Q2 2021 Granite Point Mortgage Trust Inc Earnings Call
Good morning, My name is cole and I'll be your conference facilitator at this time of we'd like to welcome everyone to the granite mortgage.
Granite point mortgage Trust second quarter 2021 financial results Conference call all participants will be in a listen only mode and that's the reminder, this call is being recorded.
After the Speakers' remarks, there will be a question and answer period.
Now I'd like to turn the conference over to Chris Petta with Investor Relations for granite. Please go ahead.
Thank you and good morning, everyone. Thank you for joining our call to discuss granite 0.2nd quarter 2021 financial results.
With me on the call. This morning are Jack Taylor, our President and Chief Executive Officer, Mark on your bad debt, our Chief Financial Officer, He's out part of our Chief investment Officer, and co head of originations Pete and morale of our Chief Development Officer of co head of originations and Steve Clark, Our Chief operating officer.
After my introductory comments, Jack will review, our current business activities and provide a brief recap of market conditions.
These are part will discuss our portfolio and Marshall will highlight key items from our financial results.
The press release of financial tables associated with today's call as well as the form 10-Q filed yesterday with the SEC.
You do not have the copy you may find them on our website or on the SEC's website at SEC Gov.
In our earnings release, and slides, which are now posted in the Investor Relations section of our website. We have provided a reconciliation of GAAP to non-GAAP financial measures.
We urge you to review this information in conjunction with today's call.
I would also like to mention this call is being webcast and maybe accessed on our website on the same location.
Before I turn the call over to Jack I would like to remind you that remarks made by management. During this conference call on the supporting slides may include forward looking statements.
Which are uncertain and outside of the company's control.
Forward looking statements reflect our views regarding future events and the typically associated with the use of words, such as anticipate expect estimate and believe or other similar expressions.
Caution investors not to rely unduly on forward looking statements named.
They imply risks and uncertainties and actual results may differ materially from expectation.
We urge you to carefully consider the risks described in our filings with the SEC, including our most recent 10-K and 10-Q reports, which may be obtained on the SEC's website at SEC desktop.
We do not undertake any obligation to update or correct any forward looking statements. If later events prove them to be inaccurate I will now turn the call over to Jack.
Thank you, Chris and good morning, everyone.
I'd like to welcome you all to our second quarter 2021 earnings call.
Hope everyone continues to stay healthy and safe.
Our business delivered another quarter of solid operating results as we continued to successfully execute on our strategy of originating and managing a well diversified portfolio of first mortgage loans generating attractive returns.
Yesterday afternoon, we reported second quarter distributable earnings of 29 cents per share, which again comfortably covered our common stock dividend of 25 cents per share.
Oh earnings continued to benefit from in the money LIBOR floors on our loans and the strength of our portfolio.
In addition, our book value of moderately increased to $17.27 per share partially benefiting from the share repurchases executed during the quarter.
We had an active quarter of across our business with respect to both assets and liabilities during the second quarter, we closed 7 new loans totaling over $200 million of commitments and currently have an additional $280 million of wells that have either closed or are expected to close in the near term.
To date, we have originated loans secured primarily by multifamily properties.
We have also funded well leased office properties and our personal loans secured by industrial warehouse self storage lifesciences at others.
In addition to our existing pipeline of committed loans, we have been actively sourcing new investment opportunities with the goal of deploying our excess liquidity and growing our portfolio, which should help improve our earnings and dividends over time.
We are currently actively reviewing several billion dollars of lending opportunities the sculpsure, which allows us to be selective and pick the most interesting investments for our portfolio.
The market for lending on transitional commercial real estate assets remains very active with significantly improved transaction volumes supported by robust levels of the available liquidity and well functioning capital markets.
Investors are increasingly enthusiastic about deploying both equity and debt capital and adding to their exposure to U S commercial real estate.
Granite point benefits from this increased market activity on both sides of our balance sheet.
The low repayments, we realize on our portfolio generally provide us with the additional liquidity for new investments. We're also able to further improve our funding profile by taking advantage of the favorable capital markets conditions.
During the second quarter, the pace of our repayments ex celebrated resulting in over 420 million in total volume, including 134 million of hotel loan payoffs.
Which contributed to the decline in our portfolio of balance and earnings quarter over quarter of repayments occurred in advance of about new originations.
We view this level of payoffs, it's elevated and would anticipate it to moderate for the rest of the year.
