Rithm Capital Corp (RITM) 2015 Q2 法說會逐字稿

Good morning. My name is Jake, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Residential second-quarter 2015 earnings call.

(Operator Instructions)

Thank you. Ms. Mandy Cheuk from Investor Relations, you may begin.

Thank you, Jake, and good morning, everyone. I would like to welcome today to New Residential's second-quarter 2015 earnings call. Joining me here today are Michael Nierenberg, our CEO, and Jonathan Brown, our interim CFO and CAO. Throughout the call, we are going to reference the earning supplement that was posted to the New Residential website this morning. If you have not done so, I would suggest that you download it now.

Before I turn the call over to Michael, I would like to point out that certain statements made today will be forward-looking statements. These statements by their nature are uncertain, and may differ materially from actual results. I encourage you to review the disclaimers in our press release and investor presentation regarding forward-looking statements, and to review the risk factors contained in our annual and quarterly reports filed with the SEC. And now, I would like to turn the call over to Michael.

Thanks, Mandy. Good morning, everyone, and thank you for joining our Q2 earnings call. We had a terrific quarter, and a very busy one. We announced the acquisition of HLSS which gives us critical mass in our three core areas of our Company, MSRs, servicing advances, and call rights. During the quarter, away from the HLSS acquisition, we also acquired or agreed to acquire $59 billion of legacy MSRs, again which is separate from the HLSS acquisition, further growing our MSR investments in the Company. In the quarter, our nonagency business took on a bigger role, as the result of the acquisition of more call rights in the nonagency mortgage space. We grew our nonagency mortgage holdings by 35%.

During the quarter, we announced record earnings, raised our dividend, and we put the Company on the path for future growth as we seek to grow our core earnings. We are now one of the largest capital providers to the mortgage servicing industry. As we look forward, we are very excited as the second quarter's activity puts the Company in a great position for continued success. With an MSR portfolio of over $400 billion, and the potential for the Federal Reserve to raise rates, we own one of the few asset classes that will likely go up in value as rates increase. Our call rights also put us in a very unique position in the marketplace, with the ability to call over $200 billion of nonagency mortgage securities.

Before I refer to the supplement which has been posted online, I want to spend a second, and talk about the timing of our earnings release. Corporate acquisitions are not always easy. The closing and integration of HLSS was more challenging than expected, and quite frankly, we needed a couple of extra days to tie up all loose ends and finalize numbers. I do want you to know that we are still on target as we think about the future, and while there was a bit of noise in getting this transaction closed, we are thrilled with the transaction.

I will now refer to the supplement which has been posted online, and I'm going to begin on page 2. A few quarters ago, we set out to try and simplify Company by focusing on three -- on our three core segments. We have done that, by growing our mortgage servicing rights, servicer advance business, and our nonagency business. We have grown our Q2 core earnings on a year-over-year basis by 13%. Our total return year-to-date is 20%. Life to date dividends paid by the Company have been $487 million. Overall, terrific metrics on all fronts.

On page 3, I want to talk about our financial performance. In the quarter, we had record core earnings of $92 million or $0.45 per diluted share. That compares to Q1 of $63 million or $0.44 per diluted share. Our GAAP income in Q2 was $75 million or $0.37 per diluted share, versus $36 million or $0.25 per diluted share. And again in the quarter, we raised our dividend to $0.45 from $0.38, a terrific quarter. I do want to mention that in the quarter, there was a little bit of noise, and certain things affected our core earnings -- had our core earnings go to $0.45 -- and I just wanted to touch on that for the second. Our MSR settlements were delayed a little bit. And to the extent that they were settled earlier in the quarter, that would have resulted with an extra $0.01 in core earnings. We also had some one-time acquisition costs of $0.005, and an additional cash drag of $0.01. So overall, without these earnings drags, our earnings would've been $0.47 to $0.48 in core earnings.

On page 4, I wanted to spend a minute as to why we're different -- why we think that we're different than other mortgage REIT's. Again, we own a very large portfolio of mortgage servicing rights, over $400 billion. MSRs are one of the few investments that should rise again in value as rates go higher, simply because prepayments will slow down, and you're going to have more cash flow for a longer period of time. Our mortgage servicing portfolio is something that you simply can't replicate in today's market. We also, I also want to be clear, that we have no intention today of raising equity, as our existing portfolio should give us the ability to access liquidity of up to $1 billion for future investments. Any acquisitions, or investment will hopefully be able to be funded with our own balance sheet. The other thing I want to point out, as you look at the bottom of the page again, is we own over $200 billion of call rights on the nonagency mortgage market. And we think the optionality that, that gives us over time, should help differentiate us from the rest of the pack.

