Steven Delaney

Steven Delaney inquired about the impact of interest rates on Redwood Trust's securitized prime jumbo portfolio, comparing the weighted average coupon (WAC) of seasoned loans to current new loan coupons, and the potential for a pickup in refinancing activity, whether driven by home price appreciation (HPA) or lower rate thresholds.

Answer

CEO Chris Abate noted that most homeowners are currently 'out of the money' for refinancing, and the portfolio's WAC is trending towards current coupon with new originations. He stated that refinancing constituted about one-third of Q3 volume, with current prime jumbo 30-year fixed rates around 6.25% (Aspire rates approximately 100 basis points higher). Chris observed a recent pickup in refinancing, partly due to HPA-driven cash-out, but also attributed to increased capacity and technology enabling refis with smaller rate differentials (25-35 basis points in the money).

Steven Delaney of Citizens JMP Securities, LLC asked about Redwood's big-picture strategy to capitalize on a potential resurgence in the prime jumbo market when interest rates eventually fall and how they plan to address the current "lock-in effect" for homeowners.

Answer

CEO Christopher Abate acknowledged the "lock-in effect" is a real issue and stated the company is focused on solutions like closed-end seconds. He explained that the current strategy is to aggressively gain market share, so when rates do fall and activity accelerates, Redwood will benefit disproportionately from its larger wallet share. He emphasized the jumbo market's resilience despite broader housing headwinds.

Steven Delaney inquired about the impact of recent bond market volatility on prime jumbo 30-year fixed loan rates and whether the resulting credit spread widening has created attractive investment opportunities.

Answer

President Dashiell Robinson noted that 30-year prime jumbo rates are in the high-6% to 7% range, which is wide relative to benchmarks, improving execution efficiency despite being a headwind for affordability. CEO Christopher Abate added that the consistent bid from private credit has kept the mortgage sector orderly and prevented excessive spread gapping during recent volatility.

Steven Delaney from Citizens JMP asked for the current pricing on 30-year prime jumbo mortgages and assessed whether the business model is dependent on interest rates falling.

Answer

President Dashiell Robinson quoted current 30-year prime jumbo rates in the high 6% range. He emphasized that the business is not dependent on lower rates, explaining that the 'higher for longer' environment creates significant opportunities to acquire large loan portfolios from banks, which leverages Redwood's strong execution and distribution capabilities.

Steven Delaney of JMP Securities asked for the current coupon rates on 30-year fixed-rate prime jumbo loans to gauge what borrowers are paying compared to recent lows.

Answer

President Dashiell Robinson stated that current rates are in the 'very high 6s, very low 7s,' approximately 60-75 basis points above the summer lows. He noted that when rates were in the low 6s, the market saw a significant pickup in both refinance and purchase activity, demonstrating clear borrower sensitivity at that level.

Steven Delaney of Citizens JMP Securities, LLC asked about potential areas for improvement beyond the current strong performance and questioned the geographic scope of Velocity's origination platform, including its presence in the Southeast.

Answer

Christopher Farrar, Co-Founder, CEO & Director, stated that while performance is strong, it is not at its peak. He identified technology implementation over the next 12-18 months as a key area for improving efficiency and productivity. Geographically, he confirmed the company has a deep reach across 48 states, focusing on major MSAs, and highlighted their successful office in Miami, noting the portfolio's concentration often resembles a 'smile' across the coasts and southern states.

Steven Delaney from Citizens JMP asked about Velocity's current operational scale, including employee headcount and office footprint, its long-term strategic vision for growth, and its loan servicing model.

Answer

President and CEO Christopher Farrar reported a headcount of 323 employees across five office locations operating on a hybrid model. He outlined a five-year vision to grow the loan portfolio to $10 billion, driven by technology-led scaling and targeted headcount additions. Farrar also clarified that Velocity performs all special servicing in-house while outsourcing primary servicing functions.

Steven Delaney inquired about the unique mindset of Velocity's borrowers regarding interest rate sensitivity and asked for a detailed breakdown of the NPL resolution process, specifically how gains are generated.

