Q4 2021 New York Mortgage Trust Inc Earnings Call

Okay.

Good morning, ladies and gentlemen, and thank you for standing by welcome to the New York Mortgage Trust fourth quarter and full year 2021 results conference call.

During todays presentation, all parties will be in a listen only mode. Following the presentation. The conference will be opened for questions. If you have a question. Please press the star followed by the one on your Touchtone phone.

If you would like to withdraw your question. Please press the pound key.

You are using speaker equipment, we do ask that you. Please lift the handset before making your selection.

This conference is being recorded on Friday February 18th 2022.

Our press release and supplemental financial presentation, with New York Mortgage Trust fourth quarter and full year 2021 results was released yesterday, both the press release and supplemental financial presentation are available on the company's website at www dot in why Amtrust.

Dot com.

Additionally, we are hosting a live webcast of todays call, which you can access in the events and presentations section of the company's website.

At this time management would like to inform would like me to inform you that certain statements made during the conference call, which are not historical maybe deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

The New York Mortgage Trust believes the expectations reflected in any forward looking statements are based on reasonable assumptions. It can give no assurance that asics.

Expectations will be attained factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's filings with the Securities and Exchange Commission.

Now at this time I would like to introduce Steve Mumma Executive Chairman Steve. Please go ahead.

Thank you operator.

Everyone and thank you for being on the call.

As the company announced last December and becoming effective this year on January 1st I've taken a new role as executive Chairman with Jason Serrano stepping up to CEO I leave the company in great hands and I look forward to the company's continued success.

Now, Jason and Christine will lead you through our fourth quarter financial presentation.

Thanks, Steve and good morning, everyone and thank you for joining our fourth quarter 2020, My earnings call Christine and I will be speaking to our Q4 2020 supplemental presentation that was released yesterday and is available on our website. We will allow questions. Following the conclusion of our presentation before I begin I want to thank Steve for the two decades of service at the company, which.

He successfully steered from a small non agency of record to what is now internally managed scalable diversified credit business, Steve the two professional in light with exceptional care.

For the company's shareholders and employees and thankful to have worked alongside side.

Side of you Steve for the last three years and I look forward to following the path you car for the company's future.

Now turning to page seven key developments, starting with the financial highlights on page seven of the supplemental I will quickly summarize our quarterly performance as Christine will cover this in greater detail.

The company generated <unk> of GAAP earnings per share underappreciated EPS was <unk> <unk> higher at <unk> <unk> per share also book value per share ended at fourth quarter at $44 70, or $4 74 per share on an underappreciated basis due to a fourth quarter increase in direct investments are real property through.

Multifamily JV program, we will provide an underappreciated earnings and unappreciated book value, which removes noncash expenses related to depreciation and certain amortization expenses related to leasehold the tangibles.

After the after the fourth quarter dividend of <unk> 10 per share. Our 2021 total rate of return was 11, 7% and despite a full transition to loan and JV investments.

G&A remained close to 2% 2021 with a transformational year for the company as our capital redeployment strategy was executed indirect loan.

<unk> Gen.

<unk> generated from our single family origination partners and as it relates to our multifamily strategy loans and Jv's regenerate internally at NYSE by our origination team.

In the fourth quarter, we added nearly $800 million of new investments, which set a record for the company. However, our quarterly earnings did not fully benefit from recurring income related to those assets as more than 70% of investments settled after late November and in December .

With high investment activity, we were able to better optimize our balance sheet as our cash balances dropped below 10% of the capitalization of our 152 million of unrestricted cash net of 30 day debt maturities.

Working through previous periods of high cash balances allowed us to re lever unencumbered assets in the first quarter, which will be touching on in a minute.

We also continue to utilize mineral recourse leverage for book value.

For book value protection in lower cost with a preferred stock issue at 7%, which redeemed a 775% callable C series, reducing capital costs by 75 basis points.

Lastly, due to the recent market volatility we thought it was prudent to add $200 million buyback program, which the board recently approved now.

Now turning to page eight subsequent developments investment activity accelerated through the first six weeks of the new year at $325 million of assets were added we are now on pace to exceed fourth quarter 2021 investment activity on the financing side, we have been very active as well with two securitizations completed thus far the first in early January against that.

<unk> portfolio of two 3% total cost of debt and in February we completed our second bridge loan securitization revolver Lastly, we redeemed $138 million convertible note, which matured on January 15th.

Simply we are committed to driving company earnings higher by growing our portfolio and have the capability to do so organically through our unencumbered loan book, we are excited to see this capital put to work and the earnings generated in subsequent quarters.

At this time I'll pass it over to Christine <unk>, our CFO to provide further detail.

And our quarterly financial results.

Thank you Jason Good morning, everyone and thank you again for being on the call and discussing the financial results for the quarter I'll be using some of the information from the quarterly comparative financial information section included in slides 29 to 36 of the supplemental presentation.

<unk> snapshot on slide 10 covers key portfolio metrics on a quarter over quarter comparison. The company continued to deliver solid results in the fourth quarter with GAAP earnings per share of <unk>, <unk> and GAAP book value of $4 70. This quarter, we are introducing two new metrics and.

Depreciated earnings on depreciated book value, which are non-GAAP financial measures under.

I appreciate it earnings represent GAAP net income, excluding the Companys, Sharon depreciation and lease intangible amortization expenses related to operating real estate and.

On depreciated book value represents the Companys GAAP book value, excluding the companys share of cumulative depreciation and lease intangible amortization expenses related to operating real estate by excluding these noncash adjustments on depreciated book value reflects the value of the company's rental property portfolio.

And it's underappreciated basis.

The company's rental property portfolio, primarily includes consolidated multifamily apartment properties.

For the fourth quarter and depreciate earnings per share was <unk>, <unk> and <unk> and.

On depreciated book value ended at $4 74 down <unk> <unk> from the previous quarter.

Our net interest margin for the fourth quarter was $3 63, an increase of 38 basis points from the previous quarter, our portfolio weighted average asset yield was $6 57, an improvement of 18 basis points.

The increase was largely attributable to our continued investment in higher yielding business purpose bridge loans.

Our funding cost improved by 20 basis points ending at $2 94, largely due to the refinancing of our 2020 Rpms strategy securitization in the latter part of the third quarter, which resulted in 210 basis points and cost savings.

The company recourse leverage ratio and portfolio recourse leverage ratio remained low at four times and two times.

Slide 11 details our financial results, we had net interest income of $30 8 million relatively flat as compared to the previous quarter. Our continued investment in higher yielding business purpose loans during the quarter contributed to the <unk> 9 million increase in single family interest income offset by 1.5.

<unk> million dollars decrease in multifamily interest income, partly due to redemptions of our mezzanine lending investments accounted for <unk> loans.

Although there was a decrease in income from our mezzanine lending investments accounted for as loans income from our mezzanine lending investments accounted for as equity increased during the period contributing $7 2 million in preferred return during the quarter had these mezzanine lending investments qualified for loan accounting treatment under GAAP It would.

Have contributed 46 basis points in net interest margin.

Interest expense on our single family portfolio decreased by <unk> 3 million, primarily due to the full quarter impact of the previously mentioned Rps refinancing securitization transaction at a lower cost.

We had non interest income of $39 3 million, mostly from net unrealized gains of $5 $15 $5 million due to continued improvement in pricing on our assets, particularly our residential loans. We also generated $5 2 million of net realized gains primarily from residential.

Loan prepayment activity offset by $4 1 million of net realized losses from.

From sale of agency RMB.

The net realized loss from the sale of agency MBS was offset by the reversal of unrealized losses recognized in the prior periods.

In addition, as discussed earlier, our mezzanine lending investments accounted for as equity contributed seven $7 2 million of preferred return.

Also generated other income of $7 9 million, which is primarily related to $4 8 million of income recognized from equity investments in entities that invest in or originate residential properties and loans.

$3 1 million of redemption premium and premium recognize from early repayment of mezzanine lending investments during the quarter.

Included in our results for the quarter as the net loss activity related to our multifamily apartment properties in which the company has equity investments in the form of preferred equity or joint venture equity.

Because of certain control provisions, we consolidate these properties in our financial statements in accordance with GAAP.

We received variable distributions from these equity investments on a pro rata basis and management fees based upon property performance.

We pursue these investments for potential participation in value appreciation of the underlying real estate, which is realized only upon sale of the multifamily assets.

These properties generated operating rental income of $7 6 million and incurred interest expense and operating expenses of $2 1 million and $13 5 million respectively.

Operating expenses incurred by these properties during the quarter is primarily related to depreciation expense and amortization of lease intangibles totaling $9 2 million.

After reflecting the share in the losses to the Noncontrolling interest of $1 3 million in total these multifamily apartment properties incurred a net loss of $6 6 million for the quarter.

We had total G&A expenses of $12 5 million relatively flat compared to the previous quarter. We had portfolio operating expenses of $8 1 million, which increased primarily due to the growth of the business purpose loan portfolio.

Slide 12 summarizes our activity in the fourth quarter as Jason mentioned earlier, we accelerated our investing activity in the fourth quarter acquired residential loans for $606 million funded multifamily joint venture and mezzanine lending investments for $123 million and $66 million respectively.

We also sold non agency MBS.

Agency <unk> and residential loans for proceeds totaling $194 million. We also had total repayments totaling $333 million comprised of $245 million from our residential loans $59 million from our investment securities and $28 million from our mezzanine lending investments.

Jason will now go over the market and strategy update Jason Thanks, Christine turn page 14 related to our strategy update our core strategies strategy remain unchanged. We believe we are strategically.

