Good day, and welcome to the Colony Credit Real Estate, Inc. First Quarter 2020 Earnings Call. Please note that today's conference is being recorded..

And at this time, I'd like to turn the conference over to Mr. David Palamé. Please go ahead, sir. .

Good afternoon, and welcome to Colony Credit Real Estate Inc.'s First Quarter 2020 Earnings Conference Call. We will refer to Colony Credit Real Estate, Inc. as CLNC, Colony Credit Real Estate, Colony Credit or the company throughout this call.

Speaking on the call today are the company's President and Chief Executive Officer, Mike Mazzei; Chief Operating Officer, Andy Witt; and Chief Financial Officer, Neale Redington. Chief Accounting Officer, Frank Saracino, is also on the line to answer questions. .

Before I hand the call over, please note that on this call, certain information presented contains forward-looking statements. These statements are based on management's current expectations and are subject to risks, uncertainties and assumptions.

Potential risks and uncertainties could cause the company's business and financial results to differ materially.

Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on the financial condition, results of operations, cash flows and performance of the company, its borrowers and tenants, the real estate market and the global economy and financial markets.

The extent to which the COVID-19 pandemic impacts us, our borrowers and our tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.

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For a discussion of risks that could affect results, please see the Risk Factors section of our most recent 10-K and other forward-looking statements in the company's current and periodic reports filed with the SEC from time to time, cautioning that interpretation of many of the risks should be heightened as a result of the ongoing and numerous adverse impact of the COVID-19 pandemic.

All information discussed on this call is as of today, May 7, 2020, and the company does not intend and undertakes no duty to update for future events or circumstances. In addition, certain financial information presented on this call represents non-GAAP financial measures.

The company's earnings release and the supplemental presentation, which was released this afternoon and is available on the company's website, presents reconciliations to the appropriate GAAP measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors. .

And now I'd like to turn the call over to Mike Mazzei, President and Chief Executive Officer of Colony Credit Real Estate.

Mike?.

Thank you, David. First, on behalf of the CLNC management team, we would like to begin by wishing everyone well as we navigate through these uncertain times. Our employees are safe in their remote working locations, where in many cases, their work lives and personal lives have fused together.

I want to thank them for their warm virtual welcomes, work ethic and positive energy, especially in these challenging times. I myself officially joined on April 1 and was able to promptly integrate remotely. In fact, the transition to a virtual workplace for the CLNC team and myself has been quite seamless with the help of technology.

I have been fully engaged with all functional areas of the organization. The use of video meeting technology has allowed me to interact with all of my fellow colleagues. Our systems and controls are working well, including our treasury and banking functions, accounting and internal audit, asset management and legal. .

While Andy Witt, our COO, will address certain current business actions; and Neale Redington, our CFO, will address Q1 results shortly, I want to focus on what is happening today and the days ahead. Our asset managers continue to be in very close communication with our borrowers and tenants.

In light of everything our borrowers and tenants were dealing with, April was a successful month, with most borrowers and tenants paying on schedule, while we work with certain others to effectuate their payments. 99% of interest payments were made on our core loan portfolio.

However, in certain cases, we agreed to utilize some portion of current reserves toward loan payments. .

On the tenant side, the overall performance was strong. We will continue to evaluate comprehensive and creative ways to help both borrowers and tenants through these unprecedented circumstances resulting from COVID-19. .

To provide further insights into April, the entire combined loan portfolio, inclusive of legacy nonstrategic, 90% of loans by unpaid principal balance or 50 loans paid current. Of this amount, there were 4 loans or 14% by unpaid principal balance, which required accessing existing reserves.

Our owned real estate portfolio experienced 87% rent collections and those tenants unable to pay rent were primarily confined to retail tenants in our legacy nonstrategic portfolio. Across CLNC's core owned real estate portfolio, we remain current on all our investment level borrowings. .

With regard to our bank counterparties, we have worked closely with them in providing asset updates for the borrowing base and master repurchase agreements. I'm happy to report that the dialogue has been productive and all of our banking partners have been constructive.

