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Ares Capital (NASDAQ:ARCC)

Q4 2013 Earnings Call

February 26, 2014 12:00 pm ET

Executives

Michael J. Arougheti - Chief Executive Officer and Director

Robert Kipp DeVeer - Senior Partner and Member of Investment Committee

Penni F. Roll - Chief Financial Officer

Analysts

Christopher York - JMP Securities LLC, Research Division

Kyle M. Joseph - Stephens Inc., Research Division

Robert J. Dodd - Raymond James & Associates, Inc., Research Division

Douglas Mewhirter - SunTrust Robinson Humphrey, Inc., Research Division

Greg Mason

Greg M. Mason - Stifel, Nicolaus & Company, Incorporated, Research Division

Terry Ma - Barclays Capital, Research Division

Casey J. Alexander - Gilford Securities Incorporated

Jonathan Bock - Wells Fargo Securities, LLC, Research Division

Operator

Good morning. Welcome to Ares Capital Corporation's Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Wednesday, February 26, 2014.

Comments made during the course of this conference call and webcast and the accompanying documents contain forward-looking statements that are subject to risks and uncertainties. Many of these forward-looking statements can be identified by the use of the words such as anticipates, believes, expects, intends, will, should, may and similar expressions.

The company's actual results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. Ares Capital Corporation assumes no obligation to update any such forward-looking statements. Please also note that past performance or market information is not a guarantee of future results.

During this conference call, the company may discuss core earnings per share or core EPS, which is a non-GAAP financial measure, as defined by SEC Regulation G. Core EPS is the net per share increase or decrease in stockholders' equity resulting from operations less realized and unrealized gains and losses, any incentive fees attributable to such realized and unrealized gains and losses and any income taxes related to such realized gains. A reconciliation of core EPS to the net share -- net per share increase or decrease in stockholders' equity resulting from operations, the most directly comparable GAAP financial measure, can be found in the accompanying slide presentation for this call by going to the company's website at www.arescapitalcorp.com and clicking on the Q4 '13 earnings presentation link on the homepage of the Investor Relations section of the website.

The company believes that core EPS provides useful information to investors regarding financial performance because it is one method the company uses to measure its financial condition and results of operations.

Certain information discussed in this presentation, including information relating to portfolio of companies, was derived from third-party sources and has not been independently verified, and accordingly, the company makes no representation or warranty in respect of this information.

As a reminder, the company's Q4 '13 earnings presentation is available by going to the company's website at www.arescapitalcorp.com and clicking on the Q4 '13 earnings presentation link on the homepage of the Investor -- Investor Resources section of the website. Ares Capital Corporation's earnings release and Form 10-K are also available on the company's website.

I will now turn the call over to Mr. Michael Arougheti, Ares Capital Corporation's Chief Executive Officer.

Michael J. Arougheti

Great. Thank you, operator. Good afternoon to everyone, and thanks again for joining us. For today's call, I'll begin with a brief discussion of our quarterly and full year results and our outlook on the current market. I'll then turn the call over to our President, Kipp DeVeer, who will review our investment activity in 2013 and discuss several of our notable strategic initiatives and accomplishments. Penni Roll, our CFO, will then walk through the Q4 results and provide additional detail on our financial position. Kipp will then provide an update on our investment portfolio and recent investments before I conclude our prepared remarks. We'll then finish with time for questions.

We're pleased to report strong results for the fourth quarter and for fiscal 2013. Our core earnings per share in the fourth quarter were $0.41, and our GAAP earnings per share were $0.47, both in excess of our quarterly dividend of $0.38 per share.

Our fourth quarter earnings generally benefited from the net growth in our investment portfolio, solid fee income and strong net investment gains, which reflect the strength and quality of our underlying investments. For the full year, we reported core earnings per share of $1.66 and GAAP earnings per share of $1.83, generating a GAAP return on equity of about 11.4%.

Our net asset value increased 2.6% year-over-year to $16.46 per share. We continue to earn income in excess of our total dividends paid in 2013, with core earnings coverage of 106% and GAAP earnings coverage of 117%. And after paying quarterly dividends of $1.52 per share and an additional dividend of $0.05 per share in 2013, we still estimate that we will carry over undistributed taxable income of approximately $244 million or $0.82 per share into 2014.

Our balance sheet remains another notable strength. Due to our heavy emphasis on fixed rate funding compared to our largely floating rate investment portfolio, we continue to believe that we're well-positioned to rising interest rates, whenever they may come. And as Penni will discuss, we successfully accessed the institutional high-grade notes market for the first time in November of last year, which provides us with an additional funding channel for lower-cost fixed rate debt. After issuing additional equity during the fourth quarter, our net debt to equity at year end stood at a modest 0.58x.

So turning to the markets. Throughout 2013, we saw a lot of interest in the Private Debt asset class as investors recognized the strong relative value of these assets compared to more traditional fixed income asset classes. Loan fund inflows and the broadly [ph] syndicated loan markets set a new record in 2013, and along with this trend, loan prices inched higher throughout the year, putting pressure on spreads and structures.

While the middle market was not immune to these trends, it remains more insulated from these dynamics, and we believe it continues to offer superior risk-adjusted returns. 2013 was a record year for new issuance, both in the broadly syndicated loan market and the middle market, with many companies looking to take advantage of the low interest rate environment by refinancing their balance sheets.

As many of you know, the first quarter of the year is typically slow in terms of new origination, but we do expect the market in 2014 to look a lot like last year with healthy transaction volumes and a solid opportunity set. We believe our company remains well-positioned from a competitive standpoint, and we have meaningful dry powder [ph] with $1.8 billion of undrawn debt capacity at year end 2013 to take advantage of investment opportunities as they arise.

I'll now turn it over to Kipp to review some of our key accomplishments in 2013 and to comment on several exciting strategic initiatives.

Robert Kipp DeVeer

Thanks, Mike. 2013 was a record origination year for us. We believe the strength and breadth of our seasoned national origination platform and our rigorous approach to credit continue to be drivers of our success. We continue to cast a very wide net and aim to review the greatest percentage of the available market to ensure that we can be highly selective in closing new transactions.

In 2013, we estimate that we reviewed approximately 1,300 transactions and closed about 7% of them. Interestingly, about 1/3 of the closed transactions in 2013 were with our existing portfolio companies, which highlights how we value incumbency. And excluding the transactions reviewed for the existing portfolio companies, we closed about 4% of the deals that we reviewed with new companies. In aggregate for the year, we committed $4 billion to 95 separate transactions, which included $1.1 billion to 31 existing portfolio companies and $1.8 billion to 36 companies new to our portfolio.

