Q1 2023 Granite Point Mortgage Trust Inc Earnings Call
Participants
Chris Petta; IR Officer; Granite Point Mortgage Trust Inc.
John A. Taylor; President, CEO & Director; Granite Point Mortgage Trust Inc.
Marcin Urbaszek; VP, CFO, Head of IR & Treasurer; Granite Point Mortgage Trust Inc.
Stephen Alpart; VP, CIO & Co-Head of Originations; Granite Point Mortgage Trust Inc.
Douglas Michael Harter; Director; Crédit Suisse AG, Research Division
Jade Joseph Rahmani; MD; Keefe, Bruyette, & Woods, Inc., Research Division
Stephen Albert Laws; Research Analyst; Raymond James & Associates, Inc., Research Division
Steven Cole Delaney; MD, Director of Mortgage & Real Estate Finance Research & Equity Research Analyst; JMP Securities LLC, Research Division
Presentation
Operator
Good morning. My name is Kevin, and I'll be your conference facilitator. At this time, I'd like to welcome everyone to Granite Point Mortgage Trust First Quarter 2023 Financial Results Conference Call. (Operator Instructions.] Please note, today's call is being recorded. I'll now turn the call over to Chris Petta with Investor Relations for Granite Point. Chris, please go ahead.
Chris Petta
Thank you, and good morning, everyone. Thank you for joining our call to discuss Granite Point's First Quarter 2023 Financial Results. With me on the call this morning are Jack Taylor, our President and Chief Executive Officer; Marcin Urbaszek, our Chief Financial Officer, Stephen Alpart, our Chief Investment Officer and Co-Head of Originations, Peter Morral, our Chief Development Officer and Co-Head of Originations and Steve Plust, our Chief Operating Officer.
After my introductory comments, Jack will provide a brief recap of market conditions and review our current business activities. Steve Alpart will discuss our portfolio, and Marcin will highlight key items from our financial results. The press release and financial tables associated with today's call were filed yesterday with the SEC and are available in the Investor Relations section of our website, along with our Form 10-Q. I would like to remind you that remarks made by management during this call and the supporting slides may include forward-looking statements, which are uncertain and outside of the company's control.
Forward-looking statements reflect our views regarding future events and are subject to uncertainties that could cause actual results to differ materially from expectations. Please see our filings with the SEC for a discussion of some of our risks that could affect results. We do not undertake any obligations to update any forward-looking statements. We will also refer to certain non-GAAP measures on this call. This information is not intended to be considered in isolation or as a substitute for financial information presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in our earnings release and slides, which are available on our website.
I will now turn the call over to Jack.
John A. Taylor
Thank you, Chris, and good morning, everyone. We would like to welcome you all to our first quarter 2023 earnings call and thank you for joining us today. Our business delivered strong operating results in the first quarter despite the challenging macro backdrop and negative sentiment around commercial real estate. Our well-diversified conservatively underwritten and granular floating rate senior loan portfolio continues to benefit from higher short-term interest rates as our first quarter distributable earnings increased to $0.20 per basic share and covered our common stock dividend. Given the highly uncertain market environment, our balance sheet remains defensively positioned, benefiting from a well-diversified funding mix, leverage that is meaningfully below our target range and a strong liquidity position. We continue to emphasize protecting our balance sheet and our stockholders' capital while actively asset managing our portfolio and rationalizing our liabilities. The diversity of our funding and the strength of our lender relationships support the execution of our objectives. During the first quarter, we successfully de-levered our FL2 CLO and released a substantial amount of capital, further strengthening our liquidity position. The loans underlying the legacy CLO were refinanced on one of our large bank credit facilities, highlighting our good standing with lenders and our ability to refinance our assets even during periods of major market dislocations.
Despite some signs of falling and recently emerging times of some more liquidity in the real estate capital markets, we continue to remain our conservative approach to new loan originations. However, we have been opportunistic with respect to deploying capital into our own securities when they present attractive relative value. We bought back our common stock capitalizing on a deep value opportunity created by what we believe to be an unwarranted market discount versus our book value. We repurchased about one million common shares, generating attractive returns and meaningful book value accretion for our shareholders while maintaining our strong liquidity position.
