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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the New York Mortgage Trust First Quarter 2023 Financial Results Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. [Operator Instructions] This conference is being recorded on Thursday, May 04, 2023.
A press release and supplemental financial presentation with New York Mortgage Trust's first 2023 results was released yesterday. Both the press release and supplemental financial presentation are available on the company's website at www.nymtrust.com. Additionally, we are hosting a live webcast of today's call, which you can access in the Events & Presentations section of the company's website.
At this time, management would like me to inform you that certain statements made during the conference call, which are not historical, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although New York Mortgage Trust believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors and risks that could cause actual results to differ materially from the expectations are detailed in yesterday's press release and from time to time in the company's filings with the Securities and Exchange Commission.
Now at this time, I would like to introduce Jason Serrano, Chief Executive Officer. Jason, please take it away.
Thank you, operator. Good morning, everybody. Thank you for joining our first quarter 2023 earnings call. On the call with me today is Nick Mah, President and Kristine Nario, Chief Financial Officer. I'll begin by providing some market information and briefly touch on the first quarter performance before passing the call to Christine, who will discuss our quarter results in more detail. Nick will then discuss an update to our portfolio and market opportunity.
The first quarter was a challenging environment, as you saw the real beginnings of a risk-off mentality after regional banks entered a type of liquidity vortex related to their deposits. Distortions to zero interest rates are on full display here. Left with a material portion of fixed rate assets or at below fed funds rate, some regional banks are caught in liquidity crunch. Liquidity is locked up in these assets and push into the distant future.
We recently witnessed three of the four largest banks failures in US history. Total assets of the deposits are approximately $550 billion compared to a total in 2008 of $365 billion. Regional bank deposits. Issues seem far from over, provisions taken on CRE loans particularly office are still to come. These events have accelerated what we see as an end stage to the growth cycle. There are many market signals that show a recession is near.
Last quarter we showed a graph related to quarter-over-quarter change to lending standards, which were on the rise, and this was noted before the regional bank liquidity issues. On Page seven of our presentation, we highlighted the obvious fact that the entire yield curve is inverted, but the not so obvious fact is that the months of inversion are now beyond or very close to when recessions were previously triggered.
Whether you look at the trends or M2, money supply growth or which is negative 4.11% [ph] which is the lowest grade progression or manufacturing ISM Index or variety of other leading historic leading indicators, this is likely the most advertised recession in US history. No two recessions are the same, and we do not see US housing leading the decline in this downturn. In fact, we believe US housing, including multi-family assets class will outperform in this market.
On the right side of the Page seven, we discussed how the previous 2000 themes of the great financial crisis are simply not relevant today. Mainly the US mortgage is predominantly fixed rate and underwritten with higher lending standards than 2007. Mortgage payment shocks are not an issue like it was at that time after the fed's aggressive rate hikes.
Also, the incentive for homeowners to walk away from their mortgage and rent across the street, which was common theme in 2007 is an option that is out of the money for today's homeowner. Besides the vast home equity that has been built up, the chief cost of housing given zero interest rate policy offered a few years back makes this move uncompelling.
The supply side of the housing remains stubbornly low, less than $1 million units for our on sale in the United States or less than three months of supply. This is a comfortable area to keep HPA range bound. This is primarily due to a locked market where sellers do not want to lose their low cost of financing, but also may have issues finding replacement housing.
On the other side, new home buyers are delaying purchase plans with borrowing costs above 5.5% and little inventory to choose from. However, we know that the housing market is not insulated from higher loan default risk. Wage loss due to layoffs as an example, will push delinquencies higher. For the US housing credit market, the loss given default should be -- should prove to what to be a somewhat stable parameter to underwrite, much different than 2007.
We believe these factors will contribute to a favorable secondary market opportunity for distressed investors in US housing. Given the persistent regional bank liquidity problems and recessionary concerns, we believe the opportunity will open up this year and add to attractive risk adjusted returns in a dislocated market. With two decades of residential housing investments and loan and property level asset managed experience in both single-family, multi-family, we are well equipped to unlock value in this market.
In fact, on Page seven, we show that we have been preparing for the economic downturn for over a year. This is a timeline we presented about a year ago, which has correctly illustrated the market transmission mechanism from a performing market with excess liquidity to what we believe will end in dislocation.
