Ready Capital Corporation Q1 2023 Earnings Call
Yes.
[music].
Greetings and welcome to be ready Capital's first quarter 2023 earnings call.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
Anyone should require operator assistance during the conference Keith Star and then zero on your telephone keypad.
As a reminder, this conference is being recorded it is now.
My pleasure to introduce your host Andrew Oborne. Thank you and you May proceed.
Thank you operator, and good morning to those of you on the call. Some of our comments today will be forward looking statements within the meaning of the federal Securities laws.
Such 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 for a 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 be considered in isolation or as a substitute for our financial results.
Paired in accordance with GAAP.
Reconciliation of these measures to the most directly comparable GAAP measure.
It is available in our first quarter 2023 earnings release.
Our supplemental information, which can be found in the investors section of the ready capital website.
In addition to Tom and myself on today's call. We are also joined by Adam <unk> ready Capital's Chief Credit Officer.
I will now turn it over to Chief Executive Officer capacity.
Thanks, Andrew Good morning, everyone and thank you for joining the call today, given the seemingly full on recession and CRE ready cap was not immune to pressure as we and others in the industry are navigating that said, our core capital like Freddie Mac, SPL and SBA, seven originations and multifamily centric credit metrics outperform.
While results did not quite achieve our 10% ROE target for the first time in 12 quarters the business demonstrated its resiliency.
Distributable earnings of 31 per share were pressured largely by nonrecurring items, resulting in a <unk> <unk> per share deviation compared to our 10% return on equity target.
Approximately 50% of the shortfall was due to mark to market losses on.
On our opportunistic investment allocations, such as CRE equity and an additional 25% was due to higher operating costs from the buildout of our small business Fintech platform.
Note the mark to market losses did not result from credit impairment, but increases in valuation metrics such as cap rate assumptions.
In our lower middle market CRE lending business originations declined to $411 million, our volume was 94% multifamily, including 67% and our capital life, Freddie Mac SPL channel.
The year over year decline in our bridge lending was due to two main factors.
First the unfolding CRE recession stope by reduce demand stemming from an approximately approximate 100 basis point increase in multifamily cap rates and a doubling in that cost of 7% reflected in the first quarter.
For 50% decline in overall CRE transaction volume compared to the same period last year.
Of note the change in demand for multifamily is less in other CRE sector due to an estimated 4 million unit housing shortage in the U S, particularly in ready capital's affordable multifamily segment.
Second at this stage of the credit cycle more defensive loan pricing in terms of spread credit and projects has emerged for.
For the quarter, our average loan spread was sofa, plus 600 basis points basis points translating to a mid to high teens retained yield.
Our current CRE CLO execution versus low teens retained yield in the first quarter 'twenty two.
We continue to tighten credit with stabilized ltvs, averaging 61% and that yields increasing to 10%.
Our ongoing focus is funding lower risk affordable multifamily projects in the strongest markets with experienced and well capitalized sponsors.
Another significant differentiator for ready cap is our lower risk credit profile versus the C. REIT peer group, where current historic share price discounts to book value reflects fears of future book value erosion and dividend cuts from seasonal reserves.
Our first quarter credit metrics continue to outperform the industry. This is exemplified by 60 day, plus delinquencies and four to five high risk assets in our originated portfolio holding at only two 7% and 5% respectively.
This 4% to five higher risks.
Our risk asset exposure is currently only one fifth of the current industry average.
Our stronger credit metrics relative to the peer group reflect the following <unk>.
First our mid market multifamily focus now accounts for 81% of the current portfolio.
Multifamily continues to perform well supported by continued rent versus buy dynamics and the ongoing housing shortages, while we believe potential credit losses in the books to be low we remain vigilant on mitigating maturity defaults should the broader landscape further weakened.
Second we have limited exposure to the most stress CRE sectors, particularly the Covid poster child office, which is weighing on C REIT sector valuations.
The National office market will continue to experience heavy lease rollover with tenants vacating or downsizing space specifically in older vintage class B properties located in central business districts.
The 10 year term of leases will result in a protracted period of defaults and foreclosures for the sector.
Our office exposure is the second lowest in the peer group at under 5% with an average balance of only $2 6 million.
Of the 5% exposure only 19%.
Or <unk> $92 million of our nonperforming office assets are located in CBD, one in downtown Manhattan and two in Chicago.
<unk> losses on these assets equaled $11 million and have already been included in our seasonal reserves the balance of our office holdings given their small balance avoid CBD, which faced the greatest challenges for the industry.