These repurchases have largely used up our prior stock buyback authorization as from time to time, we have been an active market participant over the last couple of years, accretively repurchasing almost 4 million of our common shares. As a result, and to provide us with more flexibility to actively manage our capital over time, our Board has increased our buyback authorization by an additional five million common shares or almost 10% of our outstanding shares. As we have done in the past, we will remain opportunistic with respect to our repurchases, taking into consideration multiple factors as we manage our business.
Given our conservative stance on loan originations, we have been emphasizing proactive asset management and collaboratively working with our borrowers to ensure successful loan repayments and resolutions. In general, our borrowers continue to support their properties and protect their investments as they recognize the embedded value in those assets and wait for the markets to stabilize and transaction volumes to begin returning to more normalized levels. In the near term, we believe that the recent developments in the regional banking sector are likely to further delay market recovery and impact liquidity for commercial real estate assets, given the Regional Banks significant historical presence in this market.
It remains unclear when the market environment stabilizes. The commercial real estate markets improve and for how long the Fed keeps short-term interest rates elevated. Accordingly, we further increased our CECL reserves on our portfolio in the first quarter to about 3.8% of our total loan commitments as the ongoing market disruptions, especially for certain properties located in some of the more challenging cities are likely to continue to create uncertainty. We remain focused on the macro trends in the office market and the individual performance of our office loans. We are keenly aware of the headwinds in the office market. But the office market is not monolithic, and the performance depends on the specific market fundamentals and the particular assets. Properties located in our portfolio markets such as Miami, continue having favorable demand characteristics and fundamentals. In other markets that were more impacted by the pandemic and where the trend of returning to the office is more delayed such as Minneapolis, there have been greater challenges. Fortunately, we have a very diversified and granular office portfolio across 19 MSAs. We have little to no office exposure in some of the most impacted markets such as San Francisco, Washington, D.C., Portland and Seattle.
As for specific asset characteristics, approximately 90% of our office assets by UPB are either Class A or recently renovated. So, while we are witnessing greater stress and challenges in some of our loans, for which we have established reserves and where we are working with the borrowers on resolutions. These situations are not indicative of the balance of our portfolio. In addition, we take comfort in the strong sponsorship profile of the owners of the office property securing our loans, the substantial cash equity invested in these properties to date and that these sponsors are generally committed to supporting their properties during this period of dislocation. Over the last year, our portfolio of borrowers have contributed over $140 million of additional equity in support of their properties. In the near term, we will maintain our conservative stance, actively managing our business, protecting our balance sheet and maintaining lower leverage, while emphasizing liquidity and collaboratively working with our borrowers.
As we have said in the past, we believe that the U.S. commercial real estate market provides attractive long-term opportunities and the significant amount of capital, which is currently on the sidelines waiting for more market stability will ultimately be deployed, providing support for the sector. As the environment stabilizes and likely increased regulations for banks occur, once we are on the other side of the current disruptions, this will allow us to take advantage as a nonbank lender of attractive investment opportunities.
I would now like to turn the call over to Steve Alpart to discuss our portfolio activities in more detail.
Stephen Alpart
Thank you, Jack, and thank you all for joining our call this morning. We ended the first quarter with an aggregate committed balance of $3.5 billion and an outstanding principal balance of about $3.3 billion with only $205 million of future funding commitments, accounting for less than 6% of our total commitments. Our portfolio is well diversified across regions and property types and includes 88 investments with an average loan size of approximately $38 million. Our loans continue to deliver an attractive income stream with a favorable overall credit profile, generating a realized portfolio yield of about 8% with a weighted average stabilized LTV at origination of 63%.
Given our cautious stance on originations due to the market environment, during the first quarter, we funded about $17 million on existing commitments. Our repayments and loan paydowns totaled approximately $60 million in the first quarter, which outpaced loan fundings and resulted in a slight decline in our portfolio balance over the quarter.