Answer

President and CEO Chris Farrar confirmed that Velocity's investor clients prioritize certainty of execution and access to capital over interest rates, making them less rate-sensitive than traditional homebuyers. CFO Mark Szczepaniak provided a key clarification on NPLs, stating that over 90% of resolutions come from the original borrower either bringing the loan current or paying it off entirely, which generates gains from default interest and prepayment fees. The remainder are resolved through foreclosure or REO sales.

Steven Delaney inquired about the fundamental drivers behind the strong demand for Velocity's products, the rate sensitivity of its borrowers compared to the agency market, and the prevalence of repeat customers.

Answer

President and CEO Chris Farrar explained that Velocity serves an underserved niche with smaller loan sizes that are unattractive to larger institutions. He emphasized that borrowers value the company's reliability and certainty of execution. Farrar confirmed their borrowers are far less rate-sensitive, noting they only changed rates once in the quarter, and that October was a record month for applications despite broader rate moves.

Steven Delaney of Citizens JMP Securities, LLC inquired about the primary drivers behind the sequential decline in net interest income from Q1 to Q2 and asked for an outlook on the potential peak level of the company's Real Estate Owned (REO) asset portfolio.

Answer

CFO Paul Elenio explained the net interest income drop was due to new delinquencies, lower collections of back interest, and a $5 million reversal of accrued interest on loans that were foreclosed upon. CEO Ivan Kaufman stated that 2025 is a "transitional year" for aggressively resolving problem assets, raising the expected REO peak to a $400-$600 million range. He noted a strategy of taking back assets for quicker repositioning and sale, even those with higher occupancy, from sponsors who are out of capital.

Steven Delaney inquired about the expected net growth of the bridge loan portfolio in 2025, given the attractive CLO market, and asked for the primary reasons behind the poor performance of 2022-2023 vintage loans.

Answer

President and CEO Ivan Kaufman stated that net portfolio size will depend on the balance between new originations ($1.5B-$2B) and runoff ($1.5B-$3B), fueled by a robust securitization market. He attributed poor performance of prior vintages to being at the top of the market, post-COVID issues, rising operational costs, and inexperienced sponsors, noting the current cycle has been unusually long but fundamentals are now strengthening.

Steven Delaney asked about the influx of institutional capital for distressed multifamily assets and whether the recent Fitch servicing rating upgrade was related to the company's work on its bridge loan portfolio.

Answer

President and CEO Ivan Kaufman explained that while capital was re-entering the space, the recent rate spike has caused a pause. He noted strong demand from entrepreneurial capital for assets transitioned to new sponsors, while Arbor's team handles the 'heavy lift' REO properties. Executive Paul Elenio added that the Fitch upgrade was primarily due to the quality of their agency servicing platform, which has seen significant investment in technology and staffing.

Steven Delaney of JMP Securities inquired about the amount of realized losses Arbor has taken compared to its CECL reserves and questioned the rationale behind a recent $100 million, 9% note issuance, which appeared to be expensive capital.

Answer

Executive Paul Elenio clarified that the company has not incurred any significant realized losses to date, as losses are only recognized upon the final disposition of REO assets, and the $162 million in CECL reserves is already reflected in book value. President and CEO Ivan Kaufman added that the 3-year note was considered appropriately priced capital to fund accretive, mid-teens return opportunities in the bridge and construction lending spaces, making it a strategic and accretive use of funds.

Steven Delaney from Citizens JMP Securities, LLC inquired about the lessons learned in the bridge lending market since 2022 and asked about the potential for loan portfolio growth with the current capital base.

Answer

CEO Mike Mazzei stated that the current lending environment is much improved, with better debt yields and the absence of syndicators. He noted a constructive outlook for multifamily. President & COO Andrew Witt added that the company has the potential to grow its loan portfolio from $2.4 billion to approximately $3.5 billion by redeploying capital from its REO portfolio and existing liquidity.

Steven Delaney of JMP Securities asked for a big-picture perspective on how lower long-term interest rates would impact BrightSpire's portfolio, borrower demand for new loans, and the valuation of its REO assets being marketed for sale.