On page 5, it talks about, as we go through the second quarter, and just talk about some of things that we've done. So beginning in April, we announced the actualization of HLSS. That was a $1.4 billion acquisition. In April and June, we raised equity to pay for the acquisition, as well as fund other investments. In May of 2015, we increased our dividend by 18% quarter over quarter. We also announced record core earnings for Q1, and today we're announcing record core earnings for Q2. As you look to the right side of the page, the one thing I want to highlight is we continue to do a lot more marketing, work closely with our research coverage. And quite frankly, we won't be happy until we see our dividend yield trading at a more normalized range of what we feel is right, in the 8% to 10% range. Just to give you a benchmark, HLSS traded between a 6% and 7% dividend yield going back in time.

On page 6, I want to talk about our Q2 highlights. As I mentioned, in April we acquired HLSS for $1.4 billion. In that acquisition, what we acquired were was $156 billion of seasoned credit-impaired nonagency mortgage servicing rights. We acquired $5 billion of servicer advances, and then we acquired some loans which I'll talk about in a little bit. We raised $1.3 billion to $1.4 billion of equity for to pay for HLSS and fund our investments. On the excess MSR side, I pointed out that we acquired or agreed to acquire $59 billion of legacy MSRs in the quarter. We also paid off, we took out some short-term debt to acquire HLSS, and the short-term debt was around our MSR portfolio, and we paid down $[650] million of the $[850] million (sic page 6: $659 million of the $855 million) of MSR debt in the quarter. Our lifetime IRR on our MSR portfolio is currently 24%.

On the servicer advance front, we increased our financing capacity to $11 billion, and we continued to improve the terms of our financing facilities. We are currently in the market today with a $1.5 billion term securitization around servicer advances. That deal, will increase our advance rates, lower our cost of funds, and effectively the way to think about this, is raise equity at a cost of funds of approximately 2.5%. On our servicer advance portfolio, our life to date IRR is 28%.

On the nonagency side of our business, nonagency securities and call rights in the quarter, we called 18 seasoned nonagency mortgage deals which was approximately $369 million in unpaid principal balance. We then issued a $334 million securitization. And our life to date, on our nonagency securities portfolio has been 44% IRR. So we had a very, very busy quarter, and the way that we think about the Company is we're well-positioned for all interest rate environments.

On page 7, this gives you a snapshot of our balance sheet, and the way that we think about the Company. We currently have investments as you look, in excess MSRs of $[1.7 billion]. That compares to the end of Q1 of $750 million, where our servicer advance portfolio grew from $200 million to north of $600 million. Our nonagency mortgage securities portfolio grew from $200 million to north of $300 million. And then in the opportunistic investment bucket, that's really our consumer loans which we have spoken about in prior quarters, which we carried at a basis of zero, and we have some loans that we continue to acquire as a result of our call activities. And then, as of 6/30 we had cash on our balance sheet of $246 million. So again, our goal continues to be to simplify the Company, grow our business and our core asset classes, and continue to drive returns for our shareholders.

Now if you'll flip to the excess MSR page, I'll talk a little bit about our performance and again, what sets us apart from the rest. Our excess MSRs continue to perform very well. We grew our portfolio by 67% in the quarter to $415 billion, with a market value again of $[1.7 billion]. Today, our excess MSR investment represents 57% of our total equity. As we look at the market, and we think about acquiring MSRs, we are very selective. We continue with our investment thesis to buy legacy or credit-impaired MSRs which we feel will have lower prepayment risk, and will have a better ability to recapture that borrower, to the extent that they refinance or try to pay off that loan. 85% of our portfolio is backed by credit impaired borrowers with a FICO score of approximately of 659. 98% of our portfolio is either seasoned or recently recaptured. On average, the portfolio is seasoned by 106 months or almost 10 years. Most of these borrowers have already seen the low in rates.

While the second quarter saw speeds in the broader mortgage market increased slightly, we have already seen a drop with July prepayment numbers published last week slower by 10%. As we look at our recapture rates, our recapture rates for the quarter remain steady. For Fannie Mae and Freddie Mac collateral they were approximately 30%. The Ginnie Mae collateral bucket was 20% to 25%, and PLS has been around 10%. And typically on the PLS front, most of those borrowers when they prepay it, it's more from a default that it is an elective prepayment.