As of March 31, our portfolio weighted average risk rating was 2.6%, which was largely unchanged from the prior quarter of 2.5%. During the first quarter, we downgraded a $27.5 million senior loan collateralized by an institutional quality full-service hotel property located in downtown Minneapolis to a risk ranking of 5. The property was recently substantially renovated and reflagged. It's owned by a well-regarded institutional sponsor who invested significant cash equity to purchase and then renovate the property. Although the property's performance and the market in general, have shown recent signs of improvement, operating performance has continued to be negatively affected by the ongoing impact of delayed business travel trends in the Minneapolis CBD and from the lingering impact of social unrest. We are actively working with the owner of the property, who has elected to market the property for sale. We anticipate the property will be lifted soon and are hopeful for a resolution this year, although the exact timing is hard to predict.
As of March 31, we have five loans that are risk rated 5 and on nonaccrual status totaling $275 million in UPB, for which we established specific CECL reserves of about $67.5 million, which implies an average estimated loss rate on those loans of about 25%. As we have mentioned in the past, we are in active discussions with all five of these borrowers and are evaluating a variety of potential resolution alternatives, and we'll provide more information as these situations develop over the course of the year.
Four of our nonaccrual loans are backed by office properties, each with its own characteristics and attributes as we evaluate a variety of resolution options for these office assets, some may include a conversion to an alternative use. While not all office properties are amenable to such outcomes, we would like to point out that the Phoenix and San Diego office loans are two where the highest and best used could be other than an office building. The recently extensively renovated properties securing the Phoenix office loan benefits from a convenient [pedestrian]-oriented downtown location with nearby access to light rail and mass transit. The property's configuration lays out quite well for our conversion to residential use, for which there is demand in the market.
Similarly, the San Diego office property has an excellent location, is recently and extensively renovated and can be converted to hotel, residential or mixed use. The building's physical and locational attributes lend itself well to conversion. In fact, the borrower was under contract to a buyer who plan to convert the property to a hotel, but it fell out a contract shortly after the failure of Silicon Valley Bank. For both the Phoenix and San Diego assets, we are working with the borrowers to take possession of the properties and have had multiple indications of interest for purchase for conversion. We are evaluating a range of resolution alternatives, which could include a foreclosure or deed in lieu followed by a sale of the property.
I will now turn the call over to Marcin for a more detailed review of our financial results.
Marcin Urbaszek
Thank you, Steve. Good morning, everyone, and thank you for joining us today. Yesterday afternoon, we reported our first quarter GAAP net loss of $37.5 million or $0.72 per basic share, which includes a provision for credit losses of $46.4 million or $0.89 per basic share. Compared to the prior period, our GAAP net loss widened due to an increase in our CECL reserves, driven by the onset of market conditions. Distributable earnings for the first quarter were $10.7 million or $0.20 per basic share as compared to a distributable loss last quarter, which was mainly impacted by the resolution of one of our nonaccrual loans in Q4.
On a pre-loss basis, quarter-over-quarter, our distributor earnings improved by about $0.03 per basic share, driven by higher net interest income as our floating rate portfolio continues to benefit from increases in short-term interest rates. Our distributable earnings covered our common dividend in the first quarter despite us carrying over $200 million in cash, which represents over 20% of our equity, our balance sheet leverage meaningfully below our target levels and the five nonaccrual loans, which we estimate impacted our interest income by over $5 million in Q1 or about $0.10 per share.
Our first quarter book value declined by about $0.78 per common share or about 5% to $14.8 and was mainly affected by the increase in our CECL reserves, which was partially offset by an estimated $0.19 per share benefit from our share buybacks. As Jack mentioned earlier, during the first quarter, we repurchased about one million shares of our common stock, given what we believe is a deep value opportunity our stock price currently represents. Our Board's increase in our buyback authorization of an additional five million shares furthers our ability to, over time, be opportunistic in the market given our flexible and shareholder-focused capital allocation strategy. Our CECL reserve at quarter end stood at about $33 million or $2.54 per share, representing about 3.8% of our portfolio commitments. With a $46 million increase in our CECL reserve quarter-over-quarter was mainly related to a higher allowance on our collateral dependent loans and more recessionary assumptions used in our analysis reflecting the uncertain market environment. As disclosed in our earnings supplemental, slightly more than half of our CECL allowance or about $67 million is allocated to the five nonaccrual loans.
