Ready Capital Corporation

Greetings and welcome to Ready Capital Corporation fourth quarter 2021 earnings conference call. At this time, all participants are in listen-only mode. A 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 keypad. As a reminder, this conference is being recorded. And I'd like to turn the conference over to your host, Andrew Alburn. Chief Financial Officer, please go ahead.

Thank you, Operator, and good morning, and thanks to those of you on the call for joining us this morning. Some of our comments today will be forward-looking statements within the meaning of the federal securities laws. Such statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expect. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable gap measure is available in our fourth quarter 2021 earnings release and our supplemental information, which can be found in the investors section of the Ready Capital website. I will now turn it over to Chief Executive Officer Tom Capaci.

Thanks, Andrew. Good morning, everyone, and thanks for joining the call today. The fourth quarter's results cap another banner year for Ready Capital in earnings, originations, and growth. We continue to build one of the most diversified CRE multi-strategy credit origination and securitization platforms in the industry through continued expansion in product offerings and as a leader in the CRE space and strategic acquisitions. Our lending platform is supported by a rock-solid balance sheet, which has improved both from a cost of financing and liquidity standpoint. Now in the fourth quarter, we originated a record $2.2 billion of small balance commercial or SBC loans, which was not only a quarterly record, but also exceeded total annual production in both 2020 and 2019. For the year, total SBC loan originations and acquisitions were $4.9 billion, representing 2.5x growth over 2020. In our small business lending business, fourth quarter originations of SBA 7A loans equaled $136 million, capping a record $481 million in total 2021 production, more than double 2020. Combined with our residential merchant cash advance, real estate equity, and multifamily affordable housing channels, total 2021 transaction volume reached a remarkable $10.2 billion. I would like to highlight some of the factors which contributed to our growth. First is our differentiated product offering, which provides sponsors with financing across the full life cycle of an SBC property, from construction to stabilization. This model allows us to pivot as markets move. It also allows us to capture a larger portion of the economics as properties move to stabilization and develop broader relationships with our sponsors and brokers. For the quarter, in our lead product transitional lending, we originated $1.5 billion, comprising 91% multifamily priced to a 12% retained yield and with an average as is LTV of 76%. This was supplemented with 98 million of fixed rate and CMBS loans and 29 million in acquisitions. A prime focus of 2022 will be growing our fixed rate and CMBS programs. Second is the ownership of government-sponsored lending businesses which provide recession-proof gain-on-sale income have barriers to entry, and high ROEs. We closed the year as the sixth largest SBA lender and will continue to gain market share with a rollout of new programs, including SBA Express Small Loan, for which we originated $5 million in the quarter, and USDA, for which we obtained a license. In our Freddie Mac business, we closed $169 million in the quarter and climbed to the fifth largest SBA lender. Our Redstone Freddie Mac affordable housing tax exempt lender originated $444 million in the quarter, significantly outpacing the volume we underwrote when we acquired the business in the second quarter. Third is disciplined growth of our equity capital base. In 2021, our equity capital increased 54% to $1.3 billion, comprising $240 million in M&A and $167 million in common and preferred equity issuance. Compared to the traditional Emory equity growth strategies of secondary issuance, we continue to support growth in our SBC market share through a creative M&A, including the fourth quarter signing of the $550 million merger with Mosaic Real Estate Credit. Fourth is human capital. In 2021, we added 83 full-time employees with a focus on front-end sales, production, and credit, including a national sales manager and head of strategic partnerships. These senior hires cement our strategy of realigning the business with a focus on front-end production and efficient credit processes to improve loan pull-through and processing rates. Finally, our securitization franchise is evident in tight credit spreads versus the bellwether names in the CMBS market. Since inception, we have issued nearly 9 billion of transactions across 31 issues, including a record 2.4 billion in 2021. In the fourth quarter, we closed our largest CLO to date, ranking as the fifth largest CLO issuer in 2021. As an established issuer, we have access to match-funded non-recourse financing, helping drive our dividend yield premium to our CREIT peer group. Our 2022 budgeted issuance exceeds 2021, kicking off with our eighth CRE CLO, a $1.2 billion offering in the upcoming weeks. A hallmark of Ready Capital has been a culture of credit discipline, and our market share gains have been achieved by process and data-driven improvements in product and sector focus without aggressive credit underwriting. This credit discipline is evident in a 60-day-plus delinquency rate in our SBC and SBA portfolios of only 1.2%. Further, high-risk assets rated 4 or 5 on our 1 to 5 risk rating scale declined 22 basis points to 5.4% of our SBC portfolio and remain consistent at 7.5% of our SBA portfolio. Now Ready Capital is uniquely positioned regarding the impact of rising rates and widening credit spreads on Emory dividend yields and book value. First, 78% of our portfolio was floating rate at year end. Additionally, 70% of the CRE floating rate portfolio comprises 2021 vintage with LIBOR floors averaging 19 basis points. So while we benefited from a weighted average floor of 215 at the beginning of the pandemic, as rates moved lower, the current average of 50 basis points will place pressure on short-term margins, but positions us well with more substantial movements, upward movements in rates. Second is our asset liability structure. At year end, only 5% of our debt comprised Q-SIPS pledged under short-term repo. Additionally, at year-end, 58% of the portfolio is matched funded through securitization, with only 30% of our current warehouse inventory comprising fixed-rate loans, which are fully hedged. Lastly, we made significant headway last year in securing fixed-rate corporate borrowings, adding $575 million of additional secured debt, unsecured debt, and preferred equity. In total, as proven in the COVID recession, Brady Capital's business model is highly resilient to rising macro risks from tightening monetary policy. Higher capital costs from spread widening on senior securitized debt tranches would likely be offset by earnings accretion from rising rates and widening asset yields in a less competitive SBC sector. I also want to provide a quick update on the Mosaic transaction. As we highlighted in our last call, the merger with Mosaic furthers Ready Capital's competitive advantage via a seamless expansion in our product mix from heavy transitional bridge to construction lending and is accretive to earnings. Pending shareholder approval, we expect the transaction to close in the third week in March. Finally, in terms of outlook, we're off to a strong start in 2022. Through the third week of February, we have originated $663 million of SBC loans and $33 million of SBA loans, and have a current money-up pipeline of $1.3 billion across all products. We expect near-term earnings to be elevated as the tailwinds from PPP are recognized over the next two quarters before a reversion to our 10% to 11% target ROE via the continued growth in our loan and servicing portfolio, as well as expansion of our gain-on-sale businesses. So with that, I'll turn it over to Andrew.