With respect to other borrowings during the second quarter, we closed our third commercial real estate CLO on $824 million transaction and also the extended maturities on some of our financing facilities, our CLO at attractive cost of funds and leverage increased our proportion of the non mark to market borrowers to about 75 per cent.
Achieving our targeted levels.
We believe the CLO market remains very favorable for well established of repeat issue of such as granite point and as the key component of our balance sheet management strategy.
As we originate new loans and grow our portfolio, we intend over time to be an active participant and opportunistically access the commercial real estate the CLO market as we execute on our strategy of maintaining a well diversified term match funding profile emphasized the non mark to market and non recourse financing sources.
We were very pleased with the performance of our business through the first half of the year. We have delivered solid earnings driven by the attractive income generated by a well balanced defensively positioned investment portfolio.
And supported by the benefits of the LIBOR floors embedded in all the loans.
We have improved our capital structure and we'll continue to do so to further reduce our funding cost and provide us with more balance sheet flexibility.
Refinancing our existing term loan remains a strategic priority.
Given the improving market fundamentals of increased transaction volume, our healthy level of liquidity and the strength of our origination platform. We are well positioned to take advantage of ample investment opportunities and grow our business, while delivering attractive risk adjusted results to our stockholders over time.
Supported by our highly experienced and talented team.
We intend to continue to expand the already strong forward pipeline to support on earnings and dividends. While also approved the rationalizing the mix of our funding sources.
As an internally managed REIT, we believe we have the opportunity to realize meaningful economies of scale benefits embedded in our business as we grow over time.
I would now like to turn the call over to Steve <unk> to discuss our originations forward pipeline of portfolio in more detail.
Thank you Jack and thank you all for joining our call. This morning.
We had a very busy quarter with respect to our overall portfolio activity.
We closed 7 new loans with total commitments of over 200 million and initial fundings of over $160 million.
We also funded an additional 30 million on existing commitments.
Total portfolio of funding of over $190 million.
6 of these loans comprising over 70% of our Q2 originations are secured by multifamily properties and 1 loan is secured by a well leased office building in the South East.
The new loans carry attractive return and credit profiles with the weighted average yield of LIBOR, plus 410, and a weighted average stabilized LTV of under 68% reflective of the high proportion of multifamily loans.
During the second quarter, we realized $423 million of repayments, including 8 full loan pay offs and several partial paydowns.
The repayments were diversified across various property types and included 2 of our larger hotel loans with the combined principal balance of about $134 million, which reduced our portfolio of hotel allocation to under 15%.
We do this volume of repayments is elevated and we would anticipate it to moderate over the rest of the year.
Our initial estimate for full year of repayments was between 500 million and of 1 billion, which we still view as reasonable.
<unk> timing of them, it's hard to predict we believe that of healthy repayment activity. As a result of continued improvement in market conditions and is also attributable to the overall credit quality of our portfolio.
We ended the second quarter with a portfolio of outstanding principal balance of about 3.6 billion across 99 loans with an additional 440 million of future funding commitments, which account for only about 11% of our total commitments and is reflective of the generally lighter transitional nature of our assets.
The decline in our portfolio of balance from Q1 is mainly related to the elevated volume of repayments and the timing of closing new originations.
Our assets continue to generate attractive returns and exhibit healthy overall credit characteristics with the weighted average unlevered yield of about 5.3% realized in Q2, and a weighted average stabilized LTV of under 64%.
Our portfolio has generally performed well and in line with our overall expectations given the market conditions we've.
We've had strong collections of contractual interest due on our loans through the July payment date.
Our overall risk ratings were relatively stable in Q2.
At June 30th we had 3 loans that were risk weighted 5 and were placed on non accrual status during the quarter as a result of being particularly impacted by the pandemic.
While select credit confirms we mean with respect of certain loans, we have a positive outlook for our portfolio and real estate fundamentals in general as an example, we are seeing positive trends on our hotel portfolio.
As real estate fundamentals continue to improve we are working with our borrowers and have seen the shift in the nature of the modification request, we received from interest deferrals towards the extensions, which is a reflection that many business plans have been delayed.
During Q2, we modified the 8 loans with an aggregate principal balance of about $409 million.
3 of these loans involving interested hurdles and most of the other simply allowing borrowers more time to implement their business plans in exchange for additional financial commitments to their assets.
We also deferred and capitalize approximately $4 million of interest income, which reflect some of the Q2 modifications as well as others that are currently effective from prior quarters.
The strategy of granting borrowers more time has already resulted in the payments of loans that were previously modified and that of sensory paid in full we continue to see our high quality borrowers acting responsibly and making ongoing financial commitments to their properties.
