Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| As previously discussed, these vehicles provide a tremendous strategic advantage at times of distress and dislocation, like the environment we are in today, due to the nature of that non-mark-to-market, non-recourse elements |
| In our Agency business, we had a very strong fourth quarter with $1.4 billion in originations and $1.3 billion in loan sales |
| We are very pleased with the substantial cushion we have created between our earnings and dividends, which will serve us well through the balance of this dislocation |
| Additionally and very significantly, we're able to maintain our book value of our recording reserves for potential future losses, which clearly differentiates us from everyone in this space |
| In fact, as Paul will discuss in more detail later, we generated GAAP earnings in excess of our dividend in 2023 despite recording approximately 90 million in reserves and our distributable earnings were also well in excess of our dividend, providing one of the best dividend coverages ratios in the industry |
| It's hard work and it takes a lot of management and a lot of discipline but we will achieve the best economic result, and we're doing a pretty good job, and I can deploy my asset management staff and the company as a whole for the amount of work they're putting in and the results they're getting |
| We have a large pipeline, setting us up for what we believe will be another very solid year in agency originations for 2024 |
| As you can see from this morning's press release, we had another outstanding quarter and closed out an exceptional 2023 |
| We feel we have done a very good job to-date in collecting payments and have been highly effective in refinancing deals for our Agency Businesses as well as getting borrowers to recapitalize their deals and purchase interest rate caps where appropriate |
| So far, we've done a great job |
| We also had higher gain on sale income as our agency volumes are typically stronger in the fourth quarter and we continue to benefit from strong earnings on our escrow and cash balances from elevated interest rates |
| We like that business with what we've been active in that business, and we think there is a great opportunity going forward |
| It's very stable returns |
| We think they -- once they start to begin to get their work permits and start to work, I think that, that will have a positive impact on the vacancy factors and workforce housing |
| As Ivan mentioned, we had another very strong quarter, producing distributable earnings of $104 million or $0.51 per share and $0.54 per share, excluding a $7 million onetime realized loss in an office property that we had previously reserved for |
| And very nice quarter in a very difficult environment |
| Our agency platform gives us a tremendous strategic advantage, allowing us to continue to delever our balance sheet and generate significant long-dated income streams, which is a key part of our business strategy |
| And as you've seen in the last few quarters, our runoff has greatly exceeded our new originations |
| So we think that there's going to be a real benefit in our franchise for borrowers to come directly to us rather than through a broker |
| We're also very excited about the opportunities we think we can garner from our newly added construction lending business as we believe we can generate 10% to 12% unlevered returns on our capital and eventually leverage this business and produce mid to high-teens returns |
| We also have a large pipeline and remain committed to this business as it offers us 3 turns on our capital through construction, bridge and permanent lending opportunities and generates strong levered returns in the short term, while providing significant long-term benefits by further diversifying our income streams |
| In our single-family rental business, we had a very strong fourth quarter and a full year 2023 as we continue to dominate this space and become a lender of choice in the premium markets we traffic in |
| And it's a great risk-adjusted return |
| This is in addition to the strong gain on sale margins we generate from our originations platform, providing us a strategic advantage over our peers |
| And of course, with distributable earnings of $2.25 a share that easily beat our dividend run rate, we provided a very strong dividend to earnings coverage ratio for our investors |
| As we touched upon last quarter, we also believe we are well positioned to step back into the lending market and done [ph] accretive opportunities continue to grow our platform |
| We feel now is an appropriate time to originate some of the highest quality loans with attractive returns, allowing us to grow our balance sheet and build our pipeline of future agency deals |
| In our GSE/Agency Business, we had another great quarter and an exceptional 2023 despite elevated interest rates |
| We were very incredibly pleased with the margins we generated in 2023 of 1.48%, which exceeded 2022 pace of 1.34% by 10% |
| We have also done an excellent job in reducing our exposure to short-term bank debt and have no significant pending maturity to deal with on any of our warehousing facilities |
| Statement |
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| I think if you look at the deliveries in 2023 of new construction and then the deliveries in 2024, I think you'll see continued headwinds for Class A |
| And as I mentioned earlier, we are expecting to experience additional delinquencies over the next few quarters, which could further reduce these margins |
| As I've mentioned previously, the fourth quarter was going to be a difficult quarter |
| So what we're telling you is those total delinquency numbers that we reported on those days, are down significantly from when those numbers were reported |
| However, having said that, we do think the next couple of quarters will be increasingly challenging |
| We are in a period of peak stress and expect the next two quarters to be challenging, if not more challenging than the fourth quarter |
| Our overall net interest spreads in our core assets decreased to 1.83% this quarter compared to 1.91% last quarter, and our overall spot net interest spreads were down to 1.53% at December 31 from 1.71% at September 30 again, due to an increase in delinquencies and nonaccrual loans during the quarter |
| So maybe six or nine months ago when there was a lot of fear in the market of where our value is going to go and the lack of liquidity, it was much harder to get somebody to the table |
| As Ivan mentioned, we do expect to continue to experience stress as we manage through the most challenging part of the cycle |
| They've been four quarters on it's created an enormous amount of stress on the organization of tremendous cost because the amount of extra work that has to be done has been very stressful |
| I'm not sure how and why they're comparing multifamily office, the losses on office could be extraordinarily significant |
| I think one of the big misconceptions I think for the -- I hear from people is the assumption that all delinquencies lead to a loss |
| So I would say it's definitely more challenging times |
| Provisioning was a little less than what we were expecting this quarter |
| On our last call, we gave guidance that the fourth quarter of last year and the first quarter and second quarter of this year would be the most challenging part of the cycle |
| With respect to the foreclosure process, do we win, we lose do we lose, do we win? The fact is we went on some lose on a little |
| First of all, I mean, that level of delinquency is surprising to me |
| I do want to differentiate between the product type that we have, which is a lot of workforce housing, which I think is a huge shortage versus the Class A market, which I think is suffering from different headwinds |
| As a result of this environment, we are experiencing elevated delinquencies |
| And I got to tell you, a year ago, you told me you were very pessimistic about the outlook and you were getting very defensively postured, which was a brilliant call |
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