Financial Data and Key Metrics Changes - In Q1 2026, net sales decreased by 3.3%, with organic net sales down 6% primarily due to softness in the Home and Personal Care business and an accelerated seasonal inventory build from the previous year [17] - Adjusted EBITDA for the quarter was $62.6 million, a decrease of $15.2 million, driven by lower volume and reduced gross margins [19] - Gross profit decreased by $16.2 million, with a gross margin of 35.7%, down 110 basis points [18] Business Line Data and Key Metrics Changes - Global Pet Care reported net sales increased by 8.3%, with organic net sales up 5.8%, driven by strong performance in companion animal and aquatics categories [21] - Home and Garden net sales decreased by 19.8%, aligning with historical averages for the first quarter, which is typically the slowest sales quarter [26] - Home and Personal Care saw reported net sales decrease by 7.6%, with organic net sales down 11.1%, impacted by higher inventory levels at a retailer following a weaker holiday season [31] Market Data and Key Metrics Changes - North America showed growth in the Global Pet Care segment, with sales increasing in both companion animal and aquatics [21] - EMEA sales in Global Pet Care decreased in the low single digits, primarily due to a decline in dog and cat food sales following a portfolio refresh [22] - LATAM region experienced high teens growth in Home and Personal Care, driven by positive consumer reactions to new product launches [32] Company Strategy and Development Direction - The company aims to maintain a healthy balance sheet and focus on operational excellence, with a disciplined approach to investments and a commitment to innovation [10][12] - The strategic priority includes transformation, with expectations for both Global Pet Care and Home and Garden businesses to return to growth in fiscal 2026 [13][15] - The company is optimistic about the evolving M&A landscape and aims to be a consolidator of choice in its categories [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the most significant impacts from tariff disruptions and macroeconomic volatility are largely behind them, with early signs of recovery in consumables [5] - The company anticipates continued softness in global consumer demand within Home and Personal Care categories, with expectations for improvement in the second half of the fiscal year [37] - Management reiterated expectations for flat to low single-digit growth in net sales and low single-digit growth in Adjusted EBITDA for fiscal 2026 [45] Other Important Information - The company generated nearly $60 million of adjusted free cash flow in Q1 and repurchased approximately 600,000 shares [8] - A new $300 million share repurchase program has been authorized by the board [8] - The company ended the quarter with a cash balance of $126.6 million and $492.2 million available on its cash flow revolver [20] Q&A Session Questions and Answers Question: Do you agree with a competitor's assessment that the pet market has reached a bottom? - Management refrained from making predictions about market bottoms but expressed satisfaction with the new leadership and market share gains in the pet segment [48][49] Question: How committed are retailers to the garden category this upcoming season? - Management expressed bullishness on the Home and Garden business, citing strong POS trends and successful new product launches [50][51] Question: Can you discuss the anticipated improvement in sales growth for the year? - Management indicated that while the pet business is expected to continue growing, Home and Garden may see a more back-half weighted growth story due to disciplined inventory management by retailers [56][58] Question: Are investment levels in brands where you want them? - Management stated that investment levels are appropriate for Global Pet Care and Home and Garden, but there may be a pullback in Home and Personal Care investments based on recovery timing [62][64] Question: Can you elaborate on the innovation pipeline for FY 2026? - Management confirmed a strong pipeline of new products for both Home and Garden and Global Pet Care, with plans for expanded distribution [66]

Great Elm Group (NasdaqGS:GEG) Q2 2026 Earnings call February 05, 2026 08:30 AM ET Speaker3Greetings and welcome to the Great Elm Group Fiscal 2026 second quarter conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce yo ...

