Good morning, ladies and gentlemen, and welcome to the first quarter 2024 Arbor Realty Trust Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this period, you will need to press star one on your telephone. If you want to remove yourself from the queue, please press star two. Please be advised that today's conference is being recorded. If you should need operator assistance, please press star zero. I would now like to turn the call over to your speaker today, Paul Elenio, Chief Financial Officer. Please go ahead. Okay, thank you, James, and good morning, everyone, and welcome to the quarterly earnings call for Arbor Realty Trust. This morning we'll discuss the results for the quarter ended March 31st, 2024. With me on the call today is Ivan Kaufman, our President and Chief Executive Officer. Before we begin, I need to inform you that statements made in this earnings call may be deemed forward-looking statements that are subject to risk and uncertainties, including information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans, and objectives. These statements are based on our beliefs, assumptions, and expectations of our future performance, taking into account the information currently available to us. Factors that could cause actual results to differ materially from Arbor's expectations in these forward-looking statements are detailed in our SEC reports. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Arbor undertakes no obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after today or the occurrences of unanticipated events. I'll now turn the call over to Arbor's President and CEO, Ivan Kaufman. Thank you, Paul, and thanks to everyone for joining us on today's call. As you can see from this morning's press release, we had another very strong quarter despite an extremely challenging environment. Through our diversified business model with many countercyclical income streams, we once again generated Distributable Earnings in excess of our dividend, with a payout ratio of around 90% for the first quarter. This is clearly well above the performance of our peers, most of which are paying their dividends out of capital or have been forced to cut their dividends substantially. And just as importantly, in a time of tremendous stress, we've managed to maintain our book value over the last 15 months while recording reserves for potential future losses, which clearly differentiates us from everyone else in our peer group, the vast majority of which have experienced significant book value erosion in this environment. On the last call, we gave guidance that the first two quarters of this year would be the most challenging part of the cycle, and we are in a period of peak stress. We also mentioned that if rates stay higher for longer, that dislocation could potentially leak into the third and possibly even the fourth quarter as well. Given the recent backup in rates, combined with the Fed's somewhat more hawkish view on the timing of potential rate cuts in 2024, we believe this is a distinct possibility and is something we have been preparing for and is reflected in the way we are currently operating our business. As a result, we have been extremely active over the last 4 months in working through our balance sheet loan book. We have demonstrated tremendous patience and poise in dealing with the most recent wave of delinquencies. Again, our goal is to maximize shareholder value, and very often it's not just the value of the collateral, but the recourse provisions that we evaluate in determining how to approach each individual circumstance. The short-term nature of having a delinquent loan will not impact our decision-making process to achieve the correct economic result on a transaction. With this philosophy in mind, we had a tremendous amount of success in the first quarter, working through a substantial amount of our delinquencies and modifying these loans by getting borrowers to bring a significant amount of fresh equity to the table and recapitalizing their deals. As a result, in the first quarter, we successfully modified 40 loans, total of $1.9 billion, with fresh capital being brought to the table in every one of these deals. This includes cash to purchase new interest rate caps, fund interest rate and renovation reserves, bring any past due loans current, and pay down balances where appropriate. In fact, borrowers injected approximately $45 million of new capital into these deals, with $1.65 billion of these loans purchasing new interest rate caps. We have also been highly effective in refinancing deals through our agency business, as well as leveraging our long-term standing relationships with many quality sponsors to step in and take over assets that are underperforming and assume our debt. This is a difficult and complicated work in an extremely challenging environment. I can't say enough about the efforts put forth by our entire organization in successfully managing through the teeth of this dislocation. We're very pleased with the success we have had to date and expect to remain extremely busy over the next few months and steadfast in our approach as we continue to manage through the balance of this downturn. Clearly, in this environment, having adequate liquidity is paramount to our success. As a result, we have focused heavily on maintaining a very strong liquidity position. Currently, we have approximately $1 billion of cash between $800 million of corporate cash and $600 million of cash in our CLOs that result in additional cash equivalent of approximately $150 million dollars. And having this level of liquidity is crucial in this environment as it provides us with the flexibility needed to manage through this downturn and take advantage of opportunities that will exist in this market to generate superior returns on our capital. As you may recall, a few months back, we allocated $150 million of our capital stock to buy back stock, knowing full well there would be volatility in the market, allowing us to potentially repurchase our stock at discounts to book value and generate high double-digit returns on our capital. In April, we repurchased approximately $11.4 million of stock at an average price of $12.19, with a 4% discount to our book value and generating a current dividend yield of 14% and a yield of approximately 16% on distributable earnings. This is a tremendous return on capital, and with around $138 million of remaining capital available for this strategy, we will continue to be opportunistic in our approach to buying back stock if the volatility persists. We also continue to do an excellent job in deleveraging our balance sheet and reducing our exposure to short-term debt. We're down to approximately $2.6 billion in outstandings with our commercial banks