Broadmark Realty Capital Inc.

Greetings and welcome to the Broadmark Realty Capital's first quarter 2022 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Thank you, Nevin. You may now begin.

Good afternoon. Thank you for joining us today for Broadmark Realty Capital's first quarter 2022 earnings conference call. In addition to the press release issued this afternoon, we filed a supplemental package with additional detail on our results, which is available in the investor section on our website at www.broadmark.com. As a reminder, Remarks made on today's conference call may include forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those discussed today. We do not undertake any obligation to update our forward-looking statements in light of new information or future events. For a more detailed discussion of the factors that may affect the company's results, please refer to our earnings release for this quarter and to our most recent SEC filings. During this call, we will also be discussing certain non-GAAP financial measures. More information about these non-GAAP financial measures and reconciliations to the most directly comparable GAAP financial measures are contained in our earnings release and SEC filing. This afternoon's conference call is hosted by Broadmark's Chief Executive Officer, Brian Ward, and Chief Financial Officer, David Schneider. Management will make some prepared comments, after which we will open up the call to your questions. Now, I'll turn the call over to Brian.

Thank you, Nevin, and welcome to our first quarter 2022 earnings call. This afternoon, I'll begin with some remarks on the macro environment and how I believe broad markets position for success. I'll also briefly highlight our first quarter 2022 performance and then turn the call over to David to provide additional detail on our financial results, investment activity, and portfolio. We'll then open up the call for your questions. I joined Braunbark as the Chief Executive Officer on March 1st, 2022, completing a leadership transition that began last year. As I've yet to meet many of you, I want to begin with a little background on my experience. I've spent the majority of my career originating and overseeing institutional debt and equity investments across a wide range of commercial real estate assets, most recently as Chief Executive Officer of Trimont Real Estate Advisors, a credit management and servicing company with more than $165 billion of their clients' assets under management. I joined Broadmark because I see tremendous opportunities with this platform. Personally, in addition to my work, I'm passionate about education, professional development, and the science of organizational excellence. And I deepen those interests by serving on alumni boards at Harvard Business School, Harvard University, and the NYU Stern Real Estate Board of Advisors. My hands-on understanding and experience of complex credit, underwriting, asset management, and requirements for successfully executing and realizing strong returns on commercial real estate investments, has allowed me to dig in quickly to plan and expand on Broadmark's growth opportunities. Fortunately, we have a fantastic foundation on which to build, a credit to my predecessor in this role, Jeff Pyatt, his founding partner, Joe Schocken, and our deep, experienced, and diverse board of directors. Under their leadership, Broadmark grew into a force in the small-to-medium-balanced commercial real estate finance sector. This business has grown considerably over the last decade and is now set for the company's next phase of growth. As we navigate current macroeconomic trends and look towards the future, I believe Broadmark holds a strong position to expand our geographic footprint to a national scale, grow our market share, and drive consistent and strong returns for our shareholders. Importantly, Broadmark is unique among its peers, being internally managed and notably possessing a low leverage Fortress balance sheet to support our disciplined, targeted investment strategy focused in the $2 to $50 million origination range across both residential and commercial real estate investment opportunities in all major asset classes. Throughout our industry, many real estate capital providers are taking on greater leverage and pursuing more aggressive investment strategies, even as inflationary pressures accelerate and central banks around the world become more defensive. Global uncertainty is elevated, the yield curve is flattened, and mortgage rates are at a 10-year high. Setting this apart, Broadmark is positioned to thrive as markets evolve and opportunities appear. We have a deep and experienced team of ground-level real estate investment experts that understand and can underwrite complex credit in rapidly changing capital markets. We have a low-leverage balance sheet with fixed-rate debt that not only shields us from the impact of higher interest costs, but also makes our pricing more competitive when compared with the other index-based lenders who must raise their prices in response to rapidly escalating rates and market uncertainties. And our loans are generally short-term in nature, allowing us to quickly revise our target yields and credit standards, as well as reprice our book with relative speed. In fact, we believe we can succeed and thrive in any environment or any phase of the cycle, as we've proven over the last 11 years. Broadmark has a long history of successfully deploying capital into complex real estate investment opportunities. Our prudent approach to underwriting grew out of the foundation immediately following the global financial crisis. We grew when rates were relatively elevated and when they were historically low. We grew when credit was widely available and when it was not. We grew when there was little competition and when there were many competitors. Through it all, we became the trusted lender of choice in our market sector. We'll continue to evolve our credit standards and investment strategies as we move ahead. Turning to our first quarter performance, we achieved about $190 million in new originations and amendments for the quarter, at an average unleveraged yield of 10.4%. We continue to prudently expand our geographic footprint, and we are now active in 20 states, providing strong access to loan opportunities that result in a highly diversified portfolio. and we will look to add more states as we grow our national platform. As a result, we grew our portfolio to $1.6 billion of loans, secured by high-quality real estate, with a weighted average loan-to-value ratio at origination of approximately 59.2%. This growth was achieved even as we remain highly selective with our investments as global macroeconomic risks escalate. We will remain disciplined and thoughtful in our origination approach to ensure we maintain a high quality loan book, which we believe can withstand rapidly evolving conditions. In that regard, I should note that we are making some tactical changes to both our pre and post investment underwriting and asset management processes as we move forward. We have implemented a national underwriting team that, while geographically diversified, will focus greater attention on uniform underwriting standards for complex real estate credit and provide better opportunity to scale our financial analysis in relation to our growing originations efforts. Underwriting, while supporting our originations efforts, will sit outside of the production team, and our national head of underwriting will report directly to me. We don't anticipate material increases in headcount or costs to achieve this objective, as we'll primarily reallocate and develop existing resources. We've implemented greater rigor and focus around both our pre- and post-funding asset management capabilities, which will now operate as the primary credit function for our business. This team will take a more active approach to independent, pre-funding credit review, with the entire asset management team supporting the credit checks and balances objective. Post-funding, the asset management team will take a more robust approach to borrower and business plan oversight. And in the event a Broadmark loan does go off plan, and enhanced non-performing loan team to either get the loan back on plan or more proactively through our workout and REO process. We do anticipate increases in headcount in both our pre and post funding asset management roles with a smaller reallocation of existing resources when compared to our underwriting team. In connection with these tactical actions and in order to prioritize our investments in the human capital necessary to implement these changes, we have eliminated the position of Chief Operating Officer as of April 29, 2022. I would now like to address our commitment to ESG, including my personal commitment to the principles of corporate and individual responsibility. Our ESG practices start first with an absolute, unwavering commitment to diversity, equity, and inclusion. Like most companies, we have work to do here, but we're committed to measurable progress as an integral part of our culture. To that end, I'm delighted to welcome Pinky Mayfield to our board of directors. Pinky brings a wealth of experience in public relations, corporate affairs, and communications. She's a seasoned finance and banking executive with experience in multiple sectors, which adds an important diverse perspective to our board. Furthermore, Broadmark is committed to supporting all stakeholders, including our employees and communities, and strong corporate governance has always been a core principle for Broadmark. This will not change. Finally, I'd like to leave you by once again conveying the excitement I feel to join Broadmark. I'm thrilled with the opportunity we have ahead. Our employees have warmly welcomed me to the team, and I'm grateful for their continued hard work and commitment to excellence as we move forward. With that, I'll turn it over to David to review the financials.