We also invested $737 million in a Senior Secured Loan Program and acquired a diversified portfolio of middle market investments that included $362 million in commitments. We maintained our net interest and dividend margin in 2013 despite our estimates of roughly 100 basis points of market-based loan spread compression throughout the year.

In addition to the interest and dividend income earned from the portfolio, we also realized gains in excess of losses on investments for the fourth consecutive year, with net realized gains of approximately $64 million in fiscal 2013.

Since our IPO almost 10 years ago, our cumulative realized gains have exceeded our realized losses in every year but one, which has allowed us to build cumulative net realized investment gains of approximately $258 million, contributing to our estimated undistributed taxable income of $244 million at the end of the year, which carries over to 2014, as Mike mentioned earlier.

Over the same period, we generated a 13% IRR [ph] on approximately $7.7 billion of realized investments, and we believe our portfolio remains healthy today as the corporate companies that we're invested in posted nice EBITDA growth of approximately 10% year-over-year.

Our joint venture with GE, the SSLP, had its busiest year yet. During 2013, the SSLP made $5.1 billion in new commitments to 33 companies. $3.8 billion was committed to 17 new portfolio companies, and $1.3 billion was committed to 16 existing SSLP portfolio companies. Roughly 44% of the 2013 commitments were made in the fourth quarter. And at year end, the SSLP had 47 discrete portfolio companies with total invested capital of $8.7 billion.

We believe the success of the SSLP is a testament to the power of the joint venture between Ares and GE, and was one reason for the increase in the program's size of SSLP to $11 billion in 2013.

During 2013, we also continued our successful strategy of building out investment expertise in new areas that we believe are being seeded by the banking sector. As we've discussed on prior calls, we continue to believe there is a wealth of opportunity to build specialty industry teams, to invest in adjacent asset classes where traditional bank lending sources continue to reduce exposure.

2013 was a solid portfolio building year for the first 2 entries we made into these specialty areas, Project Finance and Venture Finance. As you may recall in 2011, our investment adviser hired a team of professionals with significant experience lending to power generation and infrastructure projects.

In 2013, the Project Finance team committed $431 million to 6 transactions supporting power and infrastructure-related projects and companies. Similarly in 2012, we also hired a team of investment professionals with significant experience providing loans to venture capital-backed companies. And in 2013, our Venture Finance team committed $121 million to 11 transactions.

The Project Finance and Venture Finance teams have made a significant contribution thus far, and we plan to seek additional opportunities for investments in these areas in 2014.

We do continue to explore other specialty lending segments that have been abandoned by the banking sector that we believe could be additive to the business. Our strategy continues to favor the recruitment of established teams with significant industry experience and expertise in new and complementary verticals.

One final example of how we're benefiting from the reduced appetite of banks in our core market, was the opportunistic purchase in December of a $319 million portfolio in middle market loans and equity positions. One of the sellers of this portfolio is a large bank exiting their middle market principal lending business.

These assets were attractive to many nonbank lenders and institutional investors, and although it was a competitive process, we believe that our scale, expertise and knowledge of these assets gave us a competitive edge in securing the transaction. The portfolio brought 23 portfolio companies to ARCC, 10 of which are with new sponsors, where we believe we can build relationships over time.

Finally, I'd like to spend a minute providing an update on our wholly-owned portfolio company, Ivy Hill Asset Management, as it was a meaningful contributor to ARCC's performance in 2013. During 2013, Ivy Hill was able to increase its quarterly dividend to ARCC and provide 2 additional dividends to the company during the year.

So let me provide some context -- to give some performance background on that. Ivy Hill was an asset manager of middle market bank loans, with $2.8 billion in assets under management as of December 31, 2013. And as you may recall, Ivy Hill was started in 2007 and embarked on a consolidation strategy during the market dislocation in 2008 and 2009.

The credit crisis provided an opportunistic market for Ivy Hill to purchase a variety of management contracts to manage additional funds and also to purchase discounted CLO securities from subscale or struggling asset managers. To support this growth, ARCC invested in Ivy Hill so that they would have the capital needed to purchase these discounted securities and CLOs managed by both Ivy Hill and other third-party asset managers.

Given the material recovery in the credit market since that time, this investment strategy proved to be very profitable for Ivy Hill. As a result, Ivy Hill has been taking advantage of market liquidity as a net seller of CLO securities.

Also given its performance, it has attracted third-party equity for many of the new CLOs that it manages. Consequently, realized gains from these discounted purchases, along with the interest income from its CLO investments and the management fees from its asset management business, enabled Ivy Hill to increase its quarterly dividend to ARCC in 2013 to $10 million and to pay ARCC's special dividend of another $32 million during 2013.

Unfortunately, in today's market, given where CLO assets are trading, we believe it's unlikely Ivy Hill will have the same opportunity to purchase discounted CLO securities in the near term, but we do believe that Ivy Hill can be opportunistic when another market dislocation occurs.

I will now turn the call over to Penni to highlight our fourth quarter financial results in more detail.

Penni F. Roll

Thanks, Kipp. As Mike stated, our basic and diluted core earnings were $0.41 per share for the fourth quarter of 2013 compared to $0.48 per share for the third quarter of 2013 and $0.45 per share in the fourth quarter of 2012. The $0.07 decrease in our fourth quarter core earnings per share versus the third quarter of 2013 was primarily driven by the $15 million special dividend paid by Ivy Hill in the third quarter, which had a $0.04 per share impact to our core earnings.

GAAP net income for the fourth quarter of 2013 was $0.47 per share compared to $0.52 per share for the third quarter of 2013 and $0.71 per share for the fourth quarter of 2012. For the fourth quarter, our net realized and unrealized gains totaled $22.4 million or $0.08 per share. During the quarter, we realized $34.5 million in net realized gains.

We had a very strong quarter for originations, and we made gross commitments totaling $1.2 billion compared to gross investment commitments of $1.1 billion during the third quarter of 2013 and $1.1 billion during the fourth quarter of 2012. We exited commitments of $833 million in the fourth quarter of 2013, resulting in net commitments for the quarter of $414 million.