Turning to our capitalization and liquidity. As we announced in March, we successfully refinanced our legacy 2019 FL2 CLO and funded the $269 million of loans with one of our bank facilities, which improved the efficiency of our loan level borrowings and released about $85 million of capital, further strengthening our liquidity position. This is our second refinancing of this type following a similar transaction in the second quarter of last year related to our legacy 2018 FL1 CLO and our term financing facility. We believe this highlights the strong general quality of our loan portfolio, our ability to finance our assets during challenging market conditions and the strength of our long-standing relationships with our lending partners as they look to do more business with us.
In connection with this refinancing, we upsized our JPMorgan financing facility to $425 million. Additionally, post quarter end, we also extended the maturity of our Morgan Stanley facility to June 2024. As a result of the CLO refinancing, our total leverage ticked up at quarter end to 2.5x from 2.3x in Q4. We ended the quarter with over $220 million in cash and continue to actively manage our liquidity, focusing on protecting the balance sheet and our investors' capital given the market environment. Thank you again for joining us today and now we'd like to open the call for questions.
Question and Answer Session
Operator
Thank you. We'll now begin taking your question-and-answer session. (Operator Instructions.] Our first question today is coming from Steve Delaney from JMP Securities.
Steven Cole Delaney
Well, look, for starters, we really applaud the share buyback. I think it's a nice way to reward your shareholders during these difficult times, both what you've done and the increase that you planned. I'm wondering if you've also considered trying to buy back some of your convertible notes through reverse inquiry or other method. We have noticed in this earnings call, a couple of commercial mortgage REITs have had some opportunities and bought back some debt. So, any thoughts there, I'd appreciate.
Marcin Urbaszek
Steve, it's Marcin. Thank you for joining us for your question. I appreciate the nice words on the buybacks. We thought it was a good use of capital. So, this is the price valuation. To your point on the converts, yes, it is something we've considered, and we'll continue to consider. We've had some discussions around this internally. So, it is on the table as a potential use of our liquidity, obviously, given the upcoming [mature] in the fourth quarter. So yes, it is something that's been debated internally.
Steven Cole Delaney
Okay. Great. That's good to know. And I want to apologize you -- the Dallas office loan that was new in the fourth quarter, I don't think I ever really asked or dug into that. But a couple of things pop up. I mean, thank you for the details on the new Minneapolis hotel loan. But like I said, I kind of whiffed on this one. It's a smaller loan, obviously, $32 million compared to the couple of your other office loans that are much larger. But here's what jumps out. It's a 2017 loan, so it's six years old, $35 million loan balance. The pricing is high at L plus 540. And the other thing I noticed, $35 million loan, it's almost 400 square feet, which is similar to Mini and San Diego, but those loans are $90 million, this one's $35 million. So just help me understand that picture as to what is unique here. And I'm just curious whether that's a -- Dallas is an older property or just in a not as attractive an area? Why the differences between Dallas and those other two office loans in your watch list?
Stephen Alpart
Steve, it's Steve Alpart. Thank you for your question. Yes. So, you heard Jack say earlier in his prepared remarks that about 90% of our portfolio of office loans or Class A are recently renovated. So, they're not all in that category. We've had other assets in the Dallas market. We think the market has some good trends in it. So obviously, building by building submarket by submarket and this is an asset that has underperformed, and the leasing has been sluggish. So back to the point that it's not monolithic and everyone [uses a different score.] This has just been an underperformer for a number of years. And we talked about resolution strategies on a few of the assets. This one kind of falls in the same general category. You can extrapolate that. We're looking at all the typical options here, we're collaborative discussions with our borrower -- all options are on the table and a sale of the property directly by the borrower or possibly a foreclosure or deed in lieu followed by a sale are kind of like on the menu and it's something that we're actively working on, but I can't think anything as imminent as of this call.