While we are actively managing our existing assets, we are committed to growing our portfolio and improving our earnings and dividends over time.
We have generated a strong forward pipeline of attractive investments with over 280 million of total commitments and over $265 million of initial fundings. So.
So far on the third quarter, we have closed 3 loans and funded 125 million of principal of another 12 million on prior commitments.
These loans and those of our pipeline are secured by properties of favorable fundamentals, including multifamily office and self storage assets with attractive risk adjusted return profiles.
Despite the heavy competition among lenders, we remain disciplined and selective and continue to find ample attractive investments for our portfolio from many repeat borrowers with compelling returns as we review of large set of opportunities currently available on the market.
Assuming stable market conditions, and depending on the volume of loan repayments, we anticipate growing our portfolio as we redeploy our excess capital over the rest of the year.
I will now turn the call over to Martin for a more detailed review of our financial results.
Thank you Steve Good morning, everyone and thank you for joining us today.
Yesterday afternoon, we reported our results for the second quarter of 2021 with GAAP net income of $14.2 million or 26 cents per basic share.
As compared to $28 million of 51 cents per basic share on the first quarter.
Distributable earnings for Q2 were $15.7 million of 29 cents per basic share versus $20.7 million or <unk> 38 per share in Q1.
There were a few main drivers that affected our second quarter results compared to the prior period.
First as we disclosed previously along with our dividend announcement in June.
We realized an elevated volume of loan repayments of about $423 million in Q2.
Which combined with our new originations resulted in a 225 million DAU of net decline in our portfolio of from Q1.
Second we recorded a 2 point of $1 million of reversal of interest related to 3 loans placed on non accrual status.
Both of these factors drove most of the decline in our net interest income of about $5 million on 9 cents per basic share.
Finally, our total allowance for credit losses was relatively stable quarter over quarter as.
As we did not realize a meaningful benefit from provision for credit losses in Q2.
As compared to the $9 million or <unk> 17 per basic share reserve release, we had in Q1.
Our total operating expenses in Q2 of a bit under $9 million were largely in line with the first quarter.
Our distributable earnings continued to meaningfully cover our common dividend, reflecting a strong run rate earnings power of our portfolio. Despite the elevated volume of loan repayments.
The attractive income generated by our portfolio of continues to benefit from the LIBOR floors embedded in our loans, where the weighted average rate of 155 basis points.
Over time of that portfolio mix continues to shift towards new originations with lower LIBOR floors. We would anticipate this earnings benefit to moderate however.
However, if and when short term rates increase our results should benefit of the portfolio likely becomes more rate sensitive.
Partially driven by the share repurchases are of Q2 book value increased to $17.27 per share from $17.22 per share on Q1.
The June 30 book value of includes an allowance for credit losses of $62.9 million or $1.15 per share.
However, it does not include the potential dilutive effect of the approximately $4.6 million warrants that remain effectively outstanding which were issued as part of the term loan financing last year.
At the recent stock price over on $14 per share the dilutive effect on our book value would be approximately 3.5%, assuming a cash settlement option and over 4% in the case of net share settlement option.
As I mentioned earlier, our total seats of reserve was largely unchanged from the prior quarter at about $63 million, representing about 154 basis points of our total portfolio of commitments as of June 30.
We had a few offsetting factors impacting on our allowance in Q2.
The reserve releases associated with repayments and further improving microeconomic forecast were mostly offset by an increase in the reserve on 1 office loan that was newly rated 5.
As well as an establishment of an allowance for the newly originated loans.
The other 2 loans that were also individually assessed during the quarter had been largely reserved for previously.
Turning to liquidity and leverage we ended the quarter with about $237 million on cash on hand as of August 6th we had approximately $242 million on cash.
In addition to the cash on the balance sheet. We also have our option to draw on out of $75 million on term loan proceeds through the end of September.
Our total debt to equity ratio at June 30 was 2.8 times down from 3 times in the prior quarter.
Our recourse leverage at June 30 declined to 1.1 times from 1.7 times in Q1, mainly driven by the closing of our third CRE CLO in May.
We would anticipate our total leverage to increase as we continue to originate new loans and deployed the excess liquidity.
Given current market conditions, we would anticipate on total leverage to be in the range of 3 to 3.5 times over time the.
Pending on the pace of our new loan originations and volume of repayments.
Thank you again for joining us today, and I will now ask the operator to open the call to questions.
