Q4 2021 Ready Capital Corp Earnings Call
Okay.
Greetings and welcome to ready Capital Corporation fourth quarter, 2021 earnings conference call.
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I'd now like to turn the conference over to your host Andrew Ahlborn Chief Financial Officer. Please go ahead.
Thank you operator, and good morning, and thanks to those of you on the call for joining us this morning.
Some of our comments today will be forward looking statements within the meaning of the federal Securities laws.
Statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect.
Therefore, you should exercise caution in interpreting and relying on them.
We refer you to our SEC filings.
More detailed discussion of the risks that could impact our future operating results and financial condition.
During the call we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance.
These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
A reconciliation of these measures to the most directly comparable GAAP measure is available in our fourth quarter 2021 earnings release, and our supplemental information, which can be found in the investors section of the ready capital website.
I will now turn it over to Chief Executive Officer, Tom capacity.
Thanks, Andrew Good morning, everyone and thanks for joining the call today.
Fourth quarter results capped another banner year for ready capital in earnings originations and growth. We continue to build one of the most diversified CRE multi strategy credit origination and securitization platforms in the industry to continued expansion in product offerings and as a leader in seaweed and the V series space and strategic.
Acquisitions.
Our lending platform is supported by a rock solid balance sheet, which has improved both from a cost of financing and liquidity standpoint.
Now in the fourth quarter, we originated a record $2 2 billion of small balance commercial or SBC loans, which was not only a quarterly record, but also exceeded total annual production in both 2020 in 2019 for the year total S. P. C loan originations and acquisitions were 4.9 billion billion representing.
Two and a half ex growth over 'twenty 'twenty.
In our small business lending sector business fourth quarter originations of SBA seven loans equaled 136 million capping a record 481 million in total 2021 production more than double 2020.
Combined with our residential merchant cash advance real estate equity.
And multifamily affordable housing channels totaled 2021 transaction volume reached a remarkable $10.2 billion.
I would like to highlight some of the factors, which contributed to our growth first is our differentiated product offering which provide sponsors with financing across the full lifecycle of an S. P. C property from construction to stabilization. This model allows us to pivot as markets move. It also allows us to capture a larger portion of the.
<unk>, that's properties moved to stabilization and develop broader relationships with our sponsors and brokers.
For the quarter and our lead product transitional lending, we originated $1 $5 billion, comprising 91% multifamily priced to a 12% Roe.
<unk> yield.
And with an average as is L. T V of 76%.
This was supplemented with $98 million of fixed rate and see MBS loans and $29 million in acquisitions.
Prime focus at 2022 we'll be growing our fixed rate and see MBS programs.
Secondly, the ownership of government sponsored lending businesses, which provide recession proof gain on sale income have barriers to entry and high Roe's. We closed the year at the sixth largest SBA lender and will continue to gain market share with rollout of new programs, including SBA Express small loan for which we.
<unk> 5 million in the quarter and USDA.
For which we obtained a license.
In our Freddie Mac business, we closed 169 million in the quarter and climbed to the fifth largest S. P. L lender, our Redstone Freddie Mac affordable housing.
Tax-exempt blender originated 444 million in the quarter significantly outpacing the volume we underwrote when we acquired the business in the second quarter.
Third is disciplined growth of our equity capital base in 2021 our equity capital increased 54% to $1 3 billion, comprising $240 million in M&A and $167 million in common and preferred equity issuance.
Compared to the traditional Emory equity growth strategies of secondary issuance, we continue to support growth in our S. P C market share through accretive M&A, including the fourth quarter signing of the $500 million merger with mosaic real estate credit.
Fourth this human capital.
In 2020 , one we added 83 full time employees with a focus on front end sales production in credit, including a national sales manager and head of strategic partnerships. These senior hires cement our strategy of realigning the business with a focus on front end production inefficient credit processes to improve loan pull through and processes.
Rate's.
Finally, our securitization franchise.
As evident in tight credit spreads versus the bellwether names in the MBS market since.
Since inception, we have issued nearly 9 billion of transactions across 31 issues, including a record $2 4 billion in 2021 in the fourth quarter, we closed our largest CLO to date ranking as the fifth largest CLO issuer in 2020 one.
As an established issuer, we have access to match funded nonrecourse financing, helping drive our dividend yield premium to our C. REIT peer group.
Our 2022 budgeted issuance exceeds 2021 kicking off with our a CRE CLO, a 1.2 billion dollar offering in the upcoming weeks.