After the first fed hike in March, 2022, we set plans to sharply reduce our investment pipeline, which was running at $1 billion per quarter. In Q3 2022, asset acquisitions totalled only $118 million and have stayed quite low since. We have remained steadfast in our defensive posture in order to be a meaningful offensive player in a down -- in a down market.
We believe the income potential in this new cycle will exceed earnings or capital over the past year if it was fully redeployed. Simply said, we believe the opportunity cost of holding cash over the past 12 months was extraordinary low. We are confident the investment opportunity will be highly attractive and sizable to create significant long-term value for the company.
On Page nine, we show one of the outcomes as a result of this portfolio management strategy. On the right side, the graph shows a portfolio size over the past five quarters. In late 2020, we targeted bridge loans because we were attracted to high coupon, low LTV and short duration. In the second quarter of 2022, we reached a peak of business purpose loans, despite multiple opportunities to continue growing the portfolio to increase our income over the past year, we continued to follow the plan to run off the short dated portfolio.
Consequently, the company's interest income declined from peak in second quarter of 2022 of $69 million to $57 million the first quarter of this year, a decline of 17%. As illustrated the lack of BPL reinvestment accounted for nearly all the interest income decline.
Our plan was to create $0.5 billion of dry power to be able to meaningfully participate in a downturn. The diagram on the bottom left illustrates this point. The $552 million of excess liquidity equates to 42% of our market capitalization as of quarter end. We are also prepared with $1.4 billion of borrowing capacity with warehouse facilities that are currently in place. The company is primed to be liquidity provider in a downturn to grow earnings over a longer time horizon.
On Page 10, we summarize our quarterly performance and activity. As discussed earlier, we prioritize book value protection, which consequently lowered quarterly interest to income due to the lower investment activity. As such, the company generated comprehensive earnings of $0.12 per share in the first quarter. Adjusted book value was negative 3% quarter-over-quarter, and after our previously declared $0.40 dividend, the company's quarterly economic return on adjusted book value was negative 0.5%.
Part of our strategy to keep competitive advantages was to hold to hold G&A at a low level. We want the flexibility to transition between primary and secondary markets within the sector seamlessly. The lack of compelling risk adjusted returns offered in today's market, we did use some of the capital to repurchase securitization debt, common shares and for the first time preferred stock in the first quarter.
As discussed in previous quarters, we are in the process of monetizing our common equity interest and multi-family properties held on balance sheet. As updated and note here, we have six properties in the some stage of advanced sale process. Total investments amount related to these properties is $62 million.
At this time, I'd like to pass the call to Christine to provide more financial color and then to Nick to discuss our portfolio update and strategy. Kristine?
Thank you, Jason. Good morning. In my comments today, I will focus my commentary on main drivers of first quarter financial results. Our financial snapshot on Slide 12 covers key portfolio metrics for the quarter and Slide 23 summarizes the financial results for the quarter. The company had undepreciated earnings per share of $0.14 in the first quarter as compared to undepreciated loss per share of $0.50 in the fourth quarter.
The fair value changes related to our investment portfolio continued to have significant impact on our earnings and during the quarter, we recognized $0.31 per share of unrealized gain primarily due to improved pricing on our residential loans and bond portfolio. We had net interest income of $17.8 million, a contribution of $0.20 per share down from $0.24 per share in the fourth quarter. The decrease can be attributed to a combination of a few factors.
First, a decrease in average interest earning assets due to portfolio runoff in our short duration BPL bridge loans, as well as our conscious decision to be selective in pursuing investments in our targeted assets, which Jason covered earlier. Second, overall yield on our interest earning assets decrease also due to portfolio runoff of higher yielding BPL bridge loans and uptick in maturity related delinquencies, primarily in our BPL bridge portfolio.
Additionally, financing costs in our investment portfolio increased primarily due to pay downs and repurchases of our lower cost securitizations and due to increases in interest rates related to our repurchase agreements. Although we've experienced an increase in these material-related delinquencies, we believe that through active management and our ability to work with borrower to find a reasonable exit plan, we would be able to recoup our delinquent interest on these loans at payoff, which has been our experience historically.
In the first quarter, we had non-interest related income of $66.8 million or $0.73 per share. As previously discussed, prices and a majority of the assets in our investment portfolio increase during the quarter and contributed $0.31 per share in income. In addition, our consolidated multi-family JV properties contributed $0.46 per share in income, an increase from $0.44 per share in the fourth quarter as properties continue to implement business plans to drive rents and occupancy higher.
