Release Date: March 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How would you characterize your excess capital and deployable capital? A: Nicholas Smith, Chief Investment Officer, explained that they expect $20 million to $25 million of equity capital returns from CRE positions maturing later this year. Additionally, inefficient financings from the WMC acquisition will release another $25 million to $30 million of equity. In total, they anticipate $75 million to $100 million of equity that could be rotated or newly deployed in the coming year.
Q: What are your thoughts on corporate leverage and the level of preferred stock? A: T. Durkin, CEO, stated that they are comfortable with the current leverage ratios and have been managing the company with these ratios for some time. They are actively monitoring the market, especially after the recent preferred deal, and believe they have shown good performance in managing the overall leverage ratio to the common.
Q: Can you discuss the relative attractiveness of non-QM versus home equity today and how the securitization and financing markets compare? A: Nicholas Smith noted that home equity is relatively new with a large addressable market, offering a first-mover advantage. Non-QM continues to grow and offers relative value, but they are currently leaning more towards home equity.
Q: What are your thoughts on the preferred stock given the increased costs from rolling to floating rates? A: T. Durkin mentioned that they were prepared for the floating rate switch and have other financings coming this year that will help offset the increased floating rate costs. They are looking at it at a corporate level and have incorporated the floating rate switch into their model.
Q: What are your high-level thoughts on origination volume in Arc Home into 2025? A: Nicholas Smith believes Arc Home's business model is more immune to broader market conditions, particularly in non-QM and non-agency markets, which are growing. They expect continued growth for Arc Home, supported by investments in the company's growth and resilience against interest rate changes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.