Good day and welcome to Walker & Dunlop’s Fourth Quarter and Full Year 2015 Earnings Conference Call and Webcast. Hosting the call today from Walker & Dunlop is Willy Walker, Chairman and CEO. He is joined by Steve Theobald, Chief Financial Officer and Claire Harvey, Vice President of Investor Relations. Today’s call is being recorded and will be available for replay beginning at 11:30 a.m. Eastern Standard Time. The dial-in number for the replay is 800-753-9197. The archived call is also available via webcast on the company’s website. [Operator Instructions] It is now my pleasure to turn the floor over to Claire Harvey. Please go ahead, ma’am.

Thanks, Keith. Good morning, everyone. Thank you for joining the Walker & Dunlop fourth quarter and full year 2015 earnings call. I have with me this morning, our Chairman and CEO, Willy Walker and our CFO, Steve Theobald. This call is being webcast live on our website and the recording will be available later this morning. Both our earnings, press release and website provide details on accessing the archived call. This morning, we posted our earnings release and presentation to the Investor Relations section of our website, www.walkerdunlop.com. These slides serve as a reference point for some of what Willy and Steve will touch on this morning. Please also note that we may reference the non-GAAP financial metric adjusted EBITDA during the course of this call. Please refer to the earnings release and presentation posted on our website for a reconciliation of this GAAP and non-GAAP financial metric and any related explanation. Investors are urged to carefully read the forward-looking statements language in our earnings release. Statements made on this call which are not historical facts maybe deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding future financial operating results, involve risks, uncertainties and contingencies, many of which are beyond the control of Walker & Dunlop and which may cause actual results to differ materially from the anticipated results. Walker & Dunlop is under no obligation to update or alter our forward-looking statements whether as a result of new information, future events or otherwise. We expressly disclaim any obligation to do so. More detailed information about risk factors can be found in our reports on file with the SEC. With that, I will turn the call over to Willy.

Thank you, Claire and thank you all for joining us this morning. 2015 was an incredible year across the board for Walker & Dunlop, record financing volume, record earnings, entry into new markets and new business lines and overall growth in our platform. Steve will go through our Q4 and full year financial results in detail in a moment, but I would like to begin by talking about the market we find ourselves in today and how Walker & Dunlop plans to compete and win going forward. The past six weeks have seen a tremendous dislocation in the capital markets. It has been unsettling to watch the equity markets sell-off, particularly in the real estate sector after what has been a very strong year for commercial real estate. At the same time, treasury rates have fallen, while spreads have widened creating uncertainty in the debt capital markets and potentially impacting the supply of capital to commercial real estate. There is clearly a risk off trade taking place right now and investors want to know what exposure companies have to oil and gas, China and a slowing global economy. And although major market swings are always concerning and require extremely cautious management and strategic execution, we feel very about Walker & Dunlop’s core businesses today and over the coming years. We have scaled best-in-class loan origination platforms with Fannie Mae, Freddie Mac and HUD, the three largest sources of countercyclical capital in the commercial real estate industry. We see great opportunity to continue scaling our debt and investment sales brokerage platforms given their modest size today and significant deal flow in 2016 and 2017. And the capital we have deployed on our balance sheet and through our CMBS platform will become increasingly important to key clients who have needs that cannot…

