. High volume --

Barry

HVCRE. So, they still have restrictions there. There are other changes coming with Basel Ford. It'll open new opportunities for us as a new bank lender where capital requirements are going up for banks lending in sectors that are prequalified globally. And we're super excited about entering some of those business which heretofore, we haven't been able to be competitive in. So, I'm super happy about what we're doing right now. And I'm just -- it's fun to be the CEO of this group. I mean, we got a good team, and they're rowing in the same direction, and we have stamina. We'll be here. We own a lot of stock, much more than any of our peers, the management team. So, I'm gonna do what I think is right for -- Cheryl just happens to be from my town, so we are very plugged in here. And as you know, I think, unique in our comps, that we have bought back stock. As the stock has gotten weaker, we have stepped up and bought in the company. And now, as these -- I mean, this change in the real estate taxes for the multifamily assets or affordable housing created north of $100 million of free value for shareholders, maybe $150 million. And if you don't know what I'm talking about, they have the real estate taxes on affordable housing, and we have over 15,000, 18,000?

Rina Paniry -- Chief Financial Officer

16,000 units.

Barry Sternlicht -- Chief Executive Officer and Chairman

16,000 units. So, that's not me guessing what it's worth. You can pick any cap rate you want in 99% full apartments, and that was a gift of manna for our shareholders. Did our stock go up? No, it goes down. So, kind of interesting. We're more complicated, but it's worth it. We once bought a bank called Chorus in liquidation. They had 111 construction loans. We're not interested in being Chorus. I promised one of our shareholders at the beginning of the company when we IPOed that we wouldn't overstay our welcome, and the fact that we wouldn't repeat history and wind up being a mortgage lender that went bust. We're not gonna do that as long as I can help it. And the move to GE lending's business is partly consistent with that. It's not easy. It's not simple. But we're not going way out of market. We're not embarking on some radical new strategy that you can't possibly understand. We'll work with you to educate you on what we're doing and why we're doing it, and then you can decide whether you like it or not and you think the dividend is safe. Our goal would be to grow the dividend someday. But we have a high dividend yield, and we would like to grow it. It's possible to do. But we have to really increase our loan volume. We're gonna need capital if we get much over some point. And it's a little bit of a trick, because we really can't do it very easily. We'll have to shut down or sell other securities.

We are beginning to sell assets, and we're looking at other ways to trim some our exposure in line just to recycle capital now at higher ROEs. So, we don't want to talk about it until it's done, but hopefully, we'll get something done in that area in the next couple months.

Jeff DiModica -- President

So, Barry, in addition to potentially selling equity assets with gains that you wanted to a pseudo entity --

Barry Sternlicht -- Chief Executive Officer and Chairman

Or loans. Or loans.

Jeff DiModica -- President

Or loans, we also have created a tremendous amount of unencumbered assets that support a lot of unsecured debt. We could issue more unsecured debt today. It's our position that we don't need it for asset-level financing. We can add it on top of the company, and I don't think everybody has that ability. So, we have a number of ways to raise capital that aren't going into equity markets at this dividend yield. We could also add leverage to our portfolio, which has been significantly underleveraged.

Doug Harter -- Credit Suisse -- Analyst

Thank you. And then on the New York apartment loan where you took the reserve last quarter, it sounds like there were positive steps there in terms of sales and getting a guarantee. Can you just talk about what it might take to have -- to revisit kind of the reserve or provision you took against that loan?

Barry Sternlicht -- Chief Executive Officer and Chairman

It's Barry. Our breakeven now with the new sales -- excuse me, sorry. Hold on. My mother is calling. She must know that I'm on the call. So, our breakeven on our loan is significantly below what they're selling, more than 50. It's 40% below what they're selling the units at right now. So, we feel very comfortable we'll recover all our capital on that deal plus. So -- oh my gosh, mom.

Jeff DiModica -- President

She must be listening.

Barry Sternlicht -- Chief Executive Officer and Chairman

No, she's not listening. Maybe she has a comment. I should let her on the call.