Answer

CEO Mike Mazzei responded that lower short-term rates are positive for the portfolio's credit performance, as they help borrowers with refinancing and reduce the cost of interest rate caps. He noted that while spreads might widen as rates fall, the overall effect is beneficial for getting deals done, provided there isn't a significant rise in unemployment. Mazzei expressed optimism that the Fed would begin easing, which would support the commercial real estate market.

Steven Delaney asked about BrightSpire's proactive asset management strategy, the outlook for the CLO market, and the expected pace of new bridge lending and overall portfolio growth in 2025.

Answer

CEO Mike Mazzei confirmed the company's intention to execute a new CLO in the second half of 2025 after originating an additional $600-$700 million in loans. He stated a goal to originate over $1 billion in new loans for the year to grow the portfolio towards $3.5 billion, which is necessary to sustain and potentially grow the dividend. Mazzei noted that while the lending market is competitive, he expects more transaction activity to be driven by lenders pushing borrowers to sell properties as the year progresses.

Steven Delaney asked for a target size for the bridge loan portfolio by the end of 2025, questioning if it could grow by $1 billion. He also explored whether BrightSpire might evolve into fixed-rate CMBS conduit lending, leveraging its expertise for takeouts on its own bridge book.

Answer

CEO Michael Mazzei affirmed the capacity to grow the portfolio by $1 billion, citing significant cash on hand and under-levered assets. On CMBS lending, Mazzei acknowledged his deep experience in the space but described the current market as highly competitive with significant barriers to entry. While BrightSpire has the capability, he stated that the return on resources required does not currently justify entering the business, though they might resize and sell individual loans into conduits.

Steven Delaney of Citizens JMP Securities commended the share buyback program and asked if it's realistic for KREF's loan portfolio to return to its previous peak of around $7 billion, or if there's a new target size. He also inquired if the CMBS B-piece investment strategy is opportunistic or a core focus, and how its ROE compares to the bridge loan portfolio.

Answer

President & COO W. Patrick Mattson stated that KREF doesn't target a specific portfolio dollar amount but focuses on capital allocation and leverage. He noted that buybacks reduce equity for lending, but repatriated capital from REO assets can fuel growth. CEO Matthew Salem added that they aim for CMBS B-piece investing to be a more consistent part of the strategy, citing diversification and added duration as key benefits. He mentioned the returns are slightly higher than loans but emphasized that risk/reward and portfolio construction are the primary drivers.

Steven Delaney of Citizens JMP Securities applauded the share buyback and asked if it's realistic for the loan portfolio to grow back to its previous peak of ~$7 billion, given capital allocation priorities. He also inquired if the CMBS B-piece strategy is an opportunistic play or a core part of KREF's future investment strategy.

Answer

President & COO W. Patrick Mattson explained that KREF focuses on capital allocation and leverage levels rather than a specific portfolio size target, noting that buybacks and CMBS investments affect the loan portfolio's scale. CEO Matt Salem added that KREF aims for the CMBS B-piece strategy to be a more consistent part of its business, citing diversification, attractive risk-reward, and the benefit of adding duration to the portfolio to reduce vintage risk.

Steven Delaney of Citizens Capital Markets commented on KREF's enthusiastic lending outlook and asked to compare the current opportunity set to prior years. He also inquired about the mix of new financing and the attractiveness of share buybacks after a recent stock price decline.

Answer

CEO Matt Salem highlighted that the current lending environment is attractive due to the ability to lend at lower valuations on nearly stabilized assets. He noted a temporary opportunity in large loans as sponsors avoid CMBS market volatility and stated the pipeline is currently 70% refinances. Regarding capital allocation, he reiterated the need for a balanced approach between repurchasing stock, which remains attractive, and deploying capital into new investments to diversify the portfolio.

Steven Delaney commended the company's share buyback activity and asked if it remains an attractive opportunity at current prices. He also inquired about the target portfolio size KREF aims to achieve over the next year.