As it relates to our recapture, we are striving to try to get higher recapture numbers, and one of the things that our partners at Nationstar have done, they've actually hired a new person to run their origination business with a large focus on recapture. Our lifetime IRR for our portfolio is at 24%, and this includes the HLSS portfolio which we recently acquired.

On our servicer advances, the investment has been performing extremely well. Our team has done a great job working with our financing counterparties to increase capacity, increase advance rates, and lower our cost of funds. As I mentioned before, we currently have $11 billion of capacity to finance the investment, and we are -- currently have $3.5 billion of unused -- or of unused capacity. So to the extent that we acquire more portfolios of private-label mortgage securities, we're in a great place to be able to fund more servicer advances.

As we've mentioned last quarter, we are still working on a large portfolio of private-label securities with an approximate UPB of $75 billion on the MSR front. The acquisition of HLSS brings our advance portfolio to approximately $[8.5 billion] (sic slide 9) of advances, with equity invested of $638 million. That's as of 6/30. Our advances have a 90% advance rate, and a cost of funds of 2.2%. 68% of our advances are either fixed-rate, or we have purchase caps which mitigates increases in interest rates. So should short rates rise, we feel like we're in a great place to be able to mitigate any increases that we potentially will see in interest rates.

On the legacy side, pre-HLSS, our advanced balances at the time when we announced that deal in December 2014, have decreased from $[5.2 billion] to $[2.5 billion]. Our initial investment of $313 million is currently valued at $161 million, and we've already received cash flow of $208 million. Our IRR on that investment has been 28%. As I pointed out earlier, we're currently in the market with a term securitization which we hope to price later this week. The effect of that will increase advance rates by about 6%, and it is our intention to lower our cost of funds. All in all, we are very happy with the investment, and continue to do all we can to increase advance rates and lower our cost of funds.

Now I want to spend a minute talking about our nonagency securities portfolio and our call rights. As I pointed out earlier, our nonagency business will continue to take on a greater role over the next couple of years, as more and more of our call options become in the money, as deals pay down, delinquencies decrease, and advanced balances come down. If you take a look at this page, we feel this is a great way to get grounded, as how we make the money when we do a deal collapse. And simply, we buy bonds at a discount, that accrete to par when we call them. We call the collateral at par plus expenses. We then securitize, or sell the loans at a premium. The delinquent loans that we take back are retained on our balance sheet at fair market value, and that those get liquidated or modified over time. Since we have begun this strategy, we've been averaging approximately 2 to 3 points of P&L per deal. If you flip to the next page, we attempt to show our pipeline and how to think about this. Today, the notional amount of what UPB, of our call pipeline is approximately $200 billion-plus. We believe each and every one of these deals will get called at some point in the near future. As we look forward, we project the current balance to be approximately $100 billion at the time of call. If you think about this, 2 points times $100 billion is $2 billion, so the optionality that we have in this business is enormous. I am using this as an example to illustrate how we think about the power of our Company, and the earnings potential down the road.

As we look at 2015, and looking ahead, we've had a very transformative quarter and year so far. We continue to try and realize record core earnings, increasing our dividends, and simplifying our strategy. So far so good. We feel we are in an unique position with plenty of liquidity, there's no need to raise equity, a robust pipeline, and a robust pipeline of investments. We are really excited about the future, and delivering results for our shareholders. In the following pages, there's more information on our portfolios for your reference. I will now turn the call over, back to the operator for Q&A. Operator?

Operator, are you there?

Yes, sorry about that.

(Operator Instructions)

Doug Harter, Credit Suisse.

Thanks. I am hoping you could talk a little bit more about the pipelines for the call rights? The $100 billion would seem to be quite an acceleration from the pacing you've been going at in terms of call rights. And when should we expect to see that pace increase?

Doug, if you look at it, I think it's page 11 in the deck. We actually show when each one of these, or when we think the balances will be callable. Currently, today there's $31 billion of securities that are callable. The way that these securities will eventually be called, is when advanced balances come down, as a result of the delinquencies coming down. That could be one way. Two, is we acquire more non-agency securities at a discount. And as you look quarter over quarter, I think we increased our non-agency exposure by about 35%. And those are really the two ways that we're thinking about it.