Core Insights - Moelis & Company (MC) reported better-than-expected fourth-quarter 2025 results, with adjusted earnings of $1.13 per share, significantly exceeding the Zacks Consensus Estimate of 76 cents, although the bottom line declined 4% year-over-year [1][9] - The company experienced a revenue increase of 11% year-over-year to $487.9 million, surpassing the Zacks Consensus Estimate of $428.6 million [3][9] - Total operating expenses rose 17% year-over-year to $359.9 million, driven by increased compensation and benefits costs [4][9] Financial Performance - For the full year 2025, adjusted earnings were $2.99 per share, exceeding the Zacks Consensus Estimate of $2.61, and reflecting a 64% increase from the previous year [2] - Net income on a GAAP basis was $233 million for 2025, compared to $136 million in 2024 [2] - Other income for the quarter was $10 million, up 65% from the prior-year quarter, exceeding projections of $7.9 million [4] Liquidity and Share Repurchase - As of December 31, 2025, the company held cash and liquid investments totaling $848.8 million, with no debt or goodwill [5] - In the reported quarter, MC repurchased 0.7 million shares at an average price of $62.96 per share and approved a new share repurchase authorization of up to $300 million [6][9] Strategic Outlook - The company's global expansion initiatives, higher average fees, and diverse operations across sectors are expected to support future growth [7] - However, a hiring spree and rising revenue-related compensation may negatively impact bottom-line growth [7]

Financial Data and Key Metrics Changes - Gross written premiums for Q4 2025 were $4.3 billion, an 8.6% decrease in constant dollars, primarily due to the exit from the commercial retail business and targeted reductions in U.S. casualty lines [16][5] - Net investment income increased to $562 million, significantly up from the prior year, driven by growth in the fixed income portfolio and strong performance from limited partnerships [24][5] - The combined ratio for the quarter was 98.4%, including $216 million of catastrophe losses and $122 million of adverse development cover premium [6][16] - Operating return on equity (ROE) was 14.2%, with a total shareholder return (TSR) of 13.1% for the year [15][4] Business Line Data and Key Metrics Changes - The reinsurance business generated $255 million of underwriting income, with gross written premiums decreasing by 3.6% in constant dollars [19][7] - The insurance segment saw gross written premiums decrease by 20.1% in constant dollars to $1.1 billion, with growth in accident and health and other specialty lines offset by lower retention in the commercial retail business [21][10] - The attritional combined ratio improved to 89.9%, reflecting strong underlying performance despite challenges in the casualty lines [17][6] Market Data and Key Metrics Changes - Property catastrophe rates decreased by an average of 10% globally during the January 1 renewals, while the company managed to bind over $6.3 billion of premium, down just under 1% from expiring [7][8] - The company retained over 95% of enforced premium with top-tier accounts while selectively reducing exposure to less profitable deals [8][9] - The global specialty book is now approximately $2 billion in premium, with an attritional loss ratio in the mid-80s [8][11] Company Strategy and Development Direction - The company focused on simplifying operations, reducing reserve risk, and strengthening the balance sheet, positioning itself for improved performance and consistent returns [4][15] - The divestiture of the commercial retail business is expected to create short-term pressure on the group expense ratio, but this is anticipated to subside in the coming quarters [10][9] - The Global Wholesale and Specialty platform is positioned to generate reasonable underwriting profits, with a focus on expertise-driven underwriting discipline and strong distribution relationships [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite a challenging market, noting that the stock price does not reflect the firm's value [14][15] - The company expects to continue share repurchases as a use of excess capital, with $400 million repurchased in Q4 and an additional $100 million in January 2026 [25][26] - Management anticipates a lower growth environment in 2026, which will reduce pressure to support significant growth [42][43] Other Important Information - The company completed all reserve studies for the year, with a robust position in reinsurance driven by short-tail and specialty lines [13][23] - The attritional loss ratio improved to 68.6% in the insurance segment, while the underwriting-related expense ratio increased due to lower casualty net earned premium growth [22][21] - The company expects approximately $150 million in restructuring charges throughout 2026 related to the exit from the commercial retail insurance business [18][19] Q&A