Third as credit in the fourth quarter of 'twenty, one we preemptively tightened credit guidelines, specifically, we cut projected rent increases to zero to 3% lowered stabilized LTV to 63% and increased debt yield to over 9%.
Our portfolio credit metrics provide significant risk mitigate against maturity defaults, resulting from negative leverage in multifamily bridge loans, where debt costs exceed cap rates and rent increases are under budget.
This is an industry wide credit issue for aggressive lenders in the 2021 22 vintage.
Fourth the granularity of the portfolio is unique relative to the sector.
Our CRE portfolio is comprised of over 2200 loans with an average balance of $4 3 million.
Top 10 loans in our portfolio total only 10% of the loan book and excluding the loans from the 22 Mosaiq merger only 7%.
Calls the mosaic loans are covered by a contingent reserve equal to 15% of the remaining outstanding balances. This granularity reduces the statistical skewness faced by large balance lenders were a few large defaults can materially impact book value.
Finally portfolio concentration and strong CRE markets. The result of our proprietary Geo tier model, which scores msas one to five one having the best CRE fundamentals and five the worst currently 89% of the portfolio is in one and two rated markets, specifically avoiding certain msas with overbuilding in multifamily.
Emlen.
Now turning to our small business lending segment.
To review the SBA seven program features two basic segments large loans, 350000, and $5 million and small loans under 350 50.
50000, which are underwritten using our credit scoring model.
In the third quarter 'twenty, two we launched a unique dual large loan BDO and Fintech small loan model capitalizing on the SBA is mission to promote the small 708 program benefiting women and minority owned businesses.
Our <unk> business funding division focuses on small loans and continues to invest heavily in their end to end lending software lender AI, which is in addition to providing an origination edge. We're ready cap may also generate fee income as a lending as a service product.
We invested an incremental $10 million over the last 12 months versus the prior 12 and expect a lag in revenue recognition from the resulting ramp in small loan originations. We firmly believe that this approach will advance our three year <unk>.
Origination target of $750 million or two 5% market share.
In the quarter, we originated $92 million and 700 loans, comprising 65% large and 35% small loans, while total volume declined 8% year over year small loan volume grew three X, reflecting pay off of our tech investments and high business.
Average prepayment premiums on guaranteed loans increased 175 basis points to nine 5% in the quarter.
We are ranked the number one non bank and number five overall SBA seven lender.
In terms of the broader SBA lending scape the bank crisis will curtail conventional financing in favor of 708 loan financing industry experts <unk> expectations are that as rate hikes stabilize overall, 7% of lending volume will increase 10% year over year.
So as we look forward the company is well positioned to maintain a dividend consistent with our stated 10% target ROE while protecting book value. This is due to having strong credit metrics on our legacy multifamily book, but also the benefit of net net interest margin accretion.
From a reinvestment of $750 million in incremental liquidity.
We were able to accomplish this due to two initiatives.
First the reinvestment of liquidity from the pending broad Mark merger, which is expected to close may 31 into core lending products and acquisition of distressed bank commercial real estate portfolios.
Rob Mark merger will provide operating leverage on an increased equity base reduced leverage ratios by over a full turn and most importantly provide $500 million of incremental liquidity support at supporting one $5 billion of buying power.
While our core direct lending products currently.
Currently provide ro.
15% another peer group differentiator is ready capital's counter cyclical acquisitions business.
Post the GSC ready capital in predecessor funds, we're a top three buyer of small balance commercial loans from banks purchasing over $5 billion.
And the strong CRE markets in recent years bank asset sales, where sparks, however, with the unfolding bank crisis regional banks pacing deposit outflows are targeting sales of small balance CRE portfolios. One of the many benefits provided by our external manager waterfall is that its sources acquisitions were ready capital with an acquisition.
Pipeline of $750 million at 18% to 20% projected Roe.
The current bank state of play is price discovery with asset sales targeted for the second half of this year, providing reinvestment opportunity for our second half pending liquidity.
Second we plan to move out of lower yielding noncore assets, whose earning drag was compounded by the 'twenty two rate rise and product lines over the next few quarters. These efforts.
Or are expected to generate $250 million of incremental liquidity and losses on dispositions of these noncore assets will be recaptured through the significant high higher returns on new investments.
Our expectation is that second quarter lending volume and capital intensive products and thus earnings will remain lower on a year over year comparative basis, but they average described previously along with the strength of our portfolio positioning the company beyond the second quarter to deliver with consistency on our 10% target return.