I do think the mortgage market itself, at some point will undergo a transformation around the servicing side, as there's a lot of new initiatives to have -- as you look forward for example, we believe that there will be changes on the servicing side, working with bondholders and the large non-bank servicers to get to a place where mortgages will be serviced -- and there's a little bit more detail, on an as-collected basis, rather than where the servicers are obligated to advance principal and interest.

So I think it's going to take time. We currently have call notices in today, for another I believe 8 or 10 deals. For this month, we have more call notices into the trustee. So I do think it's going to be something that will be more -- you'll should see the results more in 2016, 2017, and 2018, than I think you'll see more so this year

Great. Thank you.

Paul Miller, FBR Capital Markets.

Hey guys, this is Jessica for Paul. How are you?

Hey, Jess.

One question regarding the non-agency MSRs that you guys are looking at. What kind of timing can we expect with that, and can you comment at all on the negotiations?

Yes, I think this would likely be in conjunction with us and Nationstar. We do believe something will happen, and we're hopeful that it happens this quarter. So we've had some very good productive conversations. I think it's -- and we've gone through the portfolios, we have NDAs signed and it's -- we're going through a different pricing discussions.

And then -- great, thanks, and one follow-up to that. What's your view of more PLS product coming down the line from banks and other holders?

I think if you take a step back, and you say the outstanding non-agency mortgage market is about $700 billion, we have MSRs on between $200 billion and $250 billion today. This other portfolio is $75 billion. There is probably one or two other reasonable transactions that we could expect at some point down the road. But I can't pinpoint those now. And so I think the runway is probably between one and three more large transactions, and then I think that's kind of it.

Okay, great. Thanks so much.

Bose George, KBW.

Good morning. I shall follow up with one more on the clean up calls. I am curious what the impact of rising rates would be, either in the callability or the economics of the transactions?

I think it's -- the way to think about it is twofold. It's a good question, in that as rates rise, your premium collateral theoretically will be lower in price. The counter to that is, as rates rise, you would expect that these deals continue to get cleaned up from a delinquency percentage, so we're retaining less delinquent loans that we have to mark to fair-market value. So I think while we -- premium collateral will likely go down in price, I think we still feel good that the delinquency profiles and advanced balances will come down. So effectively, your expenses are going to be less, when you call these deals. The other thing I want to point out is, that once we identify a population of loans or deals to get called, we effectively hedge out that interest rate risk in the marketplace.

Okay. That makes sense. Actually and then, just on that chart 11, the $31 billion that's callable today is -- actually, what percentage of that is in the money? So is that the reason that some of it's not going to be called is, you're waiting for it to be in the money?

Yes. I think it relates more to the servicer advance balances that are out, because that's really a cost. That gets paid off when you call those, and that's really, that plus the delinquency profile of those deals. We currently have call notices in on a little bit over $1 billion, that we're hopeful will come to fruition in this quarter.

Okay, great. And then, actually the $59 billion of UPB MSRs you mentioned. How much of that has already been funded, how much of that is on your balance sheet, and how much of that is still to come?

About -- of the $15 billion -- of the $58 billion or $59 billion, $28 billion are already funded, and the rest will be funded likely late third quarter, more likely in the fourth quarter.

Okay, thanks. And then, actually one more for me. In terms of the cash, excess cash you noted this quarter, how much was the excess cash average?

We raised equity in June, because we needed the cash to fund part of the Ocwen downgrade. I think -- I'll get -- the average Q2 balance was $328 million.

Okay, great. Thanks.

Jason Deleeuw, Piper Jaffray.

Thanks, and good morning. You guys did $0.45 in core EPS this quarter. It sounds like you had some one-time costs, and the run rate is more like $0.47, $0.48 going forward. And then you still have -- it sounds like the bulk of the $59 billion of MSRs to come onboard. I'm not sure how much of that actually helped in the second quarter. Can we expect that, that, that, that $59 billion of MSRs, is that going to be accretive to the dividend run rate when that fully boards, versus what we saw in the run rate for the second quarter?

We believe that Jason, that it will be accretive. Just to give you a sense, if you think about it, we funded HLSS in early April, on the April 6. Each day was worth approximately $500,000 in income to the Company. So if you took those six days, that would've been an extra $3 million. So one of the things that was a drag on earnings -- on core, is really the timing of these MSR settlements. While we continue to work closely with our relationships on the non-bank servicing side, we also continue to work with our friends in Washington to try to get this stuff ordered as soon as possible.