A hallmark of ready capital has been a culture of credit discipline and our market share gains have been achieved by process and data driven improvements in product and sector focus without aggressive credit underwriting. This credit discipline is evident in a 60 day plus delinquency rate and our S. P. C. N S. P. A portfolios of only one point.
2%.
Further high risk assets rated four or five on our one to five risk rating scale.
Declined 22 basis points to five 4% of our SBC portfolio and remain consistent at seven 5% of our SBA portfolio.
[laughter] now ready capital is uniquely position regarding the impact of rising rates and widening credit spreads at Emory dividend yields and book value.
First 78% of our portfolio our portfolio was floating rate at year end. Additionally, 70% of the CRE floating rate portfolio comprises 2021 vintage with LIBOR floors, averaging 19 basis points.
So while we benefited from a weighted average floor of 215 at the beginning of the pandemic as rates move lower the current average of 50 basis points will place pressure on short term margins, but positions us well with more substantial movements upward movements in rates.
Second is our asset liability structure.
At year end, only 5% of our debt comprised CUSIP pledged under short term repo.
Additionally, it you're at 58% of the portfolio is match funded through securitization with only 30% of our current warehouse inventory comprising fixed rate loans, which are fully hedged.
Lastly, we made significant headway.
Last year in securing fixed rate corporate borrowings, adding $575 million of additional secured debt unsecured debt and preferred equity.
In total as proven in the Covid recession ready Capital's business model is highly resilient to rising Mac rack macro risks from tightening monetary policy higher capital costs from spread widening on senior securitized debt tranches would likely be offset by earnings accretion from rising rates.
And widening asset yields and in a less competitive SBC sector.
I also want to provide a quick update on the Mosaiq transaction as we highlighted on our last call. The merger with mosaic further is ready capital's competitive competitive advantage via seamless expansion in our product mix from heavy transitional bridge to construction lending and is accretive to earnings pending shareholder approval, we expect the transit.
To close in the third week in March.
Finally in terms of outlook, we're off to a strong start in 2022.
Through the third week of February we have originated $663 million of SBC loans and $33 million of SBA loans and have a current money up pipeline of 1.3 billion across all products, we expect near term earnings to be elevated.
The tailwind from P. P. P are recognized over the next two quarters before a reversion to our 10% to 11% target Roe.
The continued growth in our loan servicing.
And in servicing portfolio as well as expansion of our gain on sale businesses, so with that I'll turn it over to Andrew.
Thanks, Tom.
GAAP earnings and distributable earnings per share were 69 cents and 67, respectively.
A repeatable earnings of $52 5 million equates to a 17, 8% return on average stockholders equity.
121, full GAAP earnings and distributable earnings per share or $2.17 and $2.29, respectively, covering our dividend of $1 66, and equating to a 15.4% return on average stockholders equity.
Distributable earnings related to net income from P. P. P was $15 5 million or 21 cents per share for the quarter.
The quarterly earnings profile absent the effects of the P. P. P is reflective of the growth in our balance sheet. The continued contribution from our gain on sale businesses.
And the normalization of residential mortgage banking revenue.
Net interest income increased to $39 4 million due to loan fundings of $1 2 billion outpacing loan payoffs of 339 million.
As of quarter end, the $7 1 billion dollar of held for investment portfolio had a weighted average coupon of four 8% and average margins of 275 basis points.
The stability of our revenue was further bolstered by servicing revenue of $10 1 million.
In the quarter, 68% of non P. P. P revenue was produced by the stabilized investments on the balance sheet.
Realized gains decreased 15%.
Due to a $4 $3 million quarter over quarter reduction in income generated from the sale of certain mortgage backed securities positions.
Total gain on sale revenue from our SBA Friday Mac SPL at Redstone operations remain consistent at $19 2 million.
Gains from the sale of SBA seven eight loans declined $3 4 million, primarily due to an 11% reduction in loan sale activity as well as to the decision to sell 20% of the activity for a higher future Io strip.
Gains on Freddie Mac sales remained consistent at $1 5 million and increased activity at Redstone resulted in $5 9 million of additional sale income.
As expected net revenue from residential mortgage banking activity declined 37% to $8 1 billion.
Due to both lower quarter over quarter production and margins, which declined to 75 basis points in the quarter.
Unrealized appreciation or depreciation of the MSR.