Net fundings for the fourth quarter of 2013 were $256 million as compared to $559 million for the third quarter of 2013 and net exits of $35 million for the fourth quarter of 2012. As of December 31, 2013, we had total assets of $8.1 billion and total stockholders' equity of $4.9 billion. Our portfolio totaled $7.6 billion at fair value and was in 193 portfolio companies.

From a yield standpoint, the weighted average yield in our debt and other income-producing securities at amortized cost at December 31, 2013 was 10.4%, which was 20 basis points lower than at the end of the third quarter of 2013 and 100 basis points lower than a year ago. The weighted average yield on total investments at amortized cost at December 31, 2013 was 9.4%, a 20-basis-point decline since last quarter and a 70-basis-point decline since the end of last year. The smaller decline in the total portfolio yield over the past year reflects some modest proactive rotation out of nonyielding equity securities in the portfolio.

While the yield on our portfolio has declined, we have been able to keep our last 12 months net interest and dividend margin relatively stable over the last year at 8.6% at the end of the fourth quarter of 2013 versus 8.5% at the end of the fourth quarter of 2012.

As of December 31, we had approximately $5 billion in committed debt capital, with approximately $3.1 billion aggregate principal amount of total indebtedness outstanding. Approximately 58% of our total committed debt capital and approximately 94% of our outstanding debt at year end was in fixed rate long-dated unsecured term debt. We believe our long-dated liability strategy provides operational flexibility and financial strength and also positions us to benefit should interest rates rise materially.

As you know, we've worked hard over the last few years to diversify our sources of debt capital, and we are pleased to access the investment-grade institutional notes market this past November on attractive terms. We issued $600 million in 5-year senior unsecured notes, which have a stated interest rate of 4.875%. Subsequent to their issuance, these notes traded tighter, and we took advantage of a very favorable market demand to issue an additional $150 million of these senior unsecured notes at a nearly 3% premium to par in January. The additional notes were issued at a spread over the applicable treasury that was approximately 100 basis points tighter than the initial issuance back in November. And as a result, we priced the traditional 100 -- sorry, the additional $150 million of notes at an effective yield of approximately 4.25%.

Also, during the fourth quarter, we amended our revolving funding facility with SMBC, reducing the interest rate spread over LIBOR from 2.125% to 2% and extending the reinvestment period and the state of maturity each by a year to September 2016 and September 2021, respectively.

The weighted average stated interest rate on our drawn debt capital at quarter end increased to 5.3% as compared to 4.7% at the end of the third quarter of 2013. This increase resulted from a reduced level of borrowings under our lower-cost revolving credit facilities at the end of the quarter. However, as we fund new investments, our blended cost of borrowing should decline as we access our significant revolving credit capacity. If at the end of the fourth quarter of 2013 we were to borrow all of the amounts available under our revolving credit facilities, our weighted average stated interest rate would be 4.2%.

During the fourth quarter, we also took advantage of favorable market conditions and completed 2 accretive equity raises, resulting in net proceeds of approximately $500 million. This equity capital supported the busy third and fourth quarter we had on the investment front. In total, at the end of the fourth quarter, we had approximately $1.8 billion in available debt capacity, subject to borrowing base and leverage restrictions, and $130 million in available cash. As of December 31, our debt-to-equity ratio was 0.61x, and our debt-to-equity ratio, net of available cash, was 0.58x.

Additionally, I would like to remind you that our first quarter dividend of $0.38 per share will be payable on March 31 to stockholders of record on March 14. Also, a $0.05 per share additional dividend previously declared in November 2013 is payable on March 28 to stockholders of record on March 14.

Now with that, I'd like to turn it back to Kipp to discuss our investing activities and our investment portfolio.

Robert Kipp DeVeer

Thanks, Penni. We continue to focus on senior secured debt opportunities with strong loan-to-value metrics, with an emphasis on conservatively structured, high-quality, cycle-durable businesses. During the fourth quarter, 59% of our new commitments were in first lien senior secured debt, and 23% were in the subordinated certificates of the Senior Secured Loan Program. We do believe there are still some attractive opportunities in certain junior capital investments, and we did commit $100 million in a senior subordinated loan to a manufacturer and supplier of industrial products for the automotive and power utility industries in the fourth quarter.

As Penni mentioned, we exited $833 million of investments during the fourth quarter. The significant portion of these exits were strategic in nature, including the sale of certain senior loans as we looked to rotate out of some lower yielding assets. We sold $391 million of loans, with a weighted average yield of 6.8%, as we sought to optimize our portfolio and take advantage of the strong demand for these assets in the market. In aggregate, the weighted average yield of the total investments we exited during the quarter was 8.8% compared to 9.9% on the new investments we funded.

During the fourth quarter, our portfolio experienced improved credit metrics in the aggregate as the weighted average total net leverage for our corporate borrowers declined from 4.7x to 4.6x, and weighted average interest coverage for the corporate borrowers increased from 2.6x to 2.8x. At these levels, we believe we have significant protection from a loan-to-value and cash flow coverage standpoint.

Our portfolio continues to be well-diversified. Given the size of our balance sheet, our average commitment is less than 1% of our assets, and our largest single name exposure, excluding the SSLP, is less than 4% of our portfolio at fair value. At year end, the SSLP represented approximately 23% of the portfolio at fair value. The SSLP is well-diversified with 47 separate underlying borrowers at quarter end. Excluding the SSLP, the next largest 15 investments in the aggregate represented only 28.9% of the portfolio at fair value.

Nonaccrual ratios also remained low at December 31, 2013, with 3.1% of the portfolio at cost and 2.1% of the portfolio at fair value on nonaccrual. We placed 2 investments on nonaccrual in the fourth quarter. One of the new nonaccrual investments is a legacy Allied Capital investment, and the other new nonaccrual investment is a company that we've been invested in since 2007.

The underperformance of the second investment is due to a handful of issues, but specifically, it is located in Puerto Rico, an area currently experiencing significant economic difficulties. We feel very good about the underlying health and quality of our portfolio, and we believe nonaccruals on all investments continue to be low as a percentage of the overall portfolio. If you exclude the investments on nonaccrual that were acquired from Allied, ARCC's originated nonaccruals at amortized cost and at fair value were only 1.6% and 1.2% of the portfolio, respectively, at the end of the year.

Let me finish with a quick update on our recent investment activity since year end and our current backlog and pipeline. From January 1, 2014 through to February 20, 2014, we made new investment commitments of $233 million, of which $207 million were funded. Of the $233 million of new investment commitments, 93% were floating rate, 6% were fixed rate and 1% were noninterest-bearing, and the weighted average yield on the debt and other income-producing securities funded during this period at amortized cost was 10%.