Answer

CEO Matthew Salem reiterated that the company evaluates both buybacks and new loans, favoring a 'balanced approach.' President & COO Patrick Mattson projected that, based on current capital and target leverage, the loan portfolio could grow from its current $5.9 billion to the '$6.6 billion to $6.7 billion range,' excluding the impact of any REO asset resolutions.

Steven Delaney applauded the shareholder-friendly buyback activity and asked if management continues to view repurchases as an attractive opportunity at the current stock price. He also inquired about the target portfolio size KREF could reach over the next year.

Answer

CEO Matt Salem reiterated that the company evaluates both buybacks and new loans, favoring a balanced approach as demonstrated in the past. President & COO Patrick Mattson addressed the portfolio size, stating that based on the current portfolio and target leverage, the loan book could grow to the $6.6 billion to $6.7 billion range, excluding the impact of resolving REO assets.

Steven Delaney of Citizens JMP inquired about alternative financing options beyond the traditional CRE CLO market and asked for an outlook on resolving the seven problem loans within the next 3 to 6 months.

Answer

CEO James Flynn confirmed that LFT is exploring more flexible financing from banks and private credit as potential interim or permanent options, but stressed that the CRE CLO market remains the most attractive primary financing vehicle. Regarding problem loans, Flynn stated that resolutions in the near term are a 'real possibility' and outlined a strategy of gaining control of assets to bring in new, well-capitalized sponsors to improve property value.

Steven Delaney of Citizens JMP sought confirmation on the $3.7 million specific reserve for 5-rated loans and asked about the expected timing of resolutions for these loans in 2025 to better model distributable EPS. He also questioned if a new financing structure could enable portfolio expansion with the existing capital base.

Answer

CFO James Briggs confirmed the $3.7 million specific reserve figure. CEO James Flynn advised that modeling resolutions toward the back half of 2025 would be prudent, noting that while timelines are hard to control, market conditions are improving for resolutions. Flynn also affirmed that a new, improved financing structure like a CLO could allow the portfolio to grow, as he believes the company is currently slightly under-levered compared to historical norms once problem assets are resolved.

Asked for a comparison of the current risk-return profile for multifamily bridge lending versus 2021-2022 and questioned the potential for portfolio growth from the current $1.2 billion level given the existing capital base and a future refinancing.

Answer

Executives stated that the current lending opportunities have a better risk profile than in 2021-2022, with tighter standards and attractive deals at lower leverage points, though returns are slightly lower. They confirmed there is upside to the portfolio size. A new financing could provide higher leverage, and with assets available from the manager, they expect the portfolio could trend back towards $1.5 billion.

Steven Delaney asked for a comparison of the risk-return profile for multifamily bridge loans today versus 2021-2022 and questioned how a new financing could impact LFT's portfolio size.

Answer

CEO James Flynn explained that today's bridge loans offer a better credit profile due to tighter lending standards and lower LTVs, particularly for lease-up assets. While spreads are slightly lower than in 2021-2022, improving financing costs could enhance returns. He confirmed that a new financing could increase the portfolio's size from $1.2 billion back towards $1.5 billion by acquiring assets currently held by the manager.

Steven Delaney from Citizens JMP inquired about the company's patient approach to new lending, asking if management is waiting for market conditions to stabilize. He also asked about the status of the share buyback authorization, given the stock's significant discount to book value.

Answer

CEO Bryan Donohoe confirmed a selective and patient approach, stating that balance sheet flexibility allows them to evaluate all capital deployment opportunities. He noted that market volatility, partly from tariff announcements, justifies waiting for a more stable environment, likely in the second half of the year. An executive, likely CFO Jeffrey Gonzales, confirmed a $50 million share buyback authorization is in place and is being actively evaluated as a use of capital.

Steven Delaney inquired about the strategy and expected holding period for ACRE's REO properties, given their seemingly decent income yields, and asked if any were listed for sale.