from a peak of around $4.2 billion, and we have 72% of our secured indebtedness in non-mark-to-market, non-recourse, low-cost CLO vehicles. Our CLO vehicles are a major part of our business strategy as they provide us with tremendous strategic advantage in times of distress and dislocation due to the nature of their non-mark-to-market, non-recourse elements. In addition, they contribute significantly to providing a low-cost alternative to warehouse banks, which in times like this, have fluctuating pricing, leverage points, and parameters. In fact, one of the significant drivers of our income streams are our low-cost CLO vehicles, as well as the fixed rate debt and equity instruments we have that make up a big part of our capital structure. We are very strategic in our approach to capitalizing our business with a substantial amount of our low-cost, long-dated funding sources, which has allowed us to continue to generate outsized returns on our capital. Turning now to our first quarter performance, as Paul will discuss in more detail, we had a very strong first quarter producing distributable earnings of $0.48 a share, representing a payout ratio of around 90%. Clearly, having the wherewithal to create a large cushion between our earnings and dividends over the last several years has served us very well in this dislocation. I believe that this cushion, combined with our diversified business model, uniquely positions us as one of the only companies in this space with the ability to continue to provide a sustainable dividend. In our GSE agency business, we had a relatively strong first quarter, despite interest rates remaining stubbornly high. We originated $850 million in the first quarter, and our pipeline remains elevated. Traditionally, first quarter production numbers are normally lower than the rest of the year, and certainly, the backup in rates has not helped this trend. Despite the current rate environment, we continue to maintain a large pipeline, and we are not seeing significant fallout in this market. Rather, deals are just being pushed out further. We've also done a great job in converting our balance sheet loans into agency product, which has always been one of our key strategies and a significant differentiator from our peers. It's also very important to emphasize that a significant portion of our business is in the Workforce Housing part of the market. As you know, Fannie and Freddie have a very specific mandate to address the workforce/affordable housing needs, which is a major issue in the United States, making Arbor a great partner that continues to fulfill a very important mandate for the federal agencies as well as the social needs of society. And again, the agency business offers a premium value that requires limited capital and generates significant, long-dated, predictable income streams and produces significant annual cash flow. To this point, our $31 billion fee-based servicing portfolio, which grew 9% year-over-year, generates approximately $122 million a year in recurring cash flow. We also generate significant earnings on our escrow and cash balances, which acts as a natural hedge against interest rates. In fact, we are now earning 5% on around $2.8 billion of balances, or roughly $140 million annually, which, combined with our servicing income and annuity, totals approximately $260 million of annual gross cash earnings or $1.25 a share. This is in addition to the strong gain on sale margins we generate from our originations platform. Extremely important to emphasize that our agency business generates 40% of our net revenues, the vast majority of which occurs before we even turn on the lights each day. This is completely in the agency platform and something we feel is not being fully reflected in our valuation. In our balance sheet business, we continue to focus on working through our loan book and converting our multifamily bridge loans into agency product, allowing us to delever our balance sheet and produce significant long-dated income streams. In the first quarter, we produced another $540 million of balance sheet runoff, $210 million, or roughly 40% of which was recaptured into new agency loan originations. With today's high interest rates, we are chipping away at converting loans to agencies. But if the ten-year gets back to 4% again, far more meaningful, and every quarter point drop in interest rates from there will accelerate this conversion process significantly. As we touched, as we touched on the last quarter, we are well-positioned to step back into the lending market and go on our accretive opportunities to continue to grow our platform. We believe that in these type of markets, you can originate some of the highest quality loans with attractive returns, which will allow us to grow our balance sheet and build up our pipeline of future agency deals. In our single-family rental business, we're off to a great start this year as we continue to be the leader and the lender of choice in the premier markets we traffic in. We had a very strong first quarter with $172 million of fundings and another $422 million of commitments signed up. We also have a large pipeline and remain committed to this business, as it offers us returns on our capital through construction, bridge, and permanent lending opportunities, and generates strong levered returns in the short term, while providing significant long-term benefits by further diversifying our income streams. We are also very excited about the opportunities we're starting to see in our newly added construction lending business. This is a business we believe we can produce very accretive returns on our capital by generating 10%-12% unlevered returns initially, and eventually mid to high returns on our capital once we leverage this business. We have started to see a nice increase in our pipeline of potential deals, with roughly $200 million under application, another $300 million in LOIs, and a significant number of additional deals we are currently screening. We believe this product is very appropriate for our platform as it offers us returns on our capital through construction, bridge, and permanent agency lending opportunities. In summary, we had a very productive first quarter, and we are working exceptionally hard to manage through the balance of this dislocation. We understand very well the challenges that lie ahead and feel we are very well positioned. Our earnings exceeded our dividend run, run rate. We are invested in the right asset class with very stable liability structures, highlighted by a significant amount of non-recourse, non-mark-to-market CLO debt with pricing that is well below the current market. We're also well capitalized with significant liquidity and have the best-in-class asset management