Thanks, Tom. Quarterly gap earnings and distributable earnings per share were 69 cents and 67 cents, respectively. Distributable earnings of 52.5 million equates to a 17.8% return on average stockholders' equity. 2021 full gap earnings and distributable earnings per share were $2.17 and $2.29, respectively, covering our dividend of $1.66 and equating to a 15.4% return on average stockholders' equity. Distributable earnings related to net income from PPP was 15.5 million or 21 cents per share for the quarter. The quarterly earnings profile absent the effects of PPP is reflective of the growth in our balance sheet, the continued contribution from our gain on sale businesses and the normalization of residential mortgage banking revenue. Net interest income increased to $39.4 million due to loan fundings of $1.2 billion outpacing loan payoffs of $339 million. As of quarter end, the $7.1 billion held for investment portfolio had a weighted average coupon of 4.8% and average margins of 275 basis points. The stability of our revenue was further bolstered by servicing revenue of $10.1 million. In the quarter, 68% of non-PPP revenue was produced by the stabilized investments on the balance sheet. Realized gains decreased 15% due to a $4.3 million quarter over quarter reduction in income generated from the sale of certain mortgage-backed securities positions. Total gain on sale revenue from our SBA, Friday Mac SBL, and Redstone operations remained consistent at $19.2 million. Gains from the sale of SBA 7A loans declined $3.4 million, primarily due to an 11% reduction in loan sale activity, as well as the decision to sell 20% of the activity for a higher future I.O. strip. Gains on Freddie Mac sales remained consistent at 1.5 million, and increased activity at Redstone resulted in 5.9 million of additional sale income. As expected, net revenue from residential mortgage banking activity declined 37% to 8.1 million due to both lower quarter-over-quarter production and margins, which declined to 75 basis points in the quarter. Unrealized appreciation of the MSR which we do not include in distributable earnings, totaled $6.1 million, and we anticipate it will continue to be a source of book value appreciation in the upcoming quarters. Operating expenses were $9.8 million lower quarter-by-quarter, primarily due to a reduction in variable compensation in our mortgage banking segment and a quarter-by-quarter reduction in professional fees. As I stated previously, net income related to PPP totaled $15.5 million in the quarter after considering the effects of tax and fees payable to the external manager. This income, which continues to add to our outperformance, is likely to remain a significant contributor to earnings over the next few quarters. As of year end, we had $60.7 million of deferred revenue remaining to be accreted into earnings and $12.8 million of reserves against those fees. As of last week, 31.4% of the original portfolio remained. On the liquidity front, we took several measures in the quarter to fund the increasing opportunity set. This included raising $490 million of incremental corporate capital, including $350 million of 4.5% senior secured five-year notes, $110 million of 5.5% senior unsecured seven-year notes, and 30 million in equity VRATM. As of December 31st, total leverage absent the PPP LLF facility was 5.2 times and recourse leverage was 2.7 times. The recourse leverage, which is higher than historical norms, is primarily driven by both the high lending volumes in the quarter and our securitization cycle. Recourse leverage ratios are expected to revert to our historical norm of two times due to the upcoming CRE-CLO, the additional equity from our secondary offering in January, and the closing of the MOSAIC merger. With that, we will open the line for questions.