With that ill now hand, it over to Andrew to discuss our financials.
Thanks, Tom quarterly GAAP and distributable earnings per common share were <unk> 30, and.
31, respectively.
<unk> earnings of $38 1 million equates to an eight 5% return on average stockholders equity.
The quarter shortfall on our distributable earnings target and dividend coverage were primarily due to mark to market losses on opportunistic investments and higher operating costs related to year end expenses and the continued build out of our small business lending platform.
Interest income grew $10 5 million to $217 6 million as the portfolio whack rose to eight 3% due to both the quarters rising rate and a slight increase in average spread to 378 basis points.
This growth was offset by higher interest expense due to a higher quarter over quarter debt balances.
And slightly higher funding costs.
Specifically, we moved $430 million of warehouse debt to securitize debt.
Hosting and a 32 basis point increase in average spread.
Important to note the change in net interest income was not the result of negative migration in the performance of the portfolio.
And non accrual assets remained flat at two 5%.
Realized gains grew to $11 6 million in the quarter.
In the SBA seven business.
Average premiums in the quarter increased to 175 basis points to nine 5% with $74 $3 million of sale producing $6 $8 million of income.
Originations in our Freddie Mac affordable business, where seasonally high.
$277 million.
82% growth when compared to the same period last year.
This production contributed $3 3 million of gains in the quarter.
Unrealized losses totaled a $11 7 million of which $7 million is included in distributable earnings.
Additionally, lower income from unconsolidated joint ventures of.
$656000 was driven by $2 5 million in mark to market losses inside of the JV.
The losses were not reflective of a deterioration of credit and the underlying collateral.
The commercial real estate equity positions that fit inside of our unconsolidated joint ventures are expected to generate a 20% IRR over the next five years.
Operating costs rose 7 million quarter over quarter, primarily due to increased investments in our <unk> business funding build out and increased costs associated with year end audit and valuation work.
Net contribution from residential mortgage banking rose slightly to $3 7 million.
On the balance sheet, our focus remains on maintaining higher liquidity limited mark to market debt exposure and operating to conservative leverage levels.
In the quarter, we completed our 11 CRE CLO in $586 million deal with an expected retained yield of 13%.
In the deal we sold through 83% of the structure at a weighted average cost of plus 290 basis points.
At quarter end Mark to market debt exposure is limited to 21% of total debt.
And our recourse leverage ratio remained low at one four times.
With that we will open the line for questions.
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One moment, please while we poll for questions.
The first question comes from Stephen Laws from Raymond James. Please proceed with your question Steven.
Hi, good morning.
Andrew I wanted to start with the seasonal reserve release.
Like $8 1 million in the SBC segment.
<unk> was recorded as a recovery can you talk about what drove that and the assumptions underlying that change. Please.
Yes, good morning, so yeah. The way we approach so it's a combination.
Applying traps model in addition to.
Yes, an overlay on an asset by asset basis by the asset management back here.
And the majority of the recovery was driven by.
Changes in some of the macro assumption used by crop mainly.
Their projections on the unemployment rate and so what you buy.
As track moves.
These assumptions around given the short duration nature of our breakthrough.
Portfolio It does create some volatility.
Yes.
So the movement in the quarter was purely related to two traps movement in there or something when you look at our diesel reserve today approximately 50%.
Our total allowances associated coming from trap with the other 50%.
Determined by an asset by asset review of the past year.
<unk>.
So that was really the main driver of the recovery.
Okay I appreciate the color there and I'm on I wanted to try and.
Get to the.
Think about portfolio earnings level, and what we're going to go through the next quarter or two with broad Mark closing and I know that that's a lot of unlevered assets, which will take some time to optimize the returns there issue.
Look for ways to efficiently finance that but I think you mentioned six provide a onetime items in Q1, and we've got broad Mark closing.
Can you can you talk about another 10% return on book that puts us somewhere around $1 50, but can you talk about how we should think about distributable earnings ramping over the year.
Given the near term pressure.
Net interest income and the impacts of broad Mark and how we should think about distributable income versus the <unk> 40 dividend level.
Yes.
Ill give you the high frame it and then Andrew can kind of drill down into some of the bridge to how we get to the.
Our high level of confidence in the 10.
But the first point I want to make is this besides.
Those two nonrecurring items.
Yes, the investment in the small business Fintech 10 million there.
Is the net interest margin. So the net interest margin this quarter quarter over quarter was down about $6 5 million and if you boil it down to two factors. One was the fact that we refinanced $1 $1 billion of warehouse debt.
