Ken Billingsley

Ken Billingsley asked about the opportunities and potential scale for OptimumBank's newly formed bridge to HUD financing platform, specifically for skilled nursing and senior housing loans.

Answer

Executive Chairman Moishe Gubin explained that the new subsidiary leverages the bank's existing expertise in the nursing home sector, aiming to grow the portfolio to $250 million within two to three years and potentially to $1-2 billion in servicing. He detailed the strategy of transitioning from property loans to bridge-to-HUD, adhering to HUD lending protocols, and securing lines of credit from major banks, expecting it to be a strong contributor to the bottom line.

Ken Billingsley (DA Davidson) inquired about the opportunities and potential scale of OptimumBank's newly formed bridge to HUD financing platform, specifically for skilled nursing and senior housing loans.

Answer

Moishe Gubin (Executive Chairman, OptimumBank) explained that the new subsidiary is expected to significantly contribute to the holding company as a separate vertical. He projected the portfolio could reach $250 million within two to three years, with a long-term servicing portfolio potentially growing to $1 billion to $2 billion, leveraging existing relationships in the nursing home space. He also noted that the bank would earn fee income and non-interest-bearing deposits, with the platform following HUD lending protocols and seeking lines of credit from major banks.

Ken Billingsley from Compass Point sought clarification on the significant G&A expense savings in 2025, asking if they are temporary or sustainable, and inquired about the expected expense savings from the planned transition of Marriott-managed hotels. He also questioned the decision to develop two new hotels in the Las Vegas market, given some perceived weakness.

Answer

Liz Perkins, Chief Financial Officer, clarified that G&A expense is primarily tied to the executive compensation incentive plan, which correlates to operating metrics and total shareholder return, resetting annually and thus fluctuating. Justin Knight, Chief Executive Officer, explained that transitioning Marriott-managed hotels to franchise and consolidating management with existing third-party partners is expected to unlock incremental value through near-term cash flow and long-term sales flexibility. Regarding Las Vegas, he highlighted a 10% trailing 12-month yield on their existing SpringHill Suites, acknowledged market volatility but expressed conviction in the long-term trajectory due to continued investment, diverse demand drivers, and the strategic location adjacent to the convention center, which will allow for operating efficiencies across the combined properties.

Ken Billingsley asked for clarification on G&A expense savings, whether they are temporary or sustainable, and about the expected expense savings from the Marriott shift plan. He also questioned the decision to add two more hotels in the Las Vegas market despite its current weakness.

Answer

CFO Liz Perkins clarified that G&A expense is primarily tied to the executive compensation incentive plan, fluctuating annually based on operating metrics and total shareholder return. CEO Justin Knight explained that transitioning Marriott-managed hotels to franchise and consolidating management with existing partners is expected to unlock incremental value through near-term cash flow and long-term sales flexibility, aligning with Marriott's efficiency strategy. Regarding Las Vegas, Justin Knight highlighted the existing SpringHill Suites' 10% trailing 12-month yield, the market's strong long-term trajectory due to diverse demand drivers and investment, and the operational efficiencies expected from managing three connected hotels adjacent to the convention center.