Over the same period, we exited $409 million of investment commitments, 89% of which were floating rate. The weighted average yield of debt and other income-producing securities exited or repaid during the period at amortized cost was 8.9% or about 110 basis points lower than the roughly 10% yield on new investments.

Deal flow today is seasonally slow as we're in the middle of what is typically our lightest origination quarter of the year. As of February 20, 2014, our total investment backlog and pipeline stood at approximately $635 million and $145 million, respectively. Of course, we can't assure you that any of these investments will close.

Mike will now wrap up with some closing comments.

Michael J. Arougheti

Great. Thanks, Kipp. So in conclusion, 2013 was a very strong year for ARCC, and we believe that we're well-positioned going forward. As always, we'll continue to look to use our broad origination platform to source and invest in what we view as the best franchised companies in the market, with a view to maximizing our attractive risk-adjusted returns.

We believe that we've created sustainable competitive advantages for our business over the last decade. We're a leader in a large and growing market that continues to favor flexible, full capital solution providers. And we continue to see additional opportunities for growth as banks further reduce their appetite for leveraged loans, particularly in the middle market and other niche asset classes. We hope to continue to take advantage of these market trends and opportunities in the future.

As we approach our 10th anniversary as a public company, we're pleased to have delivered significant value to our shareholders through the cycles, and creating value will remain our intense focus in 2014 and beyond.

And as always, we thank you for your time and support. And we would now like to open up the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And our first question will come from Chris York of JMP Securities.

Christopher York - JMP Securities LLC, Research Division

I may have missed this in Kipp's remarks, but could you comment on the high exit repayment activity in the current quarter? And then also, what's your view of repayments for 2014 relative to 2013?

Robert Kipp DeVeer

Chris, I can take that and just go back to the section where I went through. In the fourth quarter, we exited $833 million of investments. The point that we're getting across in the prepared remarks was that we actually proactively went out and sold $391 million of senior loans. The yield on that portfolio of sales was roughly 6.8%. It was the first time in a long time that I'd say we went out and actually proactively sold assets to, in our mind, exit some lower yielding assets and optimize the mix in the portfolio.

Christopher York - JMP Securities LLC, Research Division

No, you said [indiscernible].

Robert Kipp DeVeer

To be clear, yes, I mean, the difference between the $391 million and the $833 million that I laid out was just natural repayments.

Christopher York - JMP Securities LLC, Research Division

Okay. What I was looking at was -- so from January 1 to February 20, it looks like you guys exited $409 million, and that just seems kind of high relative to other quarters. So seeing if -- what was going on there?

Robert Kipp DeVeer

I don't think there's anything there. It didn't stick out to me. I find it interesting that it stuck out to you, but I think as we looked at it as a management team, there's really nothing going on there other than just natural repayments.

Christopher York - JMP Securities LLC, Research Division

Okay. And then how would you think about repayments in '14 relative to '13, just kind of flat, down, directionally? What are your thoughts?

Robert Kipp DeVeer

It's hard to tell. I mean, again, it's a slow time of year, so we'll see what happens in terms of refinancings, new deals, et cetera, et cetera. But I wouldn't expect it to be different than it's been historically.

Christopher York - JMP Securities LLC, Research Division

Okay. And then the unitranche [ph] product has been an important competitive advantage for Ares for some time now. And given that BDCs have sought to offer their own unitranche product, how do you view the product's competitiveness in the current market relative to bank mez [ph] products and then BDCs among private equity sponsors?

Robert Kipp DeVeer

Yes. Look, the SSLP has been a wonderful advantage for the company, there's no doubt. 2013 was the busiest year the joint venture with GE ever had. So we feel that it's obviously quite competitive. And I'd say that hand-in-hand with the fact that the unitranche product is -- has been around in the market in the U.S. for, depending on who you ask, at least 5, if not 10 years. So the fact that other people are putting emphasis on it and talking about it, I think, doesn't concern us at all. Obviously, we think it's a great asset. We think it makes sense for us. We think that the way that we invest in unitranche generally through our partnership with GE is more advantageous than the way that others do it. Maybe it would be my only highlight, but we still view it as a very competitive product and, obviously, an important part of what we're going to do on a go-forward basis.

Michael J. Arougheti

Chris, one thing I'd add just about competitiveness vis-à-vis bank mez [ph]. I do believe strongly that the unitranche product has shrunk the mezzanine market opportunity. And if you think whether it's an Ares-led unitranche or a market unitranche, the attractiveness to borrowers in terms of ease-of-use, certainty of close, lack of inter-creditor friction, all of those things are pretty significant value propositions. So we are the leader in that space, and I think we've created a real competitive advantage. But as far as the product itself goes, it is a very attractive product, and I'd expect to see it represent a higher proportion of deals as the market continues to grow.

Christopher York - JMP Securities LLC, Research Division

Great. And then one last one here before I hop back in the queue. Mike, you spoke in front of Congress in October on BDC modernization legislation. What are your current thoughts on any legislation passing in '14? And what changes would you think about making on leverage and portfolio management if this legislation passed?

Michael J. Arougheti

Sure. It's hard to predict anything going on in Washington, let alone the passage of this legislation, so I'm not going to offer up a probability of it actually occurring, although there's been some very good reporting recently as to how the bill is progressing through the House. And I think the research community is doing a very good job of keeping the investment universe up to speed on all of the developments there. The one thing that I will say that I'm encouraged by is the fact that the dialogue is ongoing in Washington about BDC modernization and the increase in leverage. It's one of those pieces of legislation that's actually hard to come up with a reason to say no to it. If you think about what it is trying to do, it's effectively looking for a way to improve capital flows to small and medium-sized companies. It's looking for a way to create jobs, and it's looking for a way to do it all within the regulated system today. And when you look at things like the SBIC debenture program, where the government's already accepted 2:1 leverage as an acceptable leverage for assets like the ones the BDC industry invests in, I think its prospects are good. So I think we're going to have to wait and see. But we're encouraged by the current situation. In terms of how we would use it, as we've talked about, the BDC is a wonderful vehicle. It's flexible, it's long-lived and that flexibility and permanence of capital is a real advantage for borrowers and for investors. But when you've developed a broad national origination infrastructure like we have, you see all sorts of opportunities to provide capital into the middle market at yields that just frankly don't currently work, given the low leverage in the BDC model. As I mentioned earlier, our leverage level is 0.58x to 1 versus the KBW middle market bank index, which I believe is levered about 8.6x to 1 today. So how we would use it, and again, I can't speak to others, is we would use it to drive lower risk, lower return product through our balance sheet leveraging off of our relationships and origination network. That should have an impact on ROE, but more importantly, it should continue to consolidate a lot of the competitive advantages that we talk about in terms of our scale advantages.

