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Apollo Commercial Real Estate Fina (NYSE:ARI)
Q2 2021 Earnings Call
Jul 27, 2021, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Second Quarter 2021 Apollo Commercial Real Estate Finance Earnings Conference Call. [Operator Instructions] Please note that they are the property of Apollo Commercial Real Estate Finance, Inc., and that any unauthorized broadcast in any form is strictly prohibited. Information about the audio replay of this call is available in our earnings press release. I'd also like to call your attention to the customary safe harbor disclosure in our press release regarding forward-looking statements. Today's conference call and webcast may include forward-looking statements and projections, and we ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from these statements and projections.

In addition, we will be discussing certain non-GAAP measures on this call, which management believes are relevant to assessing the company's financial performance. These measures are reconciled to GAAP figures in our earnings presentation, which is available in the Stockholders section of our website. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. To obtain copies of our latest SEC filings, please visit our website at www.apolloreit.com, or call us at (212) 515-3200.

At this time, I'd like to turn the call over to the company's Chief Executive Officer, Stuart Rothstein. Sir, please begin.

Stuart A. Rothstein -- Chief Executive Officer, President

Thank you operator, and good morning, and thank you to those of us joining us on the Apollo Commercial Real Estate Finance second quarter 2021 earnings call. Joining me this morning, as usual, is Jai Agarwal, our CFO. The second quarter was a busy and productive one for ARI, resulting in strong earnings and a continued well-covered dividend. The company originated five first mortgage loans totaling $825 million, bringing year-to-date total originations to $1.4 billion. More importantly, the commercial real estate transaction market remains robust, with Real Capital Analytics reporting 167% increase in second quarter volume versus last year. For ARI, we continue to see a high volume of interesting opportunities as our pipeline continues to build. The diversity of the transactions closed to-date once again demonstrates the depth and talent of our origination team and highlights the benefits Apollo's platform brings to ARI.

Notably, the transaction secured by the German portfolio of properties and the U.S. portfolio of parking facilities were, one, due to our team's ability to speak for the entire loans and to be thoughtful, flexible and efficient in underwriting and structuring. Our European lending platform continues to fire on all cylinders, winning many transactions that would otherwise historically have gone to banks. Year-to-date, approximately 70% of our transactions completed were loans secured by properties throughout Europe. As our platform in Europe grows and continues to expand its market presence, we have established a reputation as a reliable, innovative capital provider. Our ability to provide borrowers with a one-stop shop for large financings, as well as our responsiveness and creativity around structuring has allowed us to compete very effectively in Europe.

With respect to loan repayments, ARI continued to benefit from improving real estate fundamentals and the robust level of liquidity in the real estate capital markets. three loans totaling approximately $260 million repaid during the quarter, including one hospitality loan and two subordinate residential for-sale loans, one of which was a large New York City project, and the other was for a condominium development in Los Angeles. Subsequent to the quarter, an additional $287 million of loans repaid as repayment activity in general is becoming more consistent with pre-pandemic expectations. Turning to the balance sheet. ARI completed an eight year $500 million debut offering of senior secured notes priced at 4.5/8%.

There was significant investor interest in the transaction, which enabled ARI to both upsize the deal and tighten pricing. Consistent with our prior commentary on corporate finance strategy, we felt it was prudent to continue to term out some of our financing, access additional non asset-specific leverage and increase our pool of unencumbered assets, which were north of $2 billion at quarter-end. Shifting to portfolios. Credit quality generally remains stable, and we continue to make progress with our focused loans. Demolition is moving forward at the property on Fulton Street in Brooklyn, which will be developed into an approximately 50 story, 600 unit multifamily tower. Given the pace of development and the strength of the Brooklyn submarket, we reduced the original reserve against this asset by $20 million. We also continue to see positive activity at our asset in the Miami Design District.

As I mentioned on our last earnings call, we signed a large lease with Restoration Hardware for a significant portion of the existing property. With the positive momentum in the submarket, we believe the appropriate path toward maximum economic recovery will be through additional short term leases, while we focus on working through zoning and planning to read the property for redevelopment as expeditiously impossible. Lastly, in Europe, the sales process on the asset underlying our Oxford Street loan is fully underway. In the second round of bidding, there were multiple credible offers in excess of ARI's loan basis, and we anticipate the sale of the asset and a full repayment to ARI before the end of the year. I also wanted to provide an update on 111 West 57th Street. The property is moving toward completion despite construction delays. We continue to see interest from potential buyers as evidenced by recent increases in foot traffic.

