Tom Capasse: Adam?
Adam Zausmer: Yes, sure. So, we intend to execute a similar strategy like we’ve done across multiple mergers similar to this. We’re going to put a strong team in place to quickly get up to speed on the assets and really decide one of two paths. One, either work closely with borrowers to continue developing the projects. Certainly, we need to have conviction in the business plan, timeline, and collateral market, et cetera. Or two, engage local experts to foreclose or engage brokers to liquidate the assets, which Broadmark hasn’t been aggressively doing today. So, I think with our asset management expertise and workout capabilities, I think it uniquely positions the company to resolve and de-risk the REO assets in the portfolio.
Matt Howlett: Got you. And most of it is residential construction, right? Correct? I mean, at least the overall portfolio is, right?
Adam Zausmer: Yes, the overall portfolio is about 80% in the multifamily residential sector. And then on the residential side, is really a balance between for sale and rent strategies. But yes, it’s about 80%. And then on the REL side, the REO is about 90% residential as well.
Matt Howlett: Right, got you. There’s some Houston multifamily complex, I think it was one hotel in Denver, but that was – that looks fine.
Adam Zausmer: Exactly. Yep.
Matt Howlett: Got you. And then just, Andrew, you mentioned the securitization. I mean, what was the spread? It said 290 plus on the press release. I think you mentioned 250 over somewhere. Is the market now in the CLO space at a point where you can originate into a securitization and make a mid-teens ROE on the retained interest, or is that now a viable funding channel given the rebound, or is it just too early to tell?
Andrew Ahlborn: Yes. So, the spreads that were mentioned earlier, we completed one in the fourth quarter, which was in the mid-280s, and then one in the first quarter, which was in the mid-250s. As we look to price new loans today, we are pricing new production on the bridge side to 14% to 15% retained yields. So, given where the CLO market is, we think it’s a very attractive investment landscape, roughly 200 basis points higher than we were for the mid last year.
Tom Capasse: Yes. And so, one thing I would add to that is, 100% we can originate in the current market at that kind of 250-ish over on the seniors at a 14 to 15 retained yield, and that’s up 200 basis points plus from where we were before the rate, early €˜22. But the only caveat to that is that a number of the sponsors, their properties don’t pencil out at that higher debt cost. So, there is – that’s resulted in the commitment in decrease in demand, which, of course, we offset with our acquired – our ability to buy acquired portfolios.
Matt Howlett: Got you. Right. You get as much as you can on this side, but you’ll focus more on that other channel, which is great to have and something could really be big for you guys in ’23. Last question, the buybacks. Are you precluded now to repurchasing shares until this gets done? And I mean, what’s your appetite? It looks at the stock here is going to open down 10%, 12% here. I mean, what’s the appetite to start buying back stock? I mean, you’re going to be trading well below anything that you bought back, a nice amount of shares. But what can you do now, or you have to wait until the deal closes?
Andrew Ahlborn: Yes. Certainly, in available windows, we will evaluate using repurchase programs on a comparative basis where we can reinvest new dollars in some of the opportunities that we talked about. But certainly, we expect to use share repurchases over the next couple of quarters as another opportunity to provide shareholder return.
Matt Howlett: You said windows, so is that 10B, one – can you buy back through the plan or is it just – you just can’t do it until the book goes through, the deal closes?