Operator

And our next question is from Kyle Joseph of Stephens.

Kyle M. Joseph - Stephens Inc., Research Division

I just wanted to dig in a little bit. It looks like one of the new nonaccruals was in the senior secured loan funds. Is that the Puerto Rican investment you referenced earlier?

Robert Kipp DeVeer

It is.

Kyle M. Joseph - Stephens Inc., Research Division

Okay. And then just in your K, you can see the actual -- the total size of the investment, but I believe that includes GE's investment as well. How big is that on your balance sheet?

Robert Kipp DeVeer

See if we can pull it up.

Kyle M. Joseph - Stephens Inc., Research Division

Could we say that it's kind of historical 25%, is that accurate?

Michael J. Arougheti

Yes. So the balance sheet investment's about $54 million at amortized cost, and then there's a smaller investment within the SSLP. This is actually a unique situation when we hold the investment both within the program and directly on our balance sheet.

Kyle M. Joseph - Stephens Inc., Research Division

Just in terms of -- you guys have given great color on yields. I was wondering about where have credit spreads been moving? I know those are tied, and just in terms of where are we versus historical troughs and peaks?

Robert Kipp DeVeer

I think we made an estimate just that we felt spreads generally across all of the asset classes that we've invested in historically, and will on a go forward basis have come in probably 100 basis points or so has been our estimate for the year. In terms of historical spreads, we're probably -- I'd have to go back and pull some numbers from the past cycle, I'd say that the spreads are -- the spreads remain higher however, interest rates were meaningfully lower than during kind of the '06, '07 period where spreads were tighter. So if you take bank deals back in '06, you did in the mid-markets, see L300 bank deals that was all in an environment where LIBOR is obviously significantly higher. We're in a place that in, generally speaking, today where asset yields are still wide, generally where we were in kind of the '06, '07 period on all in return basis. Mike, I don't know if you have anything to add there that you think useful but...

Michael J. Arougheti

No, I agree. I think the good news is that, and you can see this in the numbers, partially just based on the market dynamic and partially based on our own strategic sales of lower yielding assets, we've been able to drive the yield on booked assets higher than the yield on exited assets. As Kipp talked about, if you look during the quarter 8.8% on exited investments versus 9.9% on new investments, obviously excluding the benefit of upfront fees. And then in terms of just spreads, they have been wide relative to historical levels. They have clearly tightened, but I would say generally speaking over the last 2 quarters, they have moderated and flattened. So we're not experiencing the level of spread compression in the fourth quarter and into the first quarter that we had seen throughout 2013, which is encouraging.

Kyle M. Joseph - Stephens Inc., Research Division

Okay. That leads me to my next question. So you guys did have some good portfolio churn during the quarter and rotated those assets into higher-yielding products. So I was a little surprised to see your reported portfolio yield decline. Is that related to timing of transactions, or is there some impact from the increase in nonaccruals there?

Michael J. Arougheti

Yes. It's probably a little bit of both, yes.

Kyle M. Joseph - Stephens Inc., Research Division

Okay. Last question and I'll stop bugging you guys. Can you talk about the portfolio you purchased from the bank and provide any details you can in terms of where you purchased it versus par [ph], and are there potentially other transactions like that, that you're looking at?

Michael J. Arougheti

Yes. So we're not going to provide details on the purchase price other than to say we bought it at what we think is a very attractive risk-adjusted return, and the size of the portfolio is not material to the size of the balance sheet. But I think is compelling about it is, it is an indicator that on the heels of Dodd-Frank and Volcker, we are seeing continued portfolios coming out of the banking system. So I would expect to see more of that as time goes on. Even this week, we're seeing announcements coming out of the banking system in terms of retrenchment back to Europe, headcount reductions, et cetera. So I think that this was early in that trend, and again, as we bought it we looked at it. We think we bought it at a very attractive risk-adjusted return. And importantly, as Kipp said, it brought to the portfolio close to 30 new investments and 10 new private equity sponsor relationships that we think will have a lot of value over time. All those investments are now in the scheduled investments, so you could see what the book looks like.

Operator

And the next question will come from Robert Dodd of Raymond James.

Robert J. Dodd - Raymond James & Associates, Inc., Research Division

One thing. Obviously, a lot of clarity on the numbers et cetera, I've got to ask you about the decision by S&P and what you think of the implication there, taking BDCs out of indices [ph]? That obviously in itself is relatively minor, because they don't have a lot in there to start with, but what's your view on whether that could spread to other index managers and whether you think it's time for the BDCs maybe to have a unified lobbying effort to get some of the rules changed about pass-through fee accounting and weak [ph] ownership?

Michael J. Arougheti

Yes. I'll take a stab at that. The decision to exclude 2 BDCs from 2 S&P Indices, in and of itself, we think is a not material event. Just to take a quick step back so that everybody on the call understands exactly what's driving the issue, the acquired fund fee and expense rules AFFE require because BDCs are closed-in funds that mutual fund managers actually have to look through to the expenses of the BDCs and incorporate those expenses into their own expense ratios. So if you think about a mutual fund manager that is competing for funds flow, largely on the load as much as performance, any moderate change in their expense ratio could have a negative impact. It's somewhat nonsensical if you think about BDCs as operating companies and lenders. That would be the same as asking a mutual fund manager to consolidate the complete SG&A expense burden of a bank that it's invested in. So I do think that you hit on something that is important, which is whether it's lobbying investor education, educating the regulators, we as an industry, need to continue to make people understand that BDCs are not funds. We are structured, obviously as '40 Act Funds, but we run our business the same way any finance company or operating company does, and to be singled out under the AFFE regulations, we think, is not a real reflection of reality. One of the analysts in the space, I think, put out a very good report this morning on this particular topic. I, for what it's worth, do not think that the decision by S&P, which I disagree with, I don't think that it will creep into the other indices. But obviously, that's going to be something that we're going to need to keep an eye on.