Into Securitizations very few were able to achieve that in the capital markets that impacted.
Our margin by about 60 basis points, that's about $1 5 million and then Theres a theres a one there's another short duration mosaic asset, which under the contractual terms there was a step down in the loan amount loan interest rate from.
Roughly 12 to eight so that was another $3 7 million. So those two factors really the lion's share of the NIM and so that's that's the noise in this quarter and then we do expect some noise in the second quarter, just given all the moving parts integration costs et cetera, but in terms of the go forward NIM.
Accretion I think one of the big differentiating factors besides credit for ready cap.
Is the fact that with mosaic and the initiative, we've undertaken with sales of low yielding assets, which are credit impaired that just lower yielding and that those equal about 10% of our NAV those too.
So the activity together will generate three quarters of 1 billion of.
Liquidity, which equates to well over $2 billion buying power and the deployment of that capital into the current distressed environment, where we're definitely seeing with this regional banking crisis a lot of these.
Pending banks looking at asset sales because they can't sell their bonds because it's under underwater.
Yeah.
So those those are those are showing.
Reinvestment at 15% to 20% versus pre 22, when we were in 12 that kind of 12% to 13% area. So those are those are the those are the factors driving.
The decline this quarter noise in the second quarter, but.
In terms of the core ability to generate a 10%.
Ro.
The NIM accretion from reinvestment of that liquidity is a very unique.
<unk> positions us uniquely versus the peer group.
And again the other thing I wanted to score obviously is the realm.
Relative outperformance of our multifamily small balance credit.
Profile, which as you can see in this quarter.
<unk> also reduces the potential impact of.
Significant seasonal reserves due to declines in.
Certain sectors, most notably office so that's a.
Maybe a long winded answer to your question on Andrew If you would add to that but that's how we think about the current earnings balance sheet profile and NIM accretion going forward.
Maybe the only other thing.
The only other thing I would add to that.
Yes.
Our SBA business does experience some seasonality on that so.
Lending volume.
Tend to ramp up from the beginning of the year to the end of the year and so production in M&A.
Yeah. It was all around 40 million from the end of last year. So you will see a ramp in <unk> production in the upcoming quarters, which obviously.
It goes right to the bottom line that'd be the only other thing that I would add to what Tom said.
Great. Thanks for highlighting that Andrew I appreciate the time small.
Thank you.
Thank you. The next question comes from Jade Rahmani from TB W. Please proceed with your question Jade.
Thank you very much first question would be on the ROE target of 10%.
Considering the company's leverage.
The high returns generated by the.
Licenses you have the SBA Freddie Mac.
Historic.
Hello securitization is very high margin businesses.
The opportunity to acquire.
These discounted portfolios.
Is the 10% ROE target I, just wanted to understand a long term multiyear framework.
But.
Is it reasonable in your expectation to assume higher returns.
You know say over the next two years, how are you thinking about that.
Okay.
I would say 10 is our base case based on a conservative.
Redeployment of liquidity that we're getting at the stage in <unk> and <unk>.
Yeah.
Peak credit losses that were protecting in the portfolio.
So over the next two years, we're highly confident of the ability to sustain a 10 is there an upside scenario if we.
Got a few large bank portfolios in.
As we did back post Dfc, yes, there could be but I think 10 is a is our is our base case and it's sustainable to be in terms of being fully covered over the next two years.
And if you were to say double the size of the company do you have a number in mind of what that would do to the ROE.
Given in place expenses infrastructure and the operating leverage that that would ensue I mean, theres a number of mortgage Reits trading at <unk>.
Discounted valuations.
And perhaps there is the potential to further scale the business.
Yes, I mean, that's a good point yeah. There is a denominator effect that clearly at this stage for ready cap with broad Mark would be little shy of $3 billion and let's say through M&A, we were able to achieve $5 billion.
We would more likely than not that would result in about 100 basis point reduction in opex due to the.
A denominator effect, so that would bring that turn up to 11%. So that there's definitely potential accretion from M&A just given the scale of the business and the fact that we don't need more bodies to make more loans as we grow the AR growth.
Grow the balance sheet.
Thanks, very much in terms of the scale of distressed youre seeing and the opportunity.
Loan portfolio sales.
Could you put any ranges in terms of volumes that you believe.
Portfolio sizes that may come to market.
And perhaps how much capital ready capital would look to deploy in that and a follow on would be on the signature portfolio. If that's something that ready capital is going to be looking at.