Jeff DiModica -- President

Sorry, Doug. So, we do have a recourse agreement. We're excited about that. We will be paid down in a more quick timeframe than would we have thought six months ago, and we have some cushion there. We hope to not have to talk about that one in coming quarters.

Doug Harter -- Credit Suisse -- Analyst

Great, thank you.

Operator

Our next question comes from Steven Delaney, JMP Securities. Please proceed with your question.

Steven Delaney -- JMP Securities -- Analyst

Good morning, everyone, and thank you for taking my question. A common theme that we saw this quarter for the first time in probably well over a year among the largest U.S commercial mortgage REITs with a focus on global markets, especially Europe and the UK -- I'm just curious, that on some other calls, when questioned about that, what we heard was the loan spreads were better there. I'd like to get your opinion. Is it just a question of loan pricing, or is there collateral value in terms of higher debt yield, lower current LTVs? Is there also a quality issue at work there that you are seeing in those markets? Thank you.

Barry Sternlicht -- Chief Executive Officer and Chairman

Just picking up in Europe, several hundred basis points, and it's swapped back to the U.S, which is the first time in a long time that's been a case. So that is dramatic, right? When you're a lender, the lender doesn't have that. So, we get that, plus, as you know, we hedge everything. Every coupon, every payment. So, it's a windfall for U.S lenders in Europe at the moment, given the shape of the curve. And interesting, in other parts of the world it's, it's going the other way --Asia, for example, but not Australia, which we've seen some of our peers look at. And we're active, and our team just got back from -- we've been spending a lot of time in that country. So, it's a relatively small market, but a very good one.

And I think -- we have 55 people in London, and we have a very large, dedicated lending team in the UK. We support another small company called Starwood European Real Estate Trust on the British stock exchange, and they tend to do -- it's interesting. They do seniors, lower coupons. And it's a small vehicle. I think it's only 300 million or 400 million pounds, I guess. But the company, we've shared deals together, and we originate loan for both companies. But we have higher ROE targets than they do. So, I do think there are pockets. I mean, if you could tolerate and figure out your hedging strategies in Latin America, there's some incredible lending opportunities, but there's too much risk around it. Well, you can hedge the currency. It's just 600 basis points of the returns. Well, it was. I haven't checked it lately for Brazil. But in Europe, you have a unique moment in time with the swap.

Steven Delaney -- JMP Securities -- Analyst

Yeah. Okay thanks for that color there. And we noted, Moody's took your outlook up from stable to positive. Remind me, are you just one notch below BBB- at this time?

Jeff DiModica -- President

We're hoping to make a move to BB+ in the near future, and then the journey begins for getting us to the next grade. But it's more important to us that the bond market participants, the buyers of bonds, trade us like we're investment grade, than that the rating agency follows the investment grade. And we believe the former has come close to happening and that the later will happen in time, and they may be dragged along, right? So, that's gonna be hard for them.

Barry Sternlicht -- Chief Executive Officer and Chairman

It's funny, when I really started hotels, we were an investment grade and Hilton was, and our bonds traded through Hilton. So, I mean, the credit market do a very good job of credit announcements. And one thing for example, the rating agencies really like is our equity book. They really like the stability and duration and the cash move to that portfolio, and this is not exotic stuff. We own multi-families in Orlando, 99% leased. And they'll be 99% leased, barring them falling down, forever. They're affordable housing, but they're nice, they're newer stocks. And frankly, the deal's so good, we wish we'd done our equity book.

Jeff DiModica -- President

They also like -- on our average, they like our -- for example, our leverage. They like the diversity of our books, because there's a lot that the rating agency --

Barry Sternlicht -- Chief Executive Officer and Chairman

And the unsecured assets. That was EBITDA for them. We'd like to move the company more, and we look at that, more into unsecured debt and away from needing the direct property mortgages if we can. We'd even give up basis points to do it.

Steven Delaney -- JMP Securities -- Analyst

I appreciate the comments this morning. Thank you.

