Financial Data and Key Metrics Changes - Total transaction volume increased by 34% year over year to $15.5 billion, driven by strong demand and increased supply of debt capital [4][5] - Revenues for Q3 reached $338 million, up 16% year over year, with diluted earnings per share at $0.98, a 15% increase [4] - Adjusted EBITDA grew 4% to $82 million, while adjusted core EPS increased 3% to $1.22 [4] Business Line Data and Key Metrics Changes - Capital markets segment revenues grew 26% year over year, with loan origination fees up 32% and property sales broker fees up 37% [13][15] - GSE lending volumes increased by 64% in Q3, with Freddie Mac lending up 137% to $3.7 billion and Fannie Mae volumes up 7% to $2.1 billion [5][13] - HUD lending volumes rose 20% to $325 million, despite challenges from the government shutdown [7] Market Data and Key Metrics Changes - Investment sales volume increased by 30% to $4.7 billion, outperforming the overall market growth of 17% [7][8] - The servicing portfolio remains strong at $139 billion, generating steady cash servicing fees that grew 4% [16] - The at-risk servicing portfolio performed exceptionally well, with only 10 defaulted loans totaling just 21 basis points [17] Company Strategy and Development Direction - The company is focused on expanding its debt brokerage business and has split it into two units to target different market segments [24] - There is a strong emphasis on technology and data integration to enhance client services and differentiate from competitors [25][26] - The company aims to capitalize on the upcoming refinancing opportunities as shorter-duration loans mature over the next few years [21][58] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the commercial real estate market, citing strong transaction volumes and a favorable macroeconomic environment [19][20] - The company anticipates a gradual increase in capital markets activity, supported by a robust forward pipeline [4][19] - Management highlighted the importance of recycling capital as a key driver for transaction activity in 2025 [48][50] Other Important Information - The company ended the quarter with $275 million in cash, reflecting strong recurring revenues and capital markets activity [19] - A quarterly dividend of $0.67 per share was approved, payable to shareholders of record as of November 21 [19] Q&A Session Summary Question: Context on loan repurchase requests and credit performance - Management clarified that the recent loan repurchase requests are isolated incidents and emphasized the overall strong credit performance of the portfolio [32][34] Question: Trends in Fannie Mae volumes - Management noted that Fannie Mae and Freddie Mac volumes fluctuate, and both agencies are expected to hit their caps in 2025, which could lead to increased volumes [41][42] Question: Potential for a refinancing wave - Management indicated that the need to recycle capital is driving transaction activity, and they expect robust refinancing activity as shorter-duration loans mature [45][58] Question: New client acquisition data - Approximately 16% of transactions in Q3 were with new clients, while over 60% were new loans to existing clients [59][61] Question: Share performance concerns - Management acknowledged the disconnect between share performance and market conditions, emphasizing the focus on executing the business strategy and capitalizing on growth opportunities [64][67]

Financial Data and Key Metrics Changes - The company reported a GAAP net loss attributable to common stockholders of $17 million or negative $0.35 per basic common share, which includes a provision for credit losses of $11 million or negative $0.23 per basic common share [19] - Distributable loss for the quarter was $45.3 million or negative $0.94 per basic common share, including write-offs of $36.1 million or negative $0.75 per basic common share [19] - Book value at June 30 was $7.99 per common share, a decline of about $0.25 from Q1, primarily due to the GAAP net loss [20] Business Line Data and Key Metrics Changes - The total loan commitments at the end of the second quarter were $1.9 billion, with an outstanding principal balance of $1.8 billion and about $78 million in future fundings [12] - The loan portfolio yield for the second quarter was 7.1%, which would be 8.2% excluding nonaccrual loans, showing an improvement from the prior quarter's yield of 6.8% [12][13] - The weighted average risk rating of the portfolio improved slightly to 2.8 due to ongoing loan resolutions and no negative credit migration during the quarter [12] Market Data and Key Metrics Changes - The commercial real estate market saw continued improvement in sentiment and liquidity, with increased refinancing activity and sales transaction volume [7][8] - The transitional floating rate lending market has strengthened across most property types, indicating a recovery in the lending market [8] Company Strategy and Development Direction - The company plans to focus on loan and REO resolutions while maintaining higher levels of liquidity, expecting to return to core lending and restart origination efforts by the end of the year [17] - The company aims to regrow its portfolio in 2026, with expected originations between $750 million and $1 billion [38] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the recovery in the commercial real estate market, noting that while there are challenges, there is also a slow but steady improvement in office leasing [41][43] - The company anticipates that run rate profitability will improve as it continues to resolve non-earning assets and repay high-cost debt [22] Other Important Information - The company successfully resolved two nonaccrual loans totaling about $132 million in UPB during the second quarter [13] - The aggregate CECL reserve at June 30 was about $155 million, down from $180 million in the previous quarter [20] Q&A Session Summary Question: Outlook on the resolution of remaining assets in the four-rated bucket - Management indicated that they are actively monitoring and working with sponsors on the four-rated loans, but timing for resolution is hard to predict [28] Question: Reason for the general reserve increase - The general reserve increased by approximately $11 million due to an update in the economic forecast used in the CECL model, which was less favorable than the previous quarter [30][31] Question: Outlook for originations and timing - Management expects to restart origination efforts by the end of the year or early next year, with a focus on attractive investment opportunities [36][38] Question: Trends in the office portfolio - Management noted slow but steady improvement in office leasing across many markets, with capital slowly returning to the sector [41][43] Question: Rebuilding the lending pipeline - The company is in touch with borrowers and brokers and expects to begin quoting later this year, with a short process to get the lending engine back up and running [46] Question: Distributable EPS expectations - It is expected that distributable EPS will be below the dividend until the company starts rebuilding its loan book [48]