Answer

CEO Bryan Donohoe and CFO Jeffrey Gonzales responded that they will opportunistically exit these assets but are being patient to maximize value, aided by the stable cash flow the properties generate. Donohoe confirmed the California office asset is currently held for sale. Gonzales added that taking back the North Carolina office loan is accretive to earnings as it was previously on nonaccrual.

Sought clarification on the amounts and timing of two write-offs ($22 million and $37 million) mentioned in the call, and asked for the remaining number of risk-rated 5 loans after recent resolutions.

Answer

The company clarified that the $37 million figure represents the total of two write-offs that occurred after the quarter ended. This total includes the $22 million write-off from one resolution and about $15 million from another. After these two resolutions, the number of risk-rated 5 loans has been reduced from five to three.

Asked about potential opportunities to refinance or restructure existing CLOs given the improved market conditions, and inquired about the size of the 4-rated loan bucket.

Answer

The company sees potential CLO refinancing opportunities, but likely not until the latter half of the year. They might combine assets from existing CLOs with new originations for a new deal. At year-end, they had four 4-rated loans totaling just under $170 million in UPB.

Steven Delaney of Citizens JMP Securities sought to confirm the Q2 economic book value change was net of the dividend, inquired about the number of non-QM loan sellers and growth potential, and asked how recent market disruption affected non-QM securitization pricing.

Answer

CFO Michael Roper confirmed the estimated 2-4% Q2 decline in economic book value is net of the dividend accrual. President and CIO Bryan Wulfsohn explained MFA prefers deep relationships with 4-8 non-QM sellers rather than a broad conduit and sees definite opportunity to grow the program. He noted that while securitization spreads widened, asset yields also widened, keeping ROEs stable.

Steven Delaney asked for CEO Brian Harris's outlook on the 10-year Treasury yield over the next six months and what would make net lease investments more attractive. He also questioned how Ladder protects itself from interest rate risk on fixed-rate CMBS investments, given the expectation of a steepening yield curve.

Answer

CEO Brian Harris predicted the 10-year Treasury would rise towards 4.75% while short-term rates fall, creating a steeper curve that benefits their business model. He explained that Ladder's primary hedge against interest rate risk is the attractive price at which it acquires assets. The company also minimizes risk by focusing on short-duration, floating-rate AAA securities, using partial swaps on the few fixed-rate instruments it holds, and funding its balance sheet with long-term, fixed-rate unsecured corporate debt.

Steven Delaney of Citizens JMP commented on Ladder's stable book value and asked if the company could grow its loan book by $1 billion in 2025 and what the expected return on equity would be for those new loans.

Answer

Executive Brian Harris acknowledged the pride in maintaining book value and confirmed he expects to add at least $1 billion in new loans in 2025, significantly outpacing recent origination volumes. He detailed the strategy of rotating capital from lower-yielding cash and securities into higher-yielding loans, targeting an unlevered return around 8.5%. He added that leverage could increase the return on their AAA securities portfolio to 11%, providing another attractive deployment option.

Steven Delaney of Citizens JMP asked about the continuation of stock buybacks in Q4 given the stock price, the remaining authorization, and the potential timing for a dividend increase, questioning if both buybacks and a dividend hike could occur simultaneously.

Answer

CEO Brian Harris confirmed Ladder would likely continue buybacks, noting over $40 million in remaining authorization and an 'embarrassment of riches' in liquidity. Regarding the dividend, Harris stated he would be more open to an increase in Q1 or Q2 2025, pending a consistent pickup in the loan portfolio. He affirmed that returning capital via both stock purchases and dividend increases could 'absolutely' happen at the same time.

Steven Delaney of Citizens JMP Securities inquired about non-interest expenses, specifically confirming that severance costs were for personnel changes rather than exiting business lines, and asked about the outlook for the operating expense to revenue ratio.

Answer

CEO Willy Walker confirmed that no business lines were exited and the expenses were related to removing underperforming producers. He explained that the elevated operating expense ratio (around 60%) is directly tied to transaction volumes and that achieving the 2025 goal of $200 million in average production per broker would bring that ratio back down to the target 48-50% range.