Jeff DiModica -- President

Thanks, Steve.

Operator

Our next question comes from Rich Shane, J.P. Morgan. Please proceed with your question.

Rich Shane -- J.P. Morgan -- Analyst

Yeah, thanks for taking my questions this morning. I just wanted talk a little bit about the infrastructure of the private finance business. On a pro forma basis, where do you think the contribution would have been in the third quarter? And more importantly, as we look at this business, you make the point from a fundamental perspective, it's uncorrelated, and that makes sense. From a balance sheet perspective, it's a little bit different; it's a little bit lower yield, more leverage. Do you think that the ROEs on this business will be consistent with your core businesses?

Barry Sternlicht -- Chief Executive Officer and Chairman

So, the equity check here is like 8% of our market value, or something like that. So, we think it's all about the future. And I think you may notice that we're on our third energy infrastructure fund that we do on the equity side of Starwood capital, and it's led by a very smart guy who helped us underwrite the book, and he's routinely financing his deal at rates that would more than work for us. And he's also producing 30, 40 and 50 IRRs on his infrastructure, especially in the second fund. So, we felt very comfortable -- it's about, I think, 18 people on the team in our house, and the team is up, and he uses 16 people, I believe.

Jeff DiModica -- President

20, 22.

Barry Sternlicht -- Chief Executive Officer and Chairman

22, OK. There you go. So, we got six to three. So, anyway, we combine it, and we can underwrite any energy credit. And the spreads about it -- the less participants, the more idiosyncratic -- actually, they look like real estate deals. Often, there's leases in place to take some or all the power being generated. So, that's how we actually got into energy infrastructure business. It's kind of funny, we did exactly in the mortgage REITs when we started the capital group. Back in 2007, 2008, when we were losing every deal by a million miles on the equity side, and our funds couldn't compete with out of control lenders. We stated an energy lending business and started to invest in, because it looked like real estate deals. We built a table that connected, I believe -- brought power from Southern New Jersey to Long Island. It was nearly a $1 billion project, making seven to one on our equity. And then we laid a cable that connects Manhattan to New Jersey. It's like an extension cord. That was a $1 billion project. That one was called Neptune, and it won deal of the year. The other one was called Hudson.

So, if you look at the deal on Long Island, Long Island Towers have all the power for 20 years. The construction loan was investment grade, because it was still gonna risk -- it 20 years of upwards only rent review, basically, in the lease payments, and if you finance that at 235-0, you're getting a gift of manna from God. So, these loans also have a lot more amortization than typically commercial real estate loans. So, on the whole, I'd say they're safer and the spreads are wider, and that's why we choose to go into the business. But it is about -- for us, we lucked into the trade. We paid quite a bit at least for the book, which we're selling down, so reducing our equity in that book, because some of these loans are still good. They're like 150 and 175 over loans. They don't belong to our company right now. So, we're selling those loans. We sold --

Jeff DiModica -- President

About $350 million.

Barry Sternlicht -- Chief Executive Officer and Chairman

$350 million of loans, and we'll continue to pedal the middle of our portfolio. And it really is about the future and what we can -- and it's the start-up. We 're feeling pretty good about our pipeline, and we'll have the infrastructure team in front of you for the December 14th Investors Day, and you can meet them firsthand.

Rich Shane -- J.P. Morgan -- Analyst

So, if I go back to my original question, is the way to think of this the lower ROA, higher leverage, in-line ROE business?

Barry Sternlicht -- Chief Executive Officer and Chairman

Yes. That would be fair.

Rich Shane -- J.P. Morgan -- Analyst

Great. Thank you.

Barry Sternlicht -- Chief Executive Officer and Chairman

We'll see. I mean, I like all cycles, we consider that paper gaps out and gaps in, and it might be not lower ROI; it might be just similar. The attachment points are similar or lower for LTV, LTC, if you can interpolate one. And we can lever, because the banks, particularly you saw, that they lend, what they lend, and with their new facilities, 80% or slightly north of that, percent of costs, because the banks are super comfortable in this space, and they actually prefer it, I guess, or some do, to what they're doing in CRE, or the debt wouldn't be available in the spread. So, that shows you that it's good business, and the question really is making sure we can earn returns that are consistent with what we need to produce for our company.