function and seasoned executive team, giving us confidence in our ability to manage through this cycle and continue to be the top performer company in our space. I will now turn the call over to Paul to take you through the financial results. Okay, thank you, Ivan. As Ivan mentioned, we had another very strong quarter, producing distributable earnings of $97 million, or $0.40 - $0.47 per share and $0.48 per share, excluding a $1.6 million realized loss on a previously reserved for a non-performing loan that paid off at a slight discount in the first quarter. These results translated into ROEs of approximately 15% for the first quarter and resulted in a dividend payout ratio of around 90%. As Ivan mentioned, we successfully modified 40 loans in the first quarter, totaling $1.9 billion, all of which had borrowers invest additional capital as part of the modification terms. On $1.1 billion of these loans, we required borrowers to invest additional capital to recap their deals, with us providing some form of temporary rate relief through a pay-and-accrue feature. The pay rates were modified on average to approximately 7%, with only around 2% of the original in the residual interest being deferred. A subset of these loans, totaling $713 million, made up the vast majority of our less than 60-day delinquencies at December 31st, which we received all past due interest owed on these loans in accordance with the modified terms. Last quarter, we disclosed two pools of loans that were relevant to the total delinquencies in our balance sheet loan book. Our 60+ day delinquencies and loans that were less than 60 days past due that we were only recording interest income on to the extent cash was received. The 60+ day delinquent loans or our non-performing loans were approximately $275 million last quarter, and the less than 60-day past due loans were $957 million. Our non-performing loan numbers are now $465 million this quarter, due to approximately $175 million of loans progressing from less than 60 days delinquent to greater than 60 days past due, and roughly $55 million of net new additions for the quarter. The less than 60 days past due loans, or our non-accrual loans, came down to $489 million this quarter, mostly due to $713 million of loans being successfully modified, as I mentioned earlier, combined with $175 million of loans moving to 60+ days delinquent, which was partially offset by approximately $420 million of new loans this quarter that we did not accrue interest on. So in summary, our total delinquencies are down 23% from $1.23 billion last quarter to $954 million this quarter, which is significant progress, again, due to the tremendous success we had in modifying and resolving loans and our continued strong collection efforts. And while we expect to continue to make considerable progress in resolving these delinquencies, at the same time, we do anticipate that there will be new delinquencies in this challenging environment. We also continue to build our CECL reserves, recording an additional $18 million on our balance sheet loan book in the first quarter. We feel it's very important to emphasize that despite booking approximately $108 million CECL reserves across our platform in the last 15 months, $88 million of which was in our balance sheet business, we still grew our book value per share 1% to $12.64 a share at 3/31/2024, from $12.53 a share at 12/31/2022, which is well above the performance of our peers, the vast majority of which have experienced significant book value erosion in this market. Additionally, we are one of the only companies in our space that have seen significant book value appreciation over the last 5 years, with 36% growth during that time period, versus our peers, whose book values have declined an average of approximately 18%. In our agency business, we had a solid first quarter with $850 million in originations and $1.1 billion in loan sales. The margin on these loan sales came in at 1.54% this quarter, compared to 1.32% last quarter, mainly due to some larger deals in the fourth quarter that carry lower margins. We also recorded $10.2 million of mortgage servicing rights income related to $775 million of committed loans in the first quarter, representing an average MSR rate of around 1.31%, compared to 1.55% last quarter, mainly due to a higher percentage of Fannie Mae loan commitments in the fourth quarter, which contain higher servicing fees. Our fee-based servicing portfolio also grew to approximately $31.4 billion at March 31st, with a weighted average servicing fee of 39 basis points and an estimated remaining life of around 8 years. This portfolio will continue to generate a predictable annuity of income going forward of around $122 million gross annually, and this income stream, combined with our earnings on our escrows and gain on sale margins, represent 40% of our net revenues. In our balance sheet lending operation, our $12.25 billion investment portfolio had an all-in yield of 8.81% at March thirty-first, compared to 8.98% at December thirty-first, due to a combination of an increase in non-performing loans and some new loans that did not make their full payment as of March thirty-first, that we decided not to accrue for, which was partially offset by modifications in the first quarter on the vast majority of our less than 60-day past due loans from last quarter. The average balance in our core investments was $12.5 billion this quarter, compared to $13 billion last quarter, due to runoff exceeding originations in the fourth and first quarters. The average yield on these assets increased to 9.44% from 9.31% last quarter due to the successful modification of the bulk of our past due loans, allowing us to collect a majority of the back interest owed on our fourth quarter delinquencies, which was partially offset by an increase in non-performing loans and some new non-accrual loans in the first quarter. Total debt on our core assets decreased to approximately $11.1 billion at March 31st, from $11.6 billion at December 31st. The all-in cost of debt was flat at approximately 7.45% at both 12/31 and 3/31. The average balance on our debt facilities was approximately $11.4 billion for the first quarter, compared to $11.8 billion last quarter. The average cost of funds in our debt facilities was basically flat at 7.5% for the first quarter, compared to 7.48% for the fourth quarter. Our overall net interest spreads in our core assets increased 1.94% to 1.94% this quarter, compared to 1.83% last quarter, again, from the successful modification of the majority of our past due loans from last quarter. Our overall spot net interest spreads were down to 1.37% at March 31 from 1.53% at December 31st, mostly due to an increase in non-performing loans during the quarter. Lastly, as we continue to shrink our balance sheet loan book by moving loans to our agency business, we have delevered our business 20% over the last 15 months to a leverage ratio of 3.2 to 1 from a peak of around 4.0 to 1. Equally as important, our leverage consists of around 72% non-recourse, non-mark-to-market CLO debt, with pricing that is below the current market, providing strong levered returns on our capital. That completes our prepared remarks for this morning, and I'll now turn it back to the operator to take any questions you may have at this time. James? Thank you. As a reminder to ask a question, please press star one on your telephone. To withdraw your question, press star two. