Loading...
01/10 05:52
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presented a mixed outlook. While there are strong financial metrics and strategic growth plans, concerns about delinquencies, REO peaks, and net interest income drop are evident. The Q&A revealed some positive trends, such as strong demand for multifamily assets and potential for fixed-rate conversions. However, the lack of clear guidance on REO repositioning costs and other uncertainties tempers optimism. Given the company's market cap, the stock price is likely to remain stable, leading to a neutral sentiment.
Distributable Earnings $52.1 million or $0.25 per share, and $62.5 million or $0.30 per share excluding $10.5 million of one-time realized losses from the sale of 2 REO assets in Q2 2025. This translates to a 10% ROE for the quarter. The year-over-year change and reasons for change were not explicitly mentioned.
REO Assets Approximately $188 million of REO assets were taken back in Q2 2025, with $115 million flipped to new sponsors. The REO book stands at approximately $300 million as of June 30, 2025. The increase is attributed to recent trends in the quarter.
Loan Delinquencies Total delinquencies were $529 million as of June 30, 2025, down from $654 million as of March 31, 2025. This includes $472 million of loans greater than 60 days past due and $57 million of loans less than 60 days past due. The decrease is due to loan modifications, payoffs, and loans taken back as REO.
Agency Loan Originations $850 million of loans originated in Q2 2025, with $1.5 billion for the first 6 months of the year. July 2025 saw $1 billion in originations. The increase is attributed to a strong originations network and large off-market transactions.
Single-Family Rental Business Approximately $230 million in new business in Q2 2025, with $335 million of construction loans converted into new bridge loans in the first 6 months of the year. The increase is due to strong pipeline and efficiencies in bank lines.
Construction Lending Business $265 million of deals closed in the first 6 months of 2025, with an additional $144 million closed in July 2025. The increase is attributed to a strong pipeline and applications under review.
Fee-Based Services Portfolio Approximately $33.8 billion as of June 30, 2025, with a weighted average servicing fee of 37.4 basis points and an estimated remaining life of 6.5 years. The year-over-year change and reasons for change were not explicitly mentioned.
Investment Portfolio $11.6 billion as of June 30, 2025, with an all-in yield of 7.86%. The increase is due to originations outpacing runoff for the second straight quarter.
High-yield unsecured debt offering: Raised $500 million to pay off convertible debt and added $200 million liquidity for platform growth.
Build-to-rent securitization: Issued $800 million, the first in the industry, with enhanced leverage and a 2-year replenishment period.
Single-family rental business: Generated $230 million in new business in Q2, with strong pipeline and mid-to-high returns on capital.
Construction lending business: Closed $265 million in deals in the first half of 2025, with $144 million in July and a strong pipeline.
Agency loan originations: Originated $850 million in Q2, $1.5 billion in H1 2025, and $1 billion in July, with a strong pipeline for Q3.
Bridge loan production: Closed $100 million in Q2 and $215 million in July, targeting $1.5 billion to $2 billion for 2025.
Delinquencies and REO assets: Reduced delinquencies to $529 million from $654 million, took back $188 million in REO assets, and sold $115 million.
Balance sheet improvements: Deleveraged business by 25% over 3 years, achieving a leverage ratio of 3:1.
Securitization and public debt markets: Improved balance sheet through $2.5 billion in capital market transactions in H1 2025.
Unsecured rated debt deal: Issued first unsecured rated debt deal in July, transforming balance sheet and funding options.
Prolonged Elevated Rate Environment: The prolonged elevated rate environment has created a challenging climate, affecting the agency originations business and borrowers' ability to transition to fixed-rate loans and recap their deals. This has resulted in volatility and uncertainty in the market, making it difficult to predict rates for the remainder of the year.
Delinquencies and REO Assets: The company is dealing with elevated delinquencies and REO assets, which are expected to increase to $400 million to $600 million, above previous guidance. This creates a significant drag on earnings and operational challenges in resolving these assets.
Competitive Landscape in Lending: The lending market is highly competitive, with significant capital chasing transactions. Competitors are compromising on credit and structure, which the company is unwilling to do, potentially limiting deal flow and growth.