Great. And then, when we think about this potential $75 billion of UPB related to the MSRs, it sounds like you're working with Nationstar on this, hopefully third quarter it sounds like from timing, is that going to be accretive to the dividend? Since you've got $1 billion in capital, you won't need to raise any more equity, so it sounds like you have plenty of funding for it. But should we think about it, as we see these MSR deals such as this $75 billion, that we you can think about, hey, the dividend is going to step up from the run rate that we had been seeing?

While we can't promise a dividend increase, I think we want to be very clear to everybody, that we have no intention today of raising equity. We feel that our balance sheet affords us the ability to raise debt around our balance sheet, because we have no corporate debt really other than repo. We have a $200 million MSR note that we issued to help pay for the HLSS acquisition. But we feel today, that with our current assets on our balance sheet, the lack of debt, any or hopefully any investment or acquisition we do will likely be accretive to the Company.

Thanks. And then, the last question is on the Ocwen funding issues. And it sounds like Ocwen may be trying to resolve some of this themselves, without you guys putting in -- or trying to not -- resolve it in a way, where they do not have to make the payment to you guys? Can you update us on what exactly is going on there, and how you think this issue is going to be addressed following the downgrade on the servicer rating? Thank you.

Sure. So when we acquired HLSS, we entered into an agreement with Ocwen. In the agreement, it stipulated that should Ocwen get downgraded, it was our guesstimation at the time that the amount of money that New Residential would have to come out of pocket would be approximately $150 million for that servicer downgrade.

In negotiating, we set a return in equity similar to what we're currently earning in the market of approximately 20%, which would have correlated to a number of about $3 million. We agreed with Ocwen, that we would receive up to $3 million per month for 12 months, or no more than $36 million. We're currently in discussion with Ocwen on getting that issue resolved

But to be clear, there is a way for Ocwen to potentially address the issue, without actually making the payment to you guys, that, that is one of the options out there?

Not that we're aware of, or not that I'm aware of, and I have our counsel here now.

Okay. Thank you very much.

(Operator Instructions)

Michael Kaye, Citigroup.

Hey, good morning. I recall you were working on getting a Private Letter Ruling from the IRS to get these servicing advances to be considered a good REIT asset. Just wondering if there's any update where that stands?

I can't give you an update right now, Michael. Obviously, we do all we can to make sure every asset we have is a good REIT asset, but there's really, at this point, there's nothing I could tell you on this call right now.

Okay. How about the Blue Mountain allegations? I believe there is a standstill, I think it might have ended last month. Is there any update on where that stands in the process? Thanks.

Currently, just to give you a frame of reference, we have $72 million that's sitting in escrow. We believe, based on our discussions with counsel, that the Blue Mountain allegations are unsupported by the facts, and expect a very -- a favorable outcome in the short term. The standstill is currently still in place, and we continue to work on that. So it's something that we hope to get resolved shortly. It's not resolved, but we currently have escrowed $72 million. So the way to think about this is, once this gets resolved assuming that we are successful, we'll get our $72 million back, and that would just give us more cash to be able to used for investments.

Great. Thank you very much.

Matthew Howlett, UBS.

Hey, Mike. Thanks for taking my question. Mike, just addressing, getting back to that cost of capital, I know long term you'd like to see that go lower. And now with over half your earnings from HLSS, and you pointed out earlier that traded at a significantly lower cost of capital [than] independent. Can you just give us, maybe a scenario that where you would have to raise capital? I think the market, when they look at these -- the [extremely] managed structure, that sometimes feel like the managers are in control, and these vehicles are just capital raising entities for them. Can you just address that point? And give it -- you've got a lot of dry powder, but any scenario where you'd have to raise capital? And maybe could you just talk about how you look at accretion going forward, if you do have to raise money?

Sure. Just to be clear, and I stated this I think early on in the discussion. We have no intention of raising equity anytime soon. We do believe we have the ability to raise debt around our balance sheet, which would make effectively, almost any investment that we would consider accretive to our earnings. The only way I could -- I think we believe that we would raise equity or need to raise equity, if there were some outsized acquisition, or something that we couldn't fund off our existing liquidity, the way that we see it on our balance sheets.