Session Summary Question: What is the expected expense ratio for the Global Wholesale and Specialty business? - The company expects the expense ratio to be in the 6%-7% range for the year, potentially settling at the lower end of 6% by 2027 [30][31] Question: How does the company view reinsurance pricing trends? - Management anticipates rates on property CAT to decline in the 10%-15% range, with a focus on maintaining adequate returns on capital [34][35] Question: What is the company's approach to capital deployment and buybacks? - The capital position is strong, and management plans to continue share buybacks as a primary use of excess capital, especially given the current valuation [42][43] Question: Is the company considering M&A opportunities? - While the company has the capacity for M&A, any potential transactions would need to compete with the value of share repurchases and would likely be small and strategic [77][78] Question: How does the company view its future in the insurance segment? - Management emphasizes that profitability, rather than size, will be the measure of success in the insurance segment, with a focus on underwriting profits [59][60]

Financial Data and Key Metrics Changes - For Q4 2025, gross written premiums were $4.3 billion, an 8.6% decrease in constant dollars, primarily due to the exit from the commercial retail business and targeted reductions in U.S. casualty lines [15][4] - Net investment income increased to $562 million, significantly up from the prior year, driven by growth in the fixed income portfolio and strong performance from limited partnerships [22][4] - The combined ratio for the quarter was 98.4%, including $216 million of catastrophe losses and $122 million of adverse development cover premium [15][4] - The attritional combined ratio improved to 89.9%, reflecting the underlying strength of the book and focus on margin development [16][4] Business Line Data and Key Metrics Changes - The reinsurance business generated $255 million of underwriting income, with a disciplined approach leading to strong performance [5][4] - Gross written premiums in reinsurance decreased by 3.6% in constant dollars, while property cat XOL grew by 10.1% when excluding reinstatement premiums [18][4] - In the insurance segment, gross premiums written decreased by 20.1% in constant dollars to $1.1 billion, with growth in accident and health offset by lower retention in the commercial retail business [19][4] Market Data and Key Metrics Changes - Market conditions softened in the January 1 renewals, with property cat rates down an average of 10% globally, while remaining above required technical prices [5][4] - The company retained over 95% of enforced premium with top-tier accounts, while selectively reducing exposure to less profitable deals [6][4] - Attractive opportunities were noted in Asia, particularly in the new India branch and targeted specialty lines [7][4] Company Strategy and Development Direction - The company simplified operations, reduced reserve risk, reshaped the portfolio, and strengthened the balance sheet in 2025, positioning itself for improved performance [3][4] - The divestiture of the commercial retail business is expected to create short-term pressure on the group expense ratio, but this is anticipated to subside in future quarters [9][4] - The focus will be on driving underwriting income growth rather than merely increasing top-line revenue, with a broad appetite for various risks while maintaining depth in expertise [59][4] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite challenges in the operating environment, including social inflation and legal system abuses [11][4] - The stock price does not reflect the company's value, leading to prioritization of share repurchases as a use of excess capital [12][4] - The company expects to generate significant levels of net income in 2026, supporting ongoing buybacks and capital management strategies [41][4] Other Important Information - The company completed all reserve studies for the year, with robust positions in reinsurance driven by short-tail and specialty lines [21][4] - The attritional loss ratio improved to 68.6% in the insurance segment, with a disciplined approach to setting loss picks in U.S. casualty lines [20][4] - The company plans to report three segments beginning in 2026: treaty reinsurance, global wholesale and specialty insurance, and the other segment encompassing the exited commercial retail business [21][4] Q&A Session Summary Question: What is the expected expense ratio for the Global Wholesale and Specialty business? - Management expects the expense ratio to be on the lower end of 6% as they enter 2027, with significant improvements anticipated over time [29][30] Question: How does the company view reinsurance pricing and market share? - Management anticipates rates to remain under pressure, with a focus on maintaining adequate returns rather than pursuing market share aggressively [32][40] Question: What is the company's capital position and approach to buybacks? - The capital position is strong, with expectations for significant excess capital to support ongoing buybacks, particularly given the current discounted share price [41][42] Question: Is the company considering M&A opportunities? - While M&A is an option, any potential transactions would need to compete with the high return on capital from share repurchases, and would likely be small and strategic [76][77]

