1 00:00:00,040 --> 00:00:02,600 Speaker 1: Because activity in the private capital space is expected to 2 00:00:02,640 --> 00:00:05,400 Speaker 1: accelerate over the next few months. In the second quarter alone, 3 00:00:05,400 --> 00:00:07,920 Speaker 1: thirty four new private credit funds were able to raise 4 00:00:07,920 --> 00:00:10,760 Speaker 1: about seventy one billion dollars. That's more than double what 5 00:00:10,800 --> 00:00:13,480 Speaker 1: the industry saw in the first quarter. It's an industry, 6 00:00:13,520 --> 00:00:15,360 Speaker 1: of course, that has come so far, so fast, from 7 00:00:15,400 --> 00:00:18,480 Speaker 1: niche player to king maker and an area previously ruled 8 00:00:18,640 --> 00:00:21,520 Speaker 1: by those big Wall Street banks. But as the industry matures, 9 00:00:21,640 --> 00:00:23,439 Speaker 1: a new crop of leaders are stepping up to write 10 00:00:23,440 --> 00:00:26,360 Speaker 1: the next chapter. Armed and Panosian oversees the performing credit 11 00:00:26,440 --> 00:00:29,400 Speaker 1: business at distress debt pioneer oak Tree Capital, and starting 12 00:00:29,440 --> 00:00:31,600 Speaker 1: next year he will take the reins as co CEO 13 00:00:32,000 --> 00:00:34,200 Speaker 1: of the entire one hundred and seventy nine billion dollar business. 14 00:00:34,200 --> 00:00:36,320 Speaker 1: Please to say, Arman joins us right now here in 15 00:00:36,320 --> 00:00:38,280 Speaker 1: our New York studios. Armen, great to have you here. 16 00:00:38,400 --> 00:00:39,000 Speaker 2: Good to be here. 17 00:00:39,360 --> 00:00:41,680 Speaker 1: Let's talk a little bit about I guess what type 18 00:00:41,720 --> 00:00:45,319 Speaker 1: of activity we're seeing in the private debt space right now? 19 00:00:45,360 --> 00:00:48,839 Speaker 3: As we say, I would characterize it in two forms, 20 00:00:48,880 --> 00:00:53,080 Speaker 3: currently stepping in where the banks stepped away. The investment 21 00:00:53,080 --> 00:00:55,680 Speaker 3: banks as well as the regional banks have stepped away 22 00:00:55,720 --> 00:00:59,080 Speaker 3: from the market and providing capital to private equity sponsors 23 00:00:59,120 --> 00:01:02,400 Speaker 3: and companies that need that. Capital that historically foundated at 24 00:01:02,400 --> 00:01:05,720 Speaker 3: the banks now are provided by private capital. And secondarily, 25 00:01:06,080 --> 00:01:09,200 Speaker 3: we're beginning to see some stress in the market and 26 00:01:09,240 --> 00:01:11,760 Speaker 3: the need for more creative rescue. 27 00:01:11,440 --> 00:01:13,600 Speaker 2: Financing or opportunistic. 28 00:01:13,080 --> 00:01:14,840 Speaker 1: Count I am curious. I mean oak Try Office, of 29 00:01:14,840 --> 00:01:17,000 Speaker 1: course made its name by sort of I guess, coming 30 00:01:17,040 --> 00:01:19,640 Speaker 1: in where people were sort of leaving, sort of filling 31 00:01:19,640 --> 00:01:22,240 Speaker 1: that void, if you will. But when you're finding opportunities 32 00:01:22,280 --> 00:01:24,640 Speaker 1: out there left by the banks, whether region or big, 33 00:01:25,240 --> 00:01:26,600 Speaker 1: is the quality still there? 