Strategically positioned to take advantage of fundamental market strength with current agency mortgage coupons now at 4% housing affordability is close to the long run average where mortgage cost equals about 23% of first time homebuyers incomes any weakness in housing demand due to higher rates is not likely to correlate to lower home prices here like many sectors at this time.

Supply side components determined price equal equilibrium is in an overriding factor December printed another record low homes available for sale was below 1 million units. This correlates to one eight months of supply in the market also record low extreme and persistent low volume is likely to keep prices pinned at or above inflation.

Particularly in the south.

We continue to see value in these in this market through short term bridge loans, where underlying investors can take advantage of a technical squeezed in housing supply and we can benefit from high coupons and a short duration loan with higher short term rates, we have to fixed rate securitization revolvers are disposed to generate teens returns secondly gain on sale has all.

But evaporate for agency non agency residential loan originators in the first quarter, while market coupons, we set higher, albeit at lower origination volumes, we see an excellent opportunity to pickup deeply discounted paper in the scratching that market also secondary and tertiary msas in the south and southeast should continue to benefit from population migration trends as.

These markets provide a cheaper cost of living alternatives and our recent large scale U S pull more than 80% of workers suggested they would quit their job if employers asked them to report back to the office full time, thus work from home is likely to transition from a health measure the retention measure offered by employers to keep talent.

Sticky talent, we see great opportunity attractive risk returns in the multifamily sector to take advantage of this migration due to this trend.

Now turning to page 15 to address sourcing.

Our sourcing approach, we recently looked locked in a flow agreement for 50% of production from a large originator in the BPL space.

We are excited about this arrangement and will add to a robust growth in the single family sector in the higher rate environment. We have also increased our participate participation with our originators as we see better value offered we are an investor of choice because of our scalable reliable buyer in the market and do not directly compete against our partners on the <unk>.

The family side and as a way of background in 2016, we internalized riverbank multifamily originator and asset management platform. Since then since this time, we funded over 1 billion of loans on our balance sheet generating a 15% life to date return on our assets as we do not utilize leverage within the strategy, we have built up organic sourcing opportunities with <unk>.

The sponsors we are very excited about this program that offers portfolio cross collateralization roll up opportunities. We closed our first sale in last November on 11 properties totaling more than 200 units, we offer more than just capital to multifamily regional regional sponsors our asset management platform helps our partners will be certain operational pinch point.

As an example, our technology can map is the GM of underlying multifamily properties to automate and review month reporting. This is just one of the ways. We can help sponsors consolidate their assets.

Asset management program on page 16 relate to strategy update.

Our transformation from 2000.

Early 2000 is evident with each of these graphs in the first graph asset sales in early 2020 generated excess cash as we held a defensive posture in Q3 2020. After this time, we held a stubbornly high cash balance with the Levered balance sheet and the second graph as prices recovered and term financing normalized we.

Increased our utilization of non mark to market structures to reduce balance sheet risk and lower our cost of funds to optimize our balance sheet.

In the third graph, we monetize our securitization holdings and reinvested the proceeds into higher yielding loans and GBS. The gestation period for loans and <unk> is much longer than bond investments some of our large larger opportunities such as portfolio Rollouts can take multiple quarters to close which caused some inefficiency. These three graphs demonstrate how we.

Through the transformation and pace and how we exhibited patients and doing so in the fourth quarter cash was brought below 10%, we quadrupled usage of non market structures and dependent on short term borrowings while also lowering our cost of funds and we rotated out of security holdings to increase our yield on assets the greatest level in the company's history.

On page 18.

We are excited about our earnings potential from these activities with anticipated high investment levels in the near we are prepared for a busy first quarter to grow our portfolio by raising cash from Amy unencumbered assets on our balance sheet.

We're active in the securitization market on day, one of the new year and through 2000 and through March Sorry February 15, 2020, we have raised $584 million of cash with keeping a low rate of recourse leverage which after effect of this funding is only four times simply putting half of the cash generated from the 788.

Total financing completed completed or in process at either a 912 or 15% ROE we can generate a two to three or four cents of incremental EPS, respectively. We believe hitting the upside to the growth potential is not out of the equation. We are excited to demonstrate that over the course of the year.

Turning to page 19, we believe we can do so by protecting book value under prudent financing structures, which limit company recourse and mark to market risk as illustrated here now.

Now turning to page 20.

As I go through the single family.

Overview and just as a quick note regarding our single family allocation, we continue to stay up in credit with high FICO borrowers at low Ltvs targeting 12% to 15 <unk> after effective financing.

We began adding <unk> loans in the fourth quarter, which are loans to rental investors, we guarantee with guaranteed production from a flow agreement and coupons are nearly 100 basis points higher than at the beginning of the year, we feel confident adding exposure here with the intention of gestation to a securitization.

This longer duration mortgage loan requires the term financing term financing to prudently generate an equity return. We are confident we can now accumulate attractive levels for a rental loan loan pool securitization turning to page 21.

Our portfolio highlights.

While we are hitting our strides on multiple loan asset classes in single family sector. The performance of our credit assets remain positive delinquency rates have flattened out on our RTL book on a scratch and Dent book, we continue to benefit from PARP prepayments on our discounted loan purchases.

While we do expect prepayments to slow and durations to lengthen. This presents an opportunity to add to these loans with securitization and opportunity. We have been recently execute we've recently executed for compelling go forward equity returns relates to this asset class.

Going to page 22.

BPL bridge strategy with nearly 1 billion of loans at the end of the fourth quarter detailed bridge loan continues to be our largest exposure.

Performance has been great, which is expected with loans at 65, LTV after repair and a double digit HPA market equity buildup is substantial for the borrowers here that are experienced in their local markets.

Complete the rehab jobs focused on low cost projects.

Turning to page 23, our multifamily portfolio overview.

25% of our capital is allocated to this asset class.

We believe this portfolio offers our securities our shareholders a differentiated type of diversification in this market at ROE of 12% to 17%. We are at the center of a sector that is in the process of a fundamental landscape change the market is efficient workforce housing.

The workforce housing offering quality and affordability is an attractive proposition in today's post COVID-19 marketplace in the JV portfolio at $272 million were looking to we are looking forward to sharing the equity upside with our sponsors on property reposition strategies more on that in a minute.

Turning to page 24.

As expected performance is excellent one loan is delinquent and expected to result in a full recovery year over year of rental growth rate for our portfolio was 8%, which is the highest level. We have seen for our book with low LTV LTE.

Ltd's presented here that does not account for valuation changes that have occurred since the opportunity was funded we expect to continue our record of zero losses in our strategy to date in the near term with $71 million already closed in the first quarter and $152 million in underwriting portfolio growth will.

We will continue from Q4 levels.

Turning to page 25.

The growth we have seen here is excited with our origination platform.

With the close of a portfolio roll up and cap recapitalization. We are now on a non linear growth trajectory joint ventures is our leading product and as Christine mentioned earlier, we will also report unappreciated EPS and book value to remove these noncash costs through our income statement balance sheet and these measures.

We do expect depreciation and amortization cost to grow alongside of our portfolio, particularly amortization because of high growth rates received rent in todays market. Thus.

Thus to continue reporting these measures.

On page 26.

The asset transition plan offered in high growth Submarkets is a case, where we invest and lower.

Lower market quality property as a value play typically related to deferred maintenance or a daily concept and a udall and utilize a cost effective capex plan that produces a refresh look meeting market competition.

This has been our focus since 2014, while market while markets do change we consistently see tenants desire for a neat product at an affordable price point, and we expect to meet that growing demand.

Now on page 27.

We believe a diversified portfolio of growth strategy centered around recurring income streams will provide stability to earnings in 2022 with industry, leading global company recourse leverage and flexibility aided by our low cost operating structure, we have taken a more offensive posture to pursue opportunity opportunities and the high rate environment for <unk>.

Portfolio growth. We believe this is the path to enhancing earnings and we believe the time is now.

At this time I would like to open up the call for questions operator.

Ladies and.

Gentlemen, once again, if you have a question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue press the pound key.

Sure.

Our first question or comment comes from the line of Eric Hagen from <unk>. Your line is open.

Hey, Thanks, Good morning, I think just one for myself can you talk about the outlook and the opportunity in the fix and flip space really just the competition, which has developed there.

How much do you guys think you can source in that channel this year with the.

Backdrop being higher interest rates.

Yes. Thank you.

We have put together a flow agreement, which gives us a 50% reduction of one originator. We will also have increased our.

Participation with few other originators in the market, we do expect our fix and flip volumes to increase from what we presented in the fourth quarter given those arrangements the market.

Because of the recent rate volatility.

That market has taken a bit of a step back as it relates to the liquidity on financing related to these assets.

Securitization market.

Given rate increases is higher and therefore, there is this transition period that has to come with respect to <unk>.

Most region is out there with higher coupons.

And in this period.

Liquidity matters tremendously given the.

The change in rates.

We have been a consistent buyer of this product with our counterparties.

<unk>.

<unk> been able to help them understand where coupons are going in migrating given just swap rates in the market.

So we've been able to stay ahead of this change and which has helped some of our partners here. So we expect to continue to see portfolio growth there.

Particularly with the fact that we have one virginia at 50% of their production.

That's helpful color. Thanks, a lot.

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

Hi, good morning.

Jason can you can you talk about the your comments towards the more of that.

The posture going forward as you look for new investment opportunity.

No.

Yes.

Where you see the best opportunities decided the rising rate outlook.

What those maybe.