Thank you very much. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. Confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. We have a first question from the line of Crispin Love with Piper Sandler. Please go ahead.

Thanks, and good morning, Tom and Andrew. So Bridge Multifamily Financing and Originations definitely crushed it in 2021 driven by your results for the full year and then just also with the $1.5 billion we saw in the fourth quarter. So can you speak to some of the key drivers of the demand that you've been seeing in the Bridge space and then What kind of expectations do you have to be able to keep up that activity in 2022? Or would you expect any type of slowdown here, given the recent elevated levels? And it might not be as strong as the 1.5, but just what kind of expectations going forward in the bridge space?

Yeah, I'll make a broad market observation. And then, Adam, maybe you can comment on some of the specifics in terms of tactically how we're focusing on multifamily. But Generally speaking, if you look at multifamily broadly, a lot of the growth post-pandemic has been in suburban or locations not necessarily in CBD. So we've capitalized on that largely because we focus on obviously smaller price points. And the second factor is linkage with our Freddie Mac SBL license, where we, again, obtained a fifth largest lender status in 2021. So those are two of the broader overlays. But Adam, maybe you can comment more specifically in terms of the growth in that sector and what you see going forward.

Yeah, sure.

I think certainly there's a housing crisis in the United States. specifically on the affordable side. Our relationships in the market with some of the top multifamily investors nationwide, there's certainly a lot of activity given the strength of that sector and really propelling acquisition financing demand. Given the fact that You know, there's really a void for, you know, high quality, affordable, multi-family units. You know, our bridge platform steps in and really provides, you know, the capital expenditures necessary to help rehab some of these properties. You know, provide, you know, nice homes for, you know, folks, you know, more on the lower income side across the country. You know, our specific focus in growing homes this bridge business, you know, we're certainly pursuing lighter transitional stories, you know, where the assets are close to stabilization and require, you know, fairly minimal capex. But, you know, given the strength this year, you know, I think also what's propelled it is, you know, our certainty of execution that we deliver in the marketplace, you know, whether it's our direct clients, repeat clients, you know, mortgage banker relationships across the country, Ready Capital is really known as a firm that delivers specifically in this space, we've, we've really become experts in, in, in the multifamily sector. Um, so I think, you know, generally speaking, you know, I think our originations in 2022 should, you know, specifically in a multifamily side should, you know, fairly close, um, resemblance to, to the production we did, uh, in 2020.

And the only thing I'd add to that is, is there, there will be a bit of a bit of a handoff to, uh, additional CRE sectors, for example, industrial, as well as ultimately hospitality and retail. Again, not malls, but kind of the strip malls and smaller properties that we focus on.