34 00:01:26,880 --> 00:01:29,959 Speaker 3: The quality is quite strong, and I would say in 35 00:01:30,000 --> 00:01:32,640 Speaker 3: some respects it's even better than it had been even 36 00:01:32,680 --> 00:01:33,560 Speaker 3: two or three years ago. 37 00:01:33,560 --> 00:01:34,399 Speaker 2: And the reason for. 38 00:01:34,319 --> 00:01:37,759 Speaker 3: That is that because the cost of borrowing is so high, 39 00:01:38,080 --> 00:01:42,280 Speaker 3: the firms and sponsors that are buying these businesses are 40 00:01:42,319 --> 00:01:46,320 Speaker 3: really focusing on the least cyclical businesses, the highest quality 41 00:01:46,440 --> 00:01:49,440 Speaker 3: companies that they would buy in anticipation of a potential 42 00:01:49,440 --> 00:01:50,680 Speaker 3: recession in twenty twenty four. 43 00:01:51,040 --> 00:01:53,160 Speaker 4: Well, can we get specific there when you think about 44 00:01:53,200 --> 00:01:56,240 Speaker 4: this pullback that we're seeing from the banks who would 45 00:01:56,240 --> 00:02:00,240 Speaker 4: traditionally provide lending to those types of companies what kind 46 00:02:00,240 --> 00:02:02,920 Speaker 4: of industries, What kind of sectors and companies are you 47 00:02:03,240 --> 00:02:05,040 Speaker 4: actually seeing opportunity. 48 00:02:04,480 --> 00:02:05,000 Speaker 3: In right now. 49 00:02:05,520 --> 00:02:06,720 Speaker 2: It's a variety of sectors. 50 00:02:07,160 --> 00:02:09,840 Speaker 3: We are seeing a lot of activity in software, large 51 00:02:09,840 --> 00:02:14,720 Speaker 3: software companies with a diversified end market exposure. We are 52 00:02:14,760 --> 00:02:19,560 Speaker 3: seeing industrials which generally speaking have hundreds, if not thousands 53 00:02:19,560 --> 00:02:25,640 Speaker 3: of customers and a more regular maintenance and repair aspect 54 00:02:25,720 --> 00:02:28,960 Speaker 3: to their revenue base rather than capital expenditures. I'm really 55 00:02:28,960 --> 00:02:33,480 Speaker 3: looking for businesses that have a more depressed reaction to 56 00:02:33,520 --> 00:02:34,400 Speaker 3: GDP movements. 57 00:02:35,000 --> 00:02:37,160 Speaker 4: And of course Romain walked us through some of the 58 00:02:37,200 --> 00:02:40,440 Speaker 4: size and scope some of the magnitude of activity that 59 00:02:40,480 --> 00:02:43,040 Speaker 4: we're seeing in the private credit space. And it's interesting 60 00:02:43,280 --> 00:02:46,560 Speaker 4: when you compare that to private equity, because it seems 61 00:02:46,600 --> 00:02:50,280 Speaker 4: like fundraising has slowed down a bit in that space. 62 00:02:50,360 --> 00:02:52,600 Speaker 2: Private credit appears to be immune. 63 00:02:53,080 --> 00:02:55,320 Speaker 4: How much is that a function of what we saw 64 00:02:55,440 --> 00:02:57,240 Speaker 4: in March and these banks pulling back. 65 00:02:57,760 --> 00:03:02,080 Speaker 3: I think investors recognize that private credit offers some of 66 00:03:02,120 --> 00:03:04,600 Speaker 3: the best risk adjusted returns in the credit markets today 67 00:03:04,919 --> 00:03:08,640 Speaker 3: and especially relative to the past, and so we are 68 00:03:08,919 --> 00:03:13,720 Speaker 3: seeing fun flows into private credit and a decline and 69 00:03:13,840 --> 00:03:16,080 Speaker 3: interest in private equity at the moment, because there is 70 00:03:16,200 --> 00:03:19,840 Speaker 3: concern around the velocity of return of capital from private equity. 71 00:03:19,560 --> 00:03:21,280 Speaker 2: Funds to those LPs. 72 00:03:23,840 --> 00:03:27,520 Speaker 3: I think that they're right, you know, borrowing or investing 73 00:03:27,600 --> 00:03:30,400 Speaker 3: from our perspective, in the double digits in the low 74 00:03:30,440 --> 00:03:33,440 Speaker 3: teams on a first lean basis to companies that are 75 00:03:33,520 --> 00:03:37,000 Speaker 3: quite large and supported by very large checks from name 76 00:03:37,080 --> 00:03:40,000 Speaker 3: brand private equity firms is a very attractive place to 77 00:03:40,400 --> 00:03:41,120 Speaker 3: invest currently. 