Steven Cole Delaney
Okay. That's helpful to understand the status. And is there -- I assume there's a specific reserve on this loan. Can you share with me what that amount would be?
Stephen Alpart
Yes. So, we've -- so the five loans that are rated 5 have an asset-specific reserve of about $67.5 million, that's about 25%. They're all a little bit different, but they're -- you can kind of maybe estimate based on what the aggregate is.
Steven Cole Delaney
Got it. I understand. And also understand probably why it's not a great idea to put your specific reserve out there when you're negotiating with buyers, etc., etc. So, thank you very much for the comments. I appreciate it.
Operator
Your next question is coming from Stephen Laws from Raymond James.
Stephen Albert Laws
Yes, I want to second what Steve said about the buybacks. I think that's a good sign to support your stock given concerns in the market, especially at these valuations where it's so accretive. First question, really more on the portfolio. It seems like in total, four and five-rated loans, there were nine of them. I know the hotel moved from four to five. Were there many changes from three to four back and forth? Or are we seeing the portfolio kind of separate into these nine loans that are four and five and you feel good about everything else? Can you maybe talk about that a little bit?
Stephen Alpart
Sure. It's Steve Alpart again. So, we talked about our aggregate risk rating was relatively stable in the quarter, it went from from 2.5 to 2.6. There was not movement in the fours and fives as a group, except we did move that Minneapolis hotel loan from a four to a five, but the total of those four or five loans is the same. And then as far as the rest of the portfolio, we did have a couple of other downgrades. They generally fall in the category of good performers that were not moved to a four, obviously, but they move from like say, two to three, where we think it's on track, everything's fine. But just given the market environment, we thought it is prudent to maybe move it one notch, but it was more along those lines, nothing that we're at this moment concerned about.
Stephen Albert Laws
Great. As you have discussions with borrowers around extensions or modifications, how are those discussions going? Any pushback or inability to buy new caps? Are there other protections you'd like to see in an extension or modification maybe instead of a cap at this point? Kind of can you talk about how those discussions are going with borrowers at the original maturity date?
Stephen Alpart
Yes. The tone of the conversations we've talked about this in prior quarters is still constructive. We have a good playbook where if a borrower is coming up on an extension or more recently, maybe even a final maturity in exchange for paydowns, additional economics, spreads, fees, structure, we will work with those borrowers. So, we're doing everything right. Some of those conversations that you can imagine involve getting a new cap. All things being equal, we'd like to have a new cap. The majority of our portfolio has either an active cap in place or other structure around the cap. So, certainly in some cases if a borrower wants to put money into a reserve account debt service reserve account, that's something that we would consider. But we look at the cap where other structure is important. So, we're almost always getting one or the other.
Operator
[Operator Instructions.] Our next question is coming from Douglas Harter from Credit Suisse.
Douglas Michael Harter
Can you talk about how much of the -- how much debt you have against the current nonaccrual loans or risk rated five loans?
Marcin Urbaszek
Sure Doug, thanks for joining us. Thanks for your question. So, I would say most of those loans in terms of UPB are financed on the two sort of new facilities that we put in place in Q3 and Q4. So, you see there's over $100 million of leverage against three of those assets. I would say that's the majority of the borrowings against those loans. There's a little bit more on the other two, but this is the majority of the leverage against them.
Douglas Michael Harter
Great. And I appreciate the update on the properties that Steve gave. But just any more clarity as far as timing as to when you might be getting some of that capital back that you could either then use for the new buyback authorization or for new loans?
Stephen Alpart
Yes. So, it's Steve again. So we are, as you can imagine, actively working on all five of these loans. They're all on a different path. Ideally, we'd like to resolve some or all of these in the next couple of quarters. Just given the market, the timing is hard to predict. But high level, look, we certainly don't want to be -- and we're not going to be a force seller so we're trying to be thoughtful about it. But currently, the objective is over the next couple of quarters to start resolving as many of these as we can.
Operator
Thank your next question today is coming from Jade Rahmani from KBW.