Robert J. Dodd - Raymond James & Associates, Inc., Research Division

Great, I appreciate the color. And obviously, it makes the operating versus [ph] fund issue -- it makes -- the rules makes sense, but -- for funds owning funds, but they were not funds owning operating companies, but that's [indiscernible]

Michael J. Arougheti

What I'd just say that, I think it's disappointing because we have a number of large mutual fund complexes that I think would like to invest in the BDC industry and support the growth of the space that have been deterred from doing so because of this regulation. There has been some attempt on the part of supporters of the industry within the mutual fund space to remedy it, but it's a slow process.

Robert J. Dodd - Raymond James & Associates, Inc., Research Division

Just on -- stepping aside from that for a second, and looking at in the fourth quarter, just looking at the overall market dynamics, it looks like we saw a big relatively large shift away from refinancings, to a degree, and more towards new deals. And that tends to obviously have, in the past, has had a beneficial effect on pricing and structures. Any color on whether you think that, that actually spreads to the middle market, rather than just the large market, and what do you think about the relative mix of maybe refinancing versus new activity in 2014?

Robert Kipp DeVeer

I think it's a good observation. I would say that the last 2 quarters typically are ones where obviously deals that have been getting worked through for a while, with the calendar year coming to an end, tend to actually get done. So I think that's a fair observation. Certainly, the fourth quarter, we had more new deals than we had in the first quarter, for instance. I would say going forward, we think there will be a reasonable balance. Again, based on where we are from a seasonal perspective it being a bit slow, it's hard to take a tremendous amount of indication as to what the year will provide, but the last couple of years have generally been, to your point, first and second quarter is more dominant by refinancing, third and fourth quarters kind of more anchored by new deals.

Operator

And the next question comes from Doug Mewhirter of Sun Trust.

Douglas Mewhirter - SunTrust Robinson Humphrey, Inc., Research Division

Actually, I had just one question, the rest of them had been answered. The bank portfolio that you bought, I guess how would you characterize the -- I guess the yield and the credit quality of that portfolio relative to a typical BDC, or typical senior secured loan? Is there any appreciable difference, or are you really buying essentially the same loans that you would make anyway, just they happen to get those particular loans when they made them?

Michael J. Arougheti

I would say it's the latter. There was nothing particularly unique to the portfolio. It was diversified, sponsored, nonsponsored. It did have a SKU towards senior secured loans, which we liked. So yes, nothing out of the ordinary, which is why it was so, frankly, easy for us to evaluate and ultimately purchase.

Operator

And the next question will come from Greg Mason of KBW.

Greg Mason

Your new -- your strategy of potentially selling off some lower-yielding assets, how many more of those do you have on your radar that you could potentially call out of the portfolio?

Robert Kipp DeVeer

I don't think we're going to provide any guidance obviously on that one, at this point, Greg. But looking at where we are from sort of an asset mix and yield perspective is, obviously, something that we do here every day around the investment table. So I would just say that we saw, as you guys can see from the numbers, pressure on yield on the book all of last year. We thought it was easier to go out and sell assets that had low yields and very attractive bid prices. We thought that was a better alternative than stretching on new credits and reaching for yield in places that we might find kind of danger down the road. So I don't think we have a view on where we'll go from here, but it was a clear and sort of obvious way to make some improvements on some of those metrics in the fourth quarter.

Greg M. Mason - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay, great. And then on Slide 7, you show the $34 million of realized gains, and associated with those was $10 million of unrealized reversals. So essentially, they were marked at $10 million last quarter. Can you talk about the -- what changed to get the $24 million of appreciation in this quarter and just compare the fair value marks where you held them to the exits and what changed?

Robert Kipp DeVeer

Sure. We had an exit in 1 company where we had just simply more substantial realized gain than we expected. One of our companies was acquired for a price that we were thrilled about, 15x EBITDA. We hadn't marked it at 15x EBITDA, so it obviously generated a substantial gain on the position.

Greg M. Mason - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay, great. And then you talked about the available liquidity you have in your credit facilities. If you utilized that, that would obviously take you well north of kind of where you've been running max leverage of 0.7. As you move into more senior secured assets, is your target leverage still in that 0.7 range or would you look to be taking that potentially higher over time with lower safer-yielding assets?

Robert Kipp DeVeer

No, that's still the target.

Greg M. Mason - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. And then finally 1 last question on -- Ivy Hill, you talked about sale of equity investments just aren't making any sense right now. Could you give us just some more color around that? What are you seeing in the CLO equity market and what types of returns are occurring for CLO equities in the markets today?

Robert Kipp DeVeer

Sure. I mean, on the new mid-market CLO raises that I think we and probably others in the market can do, number one, there's not a lot of issuance; but number two, the typical benchmark equity return in a CLO in the mid-market's kind of 10% to 12%. Nothing to sneeze at, but I think the point that we're trying to make in the prepared comments on Ivy Hill was, back in '08, '09, we were doing things at rates of return, I should say they were doing things at rates of return and the company that were meaningfully better than that. We invested a lot of capital behind that opportunistic opportunity throughout the downturn. Part of taking capital back from Ivy Hill is a recognition that those opportunities just don't exist the way that they used to. That doesn't mean that we don't have interest in continuing to invest in Ivy Hill, they are raising new funds. As I mentioned in the prepared remarks, they do have the ability to attract more outside capital away from ARCC today because it's more established. Their track record is good, but obviously, to the extent they require capital for growth, it's always something they come to us for. And I've mentioned as well, to the extent the market changes and rates of return on those types of opportunities improve, we obviously have the ability to invest more capital there to support that.

Michael J. Arougheti

I think one quick additional comment, Kipp, which is if you look at the liquid deals, they're actually coming in even tighter than 10% to 12%, and we're seeing the arbitrage getting pretty tight there with new deals clearing in the 9% to 10% range. And the other thing to highlight too, is you have to think about the return in CLO securities the same way you do any opportunity in terms of the risk-adjusted return. I think one of the challenges in those investments today is just the exposure that the arbitrage in those vehicles has to simultaneous spread tightening and rate increases. And so a lot of sophisticated managers are actually looking at that forward curve and it's getting pretty tight.

Operator

And the next question comes from Terry Ma of Barclays.

Terry Ma - Barclays Capital, Research Division

I think most of mine have been answered, but can you maybe just remind us how big your specialty verticals can get as a proportion of your portfolio, and also the relative returns you're seeing there?