We will continue to be actively engaged with our bank lenders in providing them asset updates. To be clear, maintaining and enhancing liquidity wherever possible, has been and will remain a top priority as we navigate through this difficult time.

Working cooperatively with our banking counterparties is essential to our ability to meet the challenges that we have faced and will continue to face. .

The capital markets continue to be volatile. And in some sectors, we are witnessing unprecedented events. While the Fed's multitrillion-dollar market programs have helped to stabilize bond and equity markets since March close, we feel many of the economic effects of COVID-19 are still unknowable.

This is especially the case in commercial real estate equity and debt markets. As such, the company is planning for a slower recovery with variation by region and property type, which we have incorporated into our business plans, in particular, for our hospitality investments. .

The commercial mortgage REIT sector has, too, been under pressure. Except for the GSE entities, commercial real estate lenders have generally taken a pause. Lenders of every type are focused on balance sheet and asset management. Therefore, we are also forecasting slower loan payoffs. .

It is within this context that we've been focused on preserving our capital. As we previously disclosed, we have taken a serious step of suspending our monthly dividend in an effort to maintain and preserve liquidity. We realize the importance of the dividend to our shareholders.

However, given the unprecedented circumstances of COVID-19, this was a prudent incremental step to support the balance sheet and to maximize the long-term value of the company and its assets.

When the economic environment comes into focus, and it is clear that our liquidity needs are met with a meaningful margin for error, we will revisit the dividend policy. .

Looking ahead, given the impact of COVID-19 on the broader economy, there will be challenges for commercial real estate. In the coming months, our emphasis will continue to be on asset and liability management and liquidity. We will continue to be vigilant in maintaining controls and procedures as we gradually transition back to the workplace.

We will continue to maintain an open dialogue with our shareholders, borrowers, tenants and banking constituents. It is impossible right now to predict with any reasonable certainty the impact of COVID-19 on our industry and on our business. But we know it has been and will be substantial. And we come to work every day with that as a backdrop. .

Finally, in terms of our business model, the substantial majority of most of our recent origination activities has been in smaller to moderate-sized senior mortgages, which fit well within CLO structures as we experienced with our $1 billion CLO execution in late 2019. We are taking a conservative posture today.

And when we together reach the other side of COVID-19, we look forward to growing this business model to take advantage of an attractive lending environment as owner/operators seek to recapitalize their assets. .

With that, I would now like to turn the call over to our Chief Operating Officer, Andy Witt.

Andy?.

Thank you, Mike. As previously highlighted and under the current circumstances, the primary focus of the organization is on asset and liability management with particular attention on liquidity.

As such, we've reorganized our resources around select high priority assets, future funding obligations and sources of financing and liquidity that may come through asset sales from both our legacy nonstrategic and core portfolios.

We will continue to examine opportunities to monetize investments on our balance sheet with an eye towards enhancing liquidity in the coming quarters. .

Prior to the onset of COVID-19, we initiated the process of selling legacy nonstrategic assets as a result of a broader corporate initiative, which has generated significant proceeds. We also reduced our exposure to warehouse line as a result of our $1 billion CLO CLNC issued in late 2019.

As previously reported, in October 2019, we executed on the securitization transaction, which resulted in the sale of $840 million of CLO notes, collateralized by a pool of 21 senior loans and participations that we originated with approximately 80% multifamily and office at close.

Most importantly, executing on the CLO removed exposure to mark-to-market financing on the $1 billion of senior loan collateral held in the securitization. .

Currently, we have $700 million of whole loan partial recourse repurchase financing collateralized by 22 positions. We have taken steps to minimize margin-related risk by negotiating margin holidays in return for a voluntary reduction of the advance rate.

During April, we established or agreed to terms, in certain cases, on various margin holidays with our 4 largest counterparty banks, which encompass our loan repo hospitality exposure. Paydowns have been managed collaboratively with our bank counterparties.

The agreements with the counterparty banks also provides beyond view with expanded permitted modification periods to work with our borrowers and navigate these uncertain times together. .