We are required from an accounting perspective to carry our multi-family real estate assets and our health for sale at lower cost or market value. We perform our valuations for the quarter and determined that two out of the 19 multi-family properties held for sale had lower property valuations as compared to our carrying costs, resulting in an impairment loss of $10.3 million during the quarter.
Total, general, administrative and operating expenses amounted to $70.4 million for the quarter up slightly from $68.2 million in the previous quarter, primarily due to an increase in interest expense and mortgages payable on consolidate real estate due to change in base rates, partially offset by reduced portfolio operating expenses due to residential loan portfolio runoff and minimal purchase activity.
As Jason mentioned earlier, adjusted book value per share ended at 15.41% down 3.02% from December and translated to a negative 0.50% economic return on adjusted book value during the quarter. As of quarter end, the company's recourse leverage ratio and portfolio recourse leverage ratio increased slightly to 0.40 times and 0.32 times respectively from 0.33 times and 0.25 times respectively as of December 31.
While our average financing leverage still remains low, the slight increase in the quarter is primarily due to the financing of newly acquired agency RMBS. We continue with our effort to enhance our debt structure by placing greater emphasis on longer term and non-mark-to-market financing arrangements. Currently only 20% of our debt is subject to mark-to-market margin calls and remaining 80% have no exposure to collateral repricing of our counterparties.
In addition, as you can see on Slide 13, we have a $100 million of unsecured fixed debt due in 2026 and $45 million of subordinated bonds due in 2035. The maturity profile of our corporate debt allows us to have more flexibility by avoiding cash holdbacks related to near term bond maturities. In addition, while longer term and non-mark-to-market financings may per a greater expense relative to repurchase agreement financing, that exposes to mark-to-market risk, we believe that over time this waiting towards these type of financings better allow us to manage our liquidity and reduce exposure in dislocated markets.
We paid a $0.40 per common share dividend, which was unchanged from the prior quarter, and we evaluate our dividend policy each quarter and look at the 12 month to 18 month projection of not only our net interest income, but also realize our capital gains that can be generated from our investment portfolio.
And with that, I will now turn it over to Nick to go over the market and strategy update. Nick.
Thank you Kristine, and good morning, everyone. As Jason expanded on, we are still navigating a challenging investing environment. We are reminded that regional bank failures are still a concern, which has shifted the technical dynamics of banks being buyers to likely net sellers of mortgage risk and all this happening prior to a potentially more distressed environment in the horizon.
The portfolio activity over the last few quarters has been reflective of our views on the market, which is that on balance, we prefer the preservation of our liquidity and leverage today for the deployment into more compelling investment opportunities in the future. We believe our portfolio and available capital is well positioned for what is to come.
Relating to our purchases, our first quarter, 2023 acquisitions of $219 million are still meaningfully lower than our fastest pace of acquisitions that we experience at the peak in the second quarter of 2022. This quarter's activity is, however, almost double last quarter's lower base of investment volume of $106 million. The slight pickup in aggregate investments was partially driven by our opportunistically investing in $107 million of agency MBS, given the spread winding we witnessed in February and March.
We mentioned in the prior earnings call, that investing in agencies is something that we would consider given the non-credit nature of the asset class. This is further bolstered by its relative liquidity and historical outperformance during recessions. We will continue to selectively deploy in this asset class over the coming quarters as we await more attractive opportunities in residential and multi-family investments.
Across all of our core credit strategies, you will also know that our pipeline of activity has marginally increased quarter-over-quarter. We continue to engage our sourcing channels both new and old to prepare for normalization to an increased investment pace in the future.
The portfolio's prepayments and redemptions have continued to be higher than our pace of acquisitions. This has the net effect of the reduction of our overall portfolio size. However, that gap is shrinking with only $70 million delta and portfolio declines should taper off in the coming quarters.
We believe the overall portfolio is well situated today. Despite the market turmoil that we saw in the first quarter driven by the region regional bank crisis, our credit portfolio evaluations improved. The LTV profiles of our book in the 60s provide a strong buffer amidst potential home price declines in the future as our borrowers have a sizable amount of built up equity. On a corporate level, we continue to maintain low portfolio recourse leverage ratios across our entire credit portfolio.
The recent new additions to our investments would be our agency positions. We have recently been more focused on higher than current coupon spec pools where we are targeting low pay up stories for prepayment protection.