Steven Delaney from Citizens JMP asked for clarification on the strong Q4 Fannie Mae volumes, questioning if they were driven by a few large deals or broader market aggression. He also asked if management considers the company's business model to be essentially complete or if further capabilities are needed.

Answer

Chairman and CEO Willy Walker clarified that the strong Fannie Mae volume was from standard deal flow, not a few mega-deals, and noted that servicing fees were compressed as a result. He added that both GSEs became more active in the second half of the year. Regarding the business model, Mr. Walker asserted that the company is never 'complete' and must continuously evolve its scale and service offerings to compete effectively, reaffirming a commitment to focused investment and outperformance.

Steven Delaney of Citizens JMP questioned the disparity between the 36% year-over-year growth in transaction volume and the more modest 9% increase in total revenues. He also asked for CEO Willy Walker's perspective on potential long-term political or policy risks to the GSEs following the election.

Answer

CFO Greg Florkowski explained the difference is due to the business mix, as a large portion of revenue comes from the stable SAM (Servicing and Asset Management) segment, which isn't immediately impacted by quarterly transaction volumes. CEO Willy Walker added a key detail: a specific large transaction was won with a highly competitive, lower-than-normal fee, which skewed the volume-to-revenue metric for the quarter. On GSE policy, Walker shared insights from conversations with political contacts, suggesting a desire to move the GSEs out of conservatorship without major market disruption, likely via administrative action in 2026 or 2027, after tax policy is addressed in 2025.

Steven Delaney asked for a comparison of the risk/reward profile in bridge lending today versus the 2021-2022 post-COVID period, focusing on loan structure and borrower attitudes. He also inquired about the expected levered return on equity for new bridge loans.

Answer

Doug Bouquard, an executive, explained that the current market offers a better entry point with less 'proceeds creep,' as loans are generally staying below the 70% loan-to-value threshold. He noted that higher borrowing costs have made borrowers more disciplined. Bouquard also highlighted that TRTX's recent CRE CLO was executed at tight spreads, which now allows the company to deploy capital at wider loan spreads, consistently generating gross ROEs in the low to mid-teens range.

Steven Delaney from JMP Securities questioned the potential for significant portfolio growth in 2025, suggesting a target of $4.5-$5.0 billion, and asked about TRTX's typical loan size and market positioning, noting the chunkiness of the two new Q4 loans.

Answer

Executive Robert Foley, while not providing specific guidance, indicated significant growth in net earning assets is expected, as deploying existing liquidity could generate $800M to $1B in new loans, with originations likely to outpace repayments. Executive Doug Bouquard clarified that the larger Q4 loans were diversified portfolios and that TRTX's average loan size is closer to $75 million. He explained that the company has the flexibility to operate across the middle and upper-middle market, handling loans from $25 million to over $150 million, often with repeat institutional borrowers.

Steven Delaney of JMP Securities asked about potential growth targets for the loan portfolio over the next 6 to 12 months, given the current capital base. He also inquired whether high-yield unsecured notes could become part of TRTX's financing mix in the future to add corporate leverage.

Answer

Executive Doug Bouquard explained that while he could not provide forward guidance, the company has multiple levers for growth, including deploying balance sheet cash, recycling capital from REO sales, and utilizing untapped financing capacity. He noted that attractive loan-on-loan financing is abundant. Regarding the capital mix, he confirmed that he and Robert Foley are constantly evaluating all efficient financing options, including the corporate debt market, and will use every tool available as they increase leverage.

Steven Delaney of Citizens JMP Securities asked about FBRT's competitive landscape after integrating NewPoint's agency and conduit products, questioning how many lenders offer a similar comprehensive suite and the appeal of this model to borrowers.

Answer

President Michael Comparato highlighted the acquisition's logic in creating a "cradle-to-grave" capital provider, offering construction, bridge, CMBS, and agency loans. He asserted that almost no competitors have this complete product set, especially agency lenders that have struggled to build a balance sheet business. He believes the combined entity will become the "most interesting provider of capital in the multifamily sector."