Operator

Our next question comes from Jade Rahmani, KBW. Please proceed with your question.

Jade Rahmani -- KBW -- Analyst

Thanks very much. The special servicing rights, I think, are carried at about $40 million at this point, so almost immaterial per share. Yet Realto was sold for $340 million, currently has a very minimum special servicing balance. But you could view their funds that they manage as a melting ice cube. So, how do you look at the value of servicer, I guess, relative to the Realto trade?

Barry Sternlicht -- Chief Executive Officer and Chairman

I knew you'd ask that. We obviously -- you know we have an interest inside this as well from [crosstalk]. And actually, we have gains coming in from both of those deals not even in the equity book. We think there was more than we were tallying. But we have been approached to start self-registering our servicer. And I'm the one who blocked that. Jeff and Rina probably would say what the hell, half, or something like that. It turns out it's kind of like this gift that keeps on giving. You continue to find stuff -- it's not my mother calling this time. I'll turn my phone off. You always find things that you couldn't really predict. And I think it's probably a loan litigation on something. Maybe you have to really look hard on something else. So, I was talking about it yesterday, actually. So, look, there's a lot of optionality in these things. And L&R was kind of like Realto, was able to survive and prosper before the financial crisis, and then just made a lot more money, and these are clever people. I'm actually in Miami with them, and there are like, 300 people in this building? And they're here at 8:00 at night doing their jobs.

So, there is a lot to do. I constrain Adam Behlman. We kind of won't let him -- he could probably make more money for us, but we don't want the CMDS quote to bigger than X percent of our assets, which probably drives him bananas. But it's about diversification for us. And we don't want to get caught. And so far, if you remember three years ago, probably took a mark-to-market loss on --

Jeff DiModica -- President

Yeah, second quarter of 2016.

Barry Sternlicht -- Chief Executive Officer and Chairman

2016, when the debt market gapped out, we recovered all that and more when they rallied. But that's kind of hard to do. We had to decapitalize our assets. And there's other companies -- Ladder's been super successful, he's a smart guy -- that do this more regularly than we do. So, these are all things we're gonna have to figure out, but we only have so much equity capital to deploy, and our job is predictability and consistency.

Adam

And Jade, if you think about what both and Jeff said in terms of our credit rating and the focus on trying to get a higher credit rating, and potentially to investment grade over time, I mean, continued ownership of the servicer has been viewed as kind of a very important piece of the puzzle by the rating agencies, and having that credit hedge in our business that has ownership of a business that will outperform over the course of the down cycle has been viewed as very important in terms of diversification of cash flows. That's just another reason to keep that business within the Starwood property trust today.

Jeff DiModica -- President

And it's really an investment business. We're really glad that you pointed out the relative value potential of that versus others and where we market.

Barry Sternlicht -- Chief Executive Officer and Chairman

It's definitely worth more than $40 million.

Jeff DiModica -- President

It will make less for a few years.

Barry Sternlicht -- Chief Executive Officer and Chairman

You talk to Regis. He's tough. He's marketing this thing down. It's going down. And it's going up and back and down.

Jeff DiModica -- President

It'll make less for a few years, but we're excited that it will make more over time, and it's really an investment for us, and there's so much that we can do with that and with the information that we get out of it that we're glad there's at least a data point now where people can realize just how much more that service is worth to us than we're holding it.

Jade Rahmani -- KBW -- Analyst

Yeah, for what it's worth, we run an NPV analysis, and we end up with north of $200 million of future value.