Thanks Willy and good morning everyone. 2015 was truly a banner year for Walker & Dunlop. Continued investment flows in the commercial real estate, as well as maturing loans, low interest rates and steady availability of capital, provided significant boosts to our volumes and top line growth. We grew transaction volumes 56% to $17.8 billion, adding over $100 million in revenues to our top line. We grew our servicing portfolio by $6 billion, ending the year with a $50 billion portfolio, with an average servicing fee of 25 basis points. The growth in transaction volumes and servicing pushed diluted EPS up 68% to $2.65 per share and generated 47% growth in adjusted EBITDA to $124 million. We finished the year with a very strong fourth quarter that included the largest portfolio of loans that were financed by Walker & Dunlop. All of the financial metrics for the fourth quarter were in line with the previous three quarters and well above estimates, thanks to the strength of the commercial real estate financing market and the strong execution of our team. I will go through the drivers of our fourth quarter performance in a high level and then discuss our key metrics for 2016. As you can see on Slide 4, 2015 saw a positive step change in all of our key metrics and the fourth quarter was no exception. Net income for the quarter was $20.4 million, up 26% from Q4 ‘14. Earnings per share grew 34% from the prior year to $0.67 per share. Return on equity in the fourth quarter was 17% compared to 15% last year. Personnel cost as a percentage of revenues were 41%, lower than the 43% reported in the prior year. Q4 adjusted EBITDA was $29 million, up 24% from $23.4 million last Q4. All-in-all,…

Thanks Steve. In 2015, we set goals to gain market share with the GSEs, deliver a low to mid-teens ROE, deliver a mid-20s operating margin and grow earnings at double-digit rate. As Steve just ran through, we delivered on every one of those goals and significantly outperformed on ROE, operating margin and EPS. The culmination of achieving those goals resulted in the most profitable year in the company’s history. As we move into 2016, our goals remain similar to those from last year. The Mortgage Bankers Association is forecasting total financing volumes for commercial real estate at $511 billion, up slightly from $497 billion last year. Within that number, multifamily financing volumes are expected to be $262 billion, also up slightly from 2015. As I mentioned in my opening remarks, the GSEs should account for around $100 billion of the $262 billion in multifamily financing. Our goal is to continue growing with the GSEs, gain market share and continue building our reputation as one of the largest and best providers of capital to the multifamily industry. Our acquisition of Engler Financial Group and resulting entrance into the multifamily investment sales business has been extremely successful. We added one new team of investment sales professionals to the platform in Washington D.C. during Q4. With a steady flow of debt capital and strong property fundamentals, the multifamily sector should maintain its high transaction volumes as capital flows in and out of properties, benefiting Walker & Dunlop investment sales, as well as our debt financing business. We have a great core team to start the year and we will continue to actively recruiting new teams to join us. We expect to see significant growth from our investment sales team in 2016. Our capital markets group achieved its goal of originating $3 billion to…

[Operator Instructions] And we can take our first question from Cheryl Pate with Morgan Stanley. Please go ahead.

Hi, good morning guys. Just wanted to touch on the buyback authorization a little bit more, appreciate the color on sort of the growth initiatives balanced with the buyback. Just a couple quick questions, one I guess with the stock price where it is, is it fair to assume that we would potentially see this buyback take place earlier rather than later. And secondly, what would be sort of the pivot points to think about if perhaps CMBS came back more quickly or in a larger way, would that change your view on total buyback?

Yes. Cheryl, this is Steve, good morning. So as far as the timing, I think how this plays out will largely be driven by when we are able to be in the market, what the stock price is at the time, so can’t really project for you exactly the flow over the course of the 12 months that we have the authorization for. But it’s certainly our intent to get out there as soon as possible to start executing on the program. And then as we have mentioned, we do have opportunities potentially to invest in continuing to grow the bridge loan program, the interim loan program and the CMBS program. And so as those opportunities arise that we are going to play with where we are in the share buyback program as well. But for now, we think we got sufficient cash and cash generation to accomplish everything that we have set out as our goal today.

I would only add to that, Cheryl that if you think about the fact that we only have $175 million of debt on our balance sheet, should other growth opportunities present themselves, whether it be an acquisition or whether it be the growth of some of our existing business lines, we have plenty of borrowing capacity left to be able to potentially add some leverage and continue forward with the buyback program. So I think we have a lot of options given the balance sheet that we carry today.

Great, that’s really helpful. Thanks. Just a second one, if I might on the investment sales business. Just wondering is there any seasonality to consider or how should we think about the growth opportunity over the course of the year ad does rates – should we be considering sort of the rate backdrop in conjunction with the growth opportunity? Thanks.