Robert Kipp DeVeer

Yes, sure. I mean, look, Project Finance is a very large market. I would say they're just scratching the surface and the lion's share of their deals are long dated. In terms of duration of the assets, they're on par with what we're doing in both our sponsored and nonsponsored book. Venture Finance is a little bit different in that the duration of the loans that they're making tends to be shorter. I don't know if we have an exact number as to where we think they can get as a percentage of the portfolio, but you should expect that the Project Finance portfolio will always be significantly larger than the Venture Finance portfolio.

Michael J. Arougheti

I think generally speaking, at least in Venture Finance, we're continuing to see higher relative rates of return in that asset class versus the core senior loan book, which is one of the things that attracts us to that space.

Operator

And next we have a question from Casey Alexander of Gilford Securities.

Casey J. Alexander - Gilford Securities Incorporated

Have you had a -- in reference to the discussions with the change in legislation in allowing a higher leverage ratio, have you had a discussion with a rating agency in terms of how they would view that and how that might potentially impact your investment-grade rating?

Michael J. Arougheti

We have on a conceptual basis, and if you look at some of the recent reports that have come out, the language that generally is being put forward by the rating agencies has said it really is a function of what is the quality of the assets that you're leveraging. So just to put that in perspective, there are investment-grade rated banks that are significantly more leveraged than 2:1, which is a reflection of the balance sheet structure and the perceived risk in the assets on the bank's balance sheets. Within the CLO valuation framework, the rating agencies have shown a willingness and an understanding that taking on more leverage on lower-risk senior secured assets doesn't necessarily have a negative impact on ratings. So I think the -- there's a misconception that by definition, if leverage limits go up, that risk will increase. I actually believe the opposite is true and I think the good news is the rating agencies understand that as well. The other thing I would mention, is if you look at the structure of leverage in the BDC space, the BDC balance sheets are already governed by barring [ph] basis based on perceived or actual credit quality with underlying loans on the balance sheet. So if you were to go and look at Ares [ph] or any other BDCs revolving credit facility documents, what you would see is a rating -- a borrowing base facility that basically says 66% to 70% plus leverage is available for the lower-risk assets, and then there's a sliding scale down. So the mechanism is already in place for the market to govern leverage based on risk. I don't think that there's a situation where you could just go out and acquire leverage on lower quality assets. What I'm excited about, to the extent to the legislation were to pass, is the overhang that I actually believe exists throughout the space around the fear of tripping the regulation, is even if nobody chooses to use or is able to access incremental leverage, I think that it would significantly improve the attractiveness of the BDC sector as we now have created a significant amount of cushion to the regulatory framework. So the passage of the legislation, in and of itself, I think is going to be a big, big positive for the industry.

Casey J. Alexander - Gilford Securities Incorporated

On GE yield, I think that it's inevitable that somebody takes that leverage and gets too far out over their skis and eventually runs into serious trouble, which seems to be sort of the natural proclivity for some BDCs in a business that is inherently cyclical.

Michael J. Arougheti

Yes, I do not. So the way I would describe it is this and this is -- people have heard me say this before. We're in the principal investment business. You are either a good principal investor or a bad principal investor. You either understand the cycles or you don't. And the whole bad actor risk is one that exists whether the leverage limit increases or not. And so I think it's important not to tie an increase in leverage to somebody acting badly because those people are going to make bad investments whether you give them leverage or not. And that's just the nature of the business. I'd also highlight, it's important to understand that the BDC space, if somebody wants to generate a 12% or 13% return in a 2% interest rate environment, by definition, they're taking on significant risk. And if you have a structure that is driving you to maintain leverage limits of 0.5, 0.6, 0.7:1, the structure in the investment community is actually asking a BDC manager to take significant risk at the asset level on their behalf. So in some respects, giving people the operating flexibility, they don't necessarily have to use it, but giving them the operating flexibility to drive incremental return through the use of balance sheet leverage as opposed to asset level risk, I actually think, generally, will derisk the industry sector, which is important for us to continue to grow.

Casey J. Alexander - Gilford Securities Incorporated

I have one more question. It was stated in the presentation that you have $0.82 per share of undistributed taxable income, which on the surface, sounds like an awful lot. How do your investors benefit by you holding on to that much undistributable -- undistributed taxable income as opposed to pushing it out to them and not paying the excise tax on that money?

Robert Kipp DeVeer

We talk to people about this a lot, obviously, and that excess has existed now for a while. We get asked, generally, do you view that as a source of special dividends, or do you view it as kind of a rainy day fund? Or do you view it as a safeguard in any particular quarter that's not busy against maybe not earning the dividend on an every quarter basis? And I think we say, typically, yes to all 3 of those. The Board and, obviously, our management team looks at that number every quarter. The good news for us is it is a substantial number. Obviously, investors benefit from that in terms of the company's book value and presumably without the stock price. But I think it's constantly evaluated. And as you've seen, we've been paying some special dividends from that excess over the last 4, 5, 6 quarters. So it's difficult to evaluate what the right number is. That's the conversation that we have with our Board every quarter. But we think there are a lot of benefits hopefully that you see for maybe the discussion around why we have it in the first place.

Operator

And the last question will be from Jon Bock of Wells Fargo.

Jonathan Bock - Wells Fargo Securities, LLC, Research Division

Relating to the churn, Kipp, that you mentioned, and I appreciate this and trying to maybe get a little bit more color on maybe what makes sense in a churnable environment? The way I would look at it would be certainly the lower yield that you have, the more likelihood one would be wanting to churn out of that into higher-yielding investment. So roughly about $1.7 billion of assets yielding sub-8%. Of those, about $941 million done in the last maybe end date of -- origination date of August of '12, right, got to give some time for seasoning. The question I have is, who's the buyer for these assets, in light of the fact that banks are not buying, and CLO structures might have difficulty owning middle market assets? So in light of the broader regulation theories at play, I'm curious where these assets can be sold or syndicated to?