Interest Rate Volatility: Large swings in the 5-year and 10-year indexes create uncertainty, impacting the company's ability to plan and execute its strategies effectively.
Noninterest-Earning Assets: The company faces a drag from noninterest-earning assets, which impacts earnings and operational efficiency.
Loan Loss Reserves: The company recorded $16 million in loan loss reserves in Q2, reflecting changes in real estate value outlooks. This indicates potential risks in asset valuation and financial stability.
Unpredictable Market Conditions: The market conditions remain volatile and unpredictable, affecting bridge loan production and overall business performance.
Interest Rate Environment Impact: The company anticipates continued volatility and uncertainty in the interest rate environment for the remainder of 2025. A meaningful and sustained reduction in 5- and 10-year interest rates could positively impact origination volumes, earnings run rate, and position the company well for 2026.
REO Assets Guidance: The company expects to own and operate approximately $400 million to $600 million in REO assets, slightly above the previous guidance of $400 million to $500 million, reflecting recent trends.
2025 Bridge Loan Production Guidance: The company maintains its guidance of $1.5 billion to $2 billion in bridge loan production for 2025, contingent on market conditions and interest rate environment.
Agency Loan Origination Guidance: The company expects to meet or exceed its 2025 guidance of $3.5 billion to $4 billion in agency loan origination volume, with a strong pipeline and unprecedented $1 billion of agency loans originated in July.
Single-Family Rental Business Growth: The company continues to grow its single-family rental business, with $230 million in new business in Q2 and a strong pipeline. The business is expected to generate mid-to-high returns on capital and contribute to increased future earnings.
Construction Lending Business Guidance: The company expects to exceed its 2025 guidance of $250 million to $500 million in construction lending production, with $265 million closed in the first half of the year and $144 million in July.
2025 as a Transitional Year: The company views 2025 as a transitional year, focusing on resolving REO assets and delinquencies. Sustained rate relief could position the company for earnings and dividend growth in 2026.
Dividend Guidance: The company anticipates that the balance of this year will continue to be challenging due to the significant drag on earnings from REO assets and delinquencies and the effect of the prolonged higher interest rate environment. This is reflected in the current dividend. However, the company believes it is well-positioned to grow its earnings and dividend again in 2026 if it successfully resolves these assets and sees sustained rate relief.
Share Repurchase Facility: The company closed a $1.1 billion repurchase facility in the first quarter with JPMorgan to redeem two of its CLOs. This is highlighted as a significant transaction aimed at improving the right side of the balance sheet and driving higher returns on capital.
The earnings call presents a mixed outlook. Financial performance is stable but not exceptional, with some concerns about interest income and expenses. The company's strategic plans show potential for growth, but the interest rate environment poses risks. The Q&A reveals optimism about resolving delinquencies and improving income but highlights uncertainties in certain markets. The lack of clear guidance on interest income and the company's transitional phase suggest a cautious market reaction. Considering the market cap, the stock price is likely to remain stable, resulting in a neutral sentiment prediction.
The earnings call presented a mixed outlook. While there are strong financial metrics and strategic growth plans, concerns about delinquencies, REO peaks, and net interest income drop are evident. The Q&A revealed some positive trends, such as strong demand for multifamily assets and potential for fixed-rate conversions. However, the lack of clear guidance on REO repositioning costs and other uncertainties tempers optimism. Given the company's market cap, the stock price is likely to remain stable, leading to a neutral sentiment.
The earnings call indicates several concerns: a significant EPS miss, declining distributable earnings, and a high level of delinquencies. The revised earnings outlook and dividend reset further suggest financial strain. Despite some positive elements like the repurchase facility and liquidity generation, the Q&A reveals uncertainties about future growth, poor past performance, and unclear management responses. Considering the market cap, these factors likely lead to a negative stock price movement, estimated between -2% to -8%.
The earnings call reveals several concerns: elevated interest rate volatility, economic uncertainty, increased delinquencies, and reduced liquidity. While there are positive aspects like the reset dividend and repurchase facility, the company's financial health is compromised by challenges in loan originations and REO repositioning. The Q&A session highlights management's evasiveness on critical issues. Given the market cap, these factors are likely to result in a negative stock price reaction over the next two weeks, within the range of -2% to -8%.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
