00:00So it was a really good quarter. Can it continue? Yeah, of course. I mean, I say, of course, we're
00:07extremely focused on performance first.
00:09And I think performance first is going to help us grow our asset management business.
00:13If you look back at the history of the company, which we started in 2013, you know, we started it.
00:19We started it's still a REIT, but we started to take advantage of a displaced asset class, which at that
00:24time was mortgage servicing rights,
00:25using that to build a number of different businesses under our header at that time, which was known as New
00:32Residential.
00:332022 comes. We buy out our management contract from Fortress with the intent of then growing our asset management business.
00:40So in 2023, we acquired Sculptor. 2025, we acquired Crestline. We've had organic growth.
00:46So today, when you look at the firm, we're 61 billion of third party assets with over 200 clients.
00:52And, you know, and we're excited of where where we think we're going to go from a not only just
00:58growth, but again, performance first.
01:00Where does the AUM growth come from on the asset management side in an environment where there were a lot
01:07of concerns in the beginning of the year about private credit, alternative asset management?
01:11And there's just a lot of competition out there for that capital.
01:16Yeah, I you have to differentiate yourself. You know, you're going to show up at LPs and you have to
01:20have a full suite of offerings to be able to to to put on the table in front of them.
01:25Our brand is terrific. You know, at our firm today, we have north of 200 investment professionals.
01:31You know, we're out there traveling the world. We have 16 different offices.
01:36You know, you look at the at the bigger players, obviously, the Blackstones, the Apollos, the Aries, and they're raising
01:40tons and tons of money.
01:42There's a lot of money out there. And I think there's a lot of room for us to grow.
01:45We're not going to you know, I say this in every year and he's called we're not going to be
01:48Blackstone.
01:48But there is there is a there's a lot of runway for us to continue to grow our business.
01:53I mean, you've done a lot of heavy lifting over the last few years and building up this company.
01:56But I am curious about how the market values you.
01:59And is there been any sort of meaningful discussion to maybe convert from a rate into a traditional C Corp?
02:05So you would maybe be screened by the analyst community more along the lines of, you know, Blackstones and some
02:11of those companies rather than the street rates.
02:13Yeah. You know, we I discussed this as well. At some point, we have to think about what our path
02:18is.
02:19We're a dividend payer. We pay a dollar a year in dividends or dividend yield is north of 10 percent,
02:24which, quite frankly, is too high.
02:25So retaining capital is obviously much more difficult. I think Blackstone trades at about a four percent dividend yield.
02:32So the things that we could do, the levers are we could take our mortgage company public.
02:36You know, if that trades at book value, that immediately immediately should give us a few dollars a share in
02:41in pop.
02:43But, you know, getting valued as an asset management business versus a REIT or a mortgage company and not as
02:49a dividend payer should create real value for shareholders.
02:52How important is the mortgage company to you? And I ask that because, I mean, I look at where what
02:56interest rates have done.
02:57I look at the sort of dwindling originations or at least the relative to what we had a few years
03:02back.
03:03And I do wonder, as a long term story, is that a growth business for you?
03:07Yeah. I mean, I think with a I mean, the company does between four and four and a half, you
03:12know, let's call it roughly four and a billion of revenue a year.
03:15Yeah. Brings between a billion and a billion and a half of pre-tax down to the bottom line.
03:19If you think about where we're going with technology, with AI and our real tech spend, I think there's a
03:25lot of room to actually really increase earnings there.
03:27While saying that, I mean, maybe maybe part of it is we take the company public and own a good
03:32chunk of the equity and that'll help revalue the asset management business.
03:37I think for us, we're really probably one ish deal or one true growth area away on the asset management
03:44side to get to real scale on FRE.
03:47And once we do that, we could actually really separate the company. And that's what we're striving for.
03:51We can't let you go without talking about securitization.
03:55You have a long career in that part of finance.
03:58I was recently at a PIMCO event, Dan Iverson, talking about how some of this financial engineering looks like what
04:06he saw pre-financial crisis,
04:08that just some of these instruments out there are getting a little too complex and worrying.
04:12Are you worried?
04:14I think it depends on the product type.
04:16By the way, Dan was one of our summer interns going back in the day at Bear Stearns.
04:19So we're good buddies.
04:21When I look at the financial engineering that goes on, we're a big issuer in the marketplace in securitizations.
04:28We manufacture a lot of products out of our origination businesses.
04:32They're generally pretty cookie cutter, I would say.
04:34I don't see the same warning signs that we saw going back to the pre-the GFC.
04:41So I think we feel pretty good where we are.
04:43There could be some things.
04:46I believe you guys wrote an article quoting Dan on some of the data center stuff.
04:50And how they were leading some of the charge there.
04:52I think that's a lot different than some of the stuff that we're focused on.
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