Barry Sternlicht -- Chief Executive Officer and Chairman

That would be correct, probably, and maybe even more. It's funny, f we were successful in this plan, we would be more than the book value -- at one point, it would be more than the transaction as a whole enterprise. So, I mean it's kind of nuts out there. And by the way, if you asked me a few years ago, I didn't know this thing existed. Actually, I didn't know it existed a week ago. They don't tell me everything. They like to surprise me. But no, honestly, I have no idea that happened, but that was worth more than $40 million. I wasn't actually concluding any of that or the interest in [crosstalk], or even our CMBS book. I mean, we think we have latent gains in some many parts of our company. That's why it's kind of fun, but we don't have stock anywhere here. It's destroying shareholder value. So, we have to figure out how to raise the money that we need to operate our business and grow our franchise. We've tried our ability to get investment grades and diversify our book. You're not gonna see a few billion share offerings for this set of businesses now, because we're actually diluting your shareholder value. So, we know that side of it.

Jade Rahmani -- KBW -- Analyst

The BP's portfolio of $1 billion dollars, is there a significant opportunity to monetize some of those positions and retain the special servicing? I know on some of the new deals you've done, you figured out ways to participate maybe 25%, but organized to have the special servicing rights. Is that a source of potential liquidity?

Adam Behlman -- President, Real Estate Investing and Servicing Segment

Yeah, I mean, we've been --

Barry Sternlicht -- Chief Executive Officer and Chairman

This is Adam Behlman speaking.

Adam Behlman -- President, Real Estate Investing and Servicing Segment

Hi. We've been looking at our book, we've been scaling back on things that we were reducing risk in the future, and as we do new deals, if we're putting money into it, we're making sure that try to lock down servicing in the future as part of the deal. So, when we're working with partners or other third parties in this thing, we make a statement that we can control the deals in the future. In addition, we've dramatically picked up our third party servicing capabilities, and grown our book substantially. If you look at it, it's had a very nice upswing over the past four quarters. So, it's important to us to expand out beyond just what our original platform looked like.

Jeff DiModica -- President

Jade, pre-crisis, as you know, the majority owner of the lowest-rated outstanding bond funds named the special servicer around 1.0. In 3.0, we have the ability to put in the paperwork, the ability to keep ourselves as the special servicer. So, we won't be playing chess to try to buy a majority of what is the future control class in a bond. We can focus on doing what we do well, which is bringing in partnerships, analyzing more deals than anybody, doing loan level analysis on every loan, and leveraging our servicing by getting as many partnerships as we can and as much third party servicing as we can. That will pay off in 2021, 2022, 2023 and beyond. It'll just be a little bit slow while we get --

Barry Sternlicht -- Chief Executive Officer and Chairman

Going into the foreseeable future, what is the total value of REO in the book today?

Jeff DiModica -- President

Oh, we're about $6.5 billion.

Barry Sternlicht -- Chief Executive Officer and Chairman

I'm just pointing out $40 million valuation. We're servicing, we're in REO now, $6.5 billion, and we're still the main service provider on --

Rina Paniry -- Chief Financial Officer

Like another $72 billion.

Jeff DiModica -- President

$72 billion, yeah.

Barry Sternlicht -- Chief Executive Officer and Chairman

$72 billion. I mean, we're nine years past the financial crisis. And I think when we started, we would have that at zero today by now. So, $72 billion where we're the main servicer, this is 1.0.

Jeff DiModica -- President

Total. We've been bringing the book back, yeah.

Barry Sternlicht -- Chief Executive Officer and Chairman

6.5 aggregate, so you can imply any fee structure you want, but we get paid on the revolving loan, so.

Jeff DiModica -- President

If you just get a point, which is the minimum we get without the sticking fees, and that's $60 million, and we're carrying this at $40 million, and you have everything in 2.0 and 3.0 in our investment engine, and our ability to seek partnerships --

Barry Sternlicht -- Chief Executive Officer and Chairman

We're cheap. I keep telling them and saying, are you getting the picture?

Jade Rahmani -- KBW -- Analyst

The active balance declined by about $2 billion in the third quarter, and I think at a conference recently, C3 said there's just a robust amount of activity. Is there anything outsized in the third quarter to take note of, or do you expect that pace of run-off to continue?