Great. Thank you. Just one follow-up on that, Adam. I just want to make sure I heard you correctly. Did you say that originations in the bridge space in 2022 should be similar to 2020 or similar to 2021? Oh, I'm sorry. Yes, similar to 2021. Okay, perfect. Okay, that makes sense. Thank you. And then just one second question for me on ROEs. And, Tom, you've hit on this a little bit and you've prepared remarks. So this is second quarter of seeing ROEs in the mid-teens range. And it seems like with PPP and some of the growth that you're seeing in the loan originations that the next quarter or two you might expect similar levels in that mid-teens range or – or just asking a different way, when do you expect ROE to kind of drift back to the 10% plus range that you've talked about in the past?

I would say the late third, fourth quarter of 2021. Sorry, of this year, of 2022. I don't know, Andrew, if you want to comment on that.

Yeah, you know, Chris, when we still have Interruptly $60 million of revenue from PPP to flow through the earnings. Our expectation is that the majority of that flows through in the first and second quarters with probably some limited carryover into the third. So I think Tom is right in that the reversion is towards the back half of the year.

Great. Thank you. Thank you for the question. Thank you for the questions and answers. Thanks, Richman.

Thank you. We have next question from the line of Steve Dallany with JMP Securities. Please go ahead.

Good morning, Tom and Andrew. Congratulations on a really great year. Just curious, because of the strong close to the year in terms of distributable income, do you anticipate that you'll be carrying any undistributed retaxable income forward into 2022? So, Steve, good morning.

Good morning. Based on the fact that the PPP income was earned at our TRS entities and we limited distributions from that TRS up to the REIT, you know, for income test purposes, I do expect there's going to be a carryover.

Okay, thank you. And thanks, slide six is very helpful, especially the way it lays out your PPP, and I appreciate your comments about the dollar amounts that are left. You say that the PPP revenue is net of direct expenses. Does that also mean taxes, or is there a component of the 2% to 3% tax impact on ROE? Does some of that reflect taxes on the PPP revenues?

So the tax impact is included in the provision for income tax line item when we described the income or totality of PPP income in the prepared remarks, that was net of tax.

Got it. So when we look at that, obviously we're seeing numbers ranges by quarter, but let's just say it's 6% on that PPP revenue line. The true impact on your 16, 17% ROE would probably be a touch less than that because of the tax, the taxes that would be coming off of that. I'm trying to get it like PPP is gone, you know, Okay, that's what I needed to try to clarify.

There is one other thing in there. The other line item that's impacted by that is the investment advisory fees, which are also shown gross in that slide. If you look at the EPS impact, it was roughly 22 cents for the quarter.

Got it. Okay, thanks. And Tom, you mentioned fixed rate, multifamily. Just curious, as you move forward with that, do you plan to, on that product, create your own sort of private label shelf where you'd be issuing your own, or would you be operating in more of a conduit fashion with other established CMBS issuers?

We would probably, at this point, act on our own, given our current pipeline. However, we're not, you know, averse to contributing, participating with other companies. you know, other CMBS issuers. I mean, obviously our loans are smaller. Yes. And so we have more of a specific identity. We have our own capital markets brand, if you will, because of the, you know, we have four shelves outstanding currently, including the CMBS. But, you know, we're open to just in terms of optimizing inventory turn and execution, we would consider participating with another shelf.

Well, obviously there's – go ahead, Adam.

Hey, hey, Steve, it's Adam. Yeah. I mean, just to clarify as well, I mean, you know, on our, on our, on the fixed rate product. So we have a shelf, um, that we started in, uh, 20, 2014. Um, and, um, you know, we've done six, six securitizations on the fixed rate shelf to date. Uh, and we expect, we expect to be in the market, um, Q1, Q2 of this year with another deal, and the majority of those assets will be originated by Ready Capital.

Well, at some point, all the multifamily bridge lending that's been done over the last year or two, a lot of those borrowers are going to be looking for fixed or new owners of that property looking for fixed. So great job on positioning yourself strategically for that opportunity. Appreciate your comments this morning. Thanks, Stephen.

Thank you. We have next question from the line of Jade Ramani with KBW. Please go ahead.

Thanks very much. I was wondering if you can give an update on the Redstone platform, the types of opportunities that that business is seeing, maybe some color around the average deal size, what characterizes the affordable housing focus, And if there's any aims to pursue a Fannie Mae dust license or perhaps joint ventures with others looking for a product in the affordable housing space, I know that's a big focus of both the GSEs and some other lenders this year.