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. We'll take our first question today from Steve Delaney with Citizens JMP. Morning, everyone. Thank you. Great effort on the modifications in the first quarter. I just want to be clear, and Paul, appreciate that paragraph. I believe that that is new. But, 39 loans, $108 billion in UPB. Do we understand that in each of those cases, the borrowers put additional capital into the transactions? That's correct. Wow! In fact, we disclosed in the prepared remarks in Ivan's section that of the $1.9 billion that we modified, every single one of those deals required borrowers to bring capital to the table, and the capital that was injected into those deals was $45 million. Yeah. Steve, I want to shed a little light on that because you can go back to my earnings script, I think about three or four quarters ago, when, you know, people were talking about how complex and difficult the market was. And I think I gave a perspective that in general, you know, your borrowers are going to have to contribute about 3% of capital to the table, and that capital is generally going to be used to buy interest rate caps, and that's the differential to where rates are through in this elevated environment and where a normal pay rate would be in, you know, the high fours and low fives. So that's kind of reflective of the capital that's needed to buy caps or right-size assets. So that's the approximate level on an annual basis of the recapitalization that's needed in this currently elevated interest rate environment. Appreciate that, Ivan. And further, we understand that 23 of the 39 are now on pay and accrue. Is that where they will pay some, and then you agree to just accrue some portion of the cash payment required? Is that correct? That is correct. And as I said in my commentary, Steve, those loans were floating rate loans from anywhere from 3.25 over to 4.25 over. So those guys were paying 8.5%-9.5%. And when we modified the deals, we modified it to a pay of about 7%, with less than 2% being deferred. So we're getting a really strong pay rate on those deals. That's good color. Thank you, Paul. And just a quick follow-up for my second question. Ivan, the new construction loan product, strategically, obviously, credit is tighter and given the CRE market uncertainties that are out there. But we hear banks are really pulling back broadly on commercial real estate. I work for a bank these days. Is that opportunity largely been created by the void that with banks pulling back and companies like Arbor are going to have to step in and provide capital for CRE and multifamily construction loans? Yeah, that without a doubt. I mean, the landscape for regional banks is not good. I mean, you saw another regional failed in Philly last week. There's been a series of failures. The commercial real estate book that exists in the banks are significantly troubled, and I don't think there's much activity going on. So we've created that program to step in and fill that void. Our single-family built-to-rent business is exploding because a lot of regionals were doing that. And, you know, to do a construction lending activity is an okay business. You know, it's a decent business. It's a lot of work. It's a lot of labor. Yeah. What makes it most attractive for us, as we said in my comments, is the returns on our capital, the construction lending- Right. W hich is, you know, a decent levered business, but when you talk about the labor and everything else that goes along with it, I'm not sure I would love that business. But when you add the fact that you can do a stabilized bridge loan and then ultimately do an agency loan, it's an extraordinarily exciting business for our platform. Well, great progress to start the year, and thank you both for your comments. Thank you, Steve. Our next question will come from Stephen Laws with Raymond James. Good morning. Appreciate the comments and the details you've already provided. You know, Paul, I wanted to touch base on net interest income, or sorry, interest income. You know, pretty big lift. Can you talk about the mix there as far as, I think you mentioned in your prepared remarks, some of it was a recovery of some interest on delinquent loans from Q4. But how much of that is PIK income, and how much of that is possibly fees on modifications? How do we think about the mix of interest income? Sure. So it is a mix, as you laid out, Steve, and I think that it's really important to talk about the success we had in the first quarter on a substantial amount of what I'll call the non-accrual loans we disclosed last quarter. So just give you some color, we had $957 million of loans that were less than 60 days past due last quarter, that we did not accrue all the interest to the extent that they made some payment, but not the full payment. We elected to be conservative and not book that interest income. That interest income that we did not book on those loans was $12 million. During the quarter, we modified $712 million of those $957 million loans, and we got $10 million in back interest. So the first quarter was lifted by $10 million of back interest that was collected on loans that we did not previously accrue. And then that was offset by the fact that we have a new bulk of loans, $489 million of non-accrual loans and some more non-performing loans, that net of the payments they made this quarter was around, you know, another $8 million or $9 million we didn't accrue. So the way the way I look at net interest income for the quarter is we had a lift of around $10 million-$11 million from payments of back. We had a little bit of a drag of about $8 million on new loans, and then that was offset by the fact that the portfolio shrank a little bit, and acceleration of fees was a little bit lighter this quarter by, I think, $1 million. That's how you get to a flat number. I think the way I look at it going forward is that, you know, we just keep rolling these loans, and we keep working through them. So now we have a new list of loans that we're working through