Altisource Asset Management Corp Com

Good day and welcome to the AAMC Investor Call. Today's call is being recorded. At this time, I would like to turn the conference over to Mr. Kevin Sullivan. Please go ahead, sir.

Good morning, everyone, and welcome to our August Investor Call. I'm Kevin Sullivan, General Counsel of AAMC. Today, we'll discuss the material referenced in our Investor Presentation. which was issued earlier this morning and can be found on the investor relations page of our website at www.opplisourceamc.com. Note, information on forward-looking statements appears on the investor presentation, and we direct your attention to that information. This audio cast is copyrighted material of AAMC and may not be duplicated, reproduced, or rebroadcast without our consent. I'm joined today by our new Chief Executive Officer, Jason Kopchak, and our Chief Financial Officer, Stephen Kralman, who will be answering questions at the end of the prepared material. Now I'll hand this over to Jason, who will update you on the company's strategic plan.

Thank you, Kevin. I would also like to welcome everyone to our call. I'm excited to speak to you this morning and to be leading AAMC in this new direction. For today's call, I will start by describing the business we are building and the areas of focus in the near term. I will then discuss some recent developments. For those of you I haven't met or spoken with previously, I've been in the mortgage industry for more than 25 years. Most recently with Mortgage Stanley as, among other roles, a senior executive on the residential mortgage team who sat across trading, warehousing, securitization, and investment banking. I joined AAMC in May because I believe it provided a compelling opportunity based on the company's strong balance sheet, the expertise of its existing employees, and the opportunities in the alternative lending space not serviced by banks. Our immediate plan is to provide and source private credit for real estate in the non-bank space for fixed income accounts pursuing alternative assets. Initially, we were focused on the bridge and rehab loan space for single and multifamily homes and ground construction due to banks' inability to efficiently support the space. Despite the material rise in interest rate environment, which has caused a normalization in home sales, there's still an estimated 4 to 5 million shortage of housing units in the United States. We have a plan to help provide credit to build affordable housing, and we expect to be executing on it shortly. As we continue to grow and develop our origination platform, we plan to expand into other areas within private credit, both secured and unsecured. We are leveraging off the talent of our existing team. For example, our team in India has underwritten and led the acquisition of over 14,000 single-family rentals and over $4.1 billion in non-performing mortgages and REO. The team has actually managed over 30,000 single-family rentals, non-performing mortgages, and REOs. They have a deep experience in managing well over 2.5 billion warehouse lines and securitizations. Our management team has over 100 years' experience in real estate and on the street. Let me now turn to what we have accomplished so far. We've entered into a $50 million warehouse line with Flagstar. We're excited to partner with Flagstar as they are very experienced in the housing and hold-on space. and are providing a new source of capital to finance our growth. As of August 8th, we have received more than $40 million of funding from Flagstar. We have opened a new office in Tampa as headquarters for our sales staff, led by our new head of sales, Brendan Thiele. Brendan brings over 20 years of experience in the institutional whole loan and housing space, and has begun to build out our origination team both in Tampa and remotely. As part of our build-out, we have initially hired six specialists in the private credit space, and the expectation is to further grow the team. Due to the demand we are experiencing, over the last two months, we have grown our India operations by 47% and are expecting to increase headcount there and in St. Croix by another 50%. These hires consist of additional analysts, underwriters, and other supporting staff. Let me now briefly walk through our current portfolio. As of August 8th, we have purchased $105 million of loan commitments, This is an increase from approximately 53 million at the end of the second quarter. The weighted average yield across our portfolio is 7.9%, an increase from 6.7% as of the end of the second quarter. That summarizes where we are today. This is just the first phase in our growth. We plan on driving growth through originating and sourcing private credit products via direct to real estate developers and investors, wholesale originations, and correspondent lending, with originations being our primary focus. Originations allow us to better control the creation of assets to buyers of alternative assets, and we will be more accretive to our shareholders than purchasing loans. We do not plan on being an aggregator. We are not aware of comparable public companies that are exclusively platforms similar to those we are building, but more relevant comparisons are the origination platforms that have recently been acquired by sophisticated institutional fixed income investors. For example, KKR bought TORAC, premium bought anchor loans, NRZ bought Genesis, now known as Rhythm. MFA bought Lima One. These are significant investments by well-respected investors who see this as an area of growth for alternative investment strategy. Utilizing data, technology, and analytics would be critical to our success. We're developing a data-driven proprietary system, which will dramatically allow us to increase our reach to existing and new clients. We are also creating an enterprise data management system to help us utilize information for purposes of understanding our markets, clients' needs, and the overall customer experience. Our management team has a long history of money managers, insurance companies, debt and credit funds, banks, and other institutional investors. We believe our key strength will not only be to originate and source private credit, but also the ability to distribute various credit products into the deep demand for alternative assets among large fixed income accounts. As we optimize our platform through the leveraging of technology combined with the feedback from our fixed income investors and the market, we will be able to adjust our origination to fill that gap accordingly. Unlike some of our competitors, we are independent and not constrained by one set of yield and credit requirements. We do not want to limit ourselves to the securitization market as our only takeout partner, but rather we are focused on partnering with balance sheet accounts due to their stable source of funding. Finally, I want to update you on a couple of recent developments. Last month, we announced that we had purchased Putnam shares in our company. While we are not actively looking to buy back common stock, the purchase of Putnam's stake is consistent with our strategy of being opportunistic in the use of the firm's capital. The NYSE announced in late May that AAMC was not in compliance with the NYSE's listing standards. We submitted our plan to regain compliance to the NYSE at the end of June. We are confident in our plan. We expect to hear soon whether or not the NYSE has accepted our plan. Lastly, we continue to actively monitor the recent developments in the crypto markets. Our interest has always been in helping clients transact between cryptocurrencies and fiat currencies and not taking balance sheet positions in crypto assets. We still plan to move forward in the crypto ATM space. That concludes the prepared material for today.