We have the benefit of being able to construct the portfolio from scratch, which has allowed us to avoid lower coupon bonds, which now face additional technical selling pressures from FDIC bank selling. Higher coupon agency bonds also help balance the convexity profile of the overall residential portfolio, where more of our seasoned assets have a potential for price appreciation, but may not generate as much NIM.
Our largest exposure in residential credit is our BPL bridge loans, which we continue to cautiously deploy capital through a more conservative credit buy box. We see value in the short duration and the high coupon nature of the product. We have noted in the past that we continue to be active in the asset management of the BPL bridge portfolio, especially guiding the assets to resolution in a timely manner. The portfolio has declined from its peak of $1.7 billion in the second quarter of 2022 to $1.1 billion today, mostly through organic resolutions.
With the curtailing and purchasing activity, our existing portfolio is seasoned about 14 months on average. So we have experienced and will continue to face increasing maturity related delinquencies. Our asset management team alongside our third party servicers and asset managers, continue to work with borrowers to a responsible exit plan and to the extent that an extension is required to charge the borrowers the fees necessary to align them with our cost of continuing to hold on to the asset on our balance sheet.
From a market standpoint, the time to resolution for bridge loans has increased for a couple of factors. First, the market for refinancing of these borrowers into other loan products is smaller than in the past, with tighter underwriting standards constraining the market.
Also, borrowers are also having to align their original profitability assumptions in their projects amidst a less than -- a less a buoyant home price backdrop. All in all, we do feel comfortable with the credit profile of our BPL portfolio given that the LTV ratios and the progress of the projects in our book.
Losses in our BPL bridge portfolio to date continue to be less than one basis point across the $2.9 billion of bridge loan purchase we've made today. Delinquencies across other parts of our residential book has declined quarter-over-quarter and still remain low.
On the multi-family side, we are focused on selectively expanding our pipeline on the multi-family mezzanine loan program and on liquidating our joint venture equity portfolio. We remain focused on finding avenues for the disposition of those assets.
On the multi-family mez portfolio, we are constructive on the credit of our existing portfolio and for further investment in this space. First of all, the demographic trends have been positive in the areas that we primarily invest in, namely the south and southeast. This can be seen through an 11% rental growth rate in 2022, with an additional 3% growth rate in the first quarter of 2023. This creates a positive valuation trend on the collateral underlying our mez loans and helps offset operating cost increases that may have arisen through inflation. The performance of the portfolio is fantastic with only one delinquency that is expected to pay off in the near future.
Unlike the BPL bridge refinancing market, the multi-family mez financing market is relatively robust. For our stabilized properties, senior agency loans are still available with competitive rates in the mid 5%. Agencies also offer supplemental loans that can in certain circumstances where our LTV positioning has improved, refinance our mez loans out.
For our non-stabilized assets such as our properties under construction, there is a natural outlet to refinance to a more efficient capital structure after stabilization. Overall, our mezzanine portfolio prepaid at a 32% rate last year, and we expect the heightened prepayment activity to continue into 2023 despite a slower Q1.
I will now turn it back to Jason for any closing remarks.
Thank you, Nick. Success in this new environment may be achieved through organic creation of liquidity, tactical asset management, and prudent liability management for book value protection. And as a REIT, we are particularly excited about our excess quitting advantages, permanent capital can have an a dislocated market.
So with that, I'll pass it back to the operator for questions.
[Operator instructions] Our first question will come from Doug Harter of Credit Suisse. Doug, please go ahead.
Thanks. Can you talk about the two properties where you took the impairment on the multi-family and kind of what might differentiate those versus the other 17 in the portfolio?
A - Jason Serrano
Yeah, so the two properties are properties where we are in advanced stages of the sale and this is a property -- these two properties are in the middle of a transition plan. These are value added Class B properties that we conducted the CapEx program. And we're deciding here that it may make sense to sell the property before the CapEx plan is fully completed.
As we may, as we find that the capital that we received back we'll add more value to the company then keeping that asset in those markets with the CapEx plan in place. So we're expecting in a transition plan that would take probably another 15 to 18 months and I think what's exceptional about these properties is that we're -- the decision to sell before the CapEx plan is completed is something we've realized and hence the reason why we're taking the adjustment on our value.
And then so if that's two of the six that I guess you have agreements on, can you just talk about the other four sort of what the gains losses relative to kind of where they're carried are?