now, and it'll take us some time, but we're optimistic we'll be able to get through a bulk of these loans and get a successful outcome on those. So it's a little bit choppy, I understand, but that's what happened. So we did have a lot of success this quarter in defaulted loans or delinquent loans from the prior quarter to be completely paid back when we modified it. It was a condition of our mod. You got to bring your loan current, and so they brought their all their loans current. Right. A really good helpful color. And you guys mentioned a couple of times in the prepared remarks about the dividend and earnings covering the div. You know, can you talk about cash earnings, maybe now that you've got some, you know, deferred interest in PIK income? How do you think about cash earnings versus distributable versus the dividend level as we kind of move over the balance of the year, which, Ivan, I know you mentioned, given this rate environment, you know, still have a little bit of work to do over the next couple of quarters. Yeah. So let me give you some color on a couple of things you pointed on, and then Ivan can probably give more global color. You asked the question; we did modify $1.9 billion loans during the quarter. $1 billion of them, we gave some form of rate relief. That rate relief for the quarter would have accrued to about $4 million. But what we do here at Arbor, and Ivan can get into more detail, is we spend a lot of time going through each individual asset and each individual mod and determining whether we think that deferred interest is going to be collectible. And it's done on a case-by-case basis. Sometimes we're more conservative on deals that, you know, than maybe, you know, others would be. So that $4 million of accrued interest, we only accrued $2.5 million for the quarter, so we did not accrue $1.5 million. So that's what hit the first quarter on those PIK assets. But I'll say, listen, it's; there's a myriad of different things that go into distributable, go into GAAP, go into cash. For instance, so there's $2.5 million in earnings that is being accrued, but there was $10 million or $11 million that came in from last quarter that we weren't accruing. In addition to that, we booked specific reserves on our agency book of another $2.9 million. If you look at our definition of distributable, because those loans are normally going through the foreclosure process with the agencies, we take that as a distributable loss, even though the cash hasn't been sent out. So we feel good about our cash position. If you look at our cash flow from operations, you see it's very strong. We certainly feel we have plenty of cash to cover our dividend. And so there's a mix of different things that go in and out of the numbers, but that's kind of a flavor, Steve, if that helps you. Yeah, that's great. And one final, if I can sneak it in, you know, can you talk about the CLO? How many loans have you—did you buy out during the quarter, and then the $600 million of CLO liquidity, how do you intend to use that? And can you put modified loans into the CLOs or how will you use that flexibility? Thank you. So I'll give you the buyout numbers, and then I'll let Ivan talk about the strategy and the CLO vehicles. So in the buyout numbers for the quarter, as you may remember from our last quarter disclosure, we told you we bought $90 million of loans out of our CLOs in February. So that's part of the first quarter numbers. Those, those loans were reworked and rebanked elsewhere. We bought another $15 million, one loan out in March, and that loan has been banked at one of our warehouse facilities. And then in April, we bought another $120 million out. So total purchases through April, from January to April, were $223 million, but, but only $20 million of those loans haven't been reworked and, and rebanked. In April, the $120 million we bought out, $100 million was one deal, and that deal in early April was recapped with a significant amount of capital brought to the table. I think it was $10 million-$15 million. Our loan was recut and paid down to $95 million. So we had a $100 million loan. It's now a $95 million loan, performing at SOFR + 300, and we have a whole host of new equity in there with new sponsors that recapped that deal. So of the $223 million we repurchased out of the CLOs since January to today, only $20 million of those loans haven't been reworked and relevered, and we're working on those now. I'll let Ivan give the color on the strategy and the vehicles. Hey, listen, we're very sensitive to, you know, the cash we have in our CLOs and, you know, utilizing those vehicles because they're low-cost vehicles, and we work extremely hard in producing new loans to fill that mandate or taking loans that are currently on our balance sheet that, you know, fit those parameters. So it's our job to maximize the value of those. We've done a pretty good job. We feel relatively comfortable that, based on our pipeline of new opportunities and existing opportunities, that we'll be able to effectively utilize that cash in the vehicle. But make no mistake about it, it's a business objective of ours, and that really adds to, you know, our income stream by leveraging off of the low-cost vehicles that are in place. Great. Appreciate the comments this morning. Thank you. Thanks, Steve. Our next question will come from Brian Violino with Wedbush Securities. Great. Good morning, and thanks for taking my question. It sounds like you anticipate that the loan loss allowance is going to continue to increase in some form in the near term. Just wondering if you could give some thoughts on expectations for where the reserve might go from here, and any dynamics of how modifications could impact your CECL reserve going forward? Thanks. So let me just give a little overview, and I covered it in my comments. In this elevated interest rate environment, we expect if it stays this way, that you'll see a consistency in the next few quarters as we've seen in the first quarter. We've talked historically over the last several earnings calls, that the first and second quarter would be the toughest. Clearly, the first quarter showed a little greater stress than the fourth quarter. We expect the consistency flowing into the second and if rates stay elevated. I mean, clearly the news that came out and the drop in the 10 years, and the change today, there's a lot of optimism already, and any drop, as I mentioned on my comments, will have a significant impact. It just doesn't impact, you know, the ability to convert off our balance sheet. It's an optimism in the market and a return to liquidity and the ability for people to recap their deals. So everything will have to do with interest rates, but if they stay, you know, in the range that