Also how do you how do you think about those new investment opportunities versus stock repurchase.

With shares of around 25% discount on depreciated book value here.

Yeah, so starting with the opportunity and the offensive posture.

We have been.

Analyzing looking at this market, we've had opportunities to buy a larger portfolios.

2021.

Which we passed on it and part of the reason was that the markets.

It was offering very efficient and high liquidity financing, particularly in the short term part of our part of financing spectrum, which back in 2020. We saw the result of that and securities long term securities against short term repo. The effect here is not as great obviously in.

The defense markets are completely open it's costlier to finance.

So our goal was to.

Focus on the short duration product, where we werent, taking large interest rate <unk>.

First rate risk given the reset of these loans or the pay off these loans is fairly quick within a year to two.

15 months and the product would reset into higher loans. We also like the opportunity of taking our borrowers that are reshaping are paying off and I say resetting now more than paying off simply because a large part of the fix and flip market is now going into <unk> loan product. So the fix and flip investor is now.

Ill likely to do a.

Our fixed to rent and.

With our with our portfolio.

The ability to recapture that bar into a DSR alone as great.

As well as.

Resetting these coupons are bit higher in this market, which will give us better.

But our NIM earnings on those on those assets. So that is part of why we are becoming more aggressive in the last.

A couple of months here on our portfolio, we just like the the fact that the coupons are.

At the highest levels, we've seen in roughly two years in.

We.

We're going to take continue to take advantage of that as it relates to our share buyback program.

<unk> opportunity to grow our book value and to grow EPS.

Which will allow.

Our shares to appreciate it if we are able to continue with that plant now the opportunity that we're seeing ahead of us today.

And assets, given where we're taking we have low cash balances were taking.

Loans that are unencumbered and encumbering them through Securitizations.

And receiving cash back for that and we've allocated into investment and investment securities, which will investment assets, which will allow us to generate a teens return, which we think will.

Bridged the gap from.

This kind of gap that we are currently trading at so we're seeing an opportunity in the market and <unk>.

The extent that we see continued volatility with respect to our share is in fact that we are not able to hit some of our objectives with respect to our portfolio growth then.

The consideration is therefore, a share buyback, which is why we put it and had the board approval and last couple of weeks.

Great. Thanks for the color.

Christine thinking about the operating real estate portfolio.

I appreciate your prepared comments.

As we look to model that forward.

How should we think about.

Run rate through 'twenty, two or kind of an outlook for the.

The revenue and expenses for those.

Those investments.

Yeah.

I think it's going to be a little bit significant more significant so.

The first quarter as majority of our JV investments that we closed in 2021 actually closed the latter part of December . So you would expect that number to grow and as we continue obviously to invest in more JV.

JV type structures. These numbers you would expect but also growth.

Okay. Thanks, I appreciate the comments this morning.

Thank you. Our next question or comment comes from the line of Christopher Nolan from Ladenburg Thalmann. Your line is open.

How much do you anticipate taking multi multifamily.

Up to as a percentage of your capital allocation.

We expect it to grow from here.

And the difficulty in answering that question, while we can while we did present our.

Our pipelines.

Estimate that.

When you take unencumbered assets off our balance sheet that are in residential loans and securitize those loans.

Our percent of market capitalization for that product does decline if you reinvest that product into an equal allocation than you expect multifamily to to increase from there.

We are growing on both sides and as I mentioned earlier, we had record volume of acquisitions on both the single family and the multifamily side in the fourth quarter and we're expecting similar results in the first quarter.

There is not a hard target we're looking at we are opportunistic.

Look to see where the best returns are in the market and where we can do so with.

Book value protection.

So there is not a set number we're targeting it's just a function of what the market is allowing is allowing us.

What the market is providing us and where we see the best opportunities. So we'll continue that approach.

Versus a hard target a certain percent great and Christine you mentioned I think in your comments and net loss.

Multifamily was that.

GAAP net loss, including the noncash depreciation charges, yes.

But it is a GAAP net loss.

So going forward, we should be starting to look at this on depreciated.

Depreciated EPS and book value.

As.

Multifamily growth as a portfolio.

That's correct.

So that's why we introduced this quarter because we see.

Those numbers getting significant as we go into joint venture equity investments in multifamily properties, where we have control.

And then Jason given that you guys invest both common and preferred equity into these joint ventures is your preferred equity from the sponsor standpoint is your preferred equity.

Equity when he goes and tries to get a first lien loan on his assets.

Well the yes, so the visit the way we look at it we call it.

Presentation, Mezz lending and the Mezz lending is basically our second priority in the cap structure.

For the sponsor and <unk>.

In certain cases, there's prohibitions on.

On.

On a second or a mezz loan as it relates to recapitalization of the first.

It is a hybrid.

Security instrument, where it has that features an equity features.

<unk> features in the form of a coupon.

And equity features in the form of Pik and other tax related measures. So from the sponsors perspective, it does give them flexibility.

As it relates to senior senior financing as it relates to prep.

<unk> versus <unk>.

<unk> mezzanine loan although the features of both of those are very similar as it relates to our.

Our return.

Given all of that should we look at these as control investments or is there a scenario where they could become control investments.

There is going to be scenarios for our preferred equity type investments.

That could be control when we have to take over the property as the property is not doing well or some things being done by the operator thats not.

That's not in accordance with our agreement there is.

I think a couple of instances in a prior years, wherein we took over these properties and by taking them over we were able to make the property better and actually not incur any loss on those properties.

Okay I'll follow up offline. Thank you.

Thank you. Our next question or comment comes from the line of Doug Harter from Credit Suisse. Your line is open.

Thanks can you talk about.

How loan loan pricing has changed in 2022.

Given some of the back up we've seen in securitization.

Spreads and pricing.

Yes, so I.

I can speak to our portfolio.

Correct Lee So we are looking at.

The latest changes for this week, we believe that we've estimated about one 5% loss to book value through the first quarter.

Thats related to this.

Our securities that we still have in our balance sheet.

And in most of the longer duration mortgage loans that we have on the balance sheet as well where a lot of those that were that losses.

Have.

We believe that losses have been incurred.

The market as a whole I mean, there is depending.

Depending on what the underlying coupons are and what the duration is it's more than just just simply looking at swap rates and taking a duration.

And taking a price change from there. It's also somewhat illiquidity measures on some of the lower coupon assets.

So when you're financing cost is greater than the spread or Youre your asset Cooper.

Coupons.

It does and how much leverage you've talked about so staying away from those low coupon asset class has been a priority for us which is why we focus on short duration high coupon bridge.

And we delayed our SCR.

Our investment strategy until.

Better have a fourth quarter, mainly starting in the first quarter.

Yes, the market is resetting and Securitizations are also resetting theres been a couple of deals that have been pulled off the market.

Not simply because of the.

Nobody wants to step into a bond deal and have it marked down a few points next day when rates move another 25 basis points up so I think the market is waiting to reset there's still plenty of capital on the sidelines for all these assets and the Securitizations.

But there's kind of a wait and see approach in the market until rates kind of settle out.

I guess, just then on your ability to deploy capital are there opportunities to take advantage of others kind of hesitancy given kind of your current defensive positioning.

Or do you kind of take the wait and see approach given given the current volatility.

No we've freed up.

We freed up capital on our balance sheet with securitization as early in the quarter.

Simply to take advantage of.

Some some illiquidity in the market that will allow us to buy it.

At lower prices.

We are open for business, we have been looking at larger portfolios.

From a region your pipelines that kind of got it got stock without.

Being able to place into the market and warehouse lines that were timing out.

R.

Our interest and our market presence and discretion of market really helps us see a lot of activity not just related to agency origination that is now scratch and dent glitches origination overall that can get kind of can get put in the period will hold where.

The buyer backed out and now they're kind of shopping that loan pool in the market at all.

We are evaluating opportunities to that end and we expect to continue seeing it.

We are absolutely looking to.

To take advantage of.

Of this technical change that's happened in the market and at deeper discounts.

Great I appreciate it.

Thank you our next question or comment comes from the line of Matthew Harrigan.

From Jones trading your line is open.

Hey, Thanks, guys asking question on behalf of Jason Stewart.

So with the partnership with BPL rental what kind of origination volume are you guys seeing from them and what should we expect in the first quarter of this year and moving forward yes.

Yes, what we liked about our partnership here is that the originator has shown kind.

Kind of a hockey stick.

Origination.

<unk> that we are.

Excited about.

They continue to add new staffing to build out that business.

And right now at current.

Right. So at origination we expect a minimum of $5 billion of loans first.

First year, but they are growing and we do expect to be able to.

To grow that portfolio along with them.

On top of it we also have the opportunity to purchase loans.

That we are seeing from other originators that.

It's not necessarily a contractual flow agreement, but we have been a very consistent buyer every every month with these with these originators, which is what when you look at our our asset acquisition strategies.

In the BPL space, you can see consistent purchases.

<unk> was around 250 million a month now we're now that number is going up as you saw last quarter and we will definitely be higher in the first quarter. This year. Overall. So this is just a partnership that allows us to.

Bring liquidity.

Certain markets such as this.

Two originators and there is potentially other originators that could fall in this kind of process with us. We think there is a low cost way.

For us to benefit from from origination platforms.

Yeah, that's great and then are they.

Located in the areas, where you guys have been active before.

Yes.

They are.

It's BPL origination Theyre focus is mostly in the <unk> space, they do fix and flip as well.

We are part of the hesitancy of going to the <unk> market was simply volume and being a secondary market buyer portfolio.