Which we do not include in distributable earnings totaled $6 1 million and we anticipate it will continue to be a source of book value appreciation in the upcoming quarters.
Operating expenses were $9 $8 million lower quarter over quarter, primarily due to a reduction in variable compensation in our mortgage banking segment.
And a quarter over quarter reduction in professional fees.
As I stated previously net income related to P. P. P totaled $15 5 million in the quarter after considering the effects of tax and fees payable to the external manager.
This income which continues to add to our outperformance is likely to remain a significant contributor to earnings over the next few quarters.
As of year end, we had $60 7 million of deferred revenue remaining to be accreted into earnings and.
And $12 8 million of reserves against those fees.
As of last week 31, 4% of the original portfolio remained.
On the liquidity front, we took several measures in the quarter to fund the increasing opportunities that.
This included raising $490 million of incremental corporate capital, including $350 million of four 5% senior secured five year notes of $110 million of five 5% senior unsecured seven year notes and $30 million in equity B R. A T M.
As of December 31st total leverage absent the P. P. P outlet facility was five two times and recourse leverage was two seven times.
The recourse leverage which is higher than historical norms is primarily driven by both the high lending volumes in the quarter and our securitization cycle.
Recourse leverage ratios are expected to revert to our historical norm of two times due to the upcoming CRE CLO. The additional equity from our second year secondary offering in January and the closing of the Mosaiq merger.
With that we will open the line for questions.
Thank you very much.
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One moment, please while we poll for questions.
We have our first question from the line of Crispin Love with Piper Sandler. Please go ahead.
Thanks, and good morning, Tom and Andrew So.
Bruce Bruce multifamily financing and originations definitely crushed it in 2020 one during my results and that for the full year and then just also with the $1 5 billion, we saw in the fourth quarter.
Can you speak to some of the key drivers of the demand that you've been seeing in the bridge space and then what kind of expectations do you have to be able to keep up that activity in 2022 or would you expect kind of any type of slowdown here given that the recent elevated levels that might not be as strong as the one five.
But just what kind of expectations going forward and the French space.
Yeah, I'll, just I'll make a.
Thanks, Kristina I'll make a.
Broad market observation and then Adam maybe you can comment on some of the specifics in terms of tactically how are folks who've got multifamily, but generally speaking if you look at multifamily broadly a lot of the growth post pandemic has been in suburban or or locations.
Locations not necessarily see in this C.
C B D.
So we've capitalized on that largely because we focus on obviously smaller.
Spot smaller price points.
And the other the second factor is our linkage with our Freddie Mac M. S. P. L license, where we again obtain to.
Our fifth largest lender status in 2021.
So those are two of the the broader overlays, but Adam maybe you can comment more specifically in terms of what you know the the growth in that sector and what you see going forward.
Yeah sure.
You know I think you know certainly there's a you know a housing crisis in the United States you know specifically on the affordable side, you know our relationships in the market you know with some of the top multifamily investors nationwide.
You know, there's certainly a lot of activity given the strength of that sector.
And you know really really propelling our acquisition.
Financing demand so given.
You know the fact that.
Theres really avoid for you know high quality.
Portable multifamily units are.
Bridge platform steps in and really provides you know the capital expenditures necessary to help rehab some of these properties.
You know provide you know nice homes for you know you know folks you know more on the lower income side across the country or specific focus in growing. This bridge business. You know, we're certainly pursuing lighter transitional stories, you know where the assets are close to stabilization and and and require you know fairly many.
Capex, but you know given given the strength. This year you know I think also what's propelled it is.
Our certainty of execution that we deliver in the marketplace, whether it's whether it's our direct clients repeat clients.
Mortgage banker relationships across the country ready capital's really known as a firm that delivers specifically in this space, we've really become experts in and in the multifamily sector.
So I think generally speaking you know I think our originations in 2022 should you know.
Typically on a multifamily side should you know fairly close resemblance to the production we did in 2020.
And the only thing I'd add to that is is that there will be a bit of a bit of a handoff to.
Additional CRE sectors for example, industrial as well as ultimately a hospitality and retail again not malls, but there's kind of a strip strip malls and smaller properties that we focus on.
Great. Thank you just one follow up on that Adam.
I just wanted to make sure I heard you correctly did you say that originations in the bridge space in 'twenty two should be similar to 2020 are similar to 2021, Oh I'm sorry, yes, similar to 2021.
Okay perfect. Okay that makes sense. Thank you.