Turning to CMBS securities, our strategy utilized repurchase financing. When liquidity deteriorated late in the first quarter as a result of COVID-19, CLNC received margin calls on these finance securities. In total, since Q1 2020 began, CLNC has paid $91 million of margin calls or paydowns across this security portfolio.

Early in the second quarter, CLNC consolidated its repo financing with 1 counterparty bank. Working together with our lender, we agreed to buy down our advance rate in exchange for extending the term of the underlying debt through the end of June. .

Current outstanding borrowings are $124 million. The blended advance rate on our collateral is approximately 62%. In addition to extending the rollover term, such financings will not be subject to margin calls until the advance rate reaches 80% on the BBB bonds and 65% on the BBs.

The finance securities consist of 46 positions, of which 75% of the portfolio by value is BBB rated. .

Following the Fed's action, since mid-April, bond prices have been relatively stable. We continue to analyze the underlying collateral, review the remittance reports and monitor the portfolio in the context of potential COVID-19-related impact. .

The most notable impacts relate to the financial condition of our borrowers, including their ability to make their monthly mortgage payments and remain in compliance with loan covenants and terms. Failure of our borrowers to meet their loan obligations may trigger repayments to our bank, credit and master repurchase facilities.

As Mike previously noted, during the month of April, 99% of our core portfolio borrowers paid current. In addition, in the month of April, 95% of our tenants within the core net lease portfolio paid rent, which was sufficient to meet our debt service obligation. .

In the current environment, our focus in the near term will be on liquidity management to ensure that we are actively managing our sources and uses of liquidity. Our liquidity stands at approximately $250 million, and we will continue to enhance our liquidity position to prepare for the unknowns ahead.

We are managing the asset side of the balance sheet and year-to-date have sold or resolved 13 legacy nonstrategic assets, generating net proceeds of approximately $170 million. .

At this point, we have now disposed of 48% of the legacy nonstrategic portfolio, as measured by net carrying value. We currently classify 26 owned real estate properties, primarily within our legacy nonstrategic portfolio as held for sale, with a total net carrying value of $100 million as of quarter end.

Given the COVID-19 pandemic, we may not sell these properties in the near to medium term. Additionally, we are evaluating select asset sales from our core portfolio. We only intend to transact on sales where bids are consistent with our view of the underlying collateral value. .

Looking ahead, we do not anticipate any meaningful new deployment activity in the short term. However, we believe this uncertainty will ultimately give way to a favorable lending environment.

At the moment, we have reorganized the organization to focus squarely on our existing investments and are committed to working with borrowers, tenants, lenders and other counterparties to collectively navigate these unprecedented times. .

Now I will turn the call over to our Chief Financial Officer, Neale Redington. .

Thank you, Mike, and good afternoon, everyone. Before discussing our first quarter results, I would like to underscore a few items that will be included in our Form 10-Q filing tomorrow. We have provided further details in areas where, in our judgment, COVID-19 may most impact our balance sheet and liquidity.

We will provide tables identifying our hotel property loans as well as our mezzanine loans and preferred equity. There is also further information about April interest receipts, and we will provide specific loan level details for some larger investments that COVID-19 may have a material impact in the future. .

I also want to draw your attention to our supplemental financial report which is available on our website. It includes additional information on each of our business segments, in addition to a description on how we define core earnings.

This definition will exclude from core earnings, incremental changes in CECL reserves and gains, losses and impairments of real estate, including unconsolidated joint ventures and preferred equity investments, but will include provision for loan losses.

Further, core earnings will come solely from our core portfolio, while we will report legacy nonstrategic earnings separately. .

In addition, we continue to provide asset-by-asset details for all of our holdings in our supplemental financial report as well as Form 10-Q. We believe this added transparency will help investors and research analysts better understand our company and the value of our assets given the additional detail it provides about our 2 business segments.

Delineating our investments between core and legacy nonstrategic portfolios creates clarity around the core mission, and we envision our pro forma core portfolio to include senior and mezzanine loans, preferred equity, commercial real estate debt securities and net leased real estate.

Further, we believe it will facilitate a greater understanding of our company and the value embedded within its assets. .