Portfolio, there is not a great way to grow a securitization book.

Given the.

The lack of consistency and the fact that you do you want to just eight for our securitization portfolio takeout.

We would only look at this space, if we had kind of guarantee pipelines, which we do today, which is why that strategy is now one of our focal points that we just we walked through there.

<unk> fixed and flip book is growing.

And we expect that to grow faster than that ECR book.

But again this is one of many that we speak to and we buy loans from and.

We're just in this case it was originated it was.

<unk> about rate movements and also concerned about liquidity.

As it relates to their operation and having a consistent buyer and that can come in and take loans off of their balance sheet. Every every month or once a week was important so the funding timelines also increase relate to this opportunity for for them, which was helpful. Over these cash and get them to put it back into the market and for us to acquire assets.

Awesome. Thank you.

Thank you. Our next question or comment comes from the line of Bose George from <unk>. Your line is open.

Hey, everyone. Good morning.

In terms of sort of where you are in the transformation you guys. Obviously put a lot of money to work in <unk> again in <unk>.

Is there a way to think about what inning youre in in terms of the transformation to a more normalized Roe.

Yes.

<unk>.

What Christine walked through and are in that purchase activity for the quarter.

I think it's helpful to kind of cement that point, we added $324 million net investment activity for the quarter.

It's been a struggle too.

Ed.

Net net incrementally positive to our balance sheet simply because of our.

Our asset sales that we have conducted in the securitization space, we sold $193 million last quarter, we are sort of at the end of that cycle for our security sales that we have on our balance sheet, which is will be helpful. Obviously to continue to grow net positive our balance sheet going forward.

So.

For those reasons, we do expect.

Further growth prepayment in redemption activity we.

We had very high pay offs in our scratching that portfolio, which was a positive given we bought those loans at discounts that.

We think that's going to moderate as well.

PL prepayments have been kind of consistent in the kind of mid single to high single digit range.

That product is less sensitive to rates they have high coupons already.

And it's more of a change of life plan for the borrower that prepays that loan after.

10 years of pain on that loan.

And in multifamily.

<unk>.

With the roll up opportunities that we're focusing on and working.

In this new environment in the South southeast.

Part of the United States, we have really hit our stride with with with sourcing.

We do speak to hundreds of sponsors we do sort of is an 80 20 rule here.

20% of our business comes in.

20% of the sponsors provide about 80% of the business and we're going to continue being able to grow in those southern markets with the migration that we see so we're we're excited about the growth that our peripheral lipid experience and the reason why we provided.

A projection or at least a hypothetical relating to our EPS movements related to asset growth.

Okay, Great. That's helpful. And then actually in terms of returns can you just talk about the returns on the operating real estate just how that compares to the.

The incremental returns on other assets.

So it relates to <unk>.

<unk> the Jv's again.

So the JV is we're targeting about 12% to 17% of return, but that's going to be over the life of the investment which would include kind of like an exit when we when we sell the property and that's what we're looking to do I mean, youll see the pop at the end, but over time, what Youll see is.

Property income less expenses, which would include depreciation and amortization expenses and then at the end, you'll see again a capital gain essentially.

I noticed that those assets are held that at basis, and we take depreciation against that.

Those assets every quarter so.

So the extent that we've had an 8% increase in rental rates for the first quarter and that's not going to gain in those assets that can be represented on.

On our balance sheet as we hold it at cost so it's cost accounting on those assets with depreciation.

To christine's point the gain.

Expect a gain that we are working towards on a.

The transformation of <unk>.

Itself through.

Capex plans or maintenance deferment cleanups as what were how we generate a return as well as the principal payments, we receive on a monthly basis.

Okay, and actually I didn't know if you said this already but what's the typical life for those properties.

Yes. Thanks.

Mentioning that because that's an important distinction.

Part of the growth strategy for US also has been the fact that our mezzanine and prep portfolio is more of a shorter duration instrument.

Typically what happens is that the.

Sponsor.

It takes the PREPA use for Capex improves the property and then looks to either a recap the property or sell the property to to get paid.

On that improvement so we've seen that duration anywhere from kind of like two five to four four and a half years as.

As the property gets transitioned we do expect the JV to EBIT the longer duration and the fact that we are equity.

We are equity alongside the sponsor and making decisions on that sale have opportunity to take back the property in the case of a sale. So if the sponsors timelines are a bit shorter than ours, we have the opportunity to hold that property through through a longer lifetime, which we really.

Really enjoy.

Lot of the sponsors will focus on IRR, we're focusing on on <unk> and IRR.

Total cash so we love, we think Theres, a great income producing asset as inflation protected and we don't mind, taking these assets.

A bit of a longer duration, if need be but we do expect it to be a bit longer than that our prep.

Okay, great. Thanks, and then just one last one.

Mentioned it earlier, but what was the book value quarter to date again was up 5% and.

And catch them.

On depreciated book value is $4 74 down <unk>.

Okay.

In the quarter since the end of the quarter like what was the change.

About half a percent that's what percent okay perfect. Okay, great. Thanks al.

I am sorry, if the question was related to first quarter book value decline.

We see about a one 5% decline to date.

Through this week if that was the question sorry.

Yes, yes, yes.

Missed it thanks a lot.

Okay.

Thank you. Our next question or comment comes from the line of Matthew Howlett from our Raleigh. Your line is open.

Hey, guys. Thanks for taking my question first of all congrats to you both Steve and good luck in your role Jason Congrats on the promotion.

Thanks, Matt Thank you.

Just a couple of questions on <unk>.

The capital deployment, but just where do you assume it happened on October 1st all of it.

So you have to start to sort of dividend coverage, we are getting close to that just curious on what the impact would have been.

The impact if we were to.

And these assets in October had clinically.

Yes.

Yes, the impact is essentially what youre seeing on that.

Hypothetical page that we presented and it's simple math you look at the average floor income right. If you look at the.

The addition to the numerator in that quarter related to a full year a full quarter cycle.

Interest earnings and then you can see the incremental impact there so.

It's yes, it's pretty straightforward, which is why we presented it and.

That's our expectation when you if you were to add those assets.

Got you. So we look at dividend coverage, we should look at the run rate.

And that is sort of the example, you gave.

Yes.

Yes.

I'll look there.

Got you second question congrats.

Congrats on paying off the high cost convertible.

Look at the unsecured side, but what are you what are you seeing out there your cost of capital has come down you'd been able to issue cheaper and would you look to replace that with something else on the balance sheet.

Yes, so we speak regularly with with bankers in the space on corporate finance opportunities.

That's available.

Very fueled a number of calls this year despite higher rates.

There's a couple of interesting transactions that.

They are out there as it relates to whole business securitization, which is securing a particular part of your asset portfolio and issuing.

Issuing debt off of that portfolio.

Portfolio. So it's like a whole business securitization related to a particular asset pool.

That is something that has evolved over the course of the last couple of years.

That product offering I remember back in 2007 was pretty popular and that seem to come back in the last six months.

I mentioned it not because we're actually considering doing a deal in that space right now simply because there are new structures that we're seeing which we're evaluating.

Right now we have.

Plenty cash our balance sheet with respect to financing that we've completed and expect to complete so we are not.

In the market at the moment looking for a.

Corporate finance opportunity related to <unk>, but during the course of the year, depending on where our portfolio migrates in.

And also what the opportunities on the sourcing side, we definitely we'll continue evaluating that but we have plenty of liquidity for our pipelines that we have established.

Great. Okay, we'll look forward to that and on the subject.

Lower cost of capital and they look at <unk> history. So I just had a great history of diversification first mover in certain asset classes.

When I look at the two sort of residential and multifamily, particularly the recent growth in the roll up strategy at the JV.

Do you see these two strategies coexisting together.

Could they be on be split out I mean, do you think the synergies of having them together or would you look at some point to try to enhance the value of the multifamily business.

Sending it out or some other type of corporate restructuring.

Yes, it's an interesting question.

We believe at the moment it offers are.

Shareholders interesting diversification that is I think unique in the market today.

I definitely believe that the story.

We've talked more about the origination platform fee because we believe it's an important part of the value of the company and our sourcing capability, particularly the fact that we are internally sourcing and originating those loans.

And it's a it's an asset class that has.

Produce roughly $100 million of origination volume net.

The course of the year as an hour.

Obviously seeing opportunities to increase that.

So as that business continues to grow we'll we'll evaluate.

The opportunity and see what is in the best interest of our shareholders as it relates to that portfolio and the rest of the book, but at the moment I think it provides a great diversification.

Our strategy for those that are looking at both.

Residential markets and looking at the.

The strength of the multifamily market that we have within our within our balance sheet today.

Just look at all the sort of there's been a lot of private equity activity real estate southeast and just look at that that portfolio may not be getting the credit yes.

That it deserves in your cost of capital should be lower as it relates to that strategy.

Yes, I mean, the private equity the property Reits have had a great run.

Most of them trade above book value, obviously depreciation plays a big role there but.

There's been a lot of.

Theres been a big increase in valuations of those underlying properties given rent rate.

Rates and.

Today, we will follow that same path as relates to that GAAP accounting and we hope our shareholders see the value of that asset on our balance sheet.

Yes, certainly familiar with that well look forward to it and congrats again.

Thank you.

Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to Mr. Serrano for any closing remarks.

Yes, Thank you everybody for being on the call today, and we look forward to speaking to you on our Q1 2020 earnings call have a great day. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.

Okay.

[music].

[music].

[music].

Good morning, ladies and gentlemen, and thank you for standing by welcome to the New York Mortgage Trust fourth quarter and full year 2021 results conference call.