78 00:03:41,240 --> 00:03:43,520 Speaker 1: When we talk about just the growth in this industry, 79 00:03:43,560 --> 00:03:45,360 Speaker 1: we know that at least for certain players in the 80 00:03:45,400 --> 00:03:48,360 Speaker 1: industry that's maybe led them I guess maybe to make 81 00:03:48,360 --> 00:03:51,320 Speaker 1: some bets or maybe somewhat ill advise, at least in hindsight. 82 00:03:51,360 --> 00:03:54,520 Speaker 1: I am curious as we sort of enter this period 83 00:03:54,640 --> 00:03:57,440 Speaker 1: where these opportunities started to crop up, how much room 84 00:03:57,480 --> 00:04:00,720 Speaker 1: did oak Tree have to be able to make new investments. 85 00:04:01,520 --> 00:04:03,840 Speaker 3: Oak Tree does have a considerable amount of dry powder 86 00:04:03,920 --> 00:04:07,080 Speaker 3: across all of our strategies, and we have been patient 87 00:04:07,200 --> 00:04:09,440 Speaker 3: over the course of the last several years. When the 88 00:04:09,440 --> 00:04:11,720 Speaker 3: markets were a little bit more open than we thought 89 00:04:11,800 --> 00:04:16,000 Speaker 3: was appropriate, and we saw capital structures in twenty eighteen 90 00:04:16,080 --> 00:04:19,560 Speaker 3: or nineteen reflective of an easy money environment, we found 91 00:04:19,640 --> 00:04:22,560 Speaker 3: less opportunity at that point in time and preferred to 92 00:04:22,800 --> 00:04:24,840 Speaker 3: go after less efficient areas of investing. 93 00:04:25,160 --> 00:04:27,080 Speaker 2: But today, with the dislocation that we're. 94 00:04:26,920 --> 00:04:30,440 Speaker 3: Seeing in the core of the private credit market, we 95 00:04:30,520 --> 00:04:33,040 Speaker 3: are leaning in heavily into that space because. 96 00:04:32,839 --> 00:04:36,040 Speaker 1: It is dislocated compared to previous sort of down economic 97 00:04:36,080 --> 00:04:38,560 Speaker 1: cycles or down business cycles. I should say here, do 98 00:04:38,600 --> 00:04:42,479 Speaker 1: you think the competition amongst asset managers and investors is 99 00:04:42,520 --> 00:04:44,080 Speaker 1: greater now than what it was in the past. 100 00:04:44,440 --> 00:04:46,480 Speaker 3: It's certainly greater today than it was during the Global 101 00:04:46,480 --> 00:04:48,960 Speaker 3: financial crisis. Private credit as an asset class was only 102 00:04:48,960 --> 00:04:51,279 Speaker 3: two hundred and fifty billion dollars prior to the Global 103 00:04:51,320 --> 00:04:54,240 Speaker 3: financial crisis. Today it's one and a half trillion. There 104 00:04:54,240 --> 00:04:57,360 Speaker 3: certainly aren't more competitors, and as a result, there's a 105 00:04:57,480 --> 00:05:01,520 Speaker 3: varying degree of issues and capability across that competitor base. 106 00:05:01,560 --> 00:05:03,159 Speaker 3: But I think one thing is definitely true of the 107 00:05:03,160 --> 00:05:05,840 Speaker 3: asset class overall is that it has been it has 108 00:05:05,880 --> 00:05:09,640 Speaker 3: benefited from a pro cyclical rise that has resulted in 109 00:05:09,720 --> 00:05:11,159 Speaker 3: maybe some excessive risk taking. 