Now turning to the quarter. For the first quarter, CLNC's core portfolio reported GAAP net loss of $35 million or $0.27 per share and core earnings of $46.2 million or $0.35 per share. Excluding provisions for loan losses of $2.3 million and realized gains on FX hedges of $8.6 million, core earnings was $40 million or $0.30 per share.

In addition, the company's legacy nonstrategic portfolio generated GAAP net loss of $43.8 million or $0.35 per share and LNS total earnings of $1.4 million or $0.01 per share, after excluding $36.8 million of provision for loan losses and $0.7 million of other realized gains. .

During the first quarter, we paid a monthly cash dividend of $0.10 per common share for the months of January, February and March. The dividends paid in the first quarter were more than fully covered at 100% of core earnings, excluding onetime gains and losses. .

As previously noted, due to the extraordinary volatility and unprecedented market conditions, we have concluded that it is prudent and in the best interest of the company to conserve available liquidity and suspend the company's monthly cash dividend, beginning with the monthly period ending April 30, 2020.

The Board will evaluate dividends in future periods based on customary considerations. Importantly, the company continues to monitor its taxable income to ensure that the company meets the minimum distribution requirements to maintain its status as a REIT. .

In terms of deployment, the company has not closed any new investments so far in 2020. Portfolio activity for the quarter included 3 full loan repayments of $68 million of gross proceeds, along with 5 partial repayments totaling $12 million of gross proceeds.

In addition, since year-end, there have been 13 LNS asset sales or resolutions for approximately $269 million gross proceeds and $170 million of net proceeds, representing an approximately $3 million gain or a 2% premium to GAAP net carrying value. .

Overall, asset dispositions within the LNS portfolio have been quicker than previously projected. We have been an embedded source of liquidity in this period of uncertainty.

Since announcing this strategy in November of 2019, we have sold or resolved 18 legacy nonstrategic assets for approximately $291 million gross sale proceeds and $192 million net sale proceeds.

In addition, 2 assets are now under contract for approximate $23 million of gross sale proceeds and 22 assets with a GAAP net carrying value of $100 million and now is listed for sale. Altogether, this represents approximately 53% of the LNS portfolio by net carrying value that has been resolved or is under contract. .

Given the immediate and significant detrimental impact of COVID-19 on our assets, we have taken additional steps to evaluate specific loan loss reserves in addition to implementation of CECL, which I will discuss in a moment. While our exposure to the U.S.

hospitality industry is only 13% of our combined portfolio, we have previously described the challenges faced by 1,300-room hotel collateralizing our New York hospitality loans. On April 22, we entered into an agreement with the owners and operators of the hotel to permit a discounted loan payoff.

As a result, we recorded a $36.8 million impairment, or $0.28 per share, against this asset to reflect the resolution of this loan. Further, we have reported a $2.3 million loan loss reserve against a Minneapolis area hotel loan, reflecting the revised estimate of recovery value from that line. .

Turning to our core portfolio. Undepreciated book value stands at approximately $1.8 billion or $14.04 per share. Our loan book continues to be the largest segment with a carrying value of approximately $2.9 billion at quarter end. The blended unlevered yield on our loan book is approximately 7.5%, with an average loan size of $54 million.

Furthermore, the loan portfolio remains well diversified in terms of size, collateral type and geography. .

Moving to CRE debt securities within our core portfolio. The portfolio had a carrying value of $270 million at March 31 and predominantly consists of investment-grade rated securities. As of March 31, 2020, $207 million of such CRE debt securities were financed by master repurchase facilities.

We have met all margin calls under financing arrangements on our CMBS securities to the most recent call received and timely paid on March 26, 2020. This CMBS repo facility is subject to the recently agreed margin buffers and extension on rollover through June 2020 that Andy just addressed in his remarks. .

Also within our core portfolio, net leased real estate comprises 25% of the core portfolio and had a carrying value of $1 billion at the end of the first quarter. This portfolio consists of industrial and office properties with a weighted average lease term of 9.5 years.