During todays presentation, all parties will be in a listen only mode.

In the presentation. The conference will be opened for questions. If you have a question. Please press the star followed by the one on your Touchtone phone. If you would like to withdraw your question. Please press the pound key.

If you are using speaker equipment, we do ask that you. Please lift the handset before making your selection this.

This conference is being recorded on Friday February 18th 2022.

Our press release and supplemental financial presentation, with New York Mortgage Trust fourth quarter and full year 2021 results was released yesterday, both the press release and supplemental financial presentation are available on the company's website at Www Dot N y amtrust.

Dot com.

Additionally, we are hosting a live webcast fortunate of todays call, which you can access in the events and presentations section of the company's website.

At this time management would like to inform would like me to inform you that certain statements made during the conference call, which are not historical maybe deemed forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, Although New York Mortgage Trust believes the expectations reflected in any.

Forward looking statements are based on reasonable assumptions it can give no assurance that.

Expectations will be attained factors and risks that could cause actual results to differ materially from expectations are detailed in yesterday's press release and from time to time in the company's filings with the Securities and Exchange Commission.

Now at this time I would like to introduce Steve Mumma Executive Chairman Steve. Please go ahead.

Thank you operator good morning.

Everyone and thank you for being on the call.

As the company announced last December and becoming effective this year on January 1st I've taken a new role as executive chairman, but the Jason Serrano stepping up to CEO I leave the company in great hands and I look forward to the company's continued success now Jason and Christine will lead you through our fourth quarter financial presentation.

Thanks, Steve and good morning, everyone and thank you for joining our fourth quarter 2020, My earnings call Christine and I will be speaking to our Q4 2020 supplemental presentation that was released yesterday and is available on our website.

We will allow questions. Following the conclusion of our presentation before I begin I want to thank Steve for the two decades of service at the company, which.

He has successfully steered from a small named Sandridge are to what is now internally managed scabble diversified credit business, Steve the two professional in light with exceptional care.

For the company's shareholders and employees and thankful to have worked alongside side of these depot at three years and I look forward to following a path you car for the company's future.

Now turning to page seven key developments, starting with the financial highlights on page seven of the supplemental I will quickly summarize our quarterly performance as Christine will cover this in greater detail.

The company generated 6% of GAAP earnings per share underappreciated EPS was <unk> <unk> higher at <unk> <unk> per share also book value per share ended at fourth quarter at $44 70, or $4 74 per share on an underappreciated basis due to a fourth quarter increase in direct investments are real proper.

Through our multifamily JV program, we will provide an underappreciated earnings and unappreciated book value, which removes noncash expenses related to depreciation and certain amortization expenses related to leasehold intangibles.

After the fourth quarter dividend of <unk> 10 per share. Our 2021 total rate of return was 11, 7% and despite a full transition to loan and JV investments.

G&A remained close to 2% 2021 with a transformational year for the company as our capital redeployment strategy was executed indirect loan investments.

Generated from our single family origination partners and as it relates to our multifamily strategy loans and <unk> were generated internally at NYSE by our origination team.

In the fourth quarter, we added nearly $800 million of new investments, which set a record for the company. However, our quarterly earnings did not fully benefit from recurring income related to those assets as more than 70% of investments settled after late November and in December with high investment activity, we were able to better optimize our balance sheet as.

Our cash balance has dropped below 10% of capitalization of our 152 million of unrestricted cash net of 30 day debt maturities working through previous periods of high cash balances allowed us to re lever unencumbered assets in the first quarter, which will be touching on in a minute.

We also continue to utilize mineral recourse leverage for book value.

For book value protection, and lowered costs with a preferred stock issue at 7%, which redeemed a 775% callable C series, reducing capital costs by 75 basis points lastly, due to the recent market volatility we thought it was prudent to add $200 million buyback program, which the board recently approved.

Now turning to page eight subsequent developments investment activity accelerated through the first six weeks of the new year at $325 million of assets were added we are now on pace to exceed fourth quarter 2021 investment activity on the financing side, we have been very active as well with two securitizations completed thus far the first in early January .

Our RPM portfolio at two 3% total cost of debt and in February we completed our second bridge loan securitization revolver Lastly, we redeemed $138 million convertible note, which matured on January 15th.

We are committed to driving company earnings higher by growing our portfolio and have the capability to do so organically through our unencumbered loan book, we are excited to see this capital put to work and the earnings generated in subsequent quarters at this time I'll pass it over to Christine <unk>, our CFO to provide further detail.

And our quarterly financial results.

Thank you Jason Good morning, everyone and thank you again for being on the call and discussing the financial results for the quarter I'll be using some of the information from the quarterly comparative financial information section included in slides 29 to 36 of the supplemental presentation.

Our financial snapshot on slide 10 covers key portfolio metrics on a quarter over quarter comparison. The company continued to deliver solid results in the fourth quarter with GAAP earnings per share of <unk>, <unk> and GAAP book value of $4 70. This quarter, we are introducing two new metrics I'm depreciated earnings.

And then on depreciated book value, which are non-GAAP financial measures.

Depreciated earnings represent GAAP net income, excluding the Companys, Sharon depreciation and lease intangible amortization expenses related to operating real estate and.

On depreciated book value represents the Companys GAAP book value, excluding the companys share of cumulative depreciation and lease intangible amortization expenses related to operating real estate by excluding these noncash adjustments on depreciated book value reflects the value of the company's rental property portfolio.

And it's underappreciated basis.

The company's rental property portfolio, primarily includes consolidated multifamily apartment properties.

For the fourth quarter and depreciate earnings per share was <unk> and then our unappreciated book value ended at $4 74 down <unk> <unk> from the previous quarter.

Our net interest margin for the fourth quarter was $3 63, an increase of 38 basis points from the previous quarter, our portfolio weighted average asset yield was $6 57, an improvement of 18 basis points. The increase was largely attributable to our continued investment in higher yielding business purpose bridge loans.

Our funding cost improved by 20 basis points ending at 294, largely due to the refinancing of our 2020 Rpms strategy securitization in the latter part of the third quarter, which resulted in 210 basis points and cost savings.

The company recourse leverage ratio and portfolio recourse leverage ratio remained low at four times and two times.

Slide 11 details our financial results, we had net interest income of $30 8 million relatively flat as compared to the previous quarter.

Our continued investment in higher yielding business purpose loans during the quarter.

<unk> to the <unk> 9 million increase in single family interest income offset by a <unk> 5 million decrease in multifamily interest income, partly due to redemptions of our mezzanine lending investments accounted for <unk> loans.

Although there was a decrease in income from our mezzanine lending investments accounted for as loans income from our mezzanine lending investments accounted for as equity increased during the period contributing $7 2 million in preferred return during the quarter had these mezzanine lending investments qualified for a loan accounting treatment under GAAP It would.

Have contributed 46 basis points in net interest margin.

Interest expense on our single family portfolio decreased by <unk> 3 million, primarily due to the full quarter impact of the previously mentioned Rps refinancing securitization transaction at a lower cost.

We had non interest income of $39 3 million, mostly from net unrealized gains of $5 $15 $5 million due to continued improvement in pricing on our assets, particularly our residential loans. We also generated $5 2 million of net realized gains primarily from residential.

Loan prepayment activity offset by $4 1 million of net realized losses from.

From sale of agency RMB.

The net realized loss from the sale of agency MBS was offset by the reversal of unrealized losses recognized in the prior periods.

In addition, as discussed earlier, our mezzanine lending investments accounted for as equity contributed seven $7 2 million of preferred return.

Also generated other income of $7 9 million, which is primarily related to $4 8 million of income recognized from equity investments in entities that invest in or originate residential properties and loans.

And $3 1 million of redemption premium and premium recognize from early repayment of mezzanine lending investments during the quarter.

Included in our results for the quarter as the net loss activity related to our multifamily apartment properties in which the company has equity investments in the form of preferred equity or joint venture equity.

Because of certain control provisions, we consolidate these properties in our financial statements in accordance with GAAP.

We received variable distributions from these equity investments on a pro rata basis and management fees based upon property performance.

We pursue these investments for potential participation in value appreciation of the underlying real estate, which is realized only upon sale of the multifamily assets.

These properties generated operating rental income of $7 6 million and incurred interest expense and operating expenses of $2 1 million and $13 5 million respectively.

Operating expenses incurred by these properties during the quarter is primarily related to depreciation expense and amortization of lease intangibles totaling $9 2 million.

After reflecting the share in the losses to the Noncontrolling interest of $1 3 million in total these multifamily apartment properties incurred a net loss of $6 6 million for the quarter.

We had total G&A expenses of $12 5 million relatively flat compared to the previous quarter. We had portfolio operating expenses of $8 1 million, which increased primarily due to the growth of the business purpose loan portfolio.

Slide 12 summarizes our activity in the fourth quarter as Jason mentioned earlier, we accelerated our investing activity in the fourth quarter acquired residential loans for $606 million funded multifamily joint venture and mezzanine lending investments for $123 million and $66 million respectively. We also saw.

Non agency MBS.

Agency <unk> and residential loans for proceeds totaling $194 million. We also had total repayments totaling $333 million comprised of $245 million from our residential loans $59 million from our investment securities and $28 million from our mezzanine lending investments.

Jason will now go over the market and strategy update Jason Thanks, Christine turn to page 14 relates to our strategy update our core strategies strategies remain unchanged. We believe we are strategically.