Thank you and we will now begin the question and answer session. If you would like to ask the question. Please press Star then 1 on your touch tone phone.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then 2.
And our first question today will come from Doug Harter with Credit Suisse. Please go ahead.
Frank I was hoping you could talk a little bit more about the the 3 loans.
And then went on to non accrual today I'm just give us the details of how reserve they are and why you're comfortable with those reserve levels.
Hey, Doug Good morning, it's Steve Thanks for joining the call. This morning.
So we've talked about most of these loans of prior quarters, there's not a lot new this quarter I'm very comfortable with the risk rankings.
The credit profile of our portfolio was generally stable in Q2.
We're closely asset managing our portfolio, we're evaluating loans each quarter as you know we.
We feel very good about the reserves and as we have new information.
We'll share that.
And I guess as Martin if you look at our Q, we provide a little bit more detail on specifically kind of how much reserves are on each of these assets.
I guess, what specifically changed that led you to to take the interest.
The reversal this quarter.
And while you havent done that in the past.
Sure.
Steve again, so on on the Minneapolis Hotel, which we talked about the little bit last quarter. So we maintained the 5 ranking this quarter, there's not a lot new this quarter.
On.
We're working towards the resolution.
So we feel like we're adequately reserved we just felt like given the overall status. It made sense of put that 1 on on non accrual status.
We moved the southern California retail loan.
That we discussed previously that had been ranked 4 in Q1, we moved the 2 of 5 in Q2.
And Doug that was mainly due to the ongoing uncertainty around retail in general and also because it had at the time of upcoming July maturity date.
And then we moved the loans secured by an office building in D. C..2 of 5 and net 1 was largely due to.
This ongoing softness in the D C leasing market and some borrower fatigue.
Without putting more equity into the property and that was the catalyst for moving that went on to non accrual.
Great. Thanks, and then could you talk about deploying the liquidity how are your win.
Applying that into loans versus repaying.
The term loan.
Took out or I guess of yourself with them.
Okay.
Doug I had on my phone on mute.
Okay.
Well, we are looking to.
Deploy that liquidity, we had our what I would say.
The downturn or a trough.
Our portfolio of balance because of the.
Elevate the level of repayments were in advance of the originations of the wells to replace them.
Our I'll, let Martin speaks of the term loans here in the second but I'll say our expectation is to we have ample liquidity of our expectation is to deploy that through the end of year expecting of yearend balance.
I would say somewhere of about 5%.
Maybe plus that.
Possibly lower over the current level of the balance by year end.
And Doug with respect of the term loan as we as we mentioned earlier you know, it's a pretty attractive piece in our capital structure, though it is it is expensive so.
We are of strategic priority is to refinance this this term loan at some point of the future.
As you can imagine it'll it will largely depend on <unk>.
Capital markets conditions were looking on a variety of different products to to accomplish that but.
We can't really comment on anything within the certain certain high degree of certainty as of right now since it is capital markets dependent.
Great. Thank you.
And our next question will come from Steve Delaney with JMP Securities. Please go ahead.
Morning, everyone. Thanks for taking my question.
Martin you were discussing some items that you indicated.
Had a non cent per share impact on second quarter earnings and I believe you were comparing that relative to first quarter.
I think 2.1 million was the reversal of interest that you described on I think the 3 non accrual loans what would the other roughly 3 million of of impact of come from to get 2 of our non said for about a $5 million.
First the total total dollar amount.
Good morning, Steve. Thank you for joining us I'm sure you all I would say the rest of it is largely related to the repayments. We had we had really elevated level of repayments in the quarter.
Some of those repayments are of hotel loans, which obviously the good sign from a credit perspective by they tend to carry higher yields. So I would say most of the most of the rest of the the decline is related to repayments of just time got it.
Rents on the closing of on new loans, So small smaller average portfolio size, obviously correct.
Okay, and just to be clear the.
Page 11 in the deck. These 5 loans. These these are all 5 rated at this time right and I think there were what 2 new 5 rated loans in the quarter just trying to make sure I've got.
I'm looking at the entirety of the 5 rated loans and also on the.
The number that were new in the quarter.
So we have we have 3 of 5 rated loans, that's the Pasadena, California retail of the Minneapolis Hotel and other Washington DC office. The other 2 are not 5 rated.
But there are there are loans that we've discussed prior in prior quarters Us US you know on our quote Unquote watch list that we're monitoring closely I see so this is not this is your watch list, but it is not intended to suggest that all 5 so the 3 of these are 5 rated 2.2 or not okay. That's helpful. And then page 3 of the deck.
