Good morning. My name is Brandon and I will be your conference facilitator. At this time, I would like to welcome everyone to Granite Point Mortgage Trust’s First Quarter 2018 Financial Results Conference Call. All participants will be on a listen-only mode. After the speakers remarks, there will be a question and answer period.

Please note, this event is being recorded. I would now like to turn the call over to [Chris Tatter] (Ph) with Investor Relations for Granite Point..

Thank you and good morning, everyone. Thank you for joining our call to discuss Granite Point’s first quarter 2018 financial results. With me on the call this morning are Jack Taylor, our President and CEO; Marcin Urbaszek, our CFO; Steve Alpart, our CIO and Steve Plust, our COO.

After my introductory comments, Jack will provide a brief recap of market conditions and some business highlights. Steve Alpart will discuss our first quarter originations, portfolio and pipeline and Marcin will highlight key items from our financials.

The press release and financial tables associated with today’s call were filed yesterday with the SEC. If you do not have a copy, you may find them on our website or on the SEC’s website at sec.gov.

In our earnings release and slides, which are now posted in the Investor Relations section of our website, we have provided a reconciliation of GAAP to non-GAAP financial measures. We urge you to review this information in conjunction with today’s call.

I would also like to mention that this call is being webcast and may be accessed on our website in the same location. Before I turn the call over to Jack, I would like to remind you that remarks made by management during this conference call and the supporting slides may include forward-looking statements.

Forward-looking statements reflect our views regarding future events and are typically associated with the use of words such as anticipate, expect, estimate and believe or other such words. We caution investors not to rely unduly on forward-looking statements.

They imply risks and uncertainties and actual results may differ materially from expectations. We urge you to carefully consider the risks described in our filings with the SEC, which may be obtained on the SEC’s website at sec.gov.

We do not undertake any obligation to update or correct any forward-looking statement if later events prove them to be inaccurate. I will now turn the call over to Jack..

Thank you, Chris and good morning everyone. On behalf of our management team, we would like to welcome you all and thank you for joining us for our first quarter earnings call.

After active and transformative year in 2017, we started 2018 with a few key objectives designed to build on the progress we made last year in expanding and improving our business with the ultimate goal of delivering strong returns to our shareholders.

I’m pleased to report that we are off to a great start this year and have made significant progress on our initiatives. As we have mentioned previously, we have been actively focused on diversifying and expanding our financing sources and have taken two key steps in that direction.

First, we established $75 million bridge financing facility which will increase the efficiency of our loan closing and cash management processes. We followed with our inaugural of CLO financing transaction. This $826 million transaction brings many benefits to our business, including a lower cost to funds and mesh term funding.

On an non mark-to-market and non-recourse basis. Despite headwinds in the capital markets at the time of our launch, our offering was very well received and we were able to that we achieve great terms and we are on par with other recent transactions.

This result is a product of the high credit quality of our loan originations and the strength of our platform. It also illustrates that our strategy were very well in the CLO context positioning Granite Point to become the successful repeat issuer in this market if so choose.

As we have previously disclosed, we had a temporary decline in our first quarter originations owning to our robust pace of originations following our IPO and the resulting capital constraints at the end of the last year. Now, our investment pipeline is again strong and consistent with our expected pace for originations.

Since quarter end, we have generated a pipeline of about $400 million of senior floating rate loans half of which have already closed. We continue to see many attractive opportunities to lend on high quality properties and are confident that we will maintain our healthy origination pace.

Our active pipeline illustrates the capabilities of our direct origination platform and highlights the strength of our relationships and reputation for our reliability, creativity and flexibility.

These fixed assets in both originations and in the financing markets illustrate our platform’s potential and will help us to continue to establish Granite Point is one of the leaders at our sector.

We are very excited about our progress so far in 2018, and remain dedicated for executing our strategy and delivering attractive returns to our shareholders. Moving to our first quarter performance, please turn to Slide 4. Marcin will discuss our detail financial results shortly, but I would like to touch on some of the highlights.

In the first quarter, we delivered core earnings of $0.35 per share, a penny per share increase over the fourth quarter. However, common dividend for the first quarter was $0.38 per share and provides an attractive current yield to our shareholders.