Robert Kipp DeVeer

Sure. I mean, I think generally, most of what we're obviously doing is looking to sell these either through a capital markets initiative here or just through a desk on the Street. I'm not a loan sales guy for a living so I can't tell you where all the paper's ending up. But the way that we think about it is we go out and obviously underwrite full capital structures solutions finance. A meaningful part of that, Jonathan, as you appreciate is, obviously, underwriting senior debt for the issuers that we do business with. The question for us is that at least how much of that you hold versus how much of that do you syndicate over time? Ivy Hill has been very reliable source, obviously, of paper. We sold hundreds of millions of dollars of bank loans in 2013 to Ivy Hill, as an example. Where does it all end up? I do think there are midmarket loan funds. I do think that there are prime rate funds and other floating rate funds that are buying middle market paper as they seek excess yield. But for us, it's just all about achieving liquidity. The good news on most of those names is we originated and underwrote them in new deals. Typically, we earn fees on that, and then obviously, we're selling those assets generally at prices that are north of obviously where we sort of originated them on a net basis, right? So you earn the fees on the underwritings and then selling to pick a number at par is a good outcome, particularly as we look to drive yield up in the book.

Jonathan Bock - Wells Fargo Securities, LLC, Research Division

Okay, appreciate that. And perhaps maybe some additional color on one's ability to back end lever with the specific banking partners, and for those of us sometimes that aren't always on with the parlance, just your ability maybe to sell as part of a transaction, a super senior piece of one of your deals to a financing partner and then you retaining the waterfall. Is that still occurring in this environment, or would you say that, that perhaps is a bit less attractive relative to some of the other initiatives you have to generate additional income?

Robert Kipp DeVeer

I mean we used to do, I think, probably more of that in the days before we had our partnership with GE. Obviously, the SSLP tries to replicate some of that on a programmatic basis. Is it still achievable? Yes. Do we still have an occasional deal where we do that? Of course. But we don't have a program with anybody, so to speak, to do that nor do we sort of have a preferred relationship that just tends to come along on a deal by deal basis. And it can be suggested by us or it can be suggested by one of our potential portfolio of companies and/or an incumbent bank maybe in a deal that we're starting to work on. So it can be attractive in certain circumstances, maybe not in others. We typically, as you know, like to originate and hold our deals sort of from the first dollar up, right? So obviously, achieving some sort of first out leverage allows you to improve yield, which is a good thing, but you also cede a little bit of control in those transactions, depending on what your agreement amongst lenders says, so I have a balanced view, but I think it's fine, yes.

Jonathan Bock - Wells Fargo Securities, LLC, Research Division

Okay. And then you did mention the GE program and the question is since that's such a powerful provider of both fee income as well as interest income, I'd imagine that the question will surface as GE becomes a SIFI, and is already one, how does that fund play into and their partnership with you play into the regulatory dynamic for them now as a very important financial institution that will come under the guise of maybe a bit more government regulation? Could you maybe walk through some of the risks associated with that, given it's such a big part of the earnings profile of ARCC?

Michael J. Arougheti

Yes. I'll just make a quick comment, Jonathan. That's really not for us to comment on. I think it's really for GE to comment on. As -- what I will say is if you look at 2013, we've seen no slowdown in GE's willingness or ability to fund the growth of the joint venture. And number two, as important as that partnership is to us and to them, I would just be careful not to characterize that as critical to the business. Obviously, it's a partnership that we're proud of and it continues to grow and be a great value creator for us. But we have a significant origination and portfolio management infrastructure here, and 75% of our balance sheet resides outside of that program. And so obviously, the business away from SSLP is growing robust and we're pretty excited about it. But I think that's really for GE to answer.

Jonathan Bock - Wells Fargo Securities, LLC, Research Division

It makes sense, Mike. And then Mike, maybe one kind of more global question for you as it relates to everybody understands that one can raise equity in this environment, and as one approaches full leverage, delivering good returns, that's always more than appreciated. And we maybe want to focus on the should you, and what goes through your mind? And so imagine today a current dividend yield in the 8.5% range with, let's say, an average trailing 12-month leverage of 0.59, maybe a little bit higher now, and your cost debt between 5% and 4%, as Penni mentioned, if one were to draw down all the revolvers that are much lower cost. When we add a 332 basis point total fees as a percentage of -- G&A as a percentage of assets, we're getting maybe to a total required return that's needed to be generated on your assets of roughly 10.5%. And current market returns today, I think Kipp you mentioned, you were originating right around at the 10% level. And so as you go through equity capital raising to the extent it's needed, can you maybe walk through -- the should you raise as part of what goes into your mind in light of where returns are today?

Michael J. Arougheti

I'll make a quick comment, John, and then I'll see if Kipp wants to add anything to it. I think the proof is in the pudding if you look at our history as a 10-year public company, we don't look quarter-to-quarter. We manage our balance sheet over the entirety of the cycle with the view towards the benefits of scale, using the benefits of scale to drive asset growth and drive the cost of liabilities down that results in net interest margin. Clearly, when you look at the ROEs that the investors require, reflected as your theoretical cost of equity, you have to factor in what's the available market opportunity. But I would just highlight to you and to the market that we have a very long track record, this quarter notwithstanding, of outearning the dividend and maintaining, on an net interest margin trajectory, that is much better than the asset spread trajectory. If you also look at our ability to generate capital gains over a long period of time, you have to factor that in. So it's not as simple if you back into 10.5% and say, "Is that available?". You have to look at velocity in portfolio, the ability to generate fees, the return on the asset, and candidly, which doesn't get reflected quarter-to-quarter, is the value of a relationship with the borrower over a very long period of time. And as Kipp highlighted in his prepared remarks, 30% to 35% of the deals that we did last year were coming from relationships that we have developed over a long period of time. And the ability to monetize those in terms of fees, amendment fees, continued asset growth on refinancing has to get factored in, but isn't get reflected quarter-to-quarter. And then the last thing I would say, is it still boggles my mind that when you look at the quality of the yield in our portfolio, relative to other yield product in the REIT space, the MLP space, and the high-yield bond market and the leveraged loan market, I would say that the issue is not whether or not we could generate 10% to 10.5% of our assets, but why investors actually require the yields that they do to own BDC equity, because I continue to think that there's a little bit of a mismatch between the stability and attractiveness of the risk-adjusted return in our equity, versus where the market is pricing it.

Okay, I think that was it for today. Again, we thank everybody for their time and attention and look forward to speaking with everybody again next quarter.

Operator

Ladies and gentlemen, this concludes our conference call for today. If you missed any part of today's call, an archived replay of this conference will be available approximately 1 hour after the end of the call through March 11, 2014. To domestic callers by dialing 1(877)344-7529 and to international callers by dialing 1(412)317-0088. For all replays, please reference conference number 10038380. An archived replay will also be available on a webcast link located on the homepage of the Investors Resources section of our website. Thank you for your time. You may now disconnect.

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