A - Jason Serrano
Yeah, as Kristine mentioned, we take the lower of the value of the property or our cost and given that we did not reduce the value of those properties, obviously we feel like that the properties are worth, either our costs are more on our cost or more. We will disclose the sale proceeds and pricing related to those assets in the next quarter.
Okay. Thank you.
[Operator instructions] And our next question comes from Matthew Hullett, B Riley. Matthew, please go ahead.
Hello. Hey, Jason, thanks for taking my question. Just like you guys have been very prudent with the capital management, and I know you don't have a crystal ball here, but what could you tell us in look, looking at the next 12 months and will all that access liquidity be deployed? I think the issue with the financial crisis was things went down and then people posted and then went down further. So what do you need to see for things to bottom and are things trading right now? Are there clearing levels established?
Yeah, so thus far we've seen a couple of regional bank sales. These are not of entities that have been seized by the FDIC. Those sales from the FDIC are mostly, be low coupon MBS, which is not a particular exciting strategy for us. We think there's going to be lots of supply of that that will be coming out, and obviously it's very tough to make a NIM off of a 3.5% coupon MBS bond. So it's more capital appreciation and that's more of a longer dated view on rates.
So at the end of the day, what we are looking at is single family loan. We're looking at a market where you have about $120 billion of senior loans from multi-family properties that will be coming due. There may be a lot of GAAP financing possibilities there on the multi-family side.
On the single family side, obviously there's a major reduction of credit availability that's occurred and we highlighted that last quarter. Powell mentioned that on his call yesterday that there's been a big pullback in lending and that's an area that we could exploit more so on the secondary market side and then the primary market side, and that there'll be a lack of financing on some loans that been met hung [ph] and we can look to restructure those loans with our servicing capabilities.
So we're excited about the opportunity obviously the market is experiencing some significant headwinds. We have been preparing for this for over a year with our excess liquidity and low margin debt, as well as keeping our balance sheet clear of any near term maturity. So we can use our cash to the fullest extent and not hold back for a maturity schedule.
And I also believe that, as I said, my final comment that our permanent capital provide distinctive advantages in this new market. To your point, in 2007 you had a downturn over the market and things looked cheap and then obviously it turned lower in 2008 and 2009, and then it finally covered with the green shoots in 2010. I think that was a market also where pricing discovery and understanding, the fact that there's such a thing as home price declines could exist in the United States. It was also a factor in a lot of the early exuberance of potential pricing.
We've looked at this market, we've been in the market for two decades. We've analysed 2007 have been involved in buying assets in that market through different cycles and on the multi-family side. We feel pretty confident about our ability to understand the values in this market. It's impossible to time the bottom.
So in our view is that that's where the permanent capital managers come into place where we feel we can earn an equity type of returns on senior loan is an exciting opportunity for us and given the confidence we have in our capability, we're not going to be shy to put capital to work and looking forward to generating what we believe is going to be exceptionally risk adjusted returns over this subsequent year. So very -- we think we're positioned well and excited for the opportunity.
Yeah, well said and look, and New York Mortgage Trust is always that history of being visionary. You sort of, you were leaders sort of out of the financial crisis or doing interesting trades and investing in interesting assets. And what can you tell us and again, I know you don't have a crystal ball, but a year from now with all you're scooping up all these cheap assets, you have the asset manager, which is great.
When you look longer term is your -- would New York Mortgage Trust, would they look to acquire an operating business? Do you see a secular change happening and would the banks may be coming out that you could take NYMT and in a new direction? Anything that could be you've got all this capital access, capital is terrific going into this market, but long term, do you look at buying an originator or still staying away from that or doing something else?
Yeah, so you're keying on a particular point, which is our G&A level that we kept low. And the reason why it's low is because we haven't vertically integrated into a significant originary servicing platform in just the single-family loan markets. We have looked at and kind of investor in loan markets, but your point is well taken in that we do believe there's opportunity for us on the operational side.
We have looked at various platforms to date last year that there was many platforms available for sale. We didn't feel like the timing was right there in a debt. In a dislocated market, we think we can pick up operating businesses for little cash or potentially get paid to take them in some cases and those are the opportunities we're looking for.
We think it also helps generate sourcing in a distressed environment. So we're excited about opportunities that may come from that, but, yeah, yeah, absolutely, we're focused on that and we will, I think likely use some of our excess liquidity to find some of those opportunities. So, we still believe that timing is not quite there, but we think it's given the lack of origination, the liquidity concerns that exist entities like us become pretty attractive partners given our lack of debt and also high cash. So yeah, that's something we're definitely looking forward to.