Financial Data and Key Metrics Changes - The company reported record 2025 full-year core earnings per share of $4.71, a 39% increase over the prior year, with a shareholder return on equity of 12.4% [4][15] - Total revenues increased by 7% year-over-year, with net premiums and contract deposits earned also up more than 7% [4][15] - Core earnings for 2025 were $196 million, reflecting strong underlying profitability across the business [15][19] Business Line Data and Key Metrics Changes - In Property and Casualty (P&C), the underlying combined ratio improved to 84.3%, a 5-point improvement year-over-year, with sales increasing by 6% [5][19] - Auto reported a combined ratio of 96.5%, improving nearly 2 points over the prior year, with policyholder retention stable at 84% [6][19] - Life and Retirement saw record life sales in Q4, up 21% year-over-year, with retirement deposits increasing by 4% [6][21] - Individual Supplemental sales increased nearly 40% year-over-year, while Group Benefits recorded a 33% increase [4][7] Market Data and Key Metrics Changes - The company expanded its distribution organization significantly, increasing points of distribution by 15% across all channels [8] - Unaided brand awareness reached 35% in 2025, up from less than 10% a year ago, indicating strong market recognition [7][8] Company Strategy and Development Direction - The company aims for a 10% average compound annual growth rate in core EPS and a sustainable 12%-13% shareholder return on equity over the next three years [11][26] - Investments in marketing, infrastructure improvements, and product expansion are prioritized to support sustained profitable growth [11][12] - The introduction of the Horace Mann Club aims to provide educators with financial wellness tools and resources, enhancing community engagement [9] Management Comments on Operating Environment and Future Outlook - Management noted that 2025 benefited from unusually light severe weather activity, with pre-tax catastrophe losses of $62 million contributing positively to core earnings [5][10] - The company does not expect a similarly low level of catastrophe losses in 2026 or subsequent years, indicating a cautious outlook [10][18] - Management expressed confidence in achieving long-term financial targets while navigating a competitive environment [26] Other Important Information - The company repurchased $21 million of shares in 2025, the highest annual level since 2022, with an additional $50 million authorization for share repurchases [14][25] - The early retirement offering was taken up by about 8% of eligible employees, aimed at aligning the workforce with future needs [56][59] Q&A Session Summary Question: Distribution initiatives and policy count growth outlook - Management indicated that 2025 was the strongest year for distribution, with significant sales momentum and increased brand awareness [30][31] Question: EPS outlook for 2026 and growth acceleration - Management confirmed expectations for a 10% annual EPS growth rate and anticipated accelerating top-line growth due to investments made [32][34] Question: Catastrophe loss assumptions in guidance - Management clarified that the $90 million catastrophe loss assumption for 2026 is based on a consistent year-over-year approach, not influenced by prior year developments [36][37] Question: Early retirement offering participation - Approximately 8% of eligible employees participated in the early retirement offering, aimed at workforce planning [56][59] Question: Free cash flow conversion targets - The company achieved about 80% free cash flow conversion in 2025 and targets over 75% for 2026, supported by capital-efficient business growth [63][64] Question: Investment in Supplemental and Group segment - Management expressed satisfaction with progress in Individual Supplemental and Group Benefits, with strong sales and distribution efforts [70][72]