So if you were at the National Multifamily Housing Council annual convention down in Orlando about three weeks ago. You would be very bullish on the multifamily investment sales space because every owner, operator, developer that I met with had a very, very positive outlook for 2016 and beyond with continued expectations for investment and buying. So I don’t think that we are going to see much “seasonality”. But one thing that always happens is that as values move around, if you have either interest rate, big interest rate movements and cap rate adjustments, it requires that the market take a pause, people look at where cap rates are, cap rates adjust and then investment sales activity kind of picks back up. I think that that cycle, if you will Cheryl, has gotten shorter and shorter as people adjust to the markets more quickly. But anytime and for instance last year when the GSEs pulled back in Q2, it took about six weeks for the investment sales market to sort of sort out, whether there was going to be continued supply of capital from the GSEs, what the impact on the market was going to be and then for the market to start transacting again. And so I think that the sell-off in the equity markets over the last six weeks clearly has a lot of people’s attention. But the treasuries dropping down to 1.75 and spreads on GSE financing is staying relatively stable, Fannie just raised by a little bit under 10 basis points yesterday, but GSE spreads have remained in comparison to most other spreads, GSE spreads have remained very tight. I think multifamily owner operators feel that there really hasn’t been a major market shift and as such, the transactions continue to go up.

Okay, great. Thanks very much.

Our next question comes from Jade Rahmani with KBW.

Good morning. Thanks for taking my question. Firstly, I wanted to ask if you or any other players, similar types of companies, have thought about the potential to create a REIT to hold your servicing intangibles which could free up capital and also improve tax efficiencies. Do you think this is something that could be possible? And also, how do you think the GSEs would evaluate that?

Yes. Jade, I think we have certainly explored this option in the past. But at this point in time, the agencies have not been supportive of splitting the servicing. And so as a result, you don’t really get the opportunity to do that.

Okay, appreciate that. In terms of market volatility, have you guys experienced an impact, for example, brokered loans in 4Q were down around 30% quarter-over-quarter? Are you seeing a continued slowdown in that channel in 1Q and your 2016 goals assume a pickup in volume in 2Q and beyond?

So I talked, Jade, about our goal of $3 billion to $5 billion of annual brokered originations, and that it’s our expectation that we can get to the high end of that range. So, I think directly to your question, yes, we believe that 2016 will be a very strong year for brokered originations.

The comments you provided focused on the debt markets, how would you characterize sentiment on the part of sponsors? Are you seeing any increased caution and impact on sponsor underwriting? I think you alluded to it, but have you seen cap rates in the multifamily space begin to increase as yet?

No, we haven’t. There are clearly certain markets where investors are pausing and saying, let’s wait and see what happens in the oil and gas sector, for instance. And so markets like Houston from an investment sales standpoint have slowed down, but from a lending standpoint, the fundamentals are still strong. And as it relates to sponsor equity prices, I would only point to equity residential, which from an equity value standpoint has held up extremely strong during the sell-off in the equity markets over the last 6 weeks. And I think that is emblematic of people’s view, not only of EQR being a great company, but also the strength of multifamily housing during any kind of overall market softness, if you will. Back to the point I made in my comments, multifamily fundamentals appear extremely strong right now at this time in the cycle. And should we have a slowing in growth in the U.S. economy, many of those people that might aspire to own a single-family home are unlikely to be able to get to that and will likely be renters for sometime to come.

And in terms of M&A, which is something you guys have pursued in the past, does the steep declines in stock prices present opportunities? And if so, what areas do you think are possible expansion sectors you might look at?