Jeff DiModica -- President

I think it's starts and fits and things like that. And you'll see some quarters that'll be bigger than others. And it's working itself out. There are some bigger deals that got done in the third quarter. I don't think you'll see as much nearly in the fourth quarter, and it will work itself out over time. There's still a lot of stuff that came in at the maturity, at the end of the maturity wall in 2007. It takes a while for it to get through the system.

Barry Sternlicht -- Chief Executive Officer and Chairman

2017.

Jeff DiModica -- President

The loans that matured in 2017, yes. So, there is stuff that's still to be had, and we're gonna work it out. And the optimal way to make sure that both our own book and the third parties that we work with at this point maximize value.

Adam Behlman -- President, Real Estate Investing and Servicing Segment

But the value really is in the timing of the resolution to this $6 billion that's going to happen over the next few years. The value is in what falls in out of what we're creating on the backend, and how much we can leverage with the smaller purchases we can make; how much can we leverage in the servicing that we can get for future revenue.

Jeff DiModica -- President

Right. And you also have to remember that there's a business to be had for actual non -- loans that are not in default there. We have to approve leases, sales, a whole bunch of other things that did work through the special services -- through the portion of business, that we'll always have some income based on that.

Rina Paniry -- Chief Financial Officer

So, Jade, at this point, we had $2.5 billion of resolution that happened in the quarter, and that's part of why you see the servicing fees pick up this quarter.

Operator

Our next question comes from Stephen Laws, Raymond James. Please proceed with your question.

Stephen Laws -- Raymond James -- Analyst

Hi, good morning. Thank you. I guess to follow up a little bit, Barry, and you provided a good bit of comments on this, I think, already, but how do you think about the mix shifting as we go forward? Obviously, you've got two new business lines. That's relatively new, or new with infrastructure, relatively new with the non-QM residential. As you're thinking about capital allocation and even reallocating capital, as you mentioned about potentially harvesting some embedded value gains, now how do you think about the mix shifting over the next 12 months or so, or what supplies do you think you can provide the most growth opportunity here as you look forward?

Barry Sternlicht -- Chief Executive Officer and Chairman

I'd love to double our residential lending business. It's really high quality and low risk. Obviously, millions of loans and tiny little stuff. And they always are better than a lending book, or commercial real estate's lending book. So, considerably better. So, if we could, doubling that, and that'd be awesome. I think also, I mean, we're still on the hunt for equity deals, but it's hard to find. When we buy assets, we pretty take the view, do I personally want to own them for 20 years? And to find assets like that, that have double-digit cash yields with fixed debt. They're not even GEITs by floating rate debt, which is 99.9% of opportunities for what ours did. These are fixed rate debt in place, 17, now 14 years on the first portfolio at 3.7% or something like that, right? Really, I mean, I was telling Rina, is that the debt's an asset, and the other ones, we even lowered the coupon to 3.5% or something.

Rina Paniry -- Chief Financial Officer

They blend to that.

Barry Sternlicht -- Chief Executive Officer and Chairman

They blend. So, anyway, we'd like to do it. It's hard to do. How do you do that? So, one of those loans came from -- one of the deals, that one we issued stock for, came from Dennis Shue, our head of originations of the mortgage book. So, it was off-market, and they came to us for a loan and wound up buying the thing. So, I think we'd love to double our loan book, our large loan. We keep adding originators. Probably have to add half a dozen more. But we will be at a point where we would need more money, because they're always where we can see them. Optimum yields are probably 11.5, 12, something like that. So, that's good. And hey, rates go up, it all gets better. We meet our targeted returns more easily. So, I'm on one of the people cheering for a 3.5 10-year and at least two more fed raises. So, go Powell.