As I have previously stated, getting the project built to spec is the first order of business for ARI, and we are confident the building is on track to be completed. Once built, the price level and pacing of sales will be the next area of focus. But the increasing level of interest in this property, along with the recent activity in the broader New York ultra luxury market is encouraging. As we disclosed in the 10-K filed yesterday, subsequent to quarter-end, there were some changes to the property's capital structure. A vehicle managed by an affiliate of Apollo transferred their junior mezzanine position to ARI and in connection with this transfer, one of the properties' subordinate capital providers paid the affiliate a price representing the original principal balance and agreed to forgo the accrued interest on the loan.

In conjunction with this transaction, ARI and the subordinate capital provider have agreed to a waterfall sharing arrangement pursuant to which rather than the company receiving interest it would otherwise have been entitled to after July 1, 2021 on the junior mezzanine loan. Proceeds received from the sale or refinance of the underlying collateral after repayment to priority lenders under the waterfall will be shared between ARI and the subordinate capital provider at an agreed upon allocation. We will continue to provide updates on the project as construction completes and sales progress.

And with that, I will turn the call over to Jai to review our financial results.

Jai Agarwal -- Chief Financial Officer, Treasurer and Secretary

Thank you, Stuart. For the second quarter, we reported strong financial results, with distributable earnings prior to realized loss and impairments of $59 million or $0.41 per share. GAAP net income available to common stockholders was $64 million or $0.42 per share. As of June 30, our General CECL Reserve remained relatively unchanged quarter-over-quarter. With respect to the specific CECL reserve, we reversed $20 million against our Fulton Street loan, as we continue to make progress in readying the site for a multifamily tower development, as well as improvements in the Brooklyn multifamily market. We also foreclosed on a hotel asset in Washington, D.C. and recorded an additional $10 million loss, bringing our total loss against that asset to $20 million.

This is now reflected as a realized loss in our financial statements. GAAP book value per share prior to depreciation and General CECL Reserve increased to $15.48 as compared to $15.35 at the end of the first quarter. The loan portfolio at quarter end was $7.5 billion, a 16% increase since the end of 2020. The portfolio had a weighted average unlevered yield of 5.5% and the remaining fully extended term of just under three years. Approximately 89% of our floating rates U.S. loans have LIBOR floors that are in the money today, with a weighted average floor of 1.32%. In addition to the five loans originated this quarter, we made $246 million of add-on funding for previously closed loans. With respect to our borrowings, we are in compliance with all covenants and continue to maintain strong liquidity.

We ended the quarter with $227 million of total liquidity. Our debt-to-equity ratio at quarter end increased to 2.3 times as our portfolio migrated toward first mortgages. And lastly, as noted in our -- in the eight-K we filed last week, subsequent to quarter end, we exchanged our $169 million, 8% Series B preferred stock, a 7.1/4% Series B1 preferred stock in the same amount. This reduces our cost by 75 basis points per annum, and the preferred stock continues to be held by a single institutional investor.

And with that, we'd like to open the line for questions. Operator, please go ahead.

Questions and Answers:

Operator

[Operator Instructions] Our first question or comment comes from the line of Doug Harter from Credit Suisse. Your line is open.

Doug Harter -- Credit Suisse -- Analyst

Hi. Thanks. You showed in your slide deck that the yield on new loans was just under 6%. Could you compare that to what the yield of the senior loans that are repaying are?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes, Doug. Look, I think, at a high level, you are probably comp for comp as you think about risk and asset type or whatever. You're probably 50 to 100 basis tighter on the new loans versus the old loans. Obviously, there are some differences, of course, in LIBOR floors as well. But as we look at sort of what's in the portfolio now and what we expect to repay, that's the rough range.

Doug Harter -- Credit Suisse -- Analyst

Great. And then, I guess, shifting to the capital structure. I guess, how are you thinking about kind of unsecured going forward? And then with $2 billion unencumbered today, what is your outlook for leaving assets unencumbered? Could you -- what level -- how much of that $2 billion would be kind of eligible to use to support future loan growth?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes. It's a great question. So if you look at the unencumbered assets, in general, it's roughly about 60% mortgages that are potentially financeable and about 40% to 45% mezz loans, which, as you know, we've historically had no interest in putting asset specific financing on. Though, I think, in tough times, I think, the full $2 billion plus is available to use for leverage if we need to. But as we look at the capital structure going forward, I think, we've now accessed the convertible notes market, the term loan market and the traditional bond market. So I think we're quite happy to have a presence in all of the, call it, non-asset specific leverage markets available to us.