So we have been quite acquisitive in our history and I think have done a fantastic job of acquiring companies, successfully integrating those companies and growing our platform dramatically because of those acquisitions. You have seen a considerable sell-off in the valuations of brokerage firms, real estate services firms and the PEs of all those companies have come down considerably. As a result, many of the companies that we have been talking to over the past several years if for whatever reason we may have been interested in, if you comp their value to the publicly traded comps, there are some real opportunity there for us today that may not have existed in the past as those companies were trading at much higher PEs. So, we see lots of opportunity. Given the strength of our balance sheet, given our track record as far as buying companies and not only creating value for Walker & Dunlop shareholders, but creating huge amounts of value for the people who sold us those companies. As you may recall, we bought Column from Credit Suisse back in 2009 and we bought CW from Fortress in 2012. And in both of those deals, Credit Suisse and Fortress took stock in Walker & Dunlop and did very, very well holding that Walker & Dunlop stock after the acquisitions. So we are, as you can imagine, looking at a lot of opportunities, and that’s part of the way we have grown the company. And I wouldn’t be surprised if we continue to grow it that way.

Thank you for taking my questions.

We will take our next question from Steve DeLaney with JMP Securities.

Good morning. Thanks for taking the question. Willy, I would like to start by asking to clarify your response to Cheryl when you were talking about loan pricing. So if we go back to like the middle of 2015, it would appear that CMBS AAA spreads are somewhere 60 basis points to 70 basis points wider, depending on where your starting point is. But I believe I heard you say that Fannie Mae just bumped their rates by 10 basis points, could you put that in the context of say, mid-2015 forward, so we could get a sense for how resilient the agency loan pricing has been versus the private market? Thank you.

So Steve, I don’t have right off the top of my head where spreads were back in mid-2015. But to your point as it relates to – I mean let’s go back to August of 2015. In August of 2015, if you recall, the 10-year treasury rallied by about 20 basis points, but spreads in the agency world gapped out between 15 basis points to 18 basis points. And as a result, borrowers sat there and said well hang on a second, we just got a 20 basis point pickup in the treasury rate, yet my overall coupon rate only went down by about 2 basis points and so we had a pretty significant widening. Fannie and Freddie over the last six weeks have held and then you just saw this what I just said was – I think it’s an 8 basis points to 9 basis point depending on the maturity length of the loan widening that Fannie announced yesterday. So they have held through out this period as you have seen what a 25 basis point rally in treasuries from 2.01 down to 1.75, somewhere around there 25 basis points, 26 basis points. So unlike last year where basically they gapped out almost one for one on the rally in treasury, this year if you are a borrower, you pick up somewhere between 15 basis points and 20 basis points. So far that doesn’t mean that the agencies don’t widen as the rest of the market widens. But so far, if you had a deal into the agencies, you have been able to benefit greatly by the rally in the treasuries.

Alright, that’s helpful. And so far, I am getting the impression that your lenders are not seeing borrowers step back from opportunities because of loan pricing, would you – is that an accurate statement in a general sense?

Yes. I mean if you think about where our debt is being priced right now on a standard sort of 75 LTV Tier 2 multifamily loans, the pricing depending on the deal, leverage, IO what have you is going to be somewhere between 4.25 and 4.75. Most people in the commercial real estate space who can get 10-year fixed rate funding at 4.25 to 4.75 will take it all day long. And so the real question becomes how much capacity the agencies have, how much capacity do the life insurance companies have because in life insurance companies on lower leverage deals are competing head-to-head with the agencies, whether the banks step in for any portion of this. And quite honestly, CMBS which would do the occasional sort of, if you will higher leverage somewhat un-stabilized multifamily deal that supply of capital is off the table right now. And so if you have a deal that is of that like, if you will, you are either going to have to wait for it to get stabilized to be able to do agency financing, life insurance company financing or potentially bank financing. But our client base is very much in that sort of 65% to 75% LTV loan, great quality assets and they have plenty of access to deal flow right now and that is making it so that they are refinancing as well as still transacting.