Jeff DiModica -- President

And as you think of what it takes to recreate a portfolio like we have, which is a unicorn today, you need to buy -- what we did buy was six to eight cap assets that were good long-term hold assets, and be able to finance them between -- 1.9 is our lowest fixed rate for seven years going forward on Dublin, and probably close to 4% on the worst. But to finance a six to eight cap at three or in the threes gets you a 10-plus cash return. It's very difficult to get that financing today given the current flattening and the increase in rates, and cap rates haven't really moved out that much. So, it'd be great to add to it; it's just a difficult thing to add. Unless you're willing to live off of your IRR rather than your cash return, which is something we've always said we're not going to do. We're not gonna drink our blood by paying all the dividends that we haven't yet earned.

Operator

Our final question comes from Tim Hayes, B. Riley FBR. Please proceed with your question.

Tim Hayes -- B. Riley FBR -- Analyst

Hey, everyone, thanks for taking my question. I'll just leave it at one. And just curious how much of your current real estate portfolio you believe falls within designated opportunity zones and how you intend to approach that opportunity?

Barry Sternlicht -- Chief Executive Officer and Chairman

Probably not much. And we haven't -- I don't know the answer to that, because in order to get value from an opportunity, you have to build, you have to add significant improvements. Obviously, our Dublin portfolio isn't qualified, and the multis -- yeah, some of them may be there, but we couldn't put in the capital that makes it worthwhile unless you tore it down. There is like -- we have odds and SOBs, though, that might be in zones. We'll have to check. It's gonna be an interesting business. As a lender, it's gonna be particularly tricky, because any time you change tax codes, you create massive distortions in the market. And the capital going into these opportunity zones could overwhelm both the demand. And you don't know, because everyone's building an apartment right next to each other in the entire zone, and they all open the same time, and all being done for tax deferral, not for the economics of the deal.

So, it's gonna be fascinating, right. I mean, it's gonna be interesting to see how this plays out. And to some extent, land values will quickly rise, so basically take into account the deferral you're gonna get, and then you have economics. And I just worry that everybody's gonna get a fixed return on cost on a new multi-deal, and it's gonna be a four, because there's gonna be too many of them, everyone racing to do the same thing. You must build, and you have to do it in a certain time, and the money has to be committed. The gain has to be realized and committed and in place. And you have to go, go, go. Go-Go Gadget. You could see some of this stuff really get built without the demand in place or a balanced community. So, I don't even know -- I don't know anything about the infrastructure of these. What are supposedly blighted and many are not. As you may know, all of downtown Portland is in an opportunity zone. That is not blighted district. So, there was a lot of political giftsmanship that went around designation, and only in Washington would they say that, oh, this helps the poor. It didn't really. I mean.

Tim Hayes -- B. Riley FBR -- Analyst

Got it. Appreciate the comments there, Barry.

Jeff DiModica -- President

Operator, I think that's the end.

Operator

Ladies and gentlemen, we have reached the end of the question and answer session. Now I would like to turn the call back to Mr. Barry Sternlicht for closing remarks.

Barry Sternlicht -- Chief Executive Officer and Chairman

Well, thank God the call's over, because I'm exhausted. And I hope I wasn't too difficult on my friends in the analyst community. But we really would love you to dig under the table and look at this company in detail compared to its peers in the comp set, because it's not a mono-line company. But that's our strength, not our weakness. And I'm aware of things like we're in need of going into cold storage, and Toys'R'Us, and J.C. Penney. That's not what we're doing here. We're actually just building other product lines where we can deploy capital, and the highest returns for the lowest amount of risk. So, thank you, and I hope you all have a great weekend. Thank you.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Duration: 64 minutes

Call participants:

Zach Tanenbaum -- Head of Investor Strategy

Rina Paniry -- Chief Financial Officer

Jeff DiModica -- President

Barry Sternlicht -- Chief Executive Officer and Chairman

Adam Behlman -- President, Real Estate Investing and Servicing Segment

Doug Harter -- Credit Suisse -- Analyst

Steven Delaney -- JMP Securities -- Analyst

Rich Shane -- J.P. Morgan -- Analyst

Jade Rahmani -- KBW -- Analyst

Stephen Laws -- Raymond James -- Analyst

Tim Hayes -- B. Riley FBR -- Analyst

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