Yeah, Adam, I'll let you kind of take the ball on this one. But just as a backdrop, you know, affordable is a very big part of our ESG focus as a firm. Obviously, on the SBA side, that adds to that. But Generally speaking, we're squarely in the fairway of the GSE scorecard in terms of affordability because the SBL product qualifies, and now we have a tax-exempt lender. So maybe, Adam, just comment on two things briefly. One is the overall business strategy, just to refresh on that in terms of the tax-exempt aspect and how Redstone operates. And secondly, what was the volume in 2021 versus what our budgeted business what we budgeted at the acquisition and what you're what you see that the prospects for originations in 2022.

Yeah, sure. You know, the the Redstone, you know, the Redstone platform, which we acquired in August, you know, those those folks have had a tremendous year, certainly government support around low income housing tax credit space, you know, that that platform working with municipalities and their investor base, um, you know, again, tremendous year, uh, from a volume perspective, somewhere North of 750 million of, of, uh, of, of loans in 2021, uh, which was slightly above the projections that we had, uh, when we acquired them, uh, I believe since, since the acquisition of that, of that, of that platform, um, they've originated somewhere North of, of 500 million. And I think, you know, again, given the lack of quality affordable housing that we discussed earlier, that platform, you know, certainly has a bright future going into 2022, a lot of momentum, extremely strong pipeline, and we expect that they will exceed volumes from the previous year, from 2021. In terms of, you know, other agency licenses, you know, as you know, you know, we have a Freddie's small balance license, and then, you know, the Redstone folks participate in the TEBS program at Freddie. But yeah, certainly, you know, as opportunities come up from a, you know, JV perspective, et cetera, working with our strategic partners, you know, as exits for, you know, the significant amount of Mopi family that we've originated in 2021 on the bridge side. Certainly, you know, JVing, working with, Lenders that have these agency products is going to be very beneficial for our clients as we move forward and those assets stabilize.

Thank you very much. A question for Tom just on the current lending environment. You've been around through a lengthy period of cycles as well as the genesis of the CMBS market. Just looking for your perspective on today's environment. First of all, what's driven the surge in non-bank lending? And I think in the fourth quarter there was some increased loan loss, you know, risk rankings in the bank space that could cause the banks to modestly pull back. Wondering if you're seeing that. And just on credit, what's your perspective on, you know, the quality of originations being done today versus prior cycles?

Yeah, just – I guess two ways to answer that. One is broadly the large balance, the overall market, and then there's our subsector, the SBC, small balance market. I would say generally right now in the CMBS versus bank, you're definitely seeing an increase in market share by the conduits. I think CMBS as a percentage of total originations in 2021 was around 15%. percent, upper teens maybe, we expect that actually to increase to maybe that 25% zone. And a lot of that is driven by two things. One is in a rising rate environment, the relative competitiveness of CMBS to portfolio lending. And secondly, we're definitely seeing a pullback in banks from a, not dramatic, but incrementally in terms of credit, in particular on the bridge side, away from CMBS. So those are just two broad market comments. And then as far as the credit component, we haven't, at least in the CMBS, I'm sorry, in our niche, which is typically below $50 million, we're definitely not seeing a significant decline in credit metrics in terms of debt yield, debt service coverage ratio, and as is LTVs or on a stabilized loan, the actual appraised values. So this vintage will probably, kind of this 2022 vintage and 2021 vintage will be more on par with what you saw in the early 2000s. So I don't know, we have a relatively benign environment on credit, which we expect to continue into 2022 with more non- with an increase in non-bank penetration of originations.

Thank you. Appreciate the commentary.

Thank you. We have next question from the line of Team HIAS with BTIG. Please go ahead.

Hey, good morning, guys. I know some questions have been asked around ROEs, but if we could just get an update from you on the target ROE as we get into the back half of the year and PPP income subsides, and then just your comfort level with where the dividend is with respect to that.

Yeah, Andrew, you want to take that?

Yeah, Tim, so I think the 10% to 11% target ROE post the effects of PPP is what we're focused on. And in terms of coverage of the dividend, I think the earnings profile continues to support where the dividend is today. And the board will continue to evaluate moving that dividend based on future earnings projections. But certainly over the next couple of quarters, the return profiles could be higher than what our future targets are.