Just one second question for me on ROE and Tom you hit on this a little bit in your prepared remarks. So this is second quarter of seeing ROE is in that mid teens range.
And it seems like with P. P P and some of the growth that you're seeing in the loan origination that the next quarter or two you might expect similar levels in that mid teens range or.
Or just asking a different way when do you expect a row.
Back to the 10% plus.
Range that you've talked about in the past.
I would say that the late late third fourth quarter of 2021, I'm, sorry, sorry of 20 of this year of 2022.
Andrew if you want to come on that but.
Yeah, you know Chris.
Chris when we still have roughly $16 billion of revenue from P. P. P that.
Flow through the earnings.
Our expectation is that the majority of that flows through in the first and second quarters with probably some limited carryover into the third and so I think Tom is right in that the reversion was towards the back half of the year.
Great. Thank you. Thank you for the questions Alright, Thank you for the questions and answers.
Thanks Christian.
Thank you we have next question from the line of Steve Delaney with JMP Securities. Please go ahead.
Good morning, Tom and Andrew Congratulations on a really great year.
I'm just curious because of the strong close to the year in terms of distributable income do you anticipate that you'll be carrying any undistributed REIT taxable income forward into 2022 .
Yeah.
Okay.
So Steve morning.
Good morning.
Based on the fact that the P. P. P income was earned at our Trs entities and we limited.
Distributions from that tier us up to the REIT.
No of course, not in less purposes, I do expect there's going to be a carryover.
Okay. Thank you and thanks, all slide six it's very helpful, especially.
Especially the way it lays out your P. P P and I appreciate your comments about the dollar amounts that are left you say that the P. P. P. Revenue is net of direct expenses does that does that also mean taxes or.
Is there a component of the two 2%, 2% to 3% tax impact on ROE, we if some of that reflect taxes on the P. P. P revenues.
Yeah.
So the the attacks.
The impact is included in the.
The provision for income tax line item.
What do we described.
The income or totality of P. P. P income in the.
Prepared remarks that was net of tax.
Got it so when we look at that obviously, we're seeing numbers, Brian just by quarter, but let's just say at 6% on that P. P. P revenue line the true impact on your sub 16, 17% of our we would probably be a touch less than that because of the tax the taxes it would be coming off of that.
Trying to get at like PPP has gone.
Okay, that's what I needed to try to clarify.
There is one other thing in there the other line item that's impacted by that as the investment advisory fees, which are also shown gross in that slide if you look at the EPS impact is roughly 22 cents.
For the quarter.
Got it okay. Thanks, and Tom you mentioned fixed fixed rate multifamily just curious as you move forward with that do you plan to on that proud to create your own sort of private label shelf, where you'd be issuing your own or would you be operating in more of a conduit fashion with other.
Establish C N B S issuers.
I know the Hum.
We would probably at this point Act.
<unk> on our own given our current pipeline. However, we're not you know averse to contributing participating with other yeah. Other see MBS issuers I mean, obviously, our our loans are smaller yes, and so we have more of a specific identity, we have our own capital markets brand. If you will because of the.
You know that we have for shelves outstanding currently included in C. M. B S. But yeah. We're open to just in terms of optimizing inventory turn and our execution. We would we would consider participating with another another shelf.
Obviously, there is quite good.
Go ahead Ed.
Hey, Hey, Steve It's Adam Yeah, I mean, just to clarify.
Clarify as well I mean, you know on our on our on the fixed rate product. So we have a shell.
That we started in <unk> 'twenty 'twenty four.
And you know we've done six six securitization on the fixed rate shelf to date and.
And we expect and.
We expect to be in the market.
Q1, Q2 of this year with another deal and the majority of those assets will be originated by by ready capital.
Well you've been at some point all the multifamily bridge lending that's been done over the last year or two a lot of the borrowers can be looking for fixed or new owners of that property looking for fixed so great job on positioning yourself strategically for that opportunity I. Appreciate your comments this morning.
Thanks, David.
Thank you we have next question from the lineup change from Montney with K B W. Please go ahead.
Thanks, very much I was wondering if you can give an update on the Redstone platform.
The types of opportunities that that business is seeing maybe some color around you know.
The average deal size.
What characterizes the affordable housing focus and if theres any aims to pursue a Fannie Mae dust license or perhaps joint ventures with others looking for product in the affordable housing space I know, that's a big focus of both the GSE and some other lenders this year.