I would say, there is no plans to do anything further in those markets. In the near term, I think we will use both available liquidity as well as selective leverage against some of the unencumbered pool and then anticipated repayments as well, to continue to stay active on the investing side. And then as we look further out into the future, I think we will continue to tend to be a strategic and opportunistic user of unencumbered leverage, where we can find it, or on non-asset specific leverage, excuse me, where we can find it. And I think that capital structure will continue to be a mix of both corporate type of leverage, but we will also continue to use some measure of leverage against the number of our first mortgage investments. But I think we like where we are today in terms of the flexibility that maintaining a large pool of unencumbered asset offers us as we think about both defensive measures as well as offensive measures looking into the future?

Doug Harter -- Credit Suisse -- Analyst

Thank you, sir.

Operator

Thank you. Our next question or comment comes from the line of Stephen Laws from Raymond James. Your line is open.

Stuart A. Rothstein -- Chief Executive Officer, President

How are you, Steve?

Stephen Laws -- Raymond James -- Analyst

Good. Hope you guys are well. Stuart and Jai, can you talk about the -- as I think about the REO, I got the numbers right, it's $1.4 million of revenue, $2 million of expenses, $0.5 million of D&A. How many quarters -- how many days was that in the quarter and how we think about the -- we can think about the full quarter impact of those line items going forward?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes. Jai, why don't you give the technical answer and then I will give sort of more of some perspective on the longer term view of the REO?

Jai Agarwal -- Chief Financial Officer, Treasurer and Secretary

Sure. Yes, Steve, so that's probably -- that's for about six to seven weeks of operations and then Stuart can give a longer term view.

Stuart A. Rothstein -- Chief Executive Officer, President

Yes. I think, Steve, if you think about the asset that we took ownership of, which is a hotel in D.C. that we've talked about before. I think D.C. was slow to open up. It is clearly starting to open up just anecdotally. This past weekend, the hotel was well north 60% in terms of occupancy. So it's moving in the right direction. And as I think as you start to think about forecasting out in the future, I think we're probably continuing to run sort of slightly negative for Q3. But as we move toward the end of the year, we expect, as long as D.C. stays open, which I know is a big if in light of the world we live in right now. But, we're definitely moving toward cash flow positive, which is a mix of both better revenue performance due to occupancy and people coming back, but also some, I think, appropriate changes made on managing the cost side as well.

Stephen Laws -- Raymond James -- Analyst

Great. And then I wanted to touch on unfunded commitments. Looking at your deck on page 11, it looks like about 70% of your unfunded commitment, so that's loans 52, a mixed-use London construction loan originated just before COVID. Can you maybe talk about that, small outstanding loan today, but a big unfunded commitment number? So can you maybe talk about that loan and the drawdown expectations of that unfunded commitment?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes. Look, at a high level the loan is sort of performing exactly as we expected it to perform at this point. We knew it was going to be a lot needed to happen, both in terms of work at the asset as well as funding of additional equity and subordinate capital before our funding of commitment was really going to sort of ramp. I think you will start to see a ramp of our funding somewhat later on this year, but in reality, much more pronounced through next year as construction starts in earnest. It is a mixed use project both for-sale residential, some retail as well. The response to the asset itself has been quite positive.

And I think we've mentioned before, it was not I'll say it the first time. I think it is a commitment where there is clearly a strong bid from those in the market to take a piece of our commitment, if we decided to offer up a piece of the commitment. And I think that will be a future decision for us based on both our thoughts on our liquidity, obviously, thoughts on max exposure that we want to any one transaction in our portfolio and then also performance of the asset as it moves through construction and people start to indicate early interest in what will be available either on a lease or a for-sale basis in terms of what's being built.

Stephen Laws -- Raymond James -- Analyst

Great. Appreciate the color there. And thanks for taking my question this morning.

Stuart A. Rothstein -- Chief Executive Officer, President

Sure.

Operator

Thank you. Our next question or comment comes from the line of Jade Rahmani from KBW. Your line is open.

Jade Rahmani -- KBW -- Analyst

Thank you very much. Excluding credit items, do you view distributable EPS currently as elevated? And should we be thinking about modeling some modest diminution in coming quarters? Or do you believe, based on the increased yield on new originations and the pipeline that it's likely to remain at similar levels going forward?