I'm, just trying to get the nuance right here.
You are making the statement at the top debt.
Through July of 2021 of 100% of borrowers are making their contractual payments in accordance with agreements and there's a footnote there 3 and it is including loan mods and for non accrual loans. So with respect to the non accrual loans. When you say of 100 per se.
Of borrowers are making their contractual payments are they making interest payments, even though they are non accrual and you're just recognizing the income as it comes in as opposed to accruing it.
No they're not so we're excluding that from our calculation.
Okay. So when you say, 100% of borrowers making payments that's excluding the 4 non accrual loans because we are assuming that they are not pay okay. Correct. So on the other than so other than those 4 of loans, you've got everybody, making their payments is that correct correct.
Correct adjusted from Ards, which which you know some some of the modifications may involve some partial deferral of interest and on waivers of about deferrals, which.
So Steve sort of point earlier, we've seen a pretty significant decline on those requests.
You mentioned C. So reserve I thought I heard you mentioned the figure of 63 million I'm looking at my model when I'm seeing 39 billion and it was down you had released on million in the first quarter as it is at $39 million or I don't know, where the 63 million came from.
No of 63.1 on Q1 and at 62.9 in Q2 on the total reserves. So it's sort of was largely unchanged, but we obviously had some movement between.
Kind of the the general population and some of the loans that we individually assessed over the quarter.
Right got it okay and within that 6 of reserve on the on the 5 loans on page 11.
Can you tell me how much of the of the cease of reserve do you have specific reserves on on any of the loans shown on page 11.
Well I get on the other way to look at our.
Go ahead I'm sorry go ahead, no. If you look at our 10-Q on when we talk about our portfolio will be a lot of live.
More detail on the 3.5 rate of loans. So thereabout, that's about 30.
32% to $35 million for those specific Lee assess 5 rated loans and the.
The pool, so more than half of our reserve.
As the Endo, Saudi is related to those 3.5% of loans excellent. Thank you. So much of other color that's very helpful.
Thank you.
And our next question will come from Stephen laws with Raymond James. Please go ahead.
Yeah, Hi, good morning, I appreciate the.
So ask questions today.
You know Jack to follow up on Doug's question earlier about your excess liquidity you know as you think about deploying in of new loans.
You know paying down some more expense of capital of refinancing that you know where does.
The stock repurchase the debt I know you bought back a little bit of stock of belief during the quarter. So.
Can you talk about your options there.
Sure of.
Good morning, Stephen Thanks for joining us and I'm happy to trust that.
First of all.
Do the usual caveat is sort of general policy not to comment on any potential buybacks or their timing.
But having said that we always have been focused on generating the best the risks.
The risk adjusted returns on what's best for the business, which has a lot of different factors of play into it.
And 1 of the.
Assessments of the best use of capital of courses in the discount the book valuation.
<unk> debt, we would take that into consideration of assessing.
The best use of capital against you know origination opportunities.
The rationalization of our.
Other liabilities et cetera.
And we do have authorization to flow.
For more share buybacks.
Are available to us as we make the successful.
Great. Thanks from the comments on that Jack.
Marcia on you know looking at page 12 on the.
The financing.
Can you talk to the 18, that's off the line opportunity is the call that you know either you know it looks like cheaper financing through the repo facilities are putting into the newer CLO can you talk about opportunities you see other than the term loan to show the kind of reduced financing costs going forward.
Sure Hi, Stephen on Thanks for the question.
Look we you know when we when we assess our liabilities on the funding. So we kind of look at everything altogether. So you make an interesting point on.
On the F. L..1 you know it is a function of kind of what.
Type of assets are financed with different with different pools, what's available on the market but.
I can assure you of do we are looking at our liabilities on funding and reassessing the best way to rationalize that.
And bring down our cost of funds, which we've been definitely focused on so we we we can probably become a little bit more efficient on the asset finance side of our business that we intend to do so.
Great. Thanks for the comments this morning.
And our next question will come from Jade Rahmani with K P. W. Please go ahead.
Thank you very much.
Looking at the expense base of $9 million on an annualized basis, it's 3.8.
8% of common.
The typical fee structure for even externally managed REIT is 1.5% base E and probably about 20% above.
Or 20% of excess returns above an 8% hurdle of 7% hurdle.
So the per expense ratio is 2.5%.
For G. M. G. P M T to operate at that level of efficiency your equity base needs to be.