Strategically positioned to take advantage of fundamental market strength with current agency mortgage coupons now at 4% housing affordability is close to the long run average where mortgage costs equals about 23% of first time homebuyers in.

Any weakness in housing demand due to higher rates is not likely to correlate lower home prices here like many sectors. At this time the supply side components determined price equal equilibrium isn't an overriding factor December printed another record low homes available for sale was below 1 million units. This correlates to one eight months of supply in the market.

<unk> also record low extreme and persistent low volume is likely to keep prices pinned at or above inflation rates, particularly in the south.

We continue to see value in these in this market through short term bridge loans, where underlying investors can take advantage of a technical squeeze in housing supply and we can benefit from high coupons and a short duration loan with higher short term rates, we had to fixed rate securitization revolvers are disposed to generate teens returns.

<unk> gain on sale has all but evaporate for agency non agency residential loan originators in the first quarter, while market coupons, we set higher, albeit at lower origination volumes, we see an excellent opportunity to pick up deeply discounted paper in the scratcher net market also secondary and tertiary msas in the south and southeast should continue to benefit.

From population migration trends as these markets provide a cheaper cost of living alternative and our recent large scale U S pull more than 80% of workers suggested they would quit their job if employers ask them to report back to the office full time, thus work from home is likely to transition from a health measure the retention measure offered by employers to.

Keep talent.

The key talent, we see great opportunity attractive risk returns in the multifamily sector to take advantage of this migration due to this trend.

Now turning to page 15 to address sourcing.

Sourcing approach, we recently looked locked in a flow agreement for 50% of production from a large originator in the BPL space.

We are excited about this arrangement and we will add to a robust growth in the single family sector in the higher rate environment. We have also increased our participate participation with our originators as we see better value offered we are an investor of choice because we are scalable reliable.

<unk> in the market and do not directly compete against our partners on the multifamily side and as a way of background in 2016, we internalized riverbank and multifamily originator and asset management platform. Since then since this time, we funded over $1 billion of loans on our balance sheet generating 15% life to date return on our assets as we do not utilize leverage with.

The strategy, we have built up organic sourcing opportunities with hundreds of sponsors. We are very excited about this program that offers portfolio cross collateralization roll up opportunities. We closed our first sale in last November on 11 properties totaling more than 200 units, we offer more than just capital to multifamily regional regional sponsors are.

Asset management platform helps our partners will leave certain operational pinch points as an example, our technology can map into the GL of underlying multifamily properties to automate and review months reporting. This is just one of the ways. We can help sponsors consolidate their assets.

Asset management program on page 16 relate to strategy update our.

Our transformation from 2000.

Early 2000 is evident with each of these graphs in the first graph asset sales in early 2020 generated excess cash as we held a defensive posture in Q3 2020. After this time, we held a stubbornly high cash balance with a levered balance sheet and the second graph as prices recovered and term financing normalized we <unk>.

Increased our utilization of non mark to market structures to reduce balance sheet risk and lower our cost of funds to optimize our balance sheet.

In the third graph, we monetize our securitization holdings and reinvested the proceeds into higher yielding loans and GBS. The gestation period for loans and <unk> is much longer than bond investments some of our large larger opportunities such as portfolio Rollouts can take multiple quarters to close which caused some inefficiency. These three graphs demonstrate how we manage.

Through the transformation in patient and out we exhibited patients and doing so in the fourth quarter cash was brought below 10%, we quadrupled usage of non market structures and dependence on short term borrowings while also lowering our cost of funds and we rotated out of security holdings to increase our yield on assets the greatest level in the company's history.

On page 18.

We are excited about our earnings potential from these activities with anticipated high investment levels in the near we are prepared for a busy first quarter to grow our portfolio by raising cash from mainly unencumbered assets on our balance sheet.

We were active in the securitization market on day, one of the new year and through 2000 and through March Sorry February 15, 2020, we have raised $584 million of cash with keeping a low rate of recourse leverage which after effect of this funding is only four times simply putting half of the cash generated from the 708.

8 million of total financing completed completed or in process.

At either a 912 or 15% ROE, we can generate a two to three or four <unk> of incremental EPS, respectively. We believe hitting the upside to the growth potential is not out of the equation and we are excited to demonstrate that over the course of the year.

Turning to page 19, we believe we can do so by protecting book value under prudent financing structures, which limit company recourse and mark to market risk as illustrated here.

Now turning to page 20.

As I go through the single family overview, and just as a quick note regarding our <unk> family allocation. We continue to stay up in credit with high FICO borrowers at low Ltvs targeting 12% to 15 ROE is after effective financing, we began adding <unk> loans in the fourth quarter, which are loans to rental investors.

We guarantee with guaranteed production from a flow agreement and coupons are nearly 100 basis points higher than at the beginning of the year, we feel confident adding exposure here with the intention of gestation to a securitization.

This longer duration mortgage loan requires to term finance.

Term financing to prudently generate an equity return we are confident we can now accumulate attractive levels for a rental loan loan pool securitization turning to page 21.

Our portfolio highlights.

While we are hitting our stride as a multiple loan asset classes in single family sector. The performance of our credit assets remained positive delinquency rates have flattened out on our RTL book on a scratch and Dent book, we continue to benefit from PARP prepayments on our discounted loan purchases.

While we do expect prepayments to slow and durations to lengthen. This presents an opportunity to add to these loans with securitization and opportunity. We have been recently execute we've recently executed for compelling go forward equity returns relates to this asset class.

Turning to page 22.

BPL bridge strategy with nearly 1 billion of loans at the end of the fourth quarter detailed bridge loan continues to be our largest exposure.

Performance has been great, which is expected with loans at 65, LTV after repair and a double digit HPA market equity buildup is substantial for the borrowers here that are experienced in our local markets.

Complete the rehab jobs focused on low cost projects turning to page 23, our multifamily portfolio overview.

25% of our capital is allocated to this asset class.

We believe this portfolio offers our securities our shareholders a differentiated type of diversification in this market at ROE of 12% to 17%. We are at the center of a sector that is in the process of a fundamental landscape change the market is efficient workforce housing offerings, the workforce housing offering quality.

And affordability is an attractive proposition in today's post COVID-19 marketplace.

In the JV portfolio at $272 million were looking to.

Looking forward to sharing the equity upside with our sponsors on property reposition strategies more on that in a minute turning to page 24.

As expected performance is excellent one loan is delinquent and expected to result in a full recovery year over year rental growth rate for our portfolio was 8%, which is the highest level, we have seen for our book with low LTV.

<unk> presented here that does not account for valuation change to have occurred since the opportunity was funded we expect to continue our record of zero losses in the strategy to date in the near term with $71 million already closed in the first quarter and $152 million in underwriting portfolio growth will.

We will continue from Q4 levels.

Turning to page 25.

The growth we have seen here is excited with our origination platform.

With the close of a portfolio roll up and cap recapitalization. We are now on a non linear growth trajectory joint ventures is our leading product and as Christine mentioned earlier, we will also report unappreciated EPS and book value to remove these noncash costs to our income statement and balance sheet in these measures.

We do expect depreciation and amortization cost to grow alongside of our portfolio, particularly amortization because of high growth rates received the rent in todays market. Thus expect us to continue reporting these measures on page 26.

The asset transition plan offered in high growth Submarkets is a case, where we invest and lower LOE.

Lower market quality property as a value play typically related to deferred maintenance or a daily concept and a udall and utilize a cost effective capex plan that produces a refresh look meeting market competition.

This has been our focus since 2014, while market while markets do change we consistently see tenants desire for a neat product at an affordable price point, and we expect to meet that growing demand.

Now on page 27.

We believe a diversified portfolio of growth strategy centered around recurring income streams will provide stability to earnings in 2022 with industry, leading global company recourse leverage and flexibility aided by our low cost operating structure, we have taken a more offensive posture to pursue opportunity opportunities in high rate environment for <unk>.

<unk> portfolio growth. We believe this is the path to enhancing earnings and we believe the time is now.

At this time I would like to open up the call for questions operator.

Ladies and gentlemen, once again, if you have a question or comment at this time. Please press Star then one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue press the pound key.

Our first question or comment comes from the line of Eric Hagen from <unk>. Your line is open.

Hey, Thanks, Good morning, I think just one for myself can you talk about the outlook and the opportunity in the fix and flip space really just the competition, which is develop there how much you guys think you consortium that channel this year with the backdrop being higher interest rates.

Yes. Thank you.

We have put together a flow agreement, which gives us a 50% production of one originator. We will also have increase our.

Participation with few other originators in the market, we do expect our fixed and flip volumes to increase from what we presented in the fourth quarter given those arrangements the market.

Because of the recent rate volatility.

That market has taken a bit of a step back as it relates to the liquidity on financing related to these assets the securitization market.

Given rate increases is higher and therefore, there is this transition period that has to come with respect.

Most recently I was out there with higher coupons and.

And in this period.

Liquidity matters tremendously given the.

The change in rates.

We have been a consistent buyer of this product with our counterparties.

<unk>.

<unk> been able to help them understand where coupons are going in migrating given just swap rates in the market.

So we've been able to stay ahead of this change and which has helped some of our partners here. So we expect to continue to see portfolio growth there.

Particularly with the fact that we have one Virginia at 50% of production.

That's helpful color. Thanks, a lot.

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

Hi, good morning.

Jason can you can you talk about the your comments towards the more of that.

The posture going forward as you look for new investment opportunity.

No.

Yes.

Where you see the best opportunities decided the rising rate outlook.

What those maybe.

Also how do you how do you think about those new investment opportunities versus the stock repurchase.