Yeah on the first point I think if we look at 'twenty four because most of these sales are not going to probably happen until last half of this year going into 'twenty four as these regionals.
From what we're hearing manage their balance sheet.
So what we're seeing right now is price discovery believe it or not in office loans, which you know where where I think we and other opportunistic.
Credit is in the kind of in the $60 to upper <unk> and Theyre kind of offering more on them based on their seasonal reserves kind of in the <unk>.
Near 90%. So there's about a 20 point bid ask but I think what will happen is like just like GSE youll see sales of.
Clean to scratch and dent.
Portfolios, because theres not as much embedded leverage in the community banks I think they account for.
I think it's like 60% or some number like that of all CRE.
That is.
Is that CRE first lien mortgages. So what we're expecting is probably something like in the.
20, I know, there's a broad range of $20 billion to $50 billion of sales.
With.
The large majority of that being.
More in the scratch and dent.
Area, where.
Some of the decline in CRE prices will create ltvs or that are above the regulatory minimum, but we're comfortable with it from a distressed debt standpoint.
And.
So thats all I have to answer your first question.
What we're expecting in terms of that quantum as far as signature I don't want to comment on that specifically, but we always do look with a waterfall desk.
They're well connected with the FDIC and we would have we would look to involve ourselves in.
Any process, where we're at with respect to relatively small balance loans that fit.
Fit our asset management capabilities and just on that topic, we are hearing that the FDIC.
These bank sales will likely revert to structure transactions, which provide embedded leverage and actually the banks themselves up an interesting point. The banks themselves are looking at these credit risk transfer structures to also provide more efficient.
Deleveraging of their of their of their balance sheets. So its really a question of do they need liquidity for deposit outflows that the cash sale or are they doing it for for a capital RBC improve.
Improvement in which case, they would revert to something like a credit risk transfer.
Interesting comments and thanks for taking the questions.
Okay.
Thank you. The next question comes from Steve Delaney from JMP. Please proceed with your question Steve.
Thanks, Good morning, Tom and Andrew.
Seasonal seasonal so beautiful thing and a lot of ways, but.
It.
Creates a lot of noise and the nice thing about <unk>.
About distributable EPS as we get rid of that noise and we just tried to focus on.
Our earnings including realized losses. So looking at page 19 can you give us a sense of your 31%, whether it's 30 31, but.
But for distributable what are the amount of actual realized losses that you've taken on the portfolio against distributable EPS in this first quarter. Thanks.
Good morning, yes, so in the quarter the realized.
Out of Washington.
It was really limited to the sale of one, particularly Oreo property.
Roughly $500000, so pretty immaterial other.
Losses on.
On the loan side were really offset by.
The contingent equity right.
From mosaic so yes, it was really just that $500000.
Sort of realized argon.
Okay and that $61 million definitely was going to was going to ask about that given that 30% I think 60 day plus so that's money you bought that portfolio.
Where you bought the equity in the portfolio from the prior manager and was that $61 million of the consideration that was set aside in escrow and would be used to absorb a principal losses is it is it that simple that you. If you have a loss on on recovering one of those assets Youre able to.
Tap into that 61 and reduce the reserve.
Alright, so when we structured the mosaic transaction.
The consideration.
Was a contingent equity Reits that have a total value of roughly $90 million basically serves as a first loss piece.
Against losses.
From the mosaic portfolio.
And so what is remaining in terms of.
The cushion on our portfolio's roughly $61 million.
Okay. So you used roughly $30 million of it to this point for to absorb real losses, Okay. Brian .
And Tom I know you know.
I liked your.
It's kind of hand to hand combat out there obviously.
On the credit side right now, but I like your long term comments about strategic versus tactical or or day to day.
Tough question I know, but in your view of the company two three years down the road is residential mortgage banking a core business for ready capital and that's my last question.
Yes, I mean, we look wherever we can to continue to simplify the story and the company part of it was the initiative, which we call. The one team of initiative to combine all of our commercial.
Real estate lending businesses under one umbrella, where we offer one one loan officer offers all the products to their sponsor to improve the brand so.
Residential mortgage banking has been a incremental.
Incremental contributor.
It's obviously shrinking in relation to the overall balance sheet. So I think we would look at options.
Two.
Potentially simplify the story as it relates to residential mortgage banking, but but we currently have no intention to.
Further invest in this sector.
From the standpoint of again.
Simplification of the.
The ready cap.