Financial Data and Key Metrics Changes - Horace Mann reported record 2025 full-year core earnings per share of $4.71, a 39% increase over the prior year, with a shareholder return on equity of 12.4% [4][15] - Total revenues increased by 7% year-over-year, with net premiums and contract deposits earned also up more than 7% [4][15] - Core earnings for 2025 were $196 million, reflecting strong underlying profitability across the business [15][19] Business Line Data and Key Metrics Changes - In Property and Casualty (P&C), core earnings were $112 million, more than double the prior year, with a reported combined ratio of 89.7, improving over 8 points year-over-year [19] - Auto net written premiums increased to $502 million, with a combined ratio of 96.5, improving nearly 2 points [19] - Life and retirement segment saw core earnings increase by 13% to $61 million, with net premiums written and contract deposits growing to $612 million, up 7% year-over-year [21] - Individual supplemental sales increased nearly 40% year-over-year, while group benefits recorded a 33% increase [6][22] Market Data and Key Metrics Changes - Unaided brand awareness reached 35% in 2025, up from less than 10% a year ago, indicating significant growth in market recognition [7] - New business customer interactions increased by 37% in the fourth quarter, reflecting improved marketing effectiveness [8] Company Strategy and Development Direction - The company aims for a 10% average compound annual growth rate in core EPS and a sustainable 12%-13% shareholder return on equity over the next three years [11][26] - Investments in marketing, infrastructure improvements, and product expansion are prioritized to support sustained profitable growth [12][14] - The introduction of the Horace Mann Club aims to enhance engagement with educators and provide financial wellness tools [9] Management's Comments on Operating Environment and Future Outlook - Management noted that 2025 benefited from unusually light severe weather activity, with pre-tax catastrophe losses of $62 million contributing positively to core earnings [5] - The company expects a normalized core earnings per share guidance range of $4.20-$4.50 for 2026, reflecting a nearly 10% increase [11][17] - Management expressed confidence in achieving long-term financial targets despite potential macroeconomic uncertainties [26] Other Important Information - The company repurchased $21 million of shares in 2025, the highest annual level since 2022, with an additional $50 million authorization in May [14][25] - The early retirement offering was taken up by about 8% of eligible employees, aimed at aligning the workforce with future needs [56][59] Q&A Session Summary Question: Distribution initiatives and policy count growth outlook - Management indicated strong sales momentum driven by distribution efforts, with brand awareness and website traffic significantly increasing [30][31] Question: EPS outlook for 2026 and growth acceleration - Management confirmed expectations for a 10% annual earnings per share growth rate, with anticipated accelerating top-line growth due to investments made [33][34] Question: Catastrophe loss assumptions and reinsurance program - Management clarified that the catastrophe loss guidance for 2026 is based on a consistent approach, not influenced by one year's results [36][37] Question: Early retirement offering participation - Approximately 8% of eligible employees participated in the early retirement offering, aimed at workforce planning [56][59] Question: Investment in supplemental and group segment - Management expressed satisfaction with progress in individual supplemental and group benefits, with strong sales and distribution efforts [70][72]

Financial Data and Key Metrics Changes - Horace Mann reported record full-year core earnings per share of $4.71, a 39% increase over the prior year, with a shareholder return on equity of 12.4% [4][16] - Total revenues increased by 7% year-over-year, with net premiums and contract deposits earned also up more than 7% [4][16] - Core earnings for 2025 were $196 million, reflecting strong underlying profitability across the business [16] Business Line Data and Key Metrics Changes - In Property and Casualty (P&C), core earnings were $112 million, more than double the prior year, with net written premiums increasing by 7% to $830 million [20] - The reported combined ratio for P&C improved to 89.7, an improvement of over 8 points year-over-year [20] - Life and retirement segment saw core earnings increase by 13% to $61 million, with net premiums written and contract deposits growing to $612 million, up 7% year-over-year [22] - Individual supplemental sales increased by nearly 40% year-over-year, while group benefits recorded a 33% increase [6][24] Market Data and Key Metrics Changes - Unaided brand awareness reached 35% in 2025, up from less than 10% a year ago, indicating significant growth in market recognition [8] - New business customer interactions increased by 37% in the fourth quarter, reflecting enhanced marketing and distribution efforts [9] Company Strategy and Development Direction - The company aims for a 10% average compound annual growth rate in core EPS and a sustainable 12%-13% shareholder return on equity over the next three years [12][28] - Investments in marketing, infrastructure improvements, and product expansion are prioritized to support long-term