Yeah, Adam I'll, let you kind of take the ball on this one but just as a as a backdrop going to affordable is a very big part of our ESG focus as a firm obviously on the SBA side that that's it.
<unk> adds to that but generally speaking we're squarely in the fairway of the GSE scorecard in terms of affordability, because the SPL product qualifies and now we have a tax exempt lender.
So maybe Adam you just comment on two things briefly one is the overall business strategy just to refresh on that in terms of the tax exempt aspect and how Redstone operates in and secondly, what what was the volume in 2020 , one versus what our budgeted what we budgeted at the acquisition and what your what you.
See the prospect for originations in 2022.
Yeah sure you know that the Redstone the original platform, which we acquired in August .
Those folks have had a tremendous years certainly government support around low income housing tax credit space.
You know that that platform working with municipalities and their invest there'd be some you know again tremendous year from a volume perspective somewhere north of 750 million of of of of loans in 2021.
Which was slightly above the projections that we had when we acquired them I believe since since the acquisition of that of that of that black warm they've originated somewhere north of 500 million and I think you know again, given given the lack of quality affordable housing that we discussed earlier.
That platform certainly has a bright future going into 2022, a lot of momentum extremely strong pipeline and we expect that they will exceed volumes from the previous year from from from 'twenty to 'twenty one.
In terms of other agency licenses yeah. As you know we have a pretty pretty small balance license and then you know the.
The Redstone folks participate in AR and the tabs program at Freddie.
But yes, certainly as opportunities come up from a JV perspective et cetera, working with our strategic partners as exits for the significant amount of multifamily that we've originated in 2021 them debride side.
Certainly you know Jay being working with lenders that have these that have these you know agency agency products is going to be very very beneficial for our clients as we as we move forward and and and those assets stabilized.
Thank you very much.
A question for Tom just on the current lending environment.
You know you've been around through a couple of.
Lengthy period of cycles as well as the Genesis of the MBS market just looking for your perspective on today's environment first of all what's driven the surge in non bank lending.
And I think in the fourth quarter there were some increased our.
Loan loss, you know risk rankings in the bank space that could cause the banks to modestly pulled back wondering if you're seeing that and just on credit. What's your perspective on the quality of originations being done today versus in prior cycles.
Yeah just.
There's two ways to answer that one is broadly the.
The large balance the overall market and then there's the this or sub sector of the U S. D. S. P. C small balanced market I would say generally right now are in the C. M. B S versus back you're definitely seeing an increase in market share by the conduits.
C N B S. As a percentage of total originations in 2021 was around.
15% upper teens, maybe we expect that actually to increase to that maybe that 25% zone and a lot of that is driven by two things. One is the route is or in a rising rate environment. The relative competitiveness of C. M. B S. A to a portfolio lending and secondly.
With the.
There, there's we're definitely seeing a S. A pullback in banks are not dramatic but incrementally in terms of credit Ah in particular on the on the on the bridge side away from C. MBS. So that that those are just too broad a market comments and then just as far as the the the credit component.
We we haven't at least in that you see MBS I'm sorry in our.
Our niche, which is you don't typically below a $50 million.
We're definitely not seeing a significant decline in credit metrics in terms of you know that yield debt service coverage ratio and as is ltvs or on a stabilized law on the you know the actual appraised values.
So this vintage will probably you know the kind of the 2022 vintage in 2020 , one vintage will be more on par with what you saw in the you know early early two thousands so I don't know we have a relatively benign environment on credit, which we expect to continue into 2022 with more non but with a greater with an increase in non <unk>.
<unk> penetration of.
Of of originations.
Thank you I appreciate the commentary.
I like that.
Thank you.
We have next question from the lineup team highest with B T. I G. Please go ahead.
Yes.
Hey, good morning, guys I know some questions have been asked around kind of ROE, but if if we can just get an update from you on the target ROE as we get into the back half of the year and PPP income subsides.
And then just your comfort level with where the dividend is with respect to that.
Andrew you want to take that.
Yeah, Tim So I think that 10% to 11% target or we post the effects of P. P. T is.
Is what we're focused on.
And in terms of coverage of the dividend.
I think the earnings profile continues to support where the dividend is today.
And then the board will continue to evaluate them.
Moving now dividend based on you know.
Our future earnings projections, but certainly over the next couple of quarters the return profiles to be.
No higher than.
What our future targets are.
Yeah.
Got it thanks for that Andrew.
And then.