We expect our earnings and dividend to benefit as we continue deploying our capital and grow our investment portfolio over the course of 2018. At quarter end, our outstanding portfolio balance was $2.4 billion and was 100% performing with the weighted average LTV of 64%.

The overall economic and commercial real estate environment continues to be positive and very conducive to our focusing on senior floating rate loans. Property fundamentals remain healthy across most markets and unchanged from last quarter and we don’t anticipate that this market environment will dramatically change in the near-term.

There is been some press in our markets lately reporting lower real estate transaction activity which in total is accurate. However, if you take it a little deeper, you will see that the areas most impacted by the tail off in volume are the larger portfolio sales in entity level transactions.

Furthermore, the overall decline in activity over the last few quarters has mainly been concentrated in the top five markets around these larger transactions. In fact, the volume of individual property transaction, the one we focus on the most improved over the last quarter.

As we have indicated in the past, our strategy prioritizes a broader set of markets and somewhat smaller transactions sizes and as such we continue to see a healthy volume with both acquisition and refinancing deals. Loan credit quality and overall lending standards generally remain rationale in terms of structure and leverage.

Property prices continue to improve, but remain within historical norms and our supported by NOI growth and the healthy overall economic environment. Active competition for assets has resulted in additional spread compression.

Nonetheless, we are able to find attractive investment opportunities as evidenced by our pipeline and as we exploit the CLO market and work with our lending counterparties, we continue to see improvement in our cost of funds keeping our overall returns generally within our target range.

We are confidence that our continued strategy of targeting both the primary and secondary markets combined with our broad network of deep industry relationships and disciplined underwriting will enable us to progress on our business plan and deliver attractive returns to our shareholders overtime. Thank you for your continued support.

Now, I will turn the call over to Steve Alpart to discuss our origination and portfolio in more detail..

Thank you, Jack and good morning everyone and we appreciate your timing this morning. I will spend a few minutes reviewing our first quarter originations and highlighting our progress so far in the second quarter and then I will provide some key metrics on our portfolio. Let’s turn to Slide 5.

Our total funding in the first quarter were about $156 million, we originated five new loans with total commitment of $113 million and initial funding of $104 million, we upsized two existing loans or about $20 million and we funded about $32 million of our preexisting loan commitment.

Our first quarter new loan originations are secured by existing high quality income producing properties across our target markets with the weighted average LTV of 62%. Due to a small sample size, the five new loans happened to be concentrated in the office and hotel sectors, we carry a weighted average yield of LIBOR plus five point.

Going forward, we would expect to see property diversification more consistent with originations from prior quarters. While we remain very selective, we continue to see a strong flow of investment opportunities at - credit and return threshold and have been very active building our pipeline.

To gain in the second quarter, we have made total commitments of approximately $400 million of senior floating rate loans with initial funding of over $330 million. About a third of our pipeline is in the multifamily assets which we continue to like from the credit perspective.

Although these loans generally carry lower yields, we believe they could be financed on more attractive terms on some other property types.

Thus far in the second quarter, we have close six loans with a total funded balance of about $190 million, the remaining loans are expected to close over the next few months subject to the typical closing conditions. As we discussed on our last earnings call, we anticipate that we will continue to experience repayments of our portfolio season.

We see about a $100 million of prepayment and principle amortization in the first quarter. Although this repayment activity limited our portfolio growth we realize relatively significant prepayment fee income highlighting our ability to thoughtfully structure our investment and manner design to protect the cash flow produced by our portfolio.

Based on our current estimates, during the second quarter, we expect to receive between $250 million and $300 million of prepayments and principle amortization, which we view as elevated. As in the case with originations, prepayment will be in quarter-to-quarter.

However, we believe that on a stabilized basis, our portfolio will likely payoff at an annual rate of approximately 25% as it becomes more season. As part of our asset management process, we actively monitor our portfolio and proactively communicating with our borrowers regarding their plans for the property and our loan.

Where appropriate we may work with borrowers to amend the original terms of our loan at market or often better terms for us in order to extend our corporate tax. Moving onto the Slide 6.