we've seen in the first quarter, we expect the next few quarters to be pretty consistent with the first quarter. Yeah, I'd agree with that, Brian. That's, that's how we're looking at it. So reserves will be obviously based on where the macro environment goes, and if interest rates stay elevated, we could see some additional reserves kind of in the line of what we've seen, but it'll all be based on what we see over the next couple of quarters. Great. Thanks for taking my question. Our next question will come from Jade Rahmani with KBW. Thank you very much. Just taking a step back for a moment, would you say, and I would say you've been ahead of the curve in expecting, you know, credit issues. Would you say credit performance to date is in line, better, or worse than what you'd have expected, compared to, say, what you thought in the fall? And maybe if you could think about certain aspects, such as the borrower, actual wherewithal, liquidity in the multifamily space, which is very strong, you know, underlying property-level cash flow, and finally, you know, valuations, cap rates. How would you think about where things are tracking? Yeah. Sounds like you want me to be a college professor. I'm not quite equipped for that, but I'll give you a little bit of a view in terms of the things that impacted us that we couldn't anticipate. I think COVID had a huge impact on the market that one couldn't anticipate. And the impacts really were the tendency that was able to be subsidized in their rent payments and not pay rents for many years, and then all of a sudden started to have to pay rent. So I think there was a higher level of delinquencies that were anticipated. Nobody quite understood that some of the elevated occupancies and rent increases were a result of government subsidies, and people artificially being able to stay in units but really not have the income streams. And then the combination in some of the jurisdictions of the court systems not evicting people, and then having a lot of economic vacancy, which we really historically haven't had. Those have been unanticipated issues, and those have created elevated delinquencies. And if you combine that with elevated short-term interest rates, those were complexities that occurred. In addition, you've had a lot of elevated insurance costs in a lot of areas, you know, in the Southeast and areas like that. Nobody anticipated, you know, insurance costs going up to those degrees. So those were unanticipated issues that occurred. I think the other thing that, you know, we, we've experienced, and I think we've covered a little bit on the call, I think there's a lot of elevated fraud in the industry through the brokerage industry, which is now being dealt with through the agencies. So there are a lot of, you know, elevated purchase prices and things of that nature. So those are kind of the unanticipated things that occurred in the market that have created additional stress beyond what we anticipated, and that's kind of my overall comment as some of the things that we didn't anticipate and that we're dealing with that created additional stress. In terms of the future outlook, you say, you know, you would expect this quarter, next quarter to be peak stress, and with elevated interest rates, it's possible that extends into the third quarter and fourth. But in terms of the actual credit outcomes, you know, losses that you're taking, CECL reserves, what do you think could make that worse? Or would you say you're expecting it to be, you know, the next few quarters to be pretty similar to what happened this quarter? I can only tell you how we feel based on our current book and how we're working through loans and borrower problems, and in this interest rate environment. You know, the interest rate environment has a lot to do with the ability for people to recap their loans. Clearly, you know, if short-term rates go down, you know, by 1 point, 1.5 points, the 3 points I mentioned earlier becomes 1 point, 1.5 points, and a level of optimism to resolve people's loans and the ability to attract capital becomes very simple. If, you know, short-term rates were at 3%, not 5.25%, people wouldn't have to be recapping their loans. They'd have the cash flow from their loans, or it would be marginal. At this level, people have to bring three points to the table to buy interest rate caps to bring them to a neutral cash level. So that's why we're talking about as thin as things exist today. Thank you. Just lastly, on cash flow from operations, something I look at closely and clearly, the servicing portfolio, as well as the GSE business overall, helps support the cash flow. It did dip in the first quarter, and I think usually there's a use of working capital. Dividends cost about $400 million per quarter. Do you expect cash flow from operations to match the dividend on a full year basis? We do. I mean, I think when you look at the cash flow, you got to back out certain items like changes and you know other assets and liabilities, and I think if you do that, we're still above the dividend. So we do expect it to continue that way. Obviously, if the market gets significantly more stressed, and there's more accrual features than there are now, then that could change. But right now, we don't see a runway for that to be lower than our dividend. Thanks very much. Our next question will come from Leon Cooperman with Omega Family Office. Yeah, hi, let me just get off the speaker. You know, Ivan, you and your team have been really brilliant in conducting the affairs of the company. I'm just curious, are things evolving in a manner that you expected? Because you were very negative a year ago, and you were very correct. I see that you have $138 million left in your repurchase program, and you bought stock at $12.19. Have things evolved in a manner where you would want to continue to buy back stock if it got back down there? Or do you think things have changed differently than you had anticipated? I think, you know, buying back stock, you know, below book is extremely attractive to us, as I mentioned in my comments. It becomes very complicated because, you know, when we buy back stock in a blackout period, it's done on a program basis. And, you know, very, very often, and, you know, this is a very sensitive subject. Very, very often, most of the attacks that come on the company are in a blackout period. It's amazing. Most of the publications come out a week before earnings, when we're not allowed to comment, or a week, or a month, and they know we can't comment, so we're kind of defenseless. The only defense we have is our buyback program. But we can't be in a position where Paul wakes up one day and say, "I want to buy this much back that day." We have, you know, a computer-driven