Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- New York Mortgage Trust Inc (NYMT, Financial) reported a significant increase in earnings per share to $0.36 for the third quarter, driven by a strategic shift towards interest income.
- The company successfully increased its portfolio by $1 billion or 17% from the previous quarter, demonstrating strong growth.
- NYMT maintained strong liquidity with $408 million at the end of the third quarter, providing flexibility for future investments.
- The company achieved a 39% year-to-date increase in adjusted interest income, reflecting effective capital deployment.
- NYMT completed six securitizations in 2024, marking its most active year in issuance and contributing to stable liquidity management.
Negative Points
- The company expressed concerns about high US debt levels potentially impacting private market trades.
- Despite portfolio growth, NYMT admitted to being underinvested earlier in the year, which affected earnings potential.
- The company experienced a 1% to 2% decline in adjusted book value quarter-to-date, indicating some volatility.
- NYMT's net loss from real estate was $7.5 million during the quarter, although this was an improvement from the previous quarter.
- The company's recourse leverage ratio increased to 2.6 times, reflecting higher financing of investment securities.
Q & A Highlights
Q: In terms of your book value now, you noted that the JV piece is now pretty small. Do you feel like your book value is largely bottomed, or is there still something in the multifamily piece to watch?
A: Jason Serrano, CEO: The book value volatility stemmed from our JV Equity book, which now has $19 million remaining. We have near-term visibility into resolutions for most of these assets, and the remaining value is about $1.4 million. We believe the volatility will decrease as this portfolio winds down.
Q: Can we get an update on book value quarter to date? Any changes?
A: Nicholas Mah, President: As of this week, we see adjusted book value down somewhere between 1% to 2%.
Q: Could you give us a high-level take on where you see gross ROE by strategy, specifically on the agency side and the BPL side?
A: Nicholas Mah, President: For the BPL bridge side, we see 20%-plus gross ROEs on a leveraged basis. On the agency side, due to volatility, ROEs are in the mid-teens. For the BPL rental strategy, we see mid to high teens ROEs.
Q: Given the volatility in the agency side, are we at the higher end of the range? Have you shifted capital allocation into that?
A: Nicholas Mah, President: We are market-driven on the agency strategy. While the trend line will be higher, we don't need to grow the portfolio in one quarter. With wider spreads, we expect to be more active in the agency space.
Q: How has the increase in rate volatility impacted CRE and multifamily deal activity?
A: Jason Serrano, CEO: Deal activity has slowed, particularly with the recent rate moves. Many properties have come off the market, and purchases have been delayed. We expect robust activity to resume in January and February after a slowdown in the last two months of this year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