With shares of around 25% discount on depreciated book value here.

Yes, so starting with the opportunity and the offensive posture.

We have been.

Analyzing looking at this market, we've had opportunities to buy a larger portfolios.

2021.

We passed on it and part of the reason was that the markets.

I was offering very efficient and high liquidity financing, particularly in the short term part of the part of the financing spectrum, which back in 2020, we saw the <unk>.

All of that and Securities long term securities against short term repo.

The effect here is not as great. Obviously in the financial markets are completely open as it's costlier to finance.

So our goal was to to.

Focus on the short duration product, where we werent, taking large interest rate <unk>.

Interest rate risk given the reset of these loans or the pay off these loans is fairly quick within a year to two.

15 months.

The product would reset into higher loans, we also like the opportunity of taking our borrowers that are reshaping are paying off and I say resetting now more than paying off simply because a large part of the fix and flip market is now going into DSR loan product. So the fix and flip investor is now likely to do.

A.

Fixed to rent.

And.

With our with our portfolio.

The ability to recapture that bar into a DSR alone is great as.

As well as <unk>.

Resetting these coupons are bit higher in this market, which will give us better.

That our NIM earnings on those on those assets. So that is part of why we are becoming more aggressive in the last.

A couple of months here on our portfolio, we just like the the fact that the coupons are.

At the highest levels, we've seen in roughly two years in.

We.

We're going to take continue to take advantage of that as it relates to our share buyback program.

See an opportunity to grow our book value and to grow EPS.

Which will allow.

Our shares to appreciate it if we are able to to continue with that plant now the opportunity that we're seeing ahead of us today.

And assets, given where we're taking we have low cash balances were taking.

Loans that are unencumbered and encumbering them through Securitizations.

And receiving cash back for that and we've allocated into investment and investment securities, which will investment assets, which will allow us to generate a teens return, which we think will.

We will bridge the gap from.

From this kind of gap that we are currently trading at so.

We're seeing an opportunity in the market and fixed.

The extent that we see continued volatility with respect to our share is in fact that we are not able to hit some of our objectives with respect to our portfolio growth then.

The consideration is therefore, a share buyback, which is why we put it and had the board approval and last couple of weeks.

Great. Thanks for the color.

Christine thinking about the operating real estate portfolio.

I appreciate your prepared comments.

As we look to model that forward.

How should we think about.

<unk> run rate through 'twenty, two or kind of an outlook for the.

The revenue and the expenses for those.

Those investments.

Yeah.

I think it's going to be a little bit significant more significant so.

The first quarter as majority of our JV investments that we closed in 2021 actually closed the latter part of December . So you would expect that number to grow and as we continue obviously to invest in more JV.

JV type structures. These numbers you would expect but also growth.

Okay. Thanks, I appreciate the comments this morning.

Thank you. Our next question or comment comes from the line of Christopher Nolan from Ladenburg Thalmann. Your line is open.

How much do you anticipate taking multi multifamily.

Up to as a percentage of your capital allocation.

We expect it to grow from here.

And the difficulty in answering that question, while we while we did present our.

Our pipelines.

Estimate that.

When you take unencumbered assets off our balance sheet that are in residential loans and securitize those loans.

Your percent of market capitalization for that product does decline if you reinvest that product into an equal allocation than you expect multifamily to increase from there.

We are growing on both sides and as I mentioned earlier, we had record volume of acquisitions on both the single family and the multifamily side in the fourth quarter and we're expecting similar results in the first quarter.

There is not a hard target we're looking at we are opportunistic.

We'll look to see where the best returns are in the market and.

Where we can do so with.

With book value protection.

So there is not a set number we're targeting it's just a function of what the market is allowing is allowing us.

What the market is providing us and where we see the best opportunities. So we'll continue that approach.

As a hard target a certain percent great and Christine you mentioned I think in your comments on net loss multi.

Multifamily was that a GAAP net loss, including the noncash depreciation charges yes.

Yes. It is.

GAAP net loss.

So going forward, we should be starting to look at this on depreciated.

Depreciated EPS and book value.

As.

Multifamily growth of the portfolio.

Thats correct.

And that's why we introduced this quarter because we see.

Those numbers getting significant as we go into joint venture equity investments in multifamily properties, where we have control.

And then Jason given that you guys invest both common and preferred equity into these joint ventures is your preferred equity from the sponsor standpoint is your preferred equity.

<unk> equity when he goes and tries to get a first lien loan as assets.

Well the yes, so the visit the way we look at it we call it.

Presentation, Mezz lending and the Mezz lending is basically our second priority in the cap structure.

For the sponsor and <unk>.

In certain cases, there's prohibitions on.

On.

On a second or a mezz loan as it relates to recapitalization of the first so it is a hybrid.

Security instrument, where it has that features an equity features.

<unk> features in the form of a coupon.

And equity futures in the form of <unk> and other tax related measures. So from the sponsors perspective, it does give them flexibility.

As it relates to senior senior financing as it relates to prep.

<unk> versus <unk>.

A mezzanine loan although the features of both of those are very similar as it relates to our <unk>.

Our return.

Given all of that should we look at these as control investments or is there a scenario where they could become control investments.

There is going to be scenarios for our preferred equity type investments.

That could be control when we have to take over the property as the property is not doing well or some things being done by the operator thats not.

That's not in accordance with our agreement.

I think a couple of instances in a prior years, wherein we took over these properties and by taking them over we were able to make the property better and actually not incur any loss on those properties.

Okay I'll follow up offline. Thank you.

Thank you. Our next question or comment comes from the line of Doug Harter from Credit Suisse. Your line is open.

Thanks can you talk about.

How loan loan pricing has changed in 2022, then given some of the back up we've seen in securitization.

And pricing.

Yes so.

I can speak to our portfolio directly so we are looking at.

The latest changes for this week, we believe that we've estimated about one 5% loss to book value through the first quarter.

That's related to.

Our securities that we still have in our balance sheet.

And in most of the longer duration mortgage loans that we have on the balance sheet as well where a lot of those that were that losses.

<unk>.

We believe that losses have been incurred.

The market as a whole I mean, there is it.

Depending on what the underlying coupons are and what the duration is it's more than just just simply looking at swap rates and taking a duration.

And taking a price change from there. It's also somewhat illiquidity measures on some of the lower coupon on assets.

So when you're financing cost is greater than the spread or Youre your asset Cooper.

Coupons.

He doesn't know how much leverage you reply to that so staying away from those low coupon asset class has been a priority for us which is why we focus on short duration high coupon bridge.

And we delayed our SCR.

Our investment strategy until.

Better half of fourth quarter, and mainly starting in the first quarter.

Yes, the market is resetting and Securitizations are also resetting theres been a couple of deals that have been pulled off the market.

Some did not.

Simply because of the.

Nobody wants to step into a bond deal and have it marked down a few points next day when rates move another 25 basis points. So I think the market is waiting to reset there's still plenty of capital on the sidelines for all these assets and the Securitizations.

But there's kind of a wait and see approach to the market until rates kind of settle out.

I guess, just then on your ability to deploy capital.

There are opportunities to take advantage of others kind of hesitancy given kind of your current defensive positioning or or do you kind of take the wait and see approach given given the current volatility.

No.

Freed up.

We freed up capital on our balance sheet with early Securitizations early in the quarter.

Simply to take advantage of.

Some some illiquidity in the market that will allow us to buy it.

At lower prices.

We are open for business, we have been looking at larger portfolios.

From a region your pipelines that kind of got it got stock without.

Being able to place into the market and warehouse lines that were timing out.

R.

Our interest and our market presence and discretion of market really helps us see a lot of activity not just related to agency origination that is now scratching to amp, which is origination overall that can get kind of put in a period will hold where the.

The buyer backed out and now they're kind of shopping that loan pool in the market at all.

We're evaluating opportunities to that end and we expect to continue seeing it.

We are absolutely looking.

To take advantage of this technical change that's happened in the market.

At <unk>.

Deeper discounts.

Great I appreciate it.

Thank you our next question or comment comes from the line of Matthew <unk>.

From Jones trading your line is open.

Hey, Thanks, guys asking question on behalf of Jason Stewart.

So with the partnership with BPL rental what kind of origination volume are you guys seeing from them and what should we expect on the <unk>.

First quarter of this year and moving forward.

What we liked about our partnership here is that the originator as shown.

Kind of a hockey stick.

Origination.

That we are.

Excited about and.

We continue to add new staffing to build out that business.

And right now at current.

The ratio of origination we expect the minimum to have $1 billion of loans.

This first year, but they are growing and we do expect to be able to.

To grow that portfolio along with them.

On top of it we also have the opportunity to purchase loans.

That we are seeing from other originators that.

It's not necessarily a contractual agreement, but we have been a very consistent buyer every every month with these with these originators, which is what when you look at our our asset acquisition strategies.

In the BPL space, you can see consistent purchases.

It was around 250 million a month now we're now that number is going up as you saw last quarter and we will definitely be higher in the first quarter. This.

This year overall. So this is just a partnership that allows us to.

Bring liquidity.

Markets such as this to originators and there is potentially other originators that could follow in this kind of process with us we think there's a low cost way for.

For us to benefit from from origination platforms.

Yeah, that's great and then are they.

Located in the areas, where you guys have been active before.

Yes.

They are.

It's BPL origination Theyre focus is mostly in the <unk> space, they do fix and flip as well.

We are part of the hesitancy of going to the <unk> market was simply volume and being a secondary market buyer portfolio.

Portfolio, but it's not a great way to grow is securitization book.