Thank you, Willy. So one final thing quickly on the conduit, it sounds like you are committed, we had another lender you may have noticed dropout last night, public company, it sounds like though that you are seeing this is more of an essential product within the capital markets part of your business and that you are committed to kind of ride out this rough term. When risks retention kicks in late next year, there is some thought that anyone who wants to be a significant player with the major underwriters may have to step up and take down their share of retained bonds. Is that something that you and the team have thought about and does your commitment to the conduit business go as far as possibly having to hold some retained risk?

So Steve, I would first say that there is a dramatic difference between Walker & Dunlop and Redwood as it relates to our CMBS business. My understanding of Redwood was that CMBS was a diversification play for them at a time when their single-family securitization business didn’t really have great growth dynamics to it. As you well know, we have a very significant presence in the commercial real estate space and have access to a tremendous amount of deal flow. So us staying in the CMBS space makes perfect sense to our core business versus someone like Redwood exiting, because it was a diversification play into a new market where they really didn’t have a very significant brand or market presence. The second thing on risk retention, if you think about the Fannie Mae DUS program, we have been holding BP’s risk on the tens of billions of dollars of loans that we have originated for Fannie Mae since we got into the Fannie Mae business 29 years ago. And although that risk is held off balance sheet through our risk sharing obligation with Fannie Mae, we feel very, very expert at underwriting loans and retaining risk. So, as the market moves towards the risk retention model, there is clearly the opportunity for a company with the skills that Walker & Dunlop has and the access to deal flow for us to potentially say we are going to hold that risk on our balance sheet, potentially raise the fund to hold that risk or potentially, as Jade asked previously, create or acquire a mortgage REIT to put that risk into. So, I think that we have lots of options available to us. And given that we are not a bank, the risk retention rules that sit on top of banks are distinct from Walker & Dunlop’s risk retention as it relates to capital standards. So, we feel quite good. I am not announcing anything today, but we are looking at this very hard and think that we can play a significant role in figuring out opportunities in this market.

Great. Appreciate the color, Willy and congrats on a strong quarter.

Thanks, Steve.

We will take our next question from Charles Nabhan with Wells Fargo.

Hi, good morning. You touched on some of the market trends you are seeing in energy-centric markets, but there is also – we have also seen an uptick in construction in a number of non-energy related markets. So, I was wondering if you could comment on what you are seeing there and if you are seeing a pause – you saw a pause in the fourth quarter due to rising construction in some geographies?

So Chuck, I was talking yesterday with somebody who had in front of them tremendous amount of data off of CoStar terminal. And during the conversation, they started talking about rents declining in San Francisco by 3% during the month of January. And this person started going on and on about how San Francisco fundamentals are still very strong, but 3% rental decline in January was concerning. And during the course of the conversation, he said, oh, hang on a second, month-to-date in February, rents in San Francisco are actually up 4%, so the whole 3% slop off in January has already gotten back into the rents in the first 1.5 weeks of the next month. I think its way too early to if you will declare victory or defeat as it relates to what this cycle is going to do. I think the biggest thing to look at is the following. Leading into the last recession in 2008, you didn’t have any of the fundamentals in rental growth that you have seen over the last several years and you also didn’t have nearly as tight a housing market. You got a lot of supply of single-family housing. And as a result of that, people had alternatives and some multifamily properties didn’t fare well in 2009, 2010 although as you know multifamily held up better than any other commercial real estate asset class. Given the rental growth that people have seen over the last several years, as well as – and by the way that person yesterday pointed out that rents in San Francisco have gone up by over 50% in the last 10 years. The rental growth you have seen, the very, very high occupancy levels in multifamily properties and the lack of supply of single-family housing makes it so that, as this economy moves forward, whether it’s at a 2% GDP growth, 1% GDP growth or heaven forbid, it goes negative. We are looking at very strong demand for rental housing. And so yes, there are some markets that have fallen off, but I think it’s a little bit too early to declare whether they are going to see longer term trends continue forward. Clearly, there has been a lot of condo development in Miami, which could impact rents in Miami. We haven’t seen it so far. Clearly, oil and gas is going to impact Houston. Houston rents have held up, although Houston office vacancies have spiked. So if you see Houston office vacancies go from 11% to 15%, which we have, that’s clearly going to have some impact on the overall housing market. But when and to what degree is, I do not know.