At March 31, while our portfolio had a total outstanding principle balance of $2.4 billion, a weighted average stabilize LTV or approximately 64% and a weighted average asset yield of LIBOR plus 5.11%. We have over $300 million of future funding commitments and we expect the majority of them to appear in the next 18 months to 24 months.

Our portfolio reflects our strategic focus on senior loans which comprise over 95% of our investment as well as a broader range of MSAs and generally smaller loan sizes in some of our other market participants. By property right our portfolio is weighted towards the office and multifamily sectors which we continue to find attractive.

The flexibility of our strategy is focused on regular credit underwriting allows us to be selective and pick the best investment for our portfolio without compromising our credit protections. As illustrated on Slide 7, our portfolio is also over 97% floating rate which positions us well for rising short-term rates.

We estimate that if LIBOR were to increase by a 100 basis points, our annual net interest income on the existing portfolio would increase by approximately $0.19 per share. Turning to Slide 8.

I will briefly comment on two recently deal examples that further illustrates our strategy and the high quality assets we originate through our large network of industry relationships.

The first deal example is the $23 million floating loan collateralized by recently renovated fully leased 43,000 square foot Class A office property in the South Beach Submarket of Miami, Florida. The property is very well located in the high barriers to entry market with strong fundamentals.

It has 8,000 square foot furnished and landscaped rooftop deck and then a tax structured parking garage with 80 spaces, both of which are major attractions in the submarket. Our sponsor who phase at Atlanta has substantial expertise with this asset class and in this region.

They have acquired and managed over 11 million square feet of commercial properties across 65 transactions focusing primarily on the office sector. The property is 100% occupied by single tenants under a long-term lease and will also work very well on a multi tenant office property.

Lastly our loan is moderately leveraged approximately 61% LTV and has a strong cash flow profile. The second deal example is a $50 million floating rate loan collateralized by newly built 747 bed Class A, institutional quality student housing property located less than half a mile from Texas A&M University, College Station, Texas.

Like the first deal example, all loan is used to complete a cash neutral refinancing, in this case to take out the construction loan and to allow the sponsor to continue to ramp and stabilize operations. This loan is secure by the tighter student housing that we really like.

Texas A&M is the second largest university in the country and growing very rapidly. We have institutional sponsorship consisting of a private equity firm that is one of the country’s largest owners of student housing properties an operating partner that has developable over 35,000 beds across 63 properties in 28 states.

The property has best-in-class amenities and is located in a vibrant neighborhood offering a diverse collection of restaurant, coffee shops and nightlife. The business plan is very straightforward.

The property is now over 80% preleased, is projected to reach 90% occupancy by the start of fall 2018 academic year, and will need one or two more academic years to fully stabilized. Finally all loan is moderately leveraged with the sponsor having over 20 million of cash equity in the deal.

In summary, we continue to see a great flow of investment opportunities that fit our overall strategy and investment criteria and we are confident that we will continue to successfully execute on our business plan in a discipline and prudent manner on behalf of our shareholders.

I will now turn the call over to Marcin for a more detailed review of our quarterly financial results..

Thank you Steve and good morning everyone. Over the next few minutes, I will discuss our financial performance as well as our capitalization and liquidity. Turning to Slide 9, our GAAP net income for the first quarter was $14.6 million or $0.34 per share. Our core earnings were $15.2 million or $0.35 per share.

Our earnings include about $0.9 million or $0.02 per share of prepayment income. Taxable income for the first quarter was $19.6 million a $0.45 per share and included about $4.3 million of GAAP to tax differences related to our formation transaction.

We declared a first quarter dividend of $0.38 per share which translates into an attractive current dividend yield, our book value at March 31 was $19.05 per common share and was affected by the common dividend in excess of GAAP earnings and slightly higher share count. I will now provide a quick update on our GAAP to tax difference.

Since our IPO, we have recognized approximately $10 million out of the total of $22 million of the additional accretion and taxable income versus GAAP earnings.

The remaining difference is approximately $12 million and has been indicate over the last three quarters, it will likely cause our taxable income being higher than GAAP earnings in future periods. The timing of its recognition is difficult to predict. However, we estimated to be a short-term factor which should be resolved over the next few quarters.