110 00:05:11,680 --> 00:05:14,600 Speaker 4: Well, on the point on competitors, of course, oak Tree, 111 00:05:15,040 --> 00:05:19,400 Speaker 4: I believe Brookfield Asset Management owns about sixty percent. When 112 00:05:19,440 --> 00:05:22,560 Speaker 4: you think about the competitive field, what benefits does that 113 00:05:22,640 --> 00:05:24,840 Speaker 4: give you in terms of being attached to one of 114 00:05:24,880 --> 00:05:25,920 Speaker 4: the largest players. 115 00:05:26,440 --> 00:05:28,560 Speaker 3: It gives us an insight into the asset classes where 116 00:05:28,560 --> 00:05:33,440 Speaker 3: they have developed very deep sector expertise. They're one of 117 00:05:33,480 --> 00:05:38,040 Speaker 3: the largest participants in renewables, infrastructure, real estate, and private equity, 118 00:05:38,400 --> 00:05:42,599 Speaker 3: and we see a lot of benefit from being part 119 00:05:42,640 --> 00:05:45,920 Speaker 3: of the organization because they're able to provide us both 120 00:05:46,400 --> 00:05:49,640 Speaker 3: technical and fundamental information about the markets that they participate in. 121 00:05:50,160 --> 00:05:52,760 Speaker 4: And so we've talked about opportunities. 122 00:05:52,080 --> 00:05:52,840 Speaker 2: That you're seeing. 123 00:05:53,200 --> 00:05:56,160 Speaker 4: What are you hearing from clients, What kind of demand 124 00:05:56,279 --> 00:05:59,359 Speaker 4: are you seeing for different types of strategies. 125 00:06:00,000 --> 00:06:02,080 Speaker 3: That it is at the top of the list, I 126 00:06:02,080 --> 00:06:05,760 Speaker 3: would say related but separate as asset back finance, where 127 00:06:05,920 --> 00:06:09,919 Speaker 3: again thematically it's the same basis or the same route, 128 00:06:10,040 --> 00:06:13,599 Speaker 3: which is banks are stepping away from consumer lending, certain 129 00:06:13,640 --> 00:06:16,320 Speaker 3: types of corporate lending, and there is a need for 130 00:06:16,680 --> 00:06:22,160 Speaker 3: structured finance or structured credit that fills that gap, and 131 00:06:22,200 --> 00:06:25,240 Speaker 3: the investor base switches from banks being the provider of 132 00:06:25,279 --> 00:06:29,680 Speaker 3: that capital to retail or insurance or pension type of 133 00:06:29,680 --> 00:06:30,880 Speaker 3: clients providing that capital. 134 00:06:30,960 --> 00:06:33,760 Speaker 1: This obviously is a function of regulation, or at least 135 00:06:33,800 --> 00:06:37,240 Speaker 1: the speculation of increased regulation, I should say, is there 136 00:06:37,279 --> 00:06:40,440 Speaker 1: any worry that the increase in regulation that we might 137 00:06:40,480 --> 00:06:44,240 Speaker 1: see placed on some of the traditional banking system that 138 00:06:44,240 --> 00:06:47,080 Speaker 1: that could eventually come into your world Given just how 139 00:06:47,080 --> 00:06:51,040 Speaker 1: big it's gotten, the regulators. 140 00:06:50,560 --> 00:06:54,039 Speaker 3: Certainly have the ability to step in and regulate parts 141 00:06:54,040 --> 00:06:55,279 Speaker 3: of the private credit markets. 142 00:06:56,160 --> 00:06:57,080 Speaker 2: I think that. 143 00:06:58,520 --> 00:07:01,960 Speaker 3: How diffuse the private credit marks it is, does not 144 00:07:02,080 --> 00:07:07,280 Speaker 3: lend itself very easily to systematic regulation that can impact it. 145 00:07:08,240 --> 00:07:12,000 Speaker 3: We are prepared, oak Tree is prepared to handle regulation 146 00:07:12,240 --> 00:07:14,760 Speaker 3: if need me, But I wouldn't expect a tremendous amount 147 00:07:14,760 --> 00:07:17,680 Speaker 3: of regulation in that space as capital is needed by. 148 00:07:17,560 --> 00:07:18,280 Speaker 2: That borrower base. 149 00:07:18,360 --> 00:07:21,040 Speaker 1: Are you trying to raise capital right now, oak Tree? 150 00:07:21,080 --> 00:07:21,760 Speaker 2: We are. 151 00:07:21,800 --> 00:07:27,320 Speaker 3: We are raising a fund targeting large sponsor led private credit, 152 00:07:28,160 --> 00:07:31,600 Speaker 3: targeting a ten billion dollar fundraise to support that opportunity 153 00:07:31,640 --> 00:07:34,800 Speaker 3: set that is as it is dislocated and very attractive 154 00:07:34,800 --> 00:07:35,880 Speaker 3: from a risk adjusted. 