Jade Joseph Rahmani
Beyond the risk five rated bucket of office, how is everything else going? You have a substantial amount of office loans, some of which are probably slated for maturity this year given the origination date. So, wondering if you can give an update there.
John A. Taylor
Jade, this is Jack. I'll give the more general update and Steve, if you want to say something more specific. Yes, the headwinds are pretty intense in office nowadays. I would say that the majority of the conversation we're having with borrowers about it relates not to work from home dynamics and things like that, but which seems to dominate the press quite a lot. But really, the absolute level of rates, and it's a -- the Fed has imposed on the market and the cost of carry as they move through this. So, the -- which I believe is the main driver for stress in real estate, commercial estate and in office. So, for the rest of our portfolio, so, we've gone through our risk rankings and our CECL reserves, there are some that we have our eyes on and are having more significant conversations. But as we said, our portfolio is supported by borrowers that are looking at the embedded value over time in their assets and are putting money in to support it. It's difficult when rates are so high to navigate for some of them. But I'll point out another thing, too, is what we've observed is in the more middle market with substantial institutional owners, but not so much the mega funds, if you will, they scramble a lot more to support their properties because it's more meaningful to them as opposed to some of the larger fund operators, who view it as an opportunity, maybe just to move on to the next fund that they've already raised, and they will exercise their put option, if you will, for the lender.
And so, we're seeing that's kind of a funny dynamic in that you might think that the bigger fund operators would be those that would stand behind their properties more. We're seeing it actually bifurcate a bit. And the middle market loan, our property say that $50 million was the $30 million loan, they're really stepping up to the plate. I want to say, though, that this is not -- I'm not guaranteeing that we're not going to see any more credit migration downward. It's really path dependent, I believe, largely on the Fed. And I think there's a lot of inner dynamics about the effective rates, not just on the intentional destruction of value that they sought but also the effect on much broader swaths of the economy and things like major city centers and the stress that is putting in municipalities. So, those paths are very uncertain still. And we're watching it very closely and in deep discussion with our borrowers on a daily or weekly basis.
Jade Joseph Rahmani
Having -- how on top of these loans are you in terms of asset management? What's your level of dialogue? I mean, right now, there's four loans within the office portfolio. I don't know, I think it's beyond the Fed that's affecting office. I think that the Fed is affecting the other property sectors, multifamily, industrial, etc., where we've seen cap rates widen but not the level of distress playing out in office. Office, it's a complete inability to underwrite rent and the lack of demand. I think, yes, you are seeing some leasing activity, and I think the best most renovated buildings are seeing demand, which is also somewhat surprising given your comments about the two conversions, those are freshly renovated projects. But what level of dialogue are you currently having with these borrowers? I mean there's many loans that were originated years ago. Can you also talk about the magnitude, the dollar amount of office maturities you'll be facing in the next three quarters?
John A. Taylor
So, Jay, let me address. I thought I heard you -- I'm sorry if I misheard you. I thought you were asking me about the nature of the conversations and what we're seeing with them. And so, we are in repeat frequent asset management dialogue with our borrowers. And there's many that are doing quite well. There's some that are in between, and there's the ones that we cited. And so, I do agree with you that rates are affecting all of commercial real estate. For example, multifamilies that were originated, bought or originated last year and put into CLOs are coming under significant stress compared to the cap rate levels that they were bought at and the level of rates. But sticking with this, we're in intense touch with these borrowers on the office side. And I did not mean to say if you took it this way, I did not mean to say that the work from home dynamic and the reduction in demand was not a factor. I think it's a quite significant factor. I think in the near term, though, the bigger factor is about liquidity, liquidity and liquidity. The demand affects that. But when you have an out-of-favor asset category, the liquidity first ranged from it. We'll see where it goes next, right? But I personally believe that there will be a healing in the capital markets and in the office market generally. I was reflecting what our borrowers are reflecting back to us about where their main stresses are.
Jade Joseph Rahmani
And practically speaking, in terms of let's just say, across the office portfolio, are you in touch with all of the borrowers? And what's the frequency of dialogue?