Turning to Slide 10. As of March 31, we had approximately $1.5 billion outstanding on our financing facilities and a total borrowing capacity of $2.3 billion.

We have ready access to financing and have seen improvements in our cost of funds on new originations as our lenders are working with us to manage their cost of capital in light of tightening loan spreads. We ended the quarter with a debt-to-equity ratio at two times.

We believe we will get your target leverage of two and half to three times in the second half of the year as we deploy the available capital. Accounting for our existing pipeline and expected loan prepayments, we currently have liquidity to originate an additional $600 million to $700 million of loans.

As Jack discussed earlier, since quarter end, we have made significant progress on our strategic goal of further diversifying our financing sources and lowering our overall cost of capital.

In addition to establishing a $75 million two year revolving bridge financing facility that will be very beneficial in helping us manage liquidity, we close an $826 million CLO. The CLO transaction represents an attractive and accretive financing for 25 of our existing investment, many of which were previously financed by credit facilities.

This financing carried a initial weighted average advance rate of approximately 80% and the initial weighted average coupon of LIBOR plus 1.27%. Also important is the CLO structure which is our non mark-to-market, non recourse type with financing that also helps us from a balance sheet management perspective.

We are proud of our progress we have made so far in 2018 and are excited about the future prospect of our business. Thank you again for joining us today. And now, I will ask the operator to open the call to questions..

Thank you. We will now begin the question-and-answer question [Operator Instructions] Our first question comes from Jade Rahmani with KBW. Please go ahead..

Good morning, guys this is actually Ryan Tomasello on for Jade. Just first congrats on the CLO. I was wondering if you can give a bit more color on the structure.

Is that a static pool where there is just sequential pay down? Or are there any features that allow for reinvestment of our payment proceed and if so how do you expect to manage that risk?.

Hi, Ryan its Steve Plust, good morning. It’s largely a static transaction that we have structured such that we can take in future funding on existing loans in the pool based on the pace of the prepayments over the first few years.

So, we think that’s a very appropriate structure given the portfolio and we think it will optimize the financing of those assets..

And do you expect CLOs to become a more meaningful source of financing for the company and for Granite Point to become a regular issuer in the market.

And if that’s the case, it seems like this couldn’t have programmatic potential and maybe you can throw some platform capability to Granite Point in our view?.

Hi, Thank you for the question, this is Jack Taylor. We have positioned ourselves to be repeat issuer in the CLO market, we have the portfolio and capacity to be do so when we will evaluate overtime when it’s to our benefit. We agree with you that it provides a diversified source of funds for us and a very competitive cost to capital for us..

And just digging into the elevated repayments that you expect in the quarter. Can you give a bit more color on what is driving that? Maybe how much of that you attribute to strong market liquidity driving elevated prepayments and maybe can you give how much of that amount is scheduled maturities versus prepayments..

Hey Ryan its Steve Plust again. The rise for the quarter is really attributable to one asset a large asset that was successful in implementing its plan a little bit faster than we expected. Given the nature of these sorts of portfolios, we are going to have some lumpiness from period-to-period in prepayments, it’s just the nature of the assets.

But in general, as we said in the past, we generally expect the portfolio once season to pay off a better quarter plus or minus per year on annually basis. I wanted to remind you, as we said in the past, our portfolio is fairly young and we have originate back half of it more or less in the past year..

And can you give the size of that loan and maybe a bit more color on the property and the business plan..

It is a approximately $100 million retail/mixed use property, and we made the loan in early 2015.

So the borrowers had a good amount of time to mature their business plan and it was largely a repositioning of tenant mix and they been able to do so and now they are choosing to go into the fixed-rate financing markets, which is something we don't serve currently..

It seems like that potentially could be positively from credit of the book given the implementation of the business plan faster than you guys expected. And just lastly, with the stock still about 10% below book value.

What are your thoughts around other capital sources outside of the CLO market, which you mentioned you expect to continue to tack forward. For example, our convert is still attractive and what are your thoughts around unsecured debt or preferred equity..

Hi Ryan good morning this is Marcin, I will take this. Look I think as I stated earlier as of today, we have pretty significant liquidity which we estimate will support another $600 million to $700 million of loans, our current base of originations is probably a couple of quarter of originations.