155 00:07:35,560 --> 00:07:37,200 Speaker 1: How has that been going, How has it been received? 156 00:07:37,280 --> 00:07:39,880 Speaker 2: It's been going well. There certainly is. 157 00:07:39,920 --> 00:07:43,720 Speaker 3: A denominator effect and a lack of liquidity in the 158 00:07:43,720 --> 00:07:46,360 Speaker 3: market amongst the limited partners who have had is seen 159 00:07:46,400 --> 00:07:50,320 Speaker 3: a slow down in private equity returns of capital to them. 160 00:07:50,440 --> 00:07:53,760 Speaker 3: So the interest in the asset class is very high. 161 00:07:54,160 --> 00:07:57,160 Speaker 3: The flows for oak Tree are reasonably high. But I 162 00:07:57,200 --> 00:08:00,280 Speaker 3: would say generally speaking, raising private assets is more childlenging 163 00:08:00,280 --> 00:08:01,960 Speaker 3: today than that it was a year or two ago. 164 00:08:02,200 --> 00:08:04,160 Speaker 1: Just real quickly on that point, though, when we talk 165 00:08:04,200 --> 00:08:06,800 Speaker 1: about the denominator effect, and with that, are we talking 166 00:08:06,800 --> 00:08:08,040 Speaker 1: about allocation limits? 167 00:08:08,040 --> 00:08:09,840 Speaker 2: I mean, is it that the potential clients. 168 00:08:09,600 --> 00:08:11,720 Speaker 1: Are already kind of up against whatever they can allocate to. 169 00:08:11,840 --> 00:08:14,840 Speaker 3: Yes, when the public markets sold off, and that was 170 00:08:14,880 --> 00:08:17,000 Speaker 3: more acute earlier in the year, when the public markets 171 00:08:17,000 --> 00:08:21,120 Speaker 3: had sold off, their allocation to private markets looked too high. 172 00:08:21,200 --> 00:08:23,680 Speaker 3: And now that the public markets have rebounded, the denominator 173 00:08:23,720 --> 00:08:25,360 Speaker 3: effect is becoming less. 174 00:08:25,120 --> 00:08:27,920 Speaker 2: Of an issue. But the liquidity remains an issue. 175 00:08:28,440 --> 00:08:31,480 Speaker 4: Liquidity remains an issue. And let's situate this conversation in 176 00:08:31,520 --> 00:08:35,679 Speaker 4: the macro economic environment, because it seems like most of 177 00:08:36,120 --> 00:08:38,080 Speaker 4: Wall Street, most of the investors that I talked to, 178 00:08:38,440 --> 00:08:41,280 Speaker 4: are pretty married to this higher for longer narrative. And 179 00:08:41,280 --> 00:08:44,000 Speaker 4: we've heard pretty much the same from the Federal Reserve. 180 00:08:44,080 --> 00:08:46,600 Speaker 4: When you look at your world of leverage finance of 181 00:08:46,640 --> 00:08:49,959 Speaker 4: distress debt, are you starting to see that filter through? 182 00:08:50,559 --> 00:08:52,080 Speaker 2: We are starting to see it filter through. 