Steven Delaney of Citizens JMP asked for a big-picture outlook on the bridge lending business, questioning if a lower rate environment in 2025 could realistically support portfolio growth to the $6 billion level by increasing leverage toward 3.0x.

Answer

CEO Richard Byrne stated that while the current vintage of new loans is highly attractive, the company has significant capacity for growth without increasing leverage, citing $350 million in cash and liquidity from cycling through REO assets. He reiterated the company's target leverage range. President Michael Comparato added that loan demand is already "massive" and that a drop in the Fed funds rate, while helpful, is not a panacea for legacy loan issues across the industry.

Steven Delaney of Citizens JMP Securities asked about ARI's significant and unique portfolio exposure in the U.K. and Europe, inquiring how the company sources and manages these assets and about the operational presence on the ground.

Answer

Executive Stuart Rothstein detailed that ARI established its European presence over a decade ago, building a full-scale origination and asset management team in London. Chief Investment Officer Scott Weiner, speaking from London, added that ARI has a first-mover advantage and benefits from structural market differences, such as a less active securitization market, which creates a competitive advantage for larger deals. He confirmed all foreign currency exposure is hedged back to U.S. dollars.

Steven Delaney from Citizens JMP Securities asked about the potential for portfolio growth from $7.1 billion to the $7.5-$8 billion range and questioned if new bridge loans reflect fresh business plans rather than just refinancings.

Answer

CIO Scott Weiner and executive Stuart Rothstein confirmed that portfolio growth of $0.5 billion to $1.0 billion is 'absolutely' feasible due to a large pipeline and abundant back-leverage capital. Rothstein added that market activity is increasing, with investors coming 'off the sidelines' to deploy fresh capital into new projects, particularly in multifamily, industrial, and data centers, indicating a shift beyond simple refinancings. Weiner noted that about a quarter of the platform's lending last year was for acquisitions.

Steven Delaney questioned if a 13% realized loss rate was a reasonable assumption for future resolutions and asked about the potential for continued stock buybacks given the discount to book value.

Answer

CFO Tony Marone advised looking to the CECL reserves on 5-rated loans, which are in the mid-20% range, as a more accurate indicator for potential losses. CEO Katharine Keenan affirmed the stock is an attractive capital deployment option, noting the company has $90 million remaining on its buyback authorization and significant overall liquidity.

Steven Delaney of Citizens JMP Securities sought to quantify the impact of upcoming resolutions, asking how much capital would remain in the 5-rated loan bucket or REO by year-end after the projected $1.1 billion in resolutions are completed. He also asked for clarification on the total size of 5-rated loans.

Answer

CEO Katie Keenan clarified the figures, stating that post-quarter end, they have closed or are closing on ~$500 million of resolutions and have firm visibility on another ~$600 million. This is relative to the ~$2.3 billion of impaired loans on the books (net of reserves). She noted that while they aim to close these in Q4, some could slip into Q1, and that the REO asset impact is not meaningful to the overall numbers.

Steven Delaney asked about the future size of Blackstone Mortgage Trust's portfolio, questioning if it is nearing a bottom, and inquired about the potential for a full acquisition of M&T Realty Capital.

Answer

CEO Katie Keenan explained that capital allocation is driven by relative value, and while the portfolio might see a 'local decline' from high repayments, the focus is on redeploying capital. She clarified the M&T deal is a strategic partnership, not a path to acquisition, viewing it as the most accretive model for BXMT.

Steven Delaney asked for a comparison of loan terms and quality in the emerging 2024-2025 vintage of bridge loans versus the 2021-2022 vintage. He also inquired about the primary buyers of the underperforming loans that CMTG has been selling, asking if new private funds are being formed for this purpose.

Answer

CEO Richard Mack stated that while levered returns on new loans are similar to the past, the risk profile is much better due to higher-quality assets, better sponsors, and more conservative business plans at lower values. Regarding buyers, he confirmed they are primarily private capital, including funds whose patience is waning, leading to more aggressive bids. Priyanka Garg, EVP, added that family offices and high-net-worth individuals are also active and aggressive buyers, providing certainty of execution.