So once we deployed that money and see where the portfolio is obviously were there any other prepayments, we will see where the stock is at that point which we hope I believe will be higher as we deployed the money and grow earnings and dividends, where we evaluate all the different options that we have in the capital markets.

And I would say between converts, preferred, common and unsecured debt any of those options maybe appropriate at this time, but we will reevaluate as we get closer to year-end once we to deploy all the capital..

Great. Thanks for taking the questions guys..

Thank you..

Our next question comes from Stephen Laws with Raymond James. Please go ahead..

Thank you. Good morning. Jack, I guess first I would like to start with a couple of questions may be on yields in the market and mix. It seems like your yield on new investments at L plus 5.11%, or excuse me plus 5.22% holding up better maybe than we are seeing some other peers they are up sequentially.

Can you maybe provide some comments around that, was that the higher hotel mix that contributed, I know you guys commented in prepared remarks that the mix will shift little bit going forward and 1Q is not reflective of the go forward mix.

Are you seeing advantages being at a smaller loan size and maybe some other players that target $100 million plus loans, but could you comment on may be why your yields on new investments seem to be holding in better than peers..

Well thank you for the question and nice speaking with you this morning. I would say a couple of things since there is several question you had. One is it is a small sample size so its distributed in part by that.

I do believe that we are seeing a yield compression along with the spread compression, but we are seeing advantages from being in the second-tier markets in the medium-size loans that we are pursuing rather than the very large loans..

Is there anything specific about the hotel investments you made, are those just a function of again a small sample size and some select investments or is there something specific to the hotel sector that you find attractive?.

Well it is in terms of percentage for this quarter it is largely because of small sample size. We continue to be selective on hotels, when we find hotels that we like which we are able to do in this market we have been perusing them..

Great and then I guess the follow-up on the repayment question and I think the retail asset that you are referring to is asset for the breakout on the portfolio on Page 14. Can you talk about, given the size, the timing and the quarter, when you expect that to repay, given it likely takes some time to get that capital redeployed.

So any clarity on timing of when it may repeat the pay during the quarter and an then additional I mean it looks like the yield is L plus about 380. So given where money is going to work is it fair to assume that once it's redeployed you know we could end up with a net benefit on the total portfolio returns there..

Hi Stephen its Marcin, I will take this.

So this asset actually repaid yesterday, yes, it is asset for the loan in California and as Steve said obviously you know the positive - the loan is almost three years old, so we are expecting it to repay a little in the year, but business plan accelerated and so it’s a good resolution we want to get our money back. In terms of yield.

I would say to the earlier point, the Q1 yield of 522 I wouldn't say that that's the reflect of current market. So I would expect that to be somewhat lower on our ongoing origination. It’s hard to speculate as to whether this asset repaying us 380 and being replaced with something higher, how much of an impact that is going to have on earnings.

I will say that we funded over $190 million of loans so far this quarter already. So this repayment, this large repayment happened yesterday, it will have some impact, but it shouldn’t be very significant..

Great. Well thank you very much for the color on that. I appreciate you taking my questions..

Absolutely. Thank you..

Thank you..

Our next question comes from Fred Small with Compass Point. Please go ahead..

Hey, good morning thanks for taking my question.

I may have missed this earlier, but on the prepayments following up on that or the large prepayments are there prepayment fees associated with that?.

No, there aren’t..

And then the elevated prepayments or repayments in the quarter, can you remind me what does do to the GAAP versus tax and the amount that still sort of bleeding into book value..

Good question Fred, I appreciate that. So repayments and prepayments and early repayments obviously do accelerate, this accretion that we have on taxable income, so this will have some impact on that this quarter. Again it’s hard to estimate, but I would expect our taxable income in Q2 to be again elevated significantly over GAAP earnings.

So again it’s hard to say what that number is going to be, but it’s going to be pretty substantial..

Okay. Got it and are there any other large loans top 10 maybe on the schedules where things are currently - the business plan is sort of running ahead of schedule, and you would anticipate faster than expected repayments..

We are expecting additional prepayments, nothing major is running ahead of schedule. So pretty much steady to go..