Okay. As a follow-up, you also touched on some of the dislocation in the CMBS market and potential pullback in activities from banks and life insurance companies, but I was wondering how big do you think the FHFA would allow the agencies to contribute to the overall lending in the multifamily space?

So if you do the math Chuck, on last year, Fannie and Freddie had a 35% market share doing the record volumes that they did, Freddie doing $47 billion, Fannie doing $42 billion, so the two of them, $89 billion of $256 billion market. There has been a lot of talk as FHFA worked through the 2016 scorecard that 40% was the sort of market share that they didn’t want to see the agencies go through. And so if you do the math on a 200 – whether it’s a $261 million market, $100 billion, that’s 39% market share for Fannie and Freddie. So doing $100 billion in $261 billion market is clearly if you will, fine as it relates to FHFA, they are saying Fannie and Freddie’s market share is too much. Now let’s go to – the market is $261 billion, but nobody else shows up to provide capital and Fannie and Freddie surged through to $120 billion or $130 billion. I think it really depends on if you will, what happens in the market, is there a competitive bid. And the FHFA will follow that very, very closely. The reason they put in their quarterly look back on their activities is they want to make sure that there is adequate liquidity in the market. And so as I sat around at a roundtable at the Mortgage Bankers Association conference last week in Orlando and spoke to a roundtable of commercial bankers, they were also and they are saying, well what says to FHFA that we are making competitive bid if we’re 20 wide of Fannie and Freddie, and therefore not lending in the market. And to be honest, I couldn’t really answer their question other than to say to them, FHFA will watch the market, they are not going to sit back and just let Fannie and Freddie gobble up market share. And at the same time, if there is not other capital out there to meet the needs of the market, FHFA has expressed that they will allow Fannie and Freddie to expand out.

Great. Thank you, guys.

And we will take the next question from Brandon Dobell with William Blair.

Thanks guys. Steve maybe one for you, if I look at the – I think let’s call it guidance or at least directional commentary about gain on sale range of 1.60 to 1.80, maybe some color around what could push that towards the high end or maybe above that or the low end, maybe below that range, is it a mix, is it going to be seasonality mix, I just want to make sure I understand how you guys were thinking about the livelihood of that different numbers within that or outside of that range?

Yes. So Brandon, thank you and I appreciate your question. So the – I mean mix is really the driver and it’s a combination of mix of Fannie versus Freddie versus brokers. Those are the primary drivers. But within that, if we do – typically, larger transactions have a lower gain on sale margin and floating rate transactions, because we book a smaller mortgage servicing right, end up having lower gain on sale margins. So the mix-master of floating versus fixed, large portfolios versus standard flow business, Fannie versus Freddy versus broker ultimately drives that makes. And I think our view is if you look back at the last four quarters with the exception of I believe of Q2 when we set the 200 basis point mark, but we have been in that 160 to 180 basis point range.

Okay. And I guess as a segue from that, given the trends the last couple of quarters away from fixed, should we continue to see more floating? And is there something within the, I guess the programmatic mix at the different capital sources that’s accelerating that or is going to keep that floating fixed mix going towards floating?

Yes. So I mean, we have seen over the last really 1.5 years an increase in the popularity of floating rate as a general matter. A lot of that is driven by again the larger portfolios have tended to be floating rate deals.

Got it, okay.

So typically, your fund investors, your PE investors tend to gravitate towards floating rate. A lot of our standard flow business on both Fannie and Freddie really tend to gravitate more towards fixed rate. So, to the extent that we still see a lot of activity in the fund space in multifamily financing this year, then I think we will still see elevated levels of floating rate deal flow.