growth [12][13] - The introduction of the Horace Mann Club aims to provide educators with financial wellness tools and resources, enhancing community engagement [10] Management's Comments on Operating Environment and Future Outlook - Management noted that 2025 benefited from unusually light severe weather activity, with pre-tax catastrophe losses of $62 million contributing positively to core earnings [5] - The company expects a normalized core earnings per share guidance range of $4.20-$4.50 for 2026, reflecting a nearly 10% increase [12][18] - Management expressed confidence in achieving long-term financial targets while navigating a competitive environment [28] Other Important Information - The company repurchased $21 million of shares in 2025, the highest annual level since 2022, with an additional $50 million authorization in May [14][27] - The early retirement offering was taken up by about 8% of eligible employees, aimed at aligning the workforce with future needs [58][59] Q&A Session Summary Question: Distribution initiatives and policy count growth outlook - Management highlighted strong sales momentum driven by distribution efforts, with brand awareness and website traffic significantly increasing [31][32] Question: EPS outlook for 2026 and growth acceleration - Management confirmed expectations for a 10% annual earnings per share growth rate, with accelerating top-line growth anticipated as investments yield results [34][36] Question: Catastrophe loss assumptions and reinsurance program - Management clarified that the $90 million catastrophe loss assumption for 2026 is based on consistent year-over-year approaches and does not include prior year development in planning [39][40] Question: Increase in educator household access - Management noted a significant increase in accessible educator households due to strategic marketing and partnerships, contributing to overall growth [44][51] Question: Long-term target for net interest spread in retirement - Management reaffirmed a target of a 200 basis point spread for fixed annuities, although 2025 performance was impacted by underperformance in commercial mortgage loans [52] Question: Early retirement offering participation - Management reported a satisfactory participation rate in the early retirement offering, aimed at workforce planning and future skill alignment [58][61] Question: Investment in supplemental and group segment - Management expressed confidence in the growth and earnings diversification from individual supplemental and group benefits, with favorable benefit ratios expected to normalize [71][76]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported a GAAP net loss of -$32 million or -$0.49 per share, with a book value of $13.04 as of December 31 [3] - Distributable earnings were $14 million or -$0.22 per share, and a cash dividend of $0.25 was paid for the quarter [3] Business Line Data and Key Metrics Changes - New originations in Q4 totaled $424 million, surpassing repayments of $380 million, indicating a positive trend in loan origination [8] - Over 75% of new originations were concentrated in multifamily and industrial loans, which are showing resilient fundamentals [5] Market Data and Key Metrics Changes - The company ended the year with over $880 million in liquidity, including $85 million in cash and $700 million in undrawn capacity on the corporate revolver [9] - The weighted average risk rating on the portfolio is 3.2, with a debt-to-equity ratio of 2.2 times and a total leverage ratio of 3.9 times, consistent with target ranges [9] Company Strategy and Development Direction - The company aims to strengthen its liquidity position and has successfully closed a $650 million term loan B, reducing the coupon to SOFR plus 250 basis points [4] - A focus on geographic diversification was highlighted, with the company closing its first loan in Europe, which is part of a strategic effort to build its real estate credit platform [4][5] - The company plans to implement an aggressive resolution strategy for watchlist assets and select office assets to compress the discount of its stock price to book value [6] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the market improving and highlighted the importance of engaging with tenants to optimize asset monetization [7] - The dividend policy is under active evaluation as part of a broader capital allocation discussion, balancing near-term earnings visibility with long-term shareholder value [7] Other Important Information - The company downgraded certain loans to risk rating 5, resulting in total incremental CECL provisions of $44 million during the quarter [8] - The company repurchased over $9 million of common stock at a weighted average share price of $8.24 during the quarter, with a total of $43 million repurchased for the full year [10] Q&A Session Summary Question: Will KREF consider a complete overhaul of its business if the stock