program. But to answer your comment very specifically, we have $138 million that we will buy back. It's set to buy back generally when we're in a blackout period below book. If the stock gets hit anything substantially, I would go to the board and ask to buy back more. I think it's a great return on our investment. Very well. Basically, that judgment means you have confidence in the realistic value of your book. You think the $12.64 is a real number, accounting for the weakness in the environment, which you've been very right on, and I congratulate you. You've been a great steward of the shareholders' money. Thank you. Thank you, Lee. Thanks. Thank you, Lee. Our next question will come from Rick Shane with JP Morgan. Hey, guys. Thanks for taking my questions this afternoon or this morning. Of the $1.9 billion in mods during the quarter, I'm curious, how much were loans that were less than 60 days delinquent, and how much were on loans more than 60 days delinquent? And what, of the $1.9 billion, how much were in the CLOs? Yeah, so let me give some numbers, Rick. Appreciate the question. So as I said in my prepared remarks, out of the $1.9 billion we modded, $1.1 billion of them we modded with some form of rate relief. But out of the 1.9, $713 million of those loans were less than 60 days delinquent, and we weren't accruing from the prior quarter. Another, I think, $40 million of loans were loans that were non-performing, that we were able to modify, take out of our non-performing bucket, although new loans came in. So that's the bucket of how we look at the modifications. As far as how many were in the CLO, I don't have that here, because I tried to give you guys numbers. I think we got a little bit off track last quarter talking about CLO delinquencies, and I think what people care about is total delinquencies, whether they're in the CLO or not, and that's what we're giving you, which is that $954 million I disclosed today, 464 in non-performing that are greater than 60, and 49 that are less than 60, which is all inclusive of loans, whether they're in the CLOs, on our balance sheet, in our warehouse lines. I can't tell you exactly, but I would say, you know, the majority of those loans were probably in the CLOs, because the bulk of our loans are financed in the CLOs. Got it. Yeah, that makes sense. And again, I would agree with you that the commentary last quarter was confusing, and I think everybody spent a lot of time trying to parse it out, so I appreciate you trying to put it in sort of a clearer context this quarter. It's interesting, as you've been providing this in some of the detail. I've been trying to tie it out to what's stated either in the press release or the 10-Q, and some of it's there, some of it's not. It would be great if, on a go-forward basis, we could see that, because it's just a lot easier to sort of match up if we can see it in print and understand what's going on there. Yeah, hey, Rick, to that comment, Rick, to that comment, in the press release, it's a little bit less disclosure, but in the Q, it's very robust. And I think, tell me if I'm wrong when you reread it, that when we do talk about the buckets of loans we modded, we have 3 buckets in the Q. And in there, you'll see a subset of the loans is the $713 million that were less than 6. So I tried to roll this forward to you guys, basically saying: "Hey, we had $957 million of loans that were less than 60 days. That's our non-accrual bucket that's in the Q. That's now at, you know, $489 million, and how you get there is $175 million of loans moved up, 713 loans were modded, and $420 million loans were added. And I did the same for the non-performing bucket. So I do think it's all there. We can have a discussion offline if after you read it again, you don't think that's correct. Happy to take any suggestions on how to prove this, improve the disclosure, but we tried real hard to be very transparent so everybody could follow the numbers. Got it. Yeah, I just wasn't able to find the 489, I think, in that, but I'll go back on that. Yeah, it's definitely in a paragraph there, you'll see. Strange question. Was the repurchase that you guys have cited in the first quarter or second quarter to date? I'm sorry, what was that question again, Rick? I'm sorry, I couldn't hear you. The share repurchases, the $12 million of share repurchases, was that Q1 or Q2? It was Q2. It was in April. Okay. Yeah, it's funny, because I couldn't find it in the cash flow statement. The way I read it, I thought it was in Q1, and then didn't see it in the cash flow statement, and that makes sense. Yeah, the press release, it should say in April. Okay. Okay. Again, we're moving pretty fast, and press release, it's for me- Yeah. Yeah. Last question. Ivan, you talked a little bit about some of the competitive—some of the peer performance, etc. One thing I would note is that you guys in the quarter modified $1.9 billion of loans and received $45 million of infusion, primarily in the form of caps. There's not a lot of peer disclosure on that. The only one—and that equates to about a 2.4%, consistent with your sort of 3% replacement of expiring caps. The only other peer that we can find had $525 million of mods in the quarter, $125 million of capital infusion, so almost 10 times the amount on a percentage basis. I'm just curious if you, clearly, you're getting additional interest rate caps, but given the movement in cap rates, does it make sense to be more aggressive in terms of getting additional equity paydowns or equity investments, bond paydowns as well? Well, I would love to get as much as we can. So you have to be very pragmatic about how to improve your position on each loan, and you have to keep in mind that we have a lot of good borrowers who have been feeding their assets substantially. I can't speak for the other peers, and I can't speak for the assets you're referring to. I can only speak to our book and the fact that we continue to improve our book and our, and we look at each loan individually and try and improve the position on each individual loan. So we're satisfied with the work we've done, and, you have to look at it in the context of, you know, what we're doing in each particular circumstance and how we're trying to improve our position on that loan, and we've done a good job with it. Got it. And, and I apologize, but the nice thing about getting to go last is that, I might get to ask one extra question. Look, you guys have been very clear about the opportunity associated with, rates coming down. Presumably, you have a lot of borrowers who have been bullish on rates, and I do wonder, with the change in tone, over the last two or three months, are you finding that you have borrowers who were sort of hanging on, waiting for an