Yes, 40% higher so my question is number 1 with the existing capital base, what kind of returns on equity do you believe are achievable and what other options do you believe there are to increase the operating leverage.
At the company so that.
That expense base can be rationalized.
Good morning day, that's Martin Thank you for joining us on for your question I think you're missing a couple of other pieces and.
And the expenses this.
Across the board, there's additional G&A that you know, we're all encouraged public company companies.
As public company costs, and also amortization of noncash equity compensation the.
The ratio of for US that you are that you are referring includes all of that so it's not just the compensation costs.
It's the public company cost of it also close to $2 million of L. Tip of amortization, which you know all of our peers also have but look as an internally managed company, where all of this up pretty significant economies of scale available to us as we grow the component of the company, which we intend to do.
And I think as we deploy our excess liquidity rationalize the liabilities, we fully intend to grow the equity base of this company in the future.
And realize those economies of scale.
And based on the current equity base do you have a view as to what the.
Levered Roe vs.
You know over say a multi year period are rolling off.
LIBOR floors, but also rationalizing some of the high cost liabilities do you have a view as to what range, we should be thinking about as to achievable Roe.
Within the existing equity base, because right now book value of $17.7 the common stock price.
Is 12.47, so I've seen a lot of mortgage Reits get into the situation and on my peers have as well, where these companies trade below book value of and it becomes.
Somewhat difficult to get out of that and grow the common equity base there could be other tools at your disposal as well.
So just curious what the outlook for Levered returns within the existing capital on.
Sure look I think the outlook is still high single digits, we are a little bit inefficient on the balance sheet in terms of liquidity on our liabilities our portfolio on a run rate basis continues to generate a low double digit gross returns of we.
We continue to make loans, you know and then low double digit gross returns levered. So I think we have enough of a capital base to grow and grow our earnings once we deploy our liquidity in and do some more work on the liability structure to get to those high single digits net ROE, which are kind of par for the for the peer group generally.
I was just saying, we just have a little bit more work to do on the balance sheet.
Okay.
I guess of couple of other items..1 is the clarification. The 4 cents of other to get to the 29 tenths of distributable EPS, what does that relate to.
You mean, the difference between GAAP and distributable.
Yes, I think you get a walk.
To get to the 29%.
It's essentially of the noncash equity comp, which is about 3 and there was a slight benefit from provision of half of sense. So that's the difference.
Got it okay.
On page 6 in the presentation.
Great and actually misspoke, the 4 cents of other to get to the 17.27 of the book value do you happen to know what that related to.
Most of that is related to the benefit of the share repurchases.
Okay great.
And then a question for Jack.
Steve Stephen would be.
1 on the company I spoke with said that the majority of the increase in production there of brokerage firm.
It was related to debt funds.
And I was wondering if you believe that the surge in repayments that were seeing across the street, primarily reflects loans takeouts by other debt funds or what do you believe the refinancing.
Source of capital is that's driving this elevated level of activity.
All.
The address that and then Stephen if you'd like to follow on.
We think it's across the board.
The huge surge of.
I'll call it increased in renewed interest in of the.
The transition in debt split.
Specifically, but also the debt from fund space generally and a lot of money came into the space.
Also.
In the public REIT sector, there's been an acceleration of financing so were.
Seeing I would say primarily takeouts from the private side, but it's been across the board.
J J I would add debt, yes go ahead.
Project debt.
Well I was just going to say so not primarily debt funds. When you guys are losing alone and you had a huge amount of repayments.
Which speaks well to the credit quality, but those loans are being taken out by.
From the lenders are debt funds.
Yeah, I would say for our portfolio notwithstanding the 3.5 rank loans the portfolio of credit has been strong and what we're seeing is that.
Our progress on the business plans.
The agency the the GIC ease of wide open. So you are seeing multifamily loans go into kind of permanent loans take outs.
Youre seeing hotels that were transitional that have progressed notwithstanding.
The pandemic so per our portfolio a lot of it is just the natural progression of the business plans and being taken out by various types of permanent lenders or securitizations or gse's.
A lot of it.
Okay.
Thanks for taking the questions I appreciate it.
Sure. Thanks Jade.
And this will conclude our question and answer session I would like to turn the conference back over to Jack Taylor for any closing remarks.
Well. Thank you everybody for joining us today, we really appreciate your questions on your time of the attention.
We really are excited about continuing our strong operating results and growing our business.
And I'd like to personally and for the group wish you all the safe and healthy quarter ahead.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.
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