183 00:08:52,559 --> 00:08:55,920 Speaker 3: I would expect rates to stay higher for longer as well, 184 00:08:56,520 --> 00:09:00,960 Speaker 3: because even with or without a recession, there there isn't 185 00:09:01,000 --> 00:09:04,760 Speaker 3: there is going to be an elevated default experience. I 186 00:09:04,800 --> 00:09:07,160 Speaker 3: think that the need for private capital is going to 187 00:09:07,160 --> 00:09:09,360 Speaker 3: be quite high, and I do. 188 00:09:11,040 --> 00:09:12,720 Speaker 2: We are seeing the beginnings of the. 189 00:09:12,559 --> 00:09:17,319 Speaker 3: Need for gap capital to help refinance maturities that are 190 00:09:17,360 --> 00:09:19,480 Speaker 3: starting to become topical next year in. 191 00:09:19,440 --> 00:09:21,920 Speaker 4: The year after when it comes to defaults, we are 192 00:09:22,320 --> 00:09:24,120 Speaker 4: starting to see some of that pick up, but we're 193 00:09:24,160 --> 00:09:27,199 Speaker 4: still at historically low levels. And if you think about 194 00:09:27,240 --> 00:09:29,480 Speaker 4: what is going to push to faults from here, do 195 00:09:29,480 --> 00:09:33,600 Speaker 4: you see more coming from a recessionary type environment or 196 00:09:33,720 --> 00:09:35,320 Speaker 4: just from higher interest rates? 197 00:09:35,400 --> 00:09:36,360 Speaker 2: What's the bigger risk? 198 00:09:36,520 --> 00:09:39,160 Speaker 3: I think for now it's higher interest rates, and higher 199 00:09:39,160 --> 00:09:42,640 Speaker 3: interest rates can tip us into a recession, but the 200 00:09:42,720 --> 00:09:46,080 Speaker 3: immediate impact is really in the tails of the portfolio 201 00:09:47,000 --> 00:09:49,720 Speaker 3: or the direct lending or just credit market portfolios out 202 00:09:49,720 --> 00:09:53,120 Speaker 3: there where the most aggressive twenty or thirty percent of 203 00:09:53,160 --> 00:09:55,600 Speaker 3: capital structures put in place over the last five years 204 00:09:56,000 --> 00:09:59,680 Speaker 3: are becoming challenged now because they were expected to grow 205 00:09:59,760 --> 00:10:02,840 Speaker 3: in to their capital structures with growth and revenue growth 206 00:10:02,880 --> 00:10:05,000 Speaker 3: in EBITDA, and that just hasn't played through. 207 00:10:05,600 --> 00:10:08,280 Speaker 1: Is there a difference that you're finding between in terms 208 00:10:08,280 --> 00:10:09,719 Speaker 1: of what's already out there on the market and the 209 00:10:09,720 --> 00:10:16,079 Speaker 1: secondary market between actual loans themselves versus debt issues bonds. 210 00:10:16,480 --> 00:10:20,280 Speaker 3: Absolutely, there is a divergence in performance the bond market. 211 00:10:20,320 --> 00:10:22,480 Speaker 3: The high heeld bond market in particular, is the highest 212 00:10:22,520 --> 00:10:23,920 Speaker 3: quality it's been in ten years. 213 00:10:24,280 --> 00:10:26,679 Speaker 2: Meanwhile the loan market is the lowest quality it's been 214 00:10:26,679 --> 00:10:27,280 Speaker 2: in ten years. 215 00:10:27,320 --> 00:10:30,960 Speaker 3: Why because the loan market was the preferred financing tool 216 00:10:31,000 --> 00:10:33,440 Speaker 3: for private equity sponsors doing new LBOs over the course 217 00:10:33,480 --> 00:10:35,600 Speaker 3: of the last ten years, because they were floating rate 218 00:10:35,640 --> 00:10:38,120 Speaker 3: and at the time floating rates were low, and because 219 00:10:38,160 --> 00:10:41,960 Speaker 3: loans do not have call protection generally, whereas bonds do 220 00:10:42,040 --> 00:10:43,920 Speaker 3: have call protection. If you were to refinance a bond, 221 00:10:43,960 --> 00:10:46,040 Speaker 3: there would be a meaningful premium that would need to 222 00:10:46,040 --> 00:10:49,520 Speaker 3: be paid out. As a result, only strategic or companies 223 00:10:49,520 --> 00:10:53,760 Speaker 3: seeking capital for strategic needs finance themselves in the bond market. 