inflection in rates and are now sort of throwing their hands up and saying, "Wait a second, we've, we've been paying out of pocket for a while, and this no longer makes sense." Is that a conversation that's picking up? This, this has been going on for two years, and it's been extraordinarily volatile, and clearly, we've had a recent, you know, move up in rates, and rates are volatile. They go up, they go down. We're as high as 5%. We went down to 3.5%. And volatility is good. It gets people to move off the dime. The biggest and hardest thing right now is an extraordinarily inverted yield curve. You're sitting at a 5.25% SOFR. If you had, you know, 4% or 3.5%, you're paying 8.5%, as opposed to a fixed rate loan, which maybe you're paying the high 5s. It's, it's a lot to carry. People have been carrying for a long period of time. As my early remarks, if you combine the economic occupancy that people have been fighting and some of the rising expenses, it's been a lot of load to carry, and people have been carrying it with a lot of stress. I do think we're seeing movement on economic occupancy, and I think the trend is, you know, clearly our friend. I think insurance costs finally have stopped rising, and more significantly, I think people are focusing on improving their assets and the performance of their assets. I think there was a period of time where, you know, people were putting a lot of time and effort to buying assets, but not running their assets. I think the attention has changed, but now they're really running their assets and improving operations. So a lot has to do with, you know, where the yield curve is, but, you know, volatility is volatility. People feel lousy one day, then the next day, they feel better. And, you know, right now, I will tell you that, you know, you're seeing a 20 basis point drop in the 10-year in the last, you know, 5 or 7 days. I can guarantee you, people are going to lock in some loans and convert and bring capital to the table and, you know, have a nice fixed rate loan. If you see a further drop in the 10-year, I think you'll see a lot more optimism. The best thing that we can see is a drop in the, you know, short-term rates, you know, cap rates. Cap, yeah, cap costs went up significantly when the mood changed. I mean, we had a borrower who was ready to buy a cap and bring money to the table. He was waiting. He waited. It cost him another $500,000. I think when the trend changes in terms of what cap costs are gonna, are gonna be, it's going to be a lot easier for borrowers, so.... it's not an answer in a vacuum. No, I appreciate that. Thank you- It's funny, as equity investors, I suppose we look at optimism as a good thing, and I understand what you're saying from a rate perspective is perhaps it's pessimism as a lender to get your borrowers to start to move. Yeah, I can tell you one thing, the borrowers who didn't take a 4%, you know, ten-year and lock in their rates, you know, 60 days ago, when it hits 4%, they're jumping. Also, keep one thing in mind, a 4% ten-year, spreads are about 20 basis points tighter, so a 4% is almost equivalent to a 3.75, 3.80. Spreads are about 20 basis points tighter right now. So a 4%'s a lot more attractive than it was 6-9 months ago. Sure. Hey, Rick, I appreciate the questions. We gotta get to another one. But I, I did wanna mention, and I, I don't know if it's apples to apples, I don't think it is. I don't know what peer you're referring to that disclosed more capital injected, but if that peer has significant amount of office exposure, that capital injection is gonna be at a different ratio than for multi. But that's just something to think about. It is, and it is. Thank you. Our final question will come from Crispin Love with Piper Sandler. Thanks, good morning, everyone. Appreciate you taking my questions. Following up on, I believe, Steven's question earlier. In the 10-Q, it looks like you're deferring interest until maturity on about $1 billion of the modified loans. So just looking at the first quarter, you had $320 million of total interest income. Can you just break out how much of that was PIK on a dollar basis, and how you would expect PIK to trend over the remainder of the year? Yeah, and that's what I tried to do earlier, Crispin. So on that $1 billion that we had about 1.86% deferral, that number for the quarter, because it wasn't a full quarter when we did the mods, was like, you know, $4 million, but only, only $2.5 million did we actually take through income. We deferred $1.5 million. So you probably gotta just annualize that. And then, you know, it's hard for me to give you a number because new loans will come on, other loans will get resolved. And then, and in addition to that, we've done a nice job of with strong collection efforts of collecting, you know, non-accrual loans in the subsequent quarter. So if we have some success in the second quarter on the non-accrual loans of $489 million that we're not accruing interest on, then that'll help that number. So it's very hard to, to predict what that's gonna look like. We're gonna keep an eye on it, but that's kind of how I would run it out. Take your $1.1 billion at 1.86 and running that on a run rate, and then there's some portion of that that we're not accruing, as I mentioned, because we look at it on an individual basis. Okay, great. So just to be clear, are you saying that $4 million of the $320 million was PIK? I, I just wanted to see if—make sure I have that number correctly. Give or take. Yeah, I'd have to look at the numbers, but that's about right. Okay, perfect. And then can you just disclose what your average net interest margins are on the modified loans just before and after the modifications on approximate levels? Well, I try, I tried to give that data the best I could. So these were 3.25%-4.25% floating deals. And so that's anywhere with SOFR at 5.33%. That's anywhere from, call it, you know, 8.5%-9.5%, and now they're paying 6.95%, and we're deferring 1.86%. So it's, it's the same number. It's just split between a pay and accrual, right? Okay, that makes sense, and that's again, kind of cost of borrowing in the 7.5% range or so, right? Plus the total borrowings, but like, again, a lot of these loans are in the vehicles which borrowings are at, you know, 170 over, which is a lot, lot less than that number, but give or take. All right. Perfect. Thank you. I appreciate you taking my questions. No problem. That will conclude the question- and- answer session. I will now turn the call over to Ivan Kaufman, CEO, for any additional closing remarks. Okay. Thank you, everybody, for your time, and I wish everybody a good weekend. Take care. Bye. This does conclude today's conference call. Thank you for your participation. You may now disconnect.