Okay. And then on headcount, any sense or color on where you guys finished ‘15 versus ‘14 in terms of origination headcounts or producers in the frontline guys and women? And what’s your expectation for ‘16 would be and if there is a particular part of the headcount store that you are really putting some emphasis on for ‘16? Obviously, you mentioned expanding the rest of the sales in our new markets, but are there other places do you think we should know about kind of bigger headcount plans that you guys have, excluding acquisitions obviously?

Yes. So Brandon, it’s a little hard to compare. I think, net, we are up on the production side. Keep in mind that part of that is we had no investment sales business at the end of 2014 and acquired Engler in April of 2015. But what we have been able to do is increase – essentially, we have increased production staff year-over-year while holding smaller increases in non-production staff. We kind of look at percentage of overall staffing in the production unit versus our support units and that’s how where you get leverage in the platform. I think it’s fair to say that we love all of our businesses and we are continuing to recruit and hire and look for opportunities to increase production staff across the board. So, there is no singular emphasis, if you will, on capital markets producers versus multifamily producers. And then as we have discussed in the past, we continue to actively recruit on the investment sales side to build that platform out nationally.

Okay. And then final one for me, as you guys think about the – I guess the increase to rhetoric during 2016 in the political race about what they may do for the agency. The rally [ph] at FHFA thinks about positioning volumes, positioning the story relative to what has happened in the past couple of years. Do you expect any change, expecting more noise in ‘16 I guess, good or bad on volumes as politicians get more involved in the discussion?

No.

Alright, thanks a lot.

[Operator Instructions] We will go next to Fred Small with Compass Point.

Hey, good morning. Quick question just on the loans held for sale at the end of the quarter, is that all related to the increase sort of quarter-over-quarter, is that all related to a specific transaction like the holiday when you announced or what drove the increase?

Yes, Fred, the $1.3 billion portfolio that we did in the fourth quarter closed at the end of December, so that was sitting in our loans held for sale balance at the end of the year.

Okay. So, is that off the books now if we were to see like a snapshot of end of January or what’s the sort of pace or velocity for that coming down?

Yes. So typically, when we close loans we hold them in our warehouse for about 45 days.

Okay, so not end of January, but…

That deal closed at the end of December.

Okay, so not end of January, but it will be out of there. That balance should normalize by the end of the quarter?

That’s correct.

Okay. And then have there been any other changes on sort of financing or haircuts on the warehouse?

No, none.

Okay, cool. And on the CMBS business that you took the – the JV you took control of, what was around the margin in that business? I don’t know how much you did in the fourth quarter, but the overall margin in that business in the fourth quarter and what are your expectations for the gain on sale margins there going forward?

Yes. Fred, the business was essentially immaterial to us in 2015. We did a little over $300 million – or the venture itself did a little over $300 million in production for the year. So, it didn’t really move the needle from a financials perspective. Right now, I think as we have tried to lay out, we are being pretty cautious with respect to lending in the market at the moment. So, I wouldn’t expect any change in that certainly for the first quarter.

But we are modeling to 2% gains when we do get back to securitizing, which we think is a perfectly, if you will, prudent level of gain. That’s an adjustment to models down from 2.5% in 2015.

Awesome. Thanks a lot.

And it does appear we have no further questions, so I will return the floor to our presenters for closing comments.

Great. Thank you, Keith. I just want to thank the W&D team again for an absolutely fantastic 2015. As one of my directors said in our recent board meeting, you guys knock the ball out of the park and are taking a nice, slow run around the basis. And I said to them actually we are already back in the dugout and getting ready for the next game and so congratulations to our team. Thank you, Claire and Steve, for all your work on this earnings call. And I appreciate everyone who participated today taking the time out of their day to listen to our comments. Thank you.

Ladies and gentlemen, this does conclude today’s conference call. Please disconnect your lines at this time and have a wonderful day.