Good morning, ladies and gentlemen, and welcome to the Q3 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 press star one on your telephone. If you want to remove yourself from the queue, simply 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, Jamie. 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 September 30th, 2024. With me on the call today is Ivan Kaufman, our President and Chief Executive Officer. Before we begin, I need to inform you 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 our expectations in these forward-looking statements are detailed in our SEC reports. Listeners, of course, should not 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 have another strong quarter, as we continue to effectively navigate through this challenging environment. As we discussed in the past, we appropriately positioned the company to succeed in this market, and we are executing our business plan very effectively and in line with our expectations. We have a diversified business model with many counter-reciprocal income streams, are invested in the right asset class with the appropriate liability structures, and are well-capitalized, which has allowed us to consistently outperform our peers in every major financial category over a long period of time and by a wide margin. In fact, most of our peers have cut their dividends substantially, have experienced significant book value erosion, and have generated a negative total shareholder return over the last five years. As we have stated many times, and as you can clearly see from the charts posted on our website, our results have been nothing short of remarkable, and we are consistently outperforming a leader in the space. As we've discussed on the last few calls, we expected the first two quarters of this year to be the most challenging part of the cycle, and we also thought it could leak into the third and Q4s as well if rates remained higher for longer. With the recent 50 basis point rate cut by the Fed. And the significant drop in the 10-year Treasury to a low of around 360, we began to see a much more positive outlook as a result of cap costs becoming far less expensive and buyers being able to access five and ten-year fixed-rate agency deals and buyers moving off the sidelines and becoming extremely active in the market. However, there's been a backup in the 10-year Treasury again to 425, which has somewhat changed the tenor, and we now believe that the recovery will be a little bit slower and could lead to a challenging Q4, which is consistent with our previous guidance. We continue to do a very effective job of working through our portfolio by getting buyers to recap their deals and purchase interest rate caps. In the Q3, we modified another $1.2 billion of loans with $43 million of fresh equity committed to be injected into these deals from the sponsors. This includes cash to purchase new interest rate caps, fund interest and renovation reserves, bring past interest due, current, and pay down loan balances where appropriate. We also continue to make progress in line with our previous guidance on the approximately $1 billion of loans that were past due at June 30th by either modifying these loans, foreclosing, taking them into REO, or bringing in new sponsorship either consensually or simultaneously with the foreclosure. Last quarter, we discussed our plans for these loans, and we estimated that approximately 30%-35% of the pool would be modified, another 30%-35% would pay off, and the remaining 30% would be taken back as REO. In the Q3, we successfully modified $250 million of these loans, or 23%, and we expect to modify another roughly 10% in the Q4. We also had one delinquent loan for $8 million pay off in full in the Q3, and we're expecting another $300 million plus of these delinquencies to pay off over the next few quarters. Additionally, we took back as REO roughly $77 million of loans in the Q3 and are expecting to take back another $250 million plus over the next few quarters. This is strong progress in one quarter and has reduced the $1 billion in delinquencies we had as of June 30th down to just over $700 million at September 30th, or a 30% decrease. As expected, we did experience additional delinquencies during the quarter of approximately $225 million, bringing our total delinquencies at September 30th to approximately $945 million, which is down 10% from our peak in the Q2. While we anticipate having additional delinquencies in this environment, we believe our resolutions will exceed new defaults, resulting in a continued decline in our total delinquencies. It is also very important to distinguish between REOs we take back and bring in new sponsorship to operate and assume debt, and REOs we own and operate ourselves o f the $77 million of REOs we took back in Q3, $20 million we successfully brought in new sponsors to operate and assume our debt, and $57 million we now own and operate directly. We are working exceptionally hard in resolving our delinquencies in accordance with our plan, which, when achieved, will convert non-interest earning assets into income-producing investments that will be highly accretive to our future earnings. This is a challenging and demanding work, and I'm very pleased with the progress we are making in resolving our delinquencies in accordance with our objectives. We also continue to focus on maintaining adequate liquidity levels and the appropriate liability structures, which is critical to our success in this environment. Currently, we have approximately $600 million cash in liquidity, providing us with the flexibility needed to manage through the balance of this downturn and take advantage of the opportunities that exist in this market to generate strong returns on our capital. One of these opportunities is our bridge lending platform, and I have said before, some of the best times, some of the best loans are made in the bottom of the cycle. We believe now is the appropriate time to start ramping up our bridge lending program again and take advantage of the opportunities that exist in the market to originate high-quality short-term bridge loans, allowing us to generate strong leverage returns on our capital in the short run while continuing to build up a significant pipeline of future