As part of our enhanced disclosures implemented last year, we introduced risk ratings on all loans within our core portfolio in order to provide more detail regarding the credit and risk profile of our core business.

Our overall risk rating at the end of the first quarter was 3.8 compared with 3.1 in the prior quarter, primarily reflecting the increased risk resulting from the uncertainty related to COVID-19. .

Turning to our legacy nonstrategic portfolio. This segment is predominantly composed of operationally intensive owned real estate, all retail and certain other legacy loans originated prior to the formation of CLNC. Total GAAP net book value for this portfolio stands at approximately $196 million or $1.49 per share. .

Moving to our balance sheet. Our total at-share assets stood at approximately $5.4 billion as of March 31, 2020. Our debt-to-assets ratio was 60% at the end of the quarter, and our current liquidity stands at approximately $250 million between cash on hand and availability under our revolving credit facility.

Use of our revolving credit facility will continue to be a source of liquidity for the foreseeable future, and we are currently renegotiating the terms of the revolver with our bank syndicate.

These terms include a reduction in the facility size, a reduction in the tangible net worth requirement and certain limitations on dividends, stock repurchases and a focus on senior loan originations and capabilities to support our existing portfolio.

We believe this new arrangement will allow us the liquidity and the flexibility we need to manage our business in the near term. .

Lastly, I would like to comment on the current expected credit losses or CECL accounting standard, which was adopted by the company on January 1, 2020.

Based on our portfolio size and composition, we recorded a day 1 CECL reserve of $23 million and an additional reserve of $29 million during the first quarter as a result of the significant change to the economy caused by COVID-19. The combined impact of this new standard is an approximately $0.41 impact on our March 31, 2020, book value per share.

The CECL reserve will modulate in future periods through an adjustment to net income as our portfolio expands or contracts, the credit quality and risk attributes by loans improve or decline or overall market conditions strengthen or weaken. .

That concludes our prepared remarks. And with that, let's open up the call for questions.

Operator?.

[Operator Instructions] We will take our first question. And our first question comes from Stephen Laws. .

So I guess, Mike, first off, congratulations on joining the company. I know it's been an interesting first 40 days or so to do that, but congratulations on your new role. .

Thank you. .

Mike and Andy, I wanted to ask a question and kind of follow-up. Typically, I would have asked Mike kind of how you see things maybe a year or 2 down the road once you've been able to do this. I think it's probably an unfair question to ask that kind of outlook given the current environment.

But Andy, you mentioned assets being under review to look at possibly shifting from core and then redesignating into the LNS portfolio.

How do you see that process going? Is it simply, we're going to reevaluate that given the revolver and the focus on senior that we're going to get rid of mezz and preferred equity or even net lease? Or does it go the other way and strictly, we're going to take the new group and reevaluate every investment one by one and what -- even senior loans could maybe moved in LNS.

Can you give us some clarity of how you see the process going and how big it could be? And what time line do you think that review process will take place in?.

Well, thank you for the question, Stephen. Actually, I'll answer that. This is Mike. First of all, let me make one thing clear. In Andy's commentary, he wasn't suggesting that we were moving assets into LNS. I'm not sure if that's what you meant.

But we are looking at -- certainly, the LNS portfolio, we've had a good experience life-to-date on that in terms of executing on almost half of that portfolio, and we'll continue to do so. The time line might drag a little bit longer, but we will continue to do so.

Separately, as you heard in our prepared remarks, we're very focused on creating and enhancing more liquidity. And so to do that, we are also considering assets in our core portfolio. And we'll do that on an asset-by-asset basis. This is not a question of value. Holding value aside, long-term value aside, this is a question of liquidity. .

So when we look at an asset, we'll look at its size, look at how it's financed externally and internally. And if it's an asset that we think is marketable and can garner a good impact on our current liquidity, then we'll consider selling that asset.

And the price at which it goes out could be at its value or there could be some discount for liquidity in the marketplace, and we'll value that as well. So some of the assets that we're considering are some of our larger net lease assets, which really are good assets for a mortgage REIT, but we think that these assets are very marketable.

