WD
#I honestly ---+ from my perspective, <UNK>, and I sit on loan committee but I only see a small percentage of the loans that we actually do, I would say no to that question.
If we got our Chief Credit Officer, Richard Warner, on the phone ---+ and we're obviously happy to do that if you want to have a follow up call.
I think he probably would echo what I am saying but he also sees a whole lot more than I do.
But as I said previously that the real issue right now is not whether the loans we're doing are great loans to be doing for 2015.
It is trying to project out and see where rates will be.
And then only other thing that I would say as any kind of concern in what we're seeing is there has been a tremendous amount of IO put on deals.
IO is ---+ typically you'd get two or three years of IO and then IO moved out to five years, and over the last year across all capital sources there has been a lot of IO out there.
And so everyone feels really good and this makes perfect sense, right.
Everyone feels really good about the cash flow of the actual asset performing today on an IO basis.
The question is you got an IO loan, you got no amortization in it, what's going to happen seven or 10 years from now when that loan turns.
But I'd reiterate we feel very, very good about our risk portfolio.
And as you know in many instances we are also originating loans where we are not taking risk and we feel pretty good about all that too.
So we have a ---+ we would like to be in three big cities beyond their existing footprint by the end of the year.
We will see if we can get there.
But we would like to be in three MSA, new MSAs for that platform by the end of the year.
I think as it relates to hiring of talent, given our platform ---+ and this is multifamily focused right now, right.
So given our brand in the multifamily space and our just the amount of financing we do in the multi space, we feel that there is a great opportunity for investment sales professionals who are on platforms that do not have anything close to <UNK> & Dunlop's client relationships or brand recognition in the multifamily space to jump from those platforms to our platform.
The second thing is that because we now have a platform to build off of with our brand and offices across the country, we don't necessarily need to go after the star brokers.
There is a great opportunity for sort of the second or third tier people and teams of investment sales professionals to be able to come to W&D and leverage off of our access to deal flow, client relationships, financing platform and I believe really take their career to a whole different level.
So the strategy here is not go out and throw huge signing bonuses out at the star brokers at some of our big competitors and try and bringing those people across.
Given the breadth of our platform we think we can grow this in a very cost effective manner with some really fantastic talent that may not be the headliners at other shops.
It is really good question and an impossible one to answer (multiple speakers)
If you look ---+ I mean the last kind of three quarters we've had roughly the same amount of prepayment fee income.
Does that make a trend for the rest of the year.
I don't know.
Like I said it's really hard to predict.
Thank you.
So it builds, John, over the three years.
So if you look at the refinancing volumes 2015 is a huge step up from 2014, 2016 is bigger than 2015 and 2017 is bigger than 2016.
So ---+ and those are annual volumes so we haven't broken it down on a quarter-by-quarter basis.
So the thought of things being pulled forward, you are not at a rate right now that would tell you the tons is being pulled forward.
To the contrary, it is sort of hit and it is being redone.
I think the amount of investment sales activity was probably the delta in Q1.
So, should you have deterioration in investment sales activity, you'd get back to a little bit sort of sitting right on top of the refinancing wave.
And then I would also say that as it relates to rates, back to <UNK> <UNK>'s question at the very, very beginning, if everyone was freaked out about rates going up, we wouldn't have had as much variable rate financing in the first quarter.
And so I think a lot of people are out there thinking that rates might move at some point.
But on the long bond, the other piece to all that is with the huge amount of foreign capital pouring into 10-year and seven-year US treasuries, even if Yellen and the Fed raise short-term interest rate, I think most people believe that the 10-yeas is going to stay begrudgingly low for quite some time because of the amount of foreign capital chasing any kind of return of sovereign debt.
And so as a result of that people don't feel quite now pressured to run and grab a loan that's going to price off of 2.10%, 10-year treasury.
That may change and as rates start to move towards the end of the year and the 10-year may or may not move, you might see that.
But right now what we are seeing from our borrowers is no great rush, it is just that they want to buy assets and refinance where assets as they come up fully financing.
So, first of all, the definition of affordable is one that has been discussed at length with FHFA.
And when and if they come out with modifications and we said previously we believe that they will, but when and if they come out with modifications to 2015 scorecard, from our understanding of the dialogue that has gone on, it is our thinking that they may make adjustments to what the definition of affordable is so that some of the projects that you just cited that may not have qualified under the affordable definition would then qualify under the affordable definition, given what is truly affordable housing, workforce housing and the FHFA's desire to have Fannie and Freddie really focus on both the affordable product and workforce housing and not necessarily the higher end type product.
And so I think when we see some adjustments to the scorecard that there will be something there where there is reclassification of what qualifies as affordable.
Yes.
Yes, <UNK>, it's <UNK>, I think for the kind of 2015, you know, I wouldn't expect a lot from it on the combination of, one, we acquired a pipeline and so part of the revenue from that pipeline will likely be offset by some amortization of pipeline intangible.
And secondly as we've discussed, we are going to be making some investments in that business.
So we think at the margin it is going to be accretive, slightly accretive for this year.
But I wouldn't expect a lot from a financial perspective in 2015.
We will cross that bridge when we get to it.
We have plans for the rest of the year and we will see how that goes.
It is ongoing.
As you point out, Greg has run very successful business.
And we are excited to have him on the team.
You bet.
I'd just thank everybody for joining us this morning.
Thank the W&D team for a fantastic quarter once again.
And I hope all of you have a great day.
Thank you.