Got it. Thanks for that, Andrew. Can you just – there were some originations or acquisitions this quarter in a category that I think previously had been maybe land loans last quarter, and I think it's just labeled as other. What kind of loans were those? And sorry if it's just related to anything. I don't believe any M&A closed in the fourth quarter, but sorry if I missed – if that's what it's described to, and I just kind of be in a bonehead.

No, not at all. Those are the origination bonds from Redstone.

this quarter okay gotcha redstone um makes sense and then just um you've given some comments previously on kind of your outlook for resi and i was curious if you at this time are comfortable giving us any type of updated guidance for origination volumes this year or or in the at least in the near term and you want to comment in terms of our budget yeah i mean tim we we're seeing

Volumes come down to sort of normalized levels. In January, it was, we originated around 250 million. And so our expectation is from the, you know, that $4 billion mark, you know, 20%, 25% reductions in, you know, where we were at in 2021.

Okay, gotcha. So, sorry, just on an annual basis, thinking a 20% to 25% reduction year over year in 2022? Correct. Okay. That's it for me this morning. I appreciate the comments.

Thanks a lot. Thank you. We have a next question from the lineup. Christopher Nolan with Landenburg Salmon. Please go ahead.

Hey, guys. Most of my questions have been asked. For Adam, though, given that you're seeing such – your multifamily clients are seeing such strong demand, what sort of annual revenue growth are they seeing in their rents?

Yeah, I mean, you know, generally across the board, you know, when we underwrite, you know, the pro forma, you know, up front, I think, you know, across the board, we're seeing anywhere from, you know, from 10 to 20%, depending on which market, you know, certainly the assets are in. But I think, you know, certainly from... from the upfront underwriting, we are generally seeing that at least in 2021, that these multifamily operators are exceeding where we underwrite it on a proforma basis. But call it anywhere from 10 to 20% growth in rents.

So if you're operating one of these multifamily facilities, For affordable housing, they're seeing between 10% and 20% increase in rents annually. Is that correct?

Well, just to differentiate, I think, Adam, just the rents generally in our non-affordable were probably up in that – similar to the large balance in that kind of 10% to 15%. But rents, Adam, I think in the affordable side, just by their nature, are less – You don't see the same upside or downside, so those were more like high single digits.

Yeah, and just for a clarification point, I mean, that was specifically in the year 2021, and those were really post-renovation rents. We were seeing a 10% to 20% growth.

Okay, and I guess a follow-up question is, you know, we're seeing a phenomenon where there is a crunch in terms of the housing supply, but, you know, the consumer is not, you know, their balance sheets are not as great as they used to be. And at some point, you know, this is sort of a recipe for rent stabilization, rent control laws. I mean, are you seeing any of that in any of your markets?

No, I mean, nothing significant. I mean, obviously, you know, depending on where the asset is located, we're certainly making sure that, you know, to the extent that these properties have, you know, some form of rent regulation, whether it's stabilized, controlled, et cetera, you know, we're certainly, you know, looking at those on a much conservative, a much more conservative basis. But, you know, to the extent that there are market units, you know, if it's market, it's market, right? I mean, we're not really seeing pullback from municipalities that are taking market units and converting them to regulated.

Yeah, and in terms of the macro benefits, regulatory risk, you're definitely not seeing a dramatic increase in the ratio, in a given MSA, of the ratio of renters that have over 50% plus of their income consumed by rent. That's kind of the red flag that they look at. And that's due to wage growth in that sector consistent with the, not as great, but at least somewhat keeping pace with the increase in rents. So if wages went up, say, mid-singles and rents are up by high singles, 10%, there's still not a dramatic increase in that percentage of total population that is contributing over 50% of their income to rent.

Final question. For your affordable housing question, what percentage of your units would have some sort of government stabilization, like Section 8 or something like that?

Yeah, somewhere north of 20%.

Yeah, north of 20%, somewhere between 20% and 30%. Great. Okay, thank you. Sure.

Thank you. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to Tom Capaz for closing remarks. Over to you, sir.

Thank you. Thank you, everybody. And we, again, a second year after a COVID recession and another record year, and we hope to continue to improve earnings through, you know, accretive acquisitions and growth in our organic growth in our core business. And appreciate your time and look forward to the next call.

Thank you. Ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.