does not recover? - Management indicated that they are focused on executing their current business plan and believe that progress on REO will lead to better market recognition [12][13] Question: What does success look like for the company by the end of 2026? - Success is defined as monetizing or liquidating the majority of the watchlist and REO assets, with a focus on clarity in the office portfolio [16][18] Question: Will there be a significant portion of the portfolio under-earning in 2026? - Management noted that while some assets are underperforming, they expect contractual payments to continue and see potential upside from resolving REO assets [25][27] Question: How is the dividend policy being evaluated? - The company is taking a rational financial approach to the dividend, focusing on empirical data rather than market sentiment [28][29] Question: What is the outlook for commercial real estate credit demand? - There is an increasing allocation to real estate credit, with institutional investors shifting focus back to the sector, particularly in opportunistic and value-add areas [48][50] Question: How have recent rate cuts affected interest in REO assets? - Management believes that rate cuts are helping liquidity in the market, although the overall sentiment for real estate is positive due to a lack of sellers [54][55] Question: What makes an office loan attractive today? - The company is focused on lending to newer, high-quality assets with stabilized cash flows and long-term leases, minimizing leasing risk [58][59]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported a GAAP net loss of $32 million or $0.49 per share, with a book value of $13.04 as of December 31 [3] - Distributable earnings were $14 million or $0.22 per share, and a cash dividend of $0.25 was paid for the quarter [3] Business Line Data and Key Metrics Changes - The company experienced $1.5 billion in repayments, consistent with 2024 levels, and $1.1 billion in new originations, with over 75% of new originations concentrated in multifamily and industrial loans [5] - The company is focused on maintaining and selectively growing the portfolio within on-theme asset classes and top-tier MSAs [6] Market Data and Key Metrics Changes - The company ended the year with over $880 million in liquidity, including $85 million in cash and $700 million in undrawn capacity on the corporate revolver [10] - The weighted average risk rating on the portfolio is 3.2, with a debt-to-equity ratio of 2.2 times and a total leverage ratio of 3.9 times [10] Company Strategy and Development Direction - The company aims to execute an aggressive resolution strategy for a significant portion of its watchlist assets and select office assets to compress the discount of its stock price to book value [6] - The company is strategically building its real estate credit platform in Europe, having closed its first loan in the region [4] Management's Comments on Operating Environment and Future Outlook - Management noted that 2026 will be a year of transition, with a focus on repositioning the loan portfolio for improved earnings [6] - The market is improving, and management remains engaged with tenants, particularly regarding the Mountain View asset [7] Other Important Information - The company repurchased over $9 million of common stock at a weighted average share price of $8.24 during the quarter, with a total of $43 million repurchased for the full year [10][11] - The board is actively evaluating the dividend as part of a broader capital allocation discussion [8] Q&A Session Summary Question: Will KREF consider a complete business revamp if the stock does not pull to par? - Management expressed optimism about the portfolio's recognition and emphasized the importance of executing their business plan [13][15] Question: What does success look like by the end of 2026? - Management indicated the goal is to liquidate the vast majority of the watchlist and clarify the office portfolio, with significant progress expected on REO assets [16][18] Question: Will there be a significant portion of the portfolio under-earning in 2026? - Management acknowledged some assets are dragging down earnings but emphasized the potential for near-term opportunities to convert REO assets into performing loans [24][25] Question: How is the company viewing the demand for commercial real estate credit? - Management noted increased allocations to real estate credit and equity, with a shift back into the sector observed among institutional allocators [46][48] Question: Have recent rate cuts increased interest in REO assets? - Management indicated that rate cuts are helping liquidity in the market, with a noted lack of sellers at opportunistic prices [53][54] Question: What makes an office loan attractive today? - Management stated that lending on newer, high-quality assets with stabilized cash flows is where they see attractive opportunities [56][57]