And so we're in various stages of discussions with potential buyers on assets. I can't promise an outcome, but we're certainly in discussions. Also in some of our preferred equity positions, we're in some discussions in marketing those as well.

As I said earlier, these are positions where we think they'll have the biggest impact on potentially capturing more liquidity. And I think we'll also look at some loan sales potentially in the core portfolio as well. .

Great, and thanks for correcting me. I listed my notes. It was stated in the prepared remarks to sell-out of the core portfolio. So thanks for the correction there. I wanted to touch base on the revolver.

Seems like a couple of covenants changed, but it gives you, it seems like, significant amounts of flexibility and other options by putting some term on that facility, and I think eliminating some mark-to-market risks.

But can you give us a little bit more detail what this allows you to do now? And then kind of piggybacking that, you mentioned, I think in the prepared remarks or the presentation, some preapproved or permitted modifications have already been preapproved or permitted.

So can you give us some examples of what those offerings are that you're going to your borrowers with that you already preapproved or permitted from the counterparty?. .

Stephen, I think you covered a couple of different things there, right? So one is the revolver, and perhaps I can address that to start with, and I may turn over to Andy, who, as you said, was talking about some of the margin holidays and the like. So in terms of the revolver, yes, we're very pleased with that.

I mentioned in my prepared remarks that we were working on that. And in fact, we have completed that arrangement. So we have moved a couple of things. One, the tangible net worth requirement has declined, and we think that will give us some flexibility as it relates to potential transactions that may come down the road.

As I think Mike has said, we don't really know what we don't know. There's a whole lot of things that could happen over the next few months. And as we look to preserve liquidity, that gives us some flexibility around opportunities for liquidity.

With that, we've reduced the facility size from 450 -- oh, from $560 million to $450 million, and that compares to borrowings of about $300 million. .

So overall, we're pleased with that. We had full support from all of the banks in that facility. There are some limitations that come with that around dividends and stock repurchases. But frankly, as we've been looking at liquidity, we'll be in that same boat anyway in terms of wanting to preserve liquidity.

So hopefully that answers the question around the revolver.

And with that, Andy, would you like to talk a little bit about some of the repo arrangement?.

Sure. Sure. Thank you, Neale. I think as it relates to the margin holidays, we've finalized agreements or agreed to terms with a number of our whole loan repo lenders. And the basic principle of those agreements has been a paydown of the advance rate in exchange for a margin holiday.

And generally, what that's included is a period of time in which to work with our borrowers under a predetermined set of modifications, and those may include forbearing interest, they may include the use of reserves, they may include waiving certain covenants to keep the property operating.

So those are a few of the things that we have worked out with our counterparty banks essentially. .

Great. And Mike, my last question, I think, or I can get back in the queue.

But management structure, I didn't -- I may have missed it, but I didn't hear a lot -- or any commentary, I don't think, but is that just -- should we consider just on holding definitely at this point? Are there still discussions going on with the -- at the Colony level or the Board? Can you give us any update or color on any progress or where we stand as of today with that?.

Thank you for the question. I think Colony Capital was pretty clear to put out a press release regarding this. I really have nothing more to add. The press release, really it's pretty clear that it's on pause now. Yes. Separately, I think that in this environment, that's common sense. A lot of these strategy things are put on pause.

So that, I think, is consistent with the overall market, but there was a press release to that effect. .

And our next question comes from Randy Binner from B. Riley. .

So yes, just to a number of questions. I guess the first is on the cash of the $255 million. I think that's a little bit lower than the last update, which I believe is $329 million.

Can you describe what caused that number to move lower?.

We've made some pay downs on the revolver. I think that was the main movement from our last situation. As I'm sure, Randy, you know there's a lot of evolving pieces here. So our liquidity projection involves a number of various outlays and the main ones that have happened in that short period of time are fundings to our existing investments.

So those deals where we have commitments to fund in the future, that's part of it. And then there have been some small paydowns on repo as we've negotiated some of the extensions of the margin holidays that Andy described, quite small numbers, and then also pay downs on the revolver. It's a combination of those 3 things. .