224 00:10:54,000 --> 00:10:57,079 Speaker 3: And therefore today we find that total debt to EBITDA 225 00:10:57,320 --> 00:11:00,480 Speaker 3: of the average high heield bond issuer is low than 226 00:11:00,480 --> 00:11:02,840 Speaker 3: the first lean debt to EBIT of the average loan. 227 00:11:02,679 --> 00:11:06,520 Speaker 4: Issuer and armand when we spoke back in June. 228 00:11:06,520 --> 00:11:07,520 Speaker 2: You were on Real Yield. 229 00:11:07,559 --> 00:11:09,840 Speaker 4: We spend a lot of time talking about commercial real estate, 230 00:11:09,880 --> 00:11:12,240 Speaker 4: and I feel like it's kind of dropped out of 231 00:11:12,280 --> 00:11:14,720 Speaker 4: the zeitgeist in the past few months. But when it 232 00:11:14,760 --> 00:11:18,040 Speaker 4: comes to commercial real estate, are you seeing opportunities there? 233 00:11:18,559 --> 00:11:21,320 Speaker 3: I think the commercial real estate opportunity for now is 234 00:11:21,400 --> 00:11:24,160 Speaker 3: really focused on office space, and I think that the 235 00:11:24,240 --> 00:11:27,480 Speaker 3: stress and distress in that opportunity set is only worsening. 236 00:11:28,320 --> 00:11:28,840 Speaker 2: I wouldn't. 237 00:11:29,960 --> 00:11:32,280 Speaker 3: I don't think right now is the depth of the opportunity, 238 00:11:32,280 --> 00:11:34,400 Speaker 3: but I do think it's coming. You know, oak Tree 239 00:11:34,400 --> 00:11:38,560 Speaker 3: as a firm does lean towards dislocation, and at some point, 240 00:11:38,640 --> 00:11:39,240 Speaker 3: I think real. 241 00:11:39,200 --> 00:11:41,559 Speaker 2: Estate it will become a bye again. 242 00:11:41,720 --> 00:11:44,160 Speaker 1: It's just not at the moment an overall just Arman 243 00:11:44,400 --> 00:11:48,600 Speaker 1: final question here, You're relatively encouraged about economic conditions right now, 244 00:11:48,679 --> 00:11:50,440 Speaker 1: at least in from an investor perspective. 245 00:11:51,080 --> 00:11:54,240 Speaker 3: I'm relatively encouraged about economic conditions. I don't think that 246 00:11:54,400 --> 00:11:55,960 Speaker 3: if we do have a recession, I don't think it'll 247 00:11:55,960 --> 00:11:58,480 Speaker 3: be a deep recession. You know, I was investing during 248 00:11:58,480 --> 00:12:02,320 Speaker 3: the global financial crisis. This is nowhere near the level 249 00:12:02,360 --> 00:12:05,280 Speaker 3: of the global financial crisis. However, I do think that 250 00:12:05,280 --> 00:12:09,080 Speaker 3: that same level of comfort with the economic conditions results 251 00:12:09,120 --> 00:12:12,880 Speaker 3: in the factors that would influence a higher for longer environment. 252 00:12:12,960 --> 00:12:16,040 Speaker 3: There's no need to reduce rates, and therefore we will 253 00:12:16,040 --> 00:12:17,840 Speaker 3: see the faults as a result of just high rates, 254 00:12:17,840 --> 00:12:19,240 Speaker 3: even if a recession does not occur. 255 00:12:19,360 --> 00:12:21,400 Speaker 1: All right, Arman, I'll really appreciate you coming in and 256 00:12:21,400 --> 00:12:24,160 Speaker 1: taking time for us. A great conversation here with Armand Panosi, 257 00:12:24,160 --> 00:12:26,760 Speaker 1: and he's managing director and head of performing credit over 258 00:12:26,840 --> 00:12:29,400 Speaker 1: at oak Tree, and starting in the first quarter he 259 00:12:29,440 --> 00:12:32,079 Speaker 1: will be the co CEO of that firm.