Okay got it and then given the funding costs coming down a little bit and just current expectations for originations and repayments, when would you expect to be covering the current dividend with core EPS..

Fred its Marcin again. I will say once we are through this tax GAAP or tax difference I think our intention is longer-term to be much closer to core and cover the dividend through core. Let me make one comment on the taxable versus the dividend and how we're thinking about it.

I think taxable income, as you saw was $0.45 in the first quarter, it’s going to be pretty significant in second quarter. I wouldn't look at taxable income quarter-to-quarter as an indication of our dividend going forward, because the lumpiness and volatility of that number every quarter it’s hard to predict.

And we are very focused on making our dividends sustainable and stable overtime, but I would say once we are through this GAAP of tax difference, which I expect most of that the results probably over the rest of this year, maybe early next year. We should see our dividend much closer to core..

Okay, got it. Thanks..

Our next question comes from Steve DeLaney with JMP Securities. Please go ahead..

Good morning and thank you for the question. Back on the CLO for a moment, average coupon of LIBOR plus 127, on the 660 million of notes, obviously very attractive, but as Marcin certainly knows the bankers don't work for free.

So I was just wondering if you could give us some indication of what you expect your all-in effective borrowing rate to be including the issuance costs. Thanks..

Hey Steve, its Steve Plust. Here are the pieces, upfront cost of issuance are plus or minus 1% to 1.2% of bonds, you have got a concentrated LIBOR 127, the average life of the financing is really something on the order plus or minus of two years. So I think that mass gives you a financing costs on an effective basis of something like LIBOR 175 to 200.

And that’s obviously going to depend on the pace of prepayments in the portfolio..

Right.

Two years is your average expected maturity on the loans or prepayment?.

It’s our best guess today..

Okay. And would you say, I’m just thinking about your term facilities and most of those I think are like between 200 and 250, so are guys thinking by about 50 basis points of the relative benefit from an interest expense versus bank facilities. I’m just trying to picture the magnitude of the benefit versus the 175 to 200..

I think that’s the right number, as we disclosed our LIBOR 228 plus amortization of all the different costs that are associated with - facilities and, I think 50 to 60 basis points advantage on that particular loan pool is probably a good estimate..

Alright, very helpful and Jack if I could or Steve Alpart. I was on the road with one of your peer CEOs earlier this week and I heard a comment about market conditions, property, values. And I heard a statement that there are signs of multifamily overbuilding in the Southeast, Southwest.

Now I know multifamily it’s not one of your top categories, I guess about 15%. But I’m just curious if you are seeing in any of your markets if you are seeing signs of any overbuilding of new apartment. Thanks..

Hey Steve its Steve Alpart. Thank you. Overall, we like the multifamily sector, as you pointed out its our second biggest category by percentage, it’s about 13% right now. So overall, we like the sector and a good part of our current pipeline is in the multifamily sector.

What we are seeing is that fundamentals overall in market that we are in seems very strong so far, we are seeing some new supply as you pointed out in some markets within those markets to put some near-term pressure on rent growth and occupancy in the short-term, but overall, I would it’s not a major concern.

We are tracking it, we are aware of it, we also I think mentioned on some prior calls, we tend to focused more on Class B and Class A we will do both, but if you look at what we've done to-date it tends to be Class B value-add multifamily and I don’t see as a debt investor we are not underwriting for the assumptions, as an equity investor or de risk position.

So where there is some new supply, I would say we are rather avoiding those markets or we view it as not a serious concern for what we are going and there are some positive tailwind like the Tax Reform Act, you know we have read research and tend to believe it that it will probably have some positive impact on the rent versus buy analysis.

And then obviously everything that we are doing is always going to be - we have the macro view is what we are talking about now, but it’s always going to be down to a specific asset, a specific location, so we can underwrite that or just avoid those markets. So were aware of it and what we are seeing right now is, it’s not a major concern..

Great. Well I thank all of you for your comments..

Thank you..

Our next question comes from Jack Marino with Colorado Wealth Management Fund. Please go ahead..

Congratulations on your first CLO, should we expect another in 2018?.

Well this is Jack Taylor. I would say that if the markets are open, we will evaluate it at the time and our capability to do so remains strong and we would not predict anything with respect to the timing..