Given the.

The lack of consistency and the fact that you do want to just eight for our securitization portfolio takeout.

We would only look at the space, if we had kind of guaranteed pipelines, which we do today, which is why that strategy is now one of our focal points that we just we walked through there.

<unk> BPL fix and flip book is growing.

And we expect that to grow faster than their JCR book.

But again this is one of many that we speak to and we buy loans from and.

We're just in this case it was originated it was.

<unk> about rate movements and also concerned about liquidity.

As it relates to their operation and having a consistent buyer and that can come in and take loans off their balance sheet. Every every month or once a week was important so the funding timelines also increase relate to this opportunity for for them, which was helpful and release cash and put it back into the market and for us to acquire assets.

Awesome. Thank you.

Thank you. Our next question or comment comes from the line of Bose George from <unk>. Your line is open.

Hey, everyone. Good morning.

In terms of sort of where you are in the transformation you guys. Obviously put a lot of money to work in <unk> again in <unk>.

Is there a way to think about what inning youre in in terms of the transformation to a more normalized Roe.

Yes.

<unk>.

What Christine walked through and are in that purchase activity for the quarter.

I think it's helpful to kind of cement that point, we added $324 million net investment activity for the quarter.

It's been a struggle too.

Ed.

Net net incrementally positive to our balance sheet simply because of our.

Our asset sales that we have conducted in the securitization space, we sold $193 million last quarter, we are sort of at the end of that cycle for our security sales that we have on our balance sheet, which is will be helpful. Obviously to continue to grow net positive our balance sheet going forward.

So for.

For those reasons, we do expect.

Further growth prepayment in redemption activity we.

We had very high pay offs in our scratching that portfolio, which was a positive given we bought those loans at discounts that.

We think that's going to moderate as well.

<unk> prepayments have been kind of consistent in the kind of mid single to high single digit range.

That product is less sensitive to rates they have high coupons already.

And it's more of a change of life plan for the borrower that prepays that loan after.

10 years of pain on that loan.

And in multifamily.

<unk>.

With the rollout of opportunities that we're focusing on and working.

In this new environment in the South southeast.

Probably United States, we have really hit our stride with with with sourcing.

We do speak to hundreds of sponsors we do so it is an 80 20 rule here.

20% of our business comes in.

20% of the sponsors provide about 80% of the business and we're going to continue being able to grow in those southern markets with the migration that we see so we're we're excited about the growth that our portfolio could experience and the reason why we provided.

A projection or at least a hypothetical relating to our EPS movements related to asset growth.

Okay, Great. That's helpful. And then actually in terms of returns can you just talk about the returns on the operating real estate just how that compares to the.

Incremental returns on other assets.

So as it relates to <unk>.

The JV the JV is again.

So the JV is we're targeting about 12% to 17% of return, but that's going to be over the life of the investment which would include kind of like an exit when we when we sell the property and that's what we're looking to do I mean, youll see the pop at the end, but over time, what Youll see is.

Property income less expenses, which would include depreciation and amortization expenses and then at the yen Youll see again, a capital gain essentially.

I noticed that those assets are held that at basis, and we take depreciation against that.

Those assets every quarter, so to the extent that we've had an 8% increase in rental rates for the first quarter and thats knock on the gain of those assets that can be represented in our on.

On our balance sheet as we hold it at cost so it's cost accounting on those assets with depreciation to.

To christine's point the gain.

Expect a gain that we are working towards on a R.

Our transformation.

The property itself through Capex plans or maintenance deferment cleanups as what were how we generate a return as well as the rental payments we receive on a monthly basis.

Okay, and actually I didn't know if you said this already but what's the typical life.

Those properties.

Yes.

Thanks for mentioning that because that's an important distinction.

Part of the growth strategy for US also has been the fact that our mezzanine and prep portfolio is more of a shorter duration instrument.

Typically what happens is that the.

Sponsor.

It takes the PREPA use for Capex improves the property and then looks to either a recap the property or sell the property to to get paid.

On that improvement so we've seen that duration anywhere from kind of like two five to four four and a half years as.

As the property gets transitioned we do expect the JV to be bit of a longer duration and the fact that we are equity.

We are equity alongside the sponsor and making decisions on that sale have opportunity to take back the property in the case of a sale. So if the sponsors timelines are a bit shorter than ours, we have the opportunity to hold that property through through a longer lifetime, which we really.

Really enjoy.

Lot of the sponsors will focus on IRR, we're focusing on on <unk> and.

Total cash so we love, we think Theres, a great income producing asset as inflation protected and we don't mind, taking these assets.

A bit of a longer duration, if need be but we do expect it to be a bit longer than that our prep.

Okay, great. Thanks, and then just one last one.

Mentioned it earlier, but what was the book value quarter to date again was up 5%.

In Kingston.

On depreciated book value is $4 74 down <unk> <unk>.

In the quarter since the end of the quarter like what was the change it's down about half a percent half a percent okay perfect. Okay, great. Thanks al.

I am sorry, if the question was related to first quarter book value decline.

We see about a one 5% decline to date.

Through this week and that was the question sorry.

Yes, yes, yes.

Alright, Thanks, a lot.

Okay.

Thank you. Our next question or comment comes from the line of Matthew Howlett from our Raleigh. Your line is open.

Hey, guys. Thanks for taking my question first of all congrats to you both Steve and good luck in your role Jason Congrats on the promotion.

Thanks, Matt Thank you.

Just a couple of questions on <unk>.

The capital deployment just were to assume it happened on October 1st all of it.

So you have to start to sense is that sort of dividend coverage. We are getting close to that just curious on what the impact would have been.

The impact if we were to.

And these assets in October hypothetically.

Yes.

Yes, the impact is essentially what youre seeing on that.

Hypothetical page that we presented.

It's simple math you look at the average floor income if you look at the the.

The addition to the numerator in that quarter related to a full year, a full quarter cycle of.

Interest earnings and then you can see the incremental impact there so.

It's yes, it's pretty straightforward, which is why we presented it and.

That's our expectation when you if you were to add those assets.

Got you. So we look at dividend coverage, we should we look at the run rate.

Company and that is sort of the example, you gave yes.

Yes.

Yes.

I'll look there.

Got it second question.

Congrats on paying off the high cost convertible.

Look at the unsecured side, but what are you what are you seeing out there in your cost of capital has come down you had been able to issue cheaper and would you look to replace that with something else on the balance sheet.

Yes, so we speak regularly with with bankers in the space on corporate finance opportunities that's.

Thats available.

Very fueled a number of calls this year, despite the higher rates.

There's a couple of interesting transactions that are.

They are out there as it relates the whole business securitization, which is securing a particular part of your asset portfolio and issuing.

Issuing debt off of that portfolio. So it's like a whole business securitization related to a particular asset pool that is something that has evolved over the course of the last couple of years.

That product offering I remember back in 2007 was pretty popular and that seem to come back in the last six months.

I mentioned it not because we're actually considering doing a deal in that space right now simply because there are new structures that we're seeing which we're evaluating.

Right now we have.

Plenty of cash our balance sheet with respect to the financing that we've completed and expect to complete so we are not.

In the market at the moment looking for a.

Corporate finance opportunity related to <unk>, but during the course of the year, depending on where our portfolio migrates in.

And also what the opportunities on the sourcing side, we definitely we'll continue evaluating that but we have plenty of liquidity for our pipelines that we have established.

Great. Okay, we'll look forward to that and on the subject.

Lower cost of capital and they look at <unk> history. So he's had a great history of diversification fresh mover in certain asset classes.

When I look at the two sort of residential and multifamily, particularly the recent growth in the roll up strategy at the JV.

Do you see these two strategies coexisting together.

Could they be on be spun out I mean, do you think the synergies of having them together or would you look at some point to try to enhance the value of the multifamily business.

Sending it out or some other type of corporate restructuring.

Yes, it's an interesting question.

We believe at the moment it offers are.

Shareholders interesting diversification that is I think unique in the market today.

I definitely believe that the story.

We've talked more about the origination platform because we believe it's an important part of the value of the company and our sourcing capability, particularly the fact that we are internally sourcing and originating those loans.

And it's a it's an asset class that has.

Produce roughly $100 million of origination volume net.

Over the course of the year is an hour, obviously seeing opportunities to increase that.

So as that business continues to grow we will evaluate.

The opportunity and see what is in the best interest of our shareholders as it relates to that portfolio and the rest of the book, but at the moment I think it provides a great day.

Replication.

<unk> strategy for those that are looking at both.

Residential markets and looking at.

The strength of the multifamily market that we have within our within our balance sheet today.

Yes, I'd just look at all the sort of there's been a lot of private equity activity real estate southeast and just look at that that portfolio may not be getting the credit debt.

That it deserves in your cost of capital it should be lower as it relates to that strategy.

Yes, I mean private equity the property rights I've had a great run.

Most of them trade above book value, obviously depreciation plays a big role there but.

Theres been a lot of.

Theres been a big increase in valuations of those underlying properties given rent rate growth.

<unk> rates and.

Today, we will follow that same path as relates that GAAP accounting and we hope our shareholders see the value of that asset on our balance sheet.

Yes, certainly familiar with that well look forward to it and congrats again.

Thank you.

Thank you I'm showing no additional questions in the queue at this time I would like to turn the conference back over to Mr. Serrano for any closing remarks.

Yes, Thank you everybody for being on the call today, and we look forward to speaking to you on our Q1 2020 earnings call Great have a great day. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program you may now disconnect everyone have a wonderful day.