Stuart A. Rothstein -- Chief Executive Officer, President

Yeah. I think it's a great question, Jade. I think if you look at what has been repaid recently, which within the portfolio, I would say, has been a couple of the higher yielding mezzanine opportunities, that to be fair, are probably not replaceable in the market today. And then if you look at -- or read through my comments on at least a portion of the 111 West 57th Street capital structure and sort of having some sense of what we've earned on that historically. I think you'd have to look at Q2 as somewhat elevated relative to what I think potentially is on a go-forward basis. I think that being said, given where we're originating things today, given what we think the levered ROEs are on those new investments. And also sort of some other things within the portfolio, sort of positive and negative, as we sort of work through extending loans or restructuring deals. I would say the high-level commentary would be, we still remain fairly confident in continuing to earn and cover the dividend at a healthy level on a go-forward basis.

Jade Rahmani -- KBW -- Analyst

And based on where things stand today, I guess, year-to-date is REIT taxable income running ahead of the dividend or in line with the dividend or perhaps below the dividend?

Stuart A. Rothstein -- Chief Executive Officer, President

I'll let Jai answer that question.

Jai Agarwal -- Chief Financial Officer, Treasurer and Secretary

Yeah. I mean, taxable income is -- we look at taxable incomes mostly on an annual basis, because they often tend to be episodic and lump sum items, so we look at that on an annual basis. And we have plenty of cushion from a tax perspective to the extent we wanted to rightsize the dividend, but taxable income is -- we talked about that more in January for the whole year.

Stuart A. Rothstein -- Chief Executive Officer, President

Said differently, Jade, I would say the dividend level that we sent that is sort of based on what we think operating earnings and covering that dividend will be, call it, $0.35 a quarter and don't expect sort of the tax situation to impact that one way or the other.

Jade Rahmani -- KBW -- Analyst

Okay. And you don't expect, I assume -- I asked OK, we got something similar, you don't expect to be required to make a special dividend payment?

Stuart A. Rothstein -- Chief Executive Officer, President

No.

Jai Agarwal -- Chief Financial Officer, Treasurer and Secretary

No, not at all.

Jade Rahmani -- KBW -- Analyst

Turning to credit. We've seen the trend of a lot of reserve releases. Do you anticipate that to continue? Or has there been any developments, whether it be portfolio specific or macro related, such as delayed reopening to cause that trend to slow or perhaps be on pause for, per se the next two quarters?

Stuart A. Rothstein -- Chief Executive Officer, President

Look, I think what we did on Fulton Street this quarter was probably the one that was most ready for that sort of, what would you referred to as sort of a reserve release. And I think we were intentionally maybe a little slow in getting that done. But I think given the strength of the market and the progress we're making on readying the sites for development, it felt like the right thing to do. I would say, as I look at our high focused assets at this point in time, I wouldn't be expecting anything additional from us on that front going forward.

Jade Rahmani -- KBW -- Analyst

Thanks. And just lastly, on Liberty Center, can you give an update on what's going on there?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes. Look, I think, as I've mentioned previously, I think, the challenge or the asset management challenge on Liberty Center is really sort of multi-pronged. It is -- one, is to increase retail occupancy with more of a focus on local and regional tenants as opposed to national tenants, and I would say we're making good progress on that front. And I think if things that we expect to come to fruition -- come to fruition, it will allow us to sort of continue to hang in, in call it the low 80% occupancy level. I think the two other initiatives, which are more about really getting this thing to a finish line that makes sense is, overtime continuing to convert some of the existing retail square footage to alternative use, which in our minds today is more of an office type use, and we've signed some office tenants for discrete spaces that lend themselves to that type of use.

But the bigger project for us is really a little bit slightly larger reconfiguration of the way the asset lays out to allow us to meaningfully shift some square footage to office use, but have it blends such as the office and the retail work well together as opposed to just, sort of, creating a jigsaw puzzle that makes -- doesn't make a lot of sense. But I would say we've had good conversations with prospective tenants, also good conversations with the local planning commissions and boards. So making progress, but still a lot of work to do. And then the third leg of, sort of, the move forward is to continue to create more density around the site in general.

There is a new multifamily project that will be built around the site, which is great news. And then we are actually working with the same, call it, planning commissions and boards that I just referenced to think about ways to potentially use some of our excess parking or service area to convert those into potential multifamily development sites as well, which we think would be positive in terms of creating more density for the site. So I think the partners we've got working with on the site are doing a great job in terms of creating the environment. Foot traffic is back up again, which is great, but still a fair bit of asset management work to be done on our side.