Yeah, look, you certainly the lowest leverage in the space and certainly acknowledge the low operating costs. So we'll look forward to that. Thank you.
And our next question will come from Eric Hagen with BTIG. Go ahead, Eric.
Hey, thanks. Good morning. Maybe starting off here, just how should investors think about a duration of the portfolio? Like how much cash flow do you expect maybe on a to take in on maybe like a quarterly basis if you wanted to deliver the portfolio just from pay downs, how capable do you feel like you are of doing that? And then a sort of related question on top of that is like, is there a way to think about the earnings, which are cash versus non-cash or discount accretion in the portfolio right now? Thanks.
Yeah, thank you. So as relates to the duration, we starting basically at the end of 2020, we focused on BPLs. We grew that portfolio to about $1.7 billion, which is the peak in second quarter of 2022. We've mentioned this multiple times in calls, which is, this was a trade for us, not necessarily a business, in that we felt that our using our cash in this manner where you could basically organically raise capital by just letting the portfolio wind down was probably the most prudent thing we could have done, a couple years ago.
We had timing of when dislocation would come was very tough, but what you wanted to do was be early on the call on slowing down your pipelines so you can get that cash back and in time for opportunity. So, we're, as we indicated on Page nine of our presentation we're letting that plan play out. That that plan has taken our portfolio from $1.7 billion to $1.1 billion, and as Nick mentioned, we're in a very seasoned stage of our portfolio related to, an 18 month kind of maturity type of loan.
So we do expect that portfolio to pay down pretty quickly and also to pay down our debt as a result. So, that with also our pref mezzanine prep book we're experiencing roughly around 15% of the loans that are paying off on a quarterly basis. That's also a very seasoned portfolio, also portfolio that we stopped really allocating or meaningful capital back in Q2 of 2022. So that is allowing us to run off as well.
On top of that, we have our JB equity portfolio, which I mentioned. There are six assets that are in the late stage process for a sale. We're looking to monetize the entire portfolio. We're focused on reducing our exposure there and using that capital for lending opportunities. So there's a lot of things that we're doing organically just letting portfolio run off. There's the JV equity, which is a capital market sale. And then on the remainder of the portfolio, we don't have a lot of capital allocated them to margin debt.
Kristine mentioned that point and that we've been systematically reducing margin debt from our portfolio. We have various points in our presentation that show that effort. So not a lot of exposure there and the transition from kind of repo debt from March, 2020 to securitizations and non-marginal longer term financing facilities is something that we set to complete, which we've been working on over for now two years. So we feel like we're in a good position there.
That was really good detail. I appreciate that. One more on the BPL, how would you characterize maybe the conditions for the borrower? Like is there a way to compare the returns that they're getting or expecting now versus, call it 12 months or 18 months ago when the cost of debt was lower, but home prices may have been higher and conditions were obviously a little different.
Yeah, I think the borrower expectation on, it's hard to, hard to estimate exactly what they're going to be thinking because that's going to be highly dependent on home price appreciation. Oftentimes when the projects come to us, the business plan really is putting in some degree of rehab and then capturing value through that rehab and not really relying on home price appreciation.
However, there has been a very strong HPA environment over the last few years. So regardless of, so there was just a much larger margin of error to the extent that you don't execute as well, or your projections were off, home price appreciation did help you.
Now it's a slightly different environment, and I would say that for what we're seeing is that we're having more experienced borrowers come through the pipeline in terms of new purchases today than newer borrowers and I think it's because the more seasoned professionals have a better way to execute and they feel more confident in the way that they can execute. So because of that, they don't have to rely as much on home price appreciation.
So, I think the dynamics have definitely changed and it's really coming from both sides. On the lending side, lenders are less inclined to lend to people without the experience. And then in terms of people looking, seeking out this more expensive debt, it tends to be more of the seasoned professionals that have -- their have confidence in their ability to execute are the ones who are actually taking on this debt and taking on this market for future opportunities.
Yep. It's definitely a market that's grown quickly. Thank you guys so much. Appreciate it.
Thank you for your questions. I would now like to turn it over to Jason Serrano, CEO for our closing remarks. Go ahead, Jason.
Yeah, thank you for your time today. We look forward to speaking with you on our second quarterly earnings call. Have a great day.
Thank you for your participation in today's conference. This concludes the program. You may now disconnect.