John A. Taylor
Well, Steve, maybe you can address that. The answer is yes. And it varies, right, by the situation. And some of them, it's not a weekly discussion when there's not that much to be concerned about, in other words, it's more frequent and intent. Steve, do you want to elaborate?
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Stephen Alpart
Yes. So, Jay, the way the [waivers] set up, the originations team that sources a loan underwriting closes alone is responsible for that loan to repayment. So, there's a real kind of soup to nuts approach here. So, we're not really originating right now. So, this is our focus point for our deal team. The amount of touch we're having is pretty significant. There's conversations about if there's a mod coming up. It will be a little bit more intense. We're looking at leases, we're reviewing leases, there's site tours, there's business plans, reviewing business plan, budgets. There's still draws going on for CapEx, some leasing. So, the amount of talks we're having, it's certainly not daily, although it can be daily at certain points, but we're very much in touch with all these borrowers. As you can imagine, a four or five-rated loan might have more of a touch than a one or a two. But I would say the level of dialogue, both with us and our borrowers, us and our lenders is kind of daily, weekly ongoing and constructive.
John A. Taylor
And Jade, I just want to point back a little bit. We had over 20% in repayments during the course of 2022, including running -- on a run rate running through to December. And over half of that was in office. And while we fully expect that we're going to see a decrease in the amount of prepayments this year because of the market environment and all the shocks to the system by the continued raising of rates. Those office loans that we paid last year were financed or bought by parties, as I said, included through the end of December. And we're seeing -- I don't want to say anywhere near the robust pace as last year, but a significant pace of repayments insight now, including for office loans. Now that's evidence that are working with our borrowers and being in touch with them and accommodating or demanding depending on the situation, their needs as we go on. And so, it is something where we think that plan of working with them, extending out, renegotiating for higher rates, etc., has proven fruitful for us.
Jade Joseph Rahmani
And on the multifamily side, I know everyone's focus is on office. Generally, I would say, summarizing first quarter earnings, multifamily has been pretty good, probably better than expected. However, there have been a few problem areas. One of your competitors, which has a GSE servicing business, Freddie Mac delinquencies spiked quite notably within the portfolio. And just today, the Wall Street Journal is talking about performance in CLOs deteriorating. How are you seeing the multifamily performance?
John A. Taylor
Steve, do you want to talk about performance and then I'll make another comment.
Stephen Alpart
Sure. Yes. So, Jade, notwithstanding the rise in rates and the economic environment. The multifamily properties in our portfolio are generally exhibiting healthy fundamentals, and we feel good about them. The portfolio is fairly diverse. It's mainly As and Bs. Our largest concentrations are in the Southeast and Southwest. We're not just in the Southeast and Southwest. Those business plans typically involve renovation, CapEx plan, pushing rents, not so much growing rents as far as market rent growth but more looking at the property next door and saying, if we do this amount of renovation work, we can get the rent the guys are getting next door. So, we are still seeing, as rent rolls turn monthly, quarterly, we are still seeing borrowers getting those underwritten rent bumps. Obviously, the housing market is expensive, and rates are high. So, that's helping the multifamily market. We're certainly seeing rent flowing. We did some, but not a ton of business. I think when I say, late 2021 into early 2022.
So, we don't have a ton of that vintage. The vintage that we -- what we did do with that time period, we had dialed back leverage probably on average about five points, and we had pushed up exit debt yields. So, I fully expect that there'll be some multifamily loans that are going to need another turn or two of the rent roll to get to the exit. But these are obviously three plus one plus one and in good markets, they might pay off in two or three years, maybe some need an extra year. And we have one right now, by the way, that we did kind of near the peak of the market that they ended up putting in less CapEx, got higher rent bumps and they're taking us out on an agency deal. I'm not saying everything is going to look like that. But I would say, in general, we saw the headlines. In general, we feel good about the multifamily.
Operator
Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Jack for any further or closing comments.
John A. Taylor
I'd like to thank everybody for joining us for today. We really appreciate your time and attention. And I'd like to thank our team for all the hard work that you've been putting in to maintain our portfolio and the quality of it. And I especially want to thank our investors for the support we've shown to us.
Operator
Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.