Jade Rahmani -- KBW -- Analyst

Thanks. Appreciate the update.

Stuart A. Rothstein -- Chief Executive Officer, President

Sure.

Operator

Thank you. Our next question or comment comes from the line of Rich Shane from JP Morgan. Your line is open.

Rich Shane -- JP Morgan -- Analyst

Thanks, guys, Thanks for taking my questions this morning. Stuart, you made an interesting observation related to dividend policy in the $0.35. And obviously, the world's changed a great deal since you set the $0.35 dividend policy last year. And I realized the credit environment is slightly better, but the interest rate environment and -- is arguably more challenging with how long rates have been at such low levels. I'm curious how you think about the dividend policy now? And with what's in front of you, how challenging that could be?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes, it's a great question. As you know, because I think I've said it to this group collectively many times before, we try and take a modestly long-term view on the dividend, because I know from an investors perspective, it's much easier to value what appears to be a somewhat stabilized quarterly dividend as opposed to something that is bouncing around from time to time. And it's very similar to the dialogue we have with the Board of ARI, who's ultimately responsible for setting the dividend. But I think we've always tried to manage through any quarterly sort of either up or downs relative to the dividend level. And I think when we set the dividend level down last year, which was really right at the sort of start of the pandemic, peak disruption in the market, most uncertainty.

We were trying to set a level where we looked out over four to eight quarters, carrying excess liquidity, expecting there would be some downside in cash flows, other sort of unforeseen externalities, because we think it was a level that we could continue to cover based on various scenarios on the portfolio. That's clearly proven to be the case, and I think we've comfortably covered the dividend for the last four or five quarters. And, obviously, given what we've achieved the early part of this year, we certainly have set ourselves up pretty nicely to continue at that level on a go-forward basis, absent any unforeseen circumstances. I think the challenge and the exercise that we're going through right now, which I think is implied in your question is, now that we think there's probably a more, call it, steady state experience on the repayment side. And, obviously, we know where we've been originating in terms of, call it, levered ROEs, which I think we know where we continue to put capital out as some stuff rolls off, as you give yourself some room, what does the model look like on a go-forward basis.

And I would say, sitting here today, I don't anticipate any changes to where we've settled in from a quarterly perspective. We'll continue to have those conversations with the Board on a quarterly basis, and we'll continue to refine our model as we move through this year and head into next year. But I would say sitting here today, yes, it's getting more challenging, but there's a little bit more challenging on the origination side, a little bit more beneficial in terms of the way we think about levering and financing our business. So net-net, still feel OK in terms of where we are. Though, at a personal level, don't love paying a 8.5% to 9% dividend, which is 800 basis points north of the 10-year or 750 basis points north of the 10-year. It seems like a fair bit of excess return, but it certainly feels like we can earn it right now given what's available to us.

Rich Shane -- JP Morgan -- Analyst

Terrific. I appreciate the thoughtfulness of that answer, and obviously, it does highlight the resilience of the model if you think back where we were 15 months ago and how differently the world has evolved since whatever framework you were using was created and the fact that the dividend is sustainable, covered, etc, really does demonstrate the resilience.

Stuart A. Rothstein -- Chief Executive Officer, President

Yeah. Thanks, Rich. Look, I think a little bit over the last four months, and I don't think this is unique to us. I think we all -- we were all running throughout this space at a fair bit of excess liquidity, which is obviously unproductive capital at the end of the day. So when you start running at a more realistic corporate finance strategy, even with somewhat tighter returns, I think everybody's models proved to be -- at least today, fairly resilient. We'll see where things go in the future, given the incredible amount of capital searching for any type of yield, which continues to make the market highly competitive.

Rich Shane -- JP Morgan -- Analyst

Got it. Okay. Thank you very much.

Stuart A. Rothstein -- Chief Executive Officer, President

Sure.

Operator

Thank you. Our next question or comment comes from the line of Tim Hayes from BTIG. Your line is open.

Tim Hayes -- BTIG -- Analyst

Hey, good morning, Stuart. Thanks for all the insight this morning on the troubled assets and the focused assets, rather. But one more on just the credit side, were there any notable upgrades or downgrades this quarter? I was looking at the Q, and I think maybe I saw one loan might have been downgraded to a four this quarter. I don't know if that's correct. But if you can maybe just touch on that or maybe a question for Jai.