Great. And then I think you quoted a number that you've committed $91 million to date to margin call pay downs.

Is that correct, that's going to be all-in number since mid-March, call it?.

Yes. I think that's what Andy had described. And yes, that's a combination of either margin calls or paydowns associated with the repo facility extension, and that's on the CMBS side. .

All the $91 million in the CMBS book?.

Yes, that's right. .

Yes. Go ahead, please. So as we said the CMBS asset was... .

I was just going to add -- sorry, we had a delay. I just -- you described CRE debt securities.

That's all just CMBS, correct?.

That is correct. .

Okay.

And you were going to say that the $91 million is all in the CMBS?.

Yes. .

Okay. Then I'm kind of just taking a little bit of a step back. All this is really good detail. Can you -- I think that you talked about the debt-to-capital for the company overall kind of in the 50% to 60% range. So for me, it seems like a helpful way to kind of toggle, if you will, where the balance sheet is going to come together.

Is that still the right framework to think of from a debt leverage perspective?.

I think that's right, Randy. As we try to -- I mean we've described this in numerous calls and discussions with you that we're in sort of the 50% to 60% range. Mathematically, this quarter, that increased because of the drawdown on the line. But just conceptually, we still expect to be in that same range. .

Okay. And then just another... .

And just to play out the math -- I'm sorry, Randy, just to play out the math on that just by drawing down, if you add the same number to the numerator and denominator. That's why it's gone up for this period, but that was more as a result of the drawdown. If you took a look at sort of a net debt concept, that can get a little bit more consistent. .

Got it. Fair enough. And then can you -- I heard -- I think I heard you disclose around 50% of your legacy book thus far, and I think I heard a 48% number and a 53% number that resolved or under contract. So maybe the under contract was the bigger of those 2 numbers.

But, yes, is that the right way to think of it is that all that had started in legacy already 50% have been resolved?.

Yes, that's exactly the way to think about it, 50% or approximately 50% has now been resolved. .

Okay. That's great. And then yes, the comments around enhanced credit disclosures, Neale, in the 10-Q. Can you maybe flesh that out a little bit? Because it seems like you've provided improved credit disclosures in this slide deck as well.

So what is the further detail that we might expect to see in the Q?.

I'll actually address that. First of all, we provide more tables that we think are driven by the COVID environment, so tables that show where we use interest reserves and things like that by property type. So you'll see some of that fleshed out in the filing.

We also made sure that we -- because we moved risk ranking on about 30 assets this time we want to give you a column on this long listing that shows you the previous risk weighting and the current risk weighting. So you can see the move there.

And then we also broke out some disclosures on some of the larger -- 2 of the larger assets that we have to give some more narrative around those and more insight into those. .

Okay. That's great.

And then the New York hospitality loan, is that 100% resolved, which is $0.28 impairment, correct?.

That is absolutely 100% resolved. .

Okay. And then you said that the -- the overall book is still 13% hospitality.

That's for legacy and core and that's after the resolution of New York hospitality? Or is that the right-sizing for the go-forward hospitality share of the book?.

That is the core book. It's about $590 million, about 10 loans.

And generally speaking, listen, as we go forward, as I said in my prepared remarks, the thinking here is that once we get past this COVID-19, and we feel like we have an ample margin of buffer of liquidity, then you'll see the orientation toward more moderately sized loans, maybe the $25 million to $50 million, more senior loans that are better suited for CLO-type liability structures or CMBS conduit loan securitizations as well as triple net and less orientation toward margin loans and preferred equity and mezz.

.

Ladies and gentlemen, that does conclude our question-and-answer session for today. At this time, I'd like to turn the call back over to Mike Mazzei, Chief Executive Officer. .

Well, thank you for joining us, Colony Credit, and me for my first call with the team today. We look forward to our next call with you for second quarter earnings, which should be sometime in early August. In the meantime, please stay safe. And we wish you well. Thank you. .

Ladies and gentlemen, this does conclude our call today. On behalf of Colony Credit, we do appreciate your participation. At this time, you may disconnect. Have a great night. Thanks..