Can you just.
There were some originations or acquisitions this quarter in a category that I think previously had been any land loans last quarter and it's just I think just labeled as other what kind of loans were those and sorry, if its just related to anything I don't I don't believe any M&A closed in the fourth quarter, but sorry, if I missed it.
That's what I would describe to you and I and I, just kind of being above that.
No. Another off those are the origination bonds from Redstone this quarter.
Okay Gotcha at Redstone.
It makes sense and then just on you've given some comments previously on kind of your outlook for <unk> and I was curious if you at this time are comfortable giving us any type of updated guidance for origination volumes this year or in the at least in the near term.
Andrew you want to comment in terms of our budget.
Yeah, I mean, Tim we were seeing.
Volumes come down to sort of normalized levels in January was.
We originated around $250 million mm.
And so our expectation is from the.
That $4 billion Mark.
You know, 2025% reduction and.
Where we were at in 2021.
Okay got you. So sorry, just on an annual basis thinking a 20% to 25% reduction year over year and 22.
Correct.
Okay.
That's it for me this morning I appreciate the comments.
Thanks, a lot.
Thank you we have next question from the lineup Christopher Nolan with Landenberger Salmon. Please go ahead.
Hey, guys. Most of my questions have been so for Adam, though given that you're seeing such your multifamily clients. We're seeing such strong demand what sort of annual revenue growth are they seeing in their rents.
Yeah, I mean generally across the board.
When we when we underwrite the.
The pro forma.
Hum.
Upfront you know I think you know across the board, we're seeing anywhere from you know from from 10% to 20% depending on on an on excuse me on which market.
Certainly the assets are in but I think you know certainly from from the upfront underwriting we are generally seeing that.
Leased in 2021 that these.
These multifamily operators are exceeding where we underwrite it.
On a pro forma basis.
But yeah call. It anywhere from 10, 10, 10 to 20 per cent.
Growth in rents.
So if you're operating one of.
These multifamily facilities for affordable housing, they're seeing between 10 and 20% increase in rents annually.
Correct.
Well just to differentiate I think Adam just to the rents generally in our non affordable we're probably up in that.
Similar to the large balance in that kind of 10% to 15%, but rents Adam I think in the affordable side just by by their nature are are less.
You don't see the same upside or downside. So those were more like high single digits, Yeah, and just to just for clarification point I mean that that was specifically in the year 2021 and those were really push rent eastern rents.
Where are we seeing a 10% to 20% growth.
Okay, and then I guess.
Yeah.
A follow up question is you know, we're seeing a phenomenon where there is a crunch in terms of the housing supply.
But you know the consumers.
Their balance sheets are not as great as it used to be.
And at some point you know this is sort of a recipe for rent stabilization rent control laws.
Are you seeing any of them any of your markets.
Oh, no I mean, nothing nothing significant I mean, obviously, depending on where the asset is located we're certainly making sure that you know to the extent that these properties have.
Some form of rent regulation, whether its stabilized controlled.
Et cetera.
Certainly.
Looking at those on a much conservative, but a much more conservative basis.
You know to the extent that there are market units.
If its market its market right I mean, we're not we're not really seeing pull back from municipalities that are taking market units and converting converting them to deregulate.
And in terms of the macro regulatory rescue you're definitely not seeing a dramatic increase in the ratio the person of giving them a MSA or the ratio of renters that have over 50% of 50% plus of their income.
Got it.
It consumed by rent that's kind of the red flag that they look at and that's due to due to our wage growth in that sector consistent with the.
Not not is not as great, but at least keeping somewhat keeping pace with the increase in rents. So if wages went up say mid singles in and rents are up by 10 high singles, 10%. Its theres still not a dramatic increase in that that the percentage of total population that is over.
Contributing over 50% of their income to rent.
Final question for your affordable housing or what percentage of your units would have some sort of government stabilization like section eight or something like that.
Yes, somewhere north of kind of north of 20, 20% somewhere between 2020, 30%.
Great. Okay. Thank you.
Sure.
Yeah.
Thank you ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the call back to Tom capacity for closing remarks over to you Sir.
Thank you. Thank you everybody and we are again, a second year after a COVID-19 recession in <unk> and another record year and we hope to continue.
Continue to improve earnings through yeah, accretive acquisitions and growth in our organic growth in our core business and I. Appreciate your time and look forward to the next call.
Yeah.
Thank you.
Gentlemen. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Yeah.
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