Product mix and brand.
Got it that clarity is helpful. Thank you both for your comments.
Okay.
Thanks Steven.
Thank you. The next question comes from Eric Hagen from BPI. Please proceed with your question Inc.
Good morning, you got a ethan on for Eric.
Just a couple from me are you seeing opportunities to pick up both bulk packages with msr's.
Yes definitely.
But to underscore Stephens prior point, we are not bidding them into ready capital.
Ready capital is.
To be.
Very clear, it's a right it's a small balanced direct lender with and that we will look at opportunistic acquisitions in the space, but but yes, we are seeing MSR ours, but not that will not be a factor for our ready cap's investment strategy. The external manager is a bidder and has infrastructure to do that and we're seeing a lot of opportunities because of the.
Nuclear winter in mortgage banking.
A lot of them are now selling MSR is to generate liquidity.
Long with a scratch and dent loans, but thats not a factor for ready cap's investment strategy.
Got it that's helpful. And then second how should we think about modeling net interest income following the CRC CRE CLO you issued.
Yes.
Recent CRE CLO.
The the debt costs increased roughly 30 basis points from from warehouse and so.
Slightly higher advance into the low <unk>, but.
The debt costs increased roughly 30 basis points from warehouse.
Got it that's helpful. Thank you.
Sure.
Thank you. The final question comes from Matthew Howlett from B Riley. Please proceed with your question Matthew.
Oh, Hey, Thanks for taking my question just on <unk>.
Mosaic set to closing any update on you still expect double digit accretion how is the portfolio in terms of the turnover of the portfolio quickly.
Adam you want to comment, yes, alright, I'm, sorry, Andrew I'm sorry.
Yes. So we are looking to close the transaction on the 31.
The book value of the company is in is in line with where.
Where we projected it to be headed into close.
We have seen the portfolio turnover, a little quicker which is.
Increasing the cash balance.
Expected to be on balance sheet at close I think when we look.
Going forward past the close as Tom mentioned in his remarks.
We are going to pull incremental capital out of the business.
Leverage is expected to come on balance sheet upon closing and then reinvest that.
That's $500 million over the next quarter or two.
That along with the operating synergies that are expected just combining two public companies.
Should drive this double digit returns we've been talking about.
Got you and so that was my follow up on the question on how you balance what youre going to do with the balance sheet would you look.
We'll ready look when that when that capital turned over and will you pay down more of the secured borrowings I think you have one maturity of small ones. Later this year just walk me through do you want to continue to move to securitize.
Securitized financing.
Going into the back half of the year I just wanted me to how <unk> balance sheet.
The right side will look.
When this has been this capital is turned over.
Yes. So certainly we have the convert comes due in August we are positioning ourselves to take that out in cash or if that is what it.
Is needed.
We are expecting to U R 12, CRE CLO.
In the third quarter, we have an SBA securitization.
That is is on the calendar and then we do think there are other parts of the portfolio today, mainly.
Legacy acquired assets and fixed rate product.
That will go into either are or acquisition shop or.
Our fixed rate Joe So I do think we'll be active in the securitization markets in terms of growth capital I think the majority of that liquidity is going to come from the asset level financing.
We plan to put on the existing broad market portfolio.
And then that capital will be redeployed into some mix.
Our core mainly bridge product.
As all of a sudden allocation into.
What I would call a revamped.
Broad mark.
Products. So that's that's really the go forward plan over the next two to three quarters.
That's interesting and I guess that the follow up you guys have had pretty good track record buy back stock.
Assuming the window.
The disclosures, you'll be you'll have the ability to repurchase stock given the discount.
Pro forma Ed.
It seemed like a compelling opportunity could you just go over how willing you are to restart the buyback.
Yes, so certainly coming out of.
The merger.
As we've demonstrated in the past.
We believe that share repurchases to be a powerful tool and providing shareholder value.
Given the amount of liquidity we plan.
To have coming out of the merger, we certainly think.
No share repurchases will be a way to drive.
Book value per share so I do expect that to be.
Tool, we use in the back half of the year, if the price of our shares the reference level.
Great. Thanks, Andrew Thanks Ruth.
Thank you.
The question and answer session I'd now like to turn the call over to Tom Capozzi for closing remarks. Thank you Sir.
Again, we appreciate everybody's participation and look forward to the second quarter earnings call.
Thank you everybody.
Okay.
Thank you, ladies and gentlemen that does conclude today's call. Thank you very much for joining US you may now disconnect your line.
Yes.
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