agency deals, which is critical to our strategy. We have also done an excellent job in deleveraging our balance sheet and reducing our exposure to short-term bank debt. We have approximately $2.9 billion in outstandings with our commercial banks, which is down from a peak of $4 billion, and we have 65% of our secured indebtedness in non-mark-to-market, non-recourse, low-cost CLO vehicles. Our CLOs are a major part of our business strategy, and they provide us with a 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 lower-cost alternative to warehouse banks, which in times like this have fluctuating pricing and leverage point parameters. In fact, one of the significant drivers of our income change are our low-cost CLO vehicles, as well as fixed-rate debt and equity instruments that make up a big part of our capital structure. We were very strategic in our approach to capitalizing our business with a substantial amount of low-cost, long-dated funding sources, which has allowed us to continue to generate outsized returns on our capital. Another major component of our unique business model is our significant agency platform, which offers a premium value as it requires limited capital and generates significant long-dated predictable income streams and produces considerable annual cash flow. In the Q3, we produced $1.1 billion of agency originations, which was in line with our Q2 volumes. In the Q3, we also saw a big dip in the 10-year Treasury to a range of 360- 380, which immediately resulted in a massive increase in our agency pipeline to approximately $1.9 billion, which is one of the highest levels we have ever seen. During that time frame, the agencies got significantly backed up by creating a delay of three to six weeks, which certainly affected the timing of our closings, which was compounded by the recent backup in rates to solidly above 4% again. As a result of these factors and given the magnitude of our pipeline, we are guiding our Q4 volumes to be in the range of $1.2 -$1.5 billion, which is very rate-dependent. If rates stay at these levels, we are confident we can originate $1.2 billion in the Q4, but if rates get meaningfully below 4% again, we can produce the top end of our range to $1.5 billion. We also continue to do an effective job at converting our balance sheet loans into agency product, which has always been one of our key strategies and a significant differentiator from our peers. In the Q3, we generated $520 million of payoffs and $385 million, or 74% of these loans being refinanced into fixed-rate agency deals for the first nine months of this year. We recaptured over 60%, or $1.1 billion, of our balance sheet runoff into agency production, and as I have said in the past, if interest rates continue to decline, we expect that this will become an even more meaningful part of our business going forward. Our fee-based servicing portfolio, which grew another two% this quarter and 10% year over year to $33 billion, generates approximately $125 million a year in recurring cash flow. We also generate significant earnings on our escrow and cash balances i n fact, we are earning 4.6% on around $2.3 billion of balances, or roughly $120 million annually, which combined with our servicing income and annuity totals $235 million of annual gross cash earnings, or $1.15 a share. This is in addition to the strong gain on sale margins we generate from our originations platform. And it's extremely important to emphasize that our agency business generates over 45% of our net revenues, the vast majority of which occurs before we even turn the lights on every day. This is completely unique to our platform. We continue to do an excellent job in growing our single-family rental business. We had another strong quarter with $240 million of fundings and another $375 million of commitments signed up, which now brings our nine-month numbers to $1.1 billion, which is already right on top of the total we've produced for all of last year and brings our total commitment volume to $4.6 billion from this platform. Additionally, we have a large pipeline and remain committed to doing this business that results as three turns on our capital through construction, bridge, and permanent lending opportunities and generate strong leverage returns in the short term while providing significant long-term benefits by further diversifying our income streams. We also continue to make steady progress in our newly added construction lending business. This is a business we believe can produce a very accretive return to our capital by generating 10%-12% unleveraged returns initially and mid to high leverage returns on our capital when we obtain leverage. We closed our first deal in the Q3 for $47 million, and we continue to see growth in our pipeline with roughly $300 million under application. And $200 million in LOIs and $600 million of additional deals in the current screening. We believe this product is very appropriate for our platform as it offers us three turns on our capital through construction, bridge, and permanent agency lending opportunities. And again, between our SFR and construction lending products, we expect to be able to continue to grow our balance sheet loan book and generate strong returns on our capital, very importantly seeding a significant amount of our future agency production. In summary, we had another productive quarter, and we are working very hard to manage through the balance of this dislocation. We feel we have done an excellent job in working through our loan book and in getting buyers to recap their deals with fresh equity, as well as bringing in quality sponsors to manage underperforming assets and working through our non-performing loans. We realize that although the market backdrop is improving, there's still a lot of work to be done to manage through this environment, and we believe we are well positioned to execute our business plan and continue to outperform our peers. I will now turn the call over to Paul to take you through the financial results. Okay, thank you, Ivan. We had another strong quarter producing distributable earnings of $88 million, or $0.43 per share, which translated into ROEs of approximately 14% for the Q3. As Ivan mentioned, we modified another 24 loans in the Q3, totