On conviction,
and the cost of it.

Each January I write to our capital partners and sponsors. The convention, in this industry, is to write a letter that flatters the firm and reassures the reader. This is not that letter. The work of private credit is, in the end, the work of saying no with care and saying yes with conviction — and a year's letter ought to account, candidly, for both.

We deployed $3.1 billion in 2025 across 388 transactions — bringing cumulative placed capital since 2018 above the $20 billion mark, a threshold I view with the wariness it deserves. We declined roughly four times that amount this year. The decline ratio is the more honest figure, and it is the one I watch first when I open the monthly committee deck. A firm that does not exercise the discipline to say no in size cannot be trusted with the discipline to say yes in conviction. The two are the same muscle.

We were wrong on a few things this year, and I would rather name them before someone else does. We underestimated the speed at which DSCR pricing would tighten in the secondary market between February and May; we held two whole-loan packages a quarter longer than we should have, and the opportunity cost was real. We also took longer than we should have to recognize that a particular Sun Belt operator's pro-formas had drifted — not in lying, but in optimism — and the bridge facility we extended in March came back to committee in October requiring a measured workout. It is being resolved, in line with our reserves, and the lesson — that optimism without operating data is a tax we pay later — is one we do not intend to pay twice.

What we got right

We held our line on first-lien, business-purpose, asset-secured paper. We did not chase mezzanine into multifamily at a moment when the equity beneath it was, charitably, theoretical. We did not buy a debt fund. We did not raise a fund of our own — which several of you, kindly, have suggested we should. We continued to deploy our capital partners' dollars on a deal-by-deal basis, which permits us to walk away from any transaction at any moment, and which is, in our view, the only honest way to operate in a market where the difference between a good year and a poor one is measured in three or four declined commitments.

We closed our fastest term-sheet-to-funding to date — a $42 million first-lien bridge in twenty-two days — without compromising our four-eyes underwriting protocol or shortening the asset-management plan. Speed in private credit is not a virtue in itself. Speed without discipline is just an expensive way to be wrong quickly. But speed with discipline — which is to say, knowing the answer because you have done the work already — is what our sponsors are paying for, and we delivered it.

The year ahead

I expect 2026 to be a year that rewards conservatism in three places and boldness in one. Conservatism in DSCR pricing, which we believe is still one or two basis-point repricings away from clearing. Conservatism in build-to-rent, where we will continue to require a stabilized DSCR test before any bridge-to-perm conversion. Conservatism in foreign-national underwriting, where we will lean further into pledged-asset reserves and away from cash-out structures. And boldness in one place: the Non-QM bulk-purchase market, where we believe the dispersion in pricing across originators creates a defensible alpha for a buyer with our diligence cadence.

We will also continue to behave as though we work for you, because, in the ways that matter, we do. The committee meets weekly. The reserve schedule is reviewed monthly. The loss memoranda — when they exist, and they will, periodically, exist — are written first, candidly, and before the quarterly note that follows. That order is not negotiable.

On behalf of the firm — thank you for the trust you have placed with us this year. We do not take it lightly. We never have.