Stuart A. Rothstein -- Chief Executive Officer, President

No. It's only the one that we move -- we moved a piece of a loan to a four, which I referenced in the script, and then it's in the subsequent events note in the 10-Q as well. It's a portion of the 111 West 57th Street...

Tim Hayes -- BTIG -- Analyst

I see. Okay.

Stuart A. Rothstein -- Chief Executive Officer, President

...loan, which is obviously experienced both self-inflicted, as well as COVID inflicted, as well as weather inflicted construction delays. And I think it's on -- it is clearly on track to be completed. We're excited to get it done. Very focused on getting it done in what appears to be a fairly attractive sales market right now, but you need to make more progress on the asset in order to encourage people to make complete sales. But that's the only change for the quarter.

Tim Hayes -- BTIG -- Analyst

Okay, got it. I guess, I thought that asset or that loan had already been a 4, so thanks for clarifying. And then, just on the pipeline, I know you gave some stats about quarter-to-date investment activity and repayments. But, can you maybe size the pipeline for us and put that into context with repayments, which I know that, that can be difficult for you to predict. But it sounds like you're seeing a normalization of repayment activity. So, just trying to get a feel for how you see portfolio growth in the back half of the year as repayment activity picks up a bit?

Stuart A. Rothstein -- Chief Executive Officer, President

Yes. Look, I think there's a couple of aspects to that. So first of all, as I think we've been talking about for quarters now, there's not a lot for us to do these days in the, call it, discrete mezzanine loan sort of opportunity set. So, as unencumbered mezzanine loans pay off, and we convert that capital into levered senior loans, there's a natural increase in the portfolio overall, which we will continue to benefit from in terms of the share portfolio size. I think beyond that, we're starting to get back to a normalized repayment pace, which for us historically has been -- typically, we originate to roughly three years average duration.

But by the time you factor in us offensively extending certain loans, because we want to keep the loans outstanding or borrowers coming to us and requesting extensions, we end up getting paid off about 20% to 25% of the portfolio a year. So, I think it's realistic to expect that will happen. I would say we feel very confident in terms of our ability to redeploy that capital through the rest of the year. And if anything, would probably envision slightly taking down the liquidity numbers that Jai referenced as well. So, I think the net of all of that, is you will probably see some slight increase in the portfolio, but nothing material. I think we're sort of a $7.5 billion to $8 billion portfolio, which for us means we're being very efficient in keeping our equity capital deployed.

Tim Hayes -- BTIG -- Analyst

Got it. That's very helpful. And then just touching on what's in the pipeline right now. Is it pretty consistent with where you've seen or what's been coming in over the past couple of quarters? I know you're doing more in Europe. So, do you expect kind of those levered returns to be a little bit higher there, given that market's kind of trailing the US a bit? And how do the structures look on those types of assets versus what you're seeing? I know it's kind of a broad general question, but just trying to get a feel for where we see structures and yields trending on new loans versus the portfolio today?

Stuart A. Rothstein -- Chief Executive Officer, President

Again, I think -- and I think it was Doug that asked the question early on. Look, I think spreads are a little tighter today than what's in the existing portfolio, but I think that is somewhat reflective of sort of the overall interest rate environment, but I think it's more bouncing sideways than anything. I think what's in the pipeline today, if you look at what we've closed year-to-date, I think what we've closed year-to-date is a pretty good proxy for what is truly of interest in our pipeline today.

Tim Hayes -- BTIG -- Analyst

Okay, great. Thanks for taking my questions.

Stuart A. Rothstein -- Chief Executive Officer, President

Sure.

Operator

Thank you. At this time, I'd like to turn the conference back over to Mr. Rothstein for any closing remarks.

Stuart A. Rothstein -- Chief Executive Officer, President

I'll say, operator, thanks as always to all that participated in the call this morning. We'll talk to you in another few months. Thanks.

Operator

[Operator Closing Remarks]

Duration: 46 minutes

Call participants:

Stuart A. Rothstein -- Chief Executive Officer, President

Jai Agarwal -- Chief Financial Officer, Treasurer and Secretary

Doug Harter -- Credit Suisse -- Analyst

Stephen Laws -- Raymond James -- Analyst

Jade Rahmani -- KBW -- Analyst

Rich Shane -- JP Morgan -- Analyst

Tim Hayes -- BTIG -- Analyst

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