So if you think about it, we have $200 million-plus of cash right now. We are going to have more cash in our balance sheet as the Company has grown pretty substantially over the course of the -- since it was spun out of Newcastle in 2013. You take that $200 million, we feel that we could access over $1 billion or up to $1 billion of liquidity off our own balance sheets, and again we have no corporate debt. So I think the likelihood of us coming to market to issue equity is very, very low. And I think again, any investment that we do will hopefully be accretive to our earnings. So to dispel that notion, we are not a serial equity issuer. We are here to do the best we can for our shareholders and grow our core earnings and grow our dividends.

And Mike that includes -- if the $75 billion PLS deal does go through, that the Company wouldn't need to raise external capital to fund it?

That's correct, Matt.

Great.

We have no intention of raising equity unless there is some outsized acquisition that we couldn't fund with our $1 billion and change of liquidity.

Got you. And then, just may be long term, Mike, could you just address how you see NRZ? I mean, you have a big UPB portfolio, it could take a long time running out. You said that there could be some bigger deals closing, but we know the private [liberal] market is sort of shrinking. But going forward, do you see NRZ becoming more into new issue MSR? Could it get its own licenses? Do you feel like you still could maintain IRRs down the road? Just long term, how you see NRZ shaping up with the state of the MSR market today, and where the non-banks currently sit?

Good question. I think first of all, we are -- and I've stated this and we stated this in prior quarters, we will get licensed at some point, hopefully here in the near future. And I want to say, getting licensed means we're not running an operation. It just gives us the ability to work, not only with Nationstar, not only with Ocwen, potentially with other non-bank servicers. And the reason that we feel it's important to us, is as Nationstar has grown their servicing portfolio, we just need to maintain a little bit more flexibility to the extent that we want to acquire a pool of mortgage servicing rights. And just have more flexibility to have them sub serviced potentially somewhere else.

So that would address the desire to get licensed. While saying that, Nationstar is still our primary partner. As we think about the Company going forward, we feel there's enough runway in a $400 billion-plus MSR book, $200 billion-plus of call options, and then our servicer advanced portfolio, as those balances come down I think we'll always try to figure out a way to grow another part of our core business. There are some interesting things that we continue to look at today, and I do believe they're in a great place with our liquidity profile, and with some of the uncertainty in the market to continue to grow our Company for the benefit of shareholders.

Okay, we look forward to that. Thanks, Mike.

Thanks, Matt.

Jason Deleeuw, Piper Jaffray.

Hey, thanks for taking the follow-up. A question on the CPRs, on the MSRs, because you guys have a lot of credit impaired MSRs, and part of the story here, is the involuntary delinquency related CPR rate should decline over time, given how mortgage credit is trending. Can you give us a sense from where your CPRs are right now in the MSRs, and what is the voluntary, involuntary breakout between those two?

On our CPRs, just to give you a sense, our three-month gross CPR for our entire portfolio was16.7% versus a 12 month average of 14.8%. Our three-month net CPR as a result of our recapture was 14.3%, versus a 12 month average at 12.5%. And our three-month recapture was in line with the 12 month average of approximately 22%.

On the voluntary prepayments, it looks like our voluntary prepayments were approximately 8.7% CPR on a three-month basis versus 7.6% projected. So overall, we think our MSR portfolio is performing in line. As I pointed out, just to give you guys a frame of reference, the 10 year note at the end of March was 1.92%, at the end of June was 2.35%, Today it sits roughly at 2.20% Mortgage rates at the end of March were 3.69%, and today they sit roughly at 4%. So we think we've seen some of the recent lows in mortgage rates. And obviously, we don't really -- and if the Fed raises rates, we think the 10 year note could gravitate to higher yields, which would lead to slower prepayments.

Great. Thank you for that. And in the last question is, on the dividend and how you guys think about setting it? You did $0.45 core EPS this quarter, your dividend is also $0.45. Can we expect that your core EPS almost would be 100% paid out, or would there be some discount? Help us think, from a modeling perspective there? Thank you.

We will typically try to pay out from 90% and 100% of our core earnings, is the way to think about. This quarter obviously, there was a little bit of noise, as it relates to the acquisition. On a run rate, we should have been, give or take $0.47 to $0.48 in core. And as we look forward, again, we hope to grow core and raise our dividend, but obviously I can't promise that.

Thanks, Michael.

Thanks.

Okay. And at this time, I would like to turn the call back over to Michael Nierenberg.

Well, thanks for everybody for dialing in. We really appreciate your support. We're extremely excited about where we are as a Company, and I think what the future brings. So I look forward to updating you on the next earnings call. Have a great day. Thanks.

This concludes today's conference call. You may now disconnect.