Okay.

Some of your peers have used open market purchases with investigators having a plan to boost their stake through those after market purchases, do you plan to consider the plan for executives to raise their stake into common stock of GPMT?.

Well as we have stated earlier on prior calls, a buyback program is something that we have discussed, we believe that at this stage of the Company's life it’s important to continue executing on our business plan deploying our capital into attractive accretive investment.

We will always do what is in the best interest of our shareholders, but its early in the stages for our Company now..

Our next question is a follow-up from Ryan on for Jade Rahmani with KBW. Please go ahead..

Hey guys thanks for taking the follow-up. Just following up on the conversation on yields. Maybe you can give us if you have it the average yield on the loans closed quarter-to-date or maybe in the overall pipeline and recognizing the mix of multifamily and the impact on yields maybe you can also quantify the levered IRRs..

Hey Ryan its Marcin. I would say generally our Q2 pipeline that’s what we are seeing right now is probably slightly lower than what you have seen it to last year. So last year we did about 485, 490 I would assume the pipeline for Q2 is somewhere in the low to mid 400s over LIBOR..

I’m sorry, I was referring to the yields on the loans in the IRRs rather than the dollar amount, if you guys have that..

No, that’s what I was talking about it. LIBOR plus low to mid 400s..

Okay. Sorry my mistake. Great, thanks..

Our next question comes from Ben Zucker with BTIG. Please go ahead..

Good morning guys and thanks for taking my questions. I appreciate the color you gave us on the issuance costs and all-in expense for your CLO. From a higher level, I also heard you say that you guys are positioned to be a serial issuer so long as the market continues to cooperate.

Now that you have got the inaugural securitization out of the way, do you think future issuances could be done even more efficiently or are those costs that you identify kind of largely fixed and pretty black-and-white with the securitization market..

Thank you for your question. I think that there is certain costs that are first-time upfront costs that won't be repeated. there is a band of costs that you can live within as an issuer.

And so we would expect that going forward our issuance costs would be a more efficient as you put it, you can only push it so far, but expect that we would be more efficient as a serial issuer..

That's helpful and this next one I think is for Marcin.

I just want to confirm that the fee income line items from the income statement is where you recognize the early repayment fees that you called out in the release, is that correct?.

Yes, that is correct..

That’s great.

So the origination in exit fees are amortized over the life of the loan through interest income, but when you guys have those really repayment fees we are going to see those show up in the fee income right?.

Yes, that’s correct..

Okay. That’s actually really helpful and the reason why ask is I think a lot of your peers burry all of that through interest income, which really distorts the picture and makes it tough to identify underlying net interest income trends.

Just lastly from me, could you just hit on the underlying credit trends within your portfolio right now, are there any loans that are worrisome or on a watch list or just general credit overview would be helpful..

Thank you its Steve Alpart. The portfolio right now is 100% performing. We also do quarterly risk rating and right now I guess on to your question, there is nothing of a risk rating that will cause concerns.

We have actually made some disclosure around this and right now everything - we risk rate on the scale of one to five, right now everything the portfolio is a one, two or three with the bulk of it being a two, typically when things get to a one it tend to payoff. So right now 100% performing with no credit concern..

That's helpful and I think you know most of us have grown accustomed to companies that operate in this sort of sandbox. You know we get used to seeing occasional risk level for also because that's kind of just the nature of these loan projects in general. Thanks for taking my questions guys..

Sure. Thank you..

Our next question is a follow-up from Fred Small with Compass Point..

Hey just following up on the yield that you mentioned Marcin. How much of the difference between 485, 490 and low to mid 400 is mix versus compression sort of yield compression..

Hi Fred, I would say it’s probably both, but I would say most of it is probably spread compression.

As Steve mentioned, we do have some multifamily assets in the pipeline which tend to have lower yields that you know on the flip side we can finance them much more quite efficiently, but I would say largely the change is the spread compression we are seeing in the market..

Alright. Thanks..

This concludes our question-and-answer session. I would like to turn the conference back over to management team for any closing remarks..

Well, thank you Brandon. We would like to thank everyone for joining us today and for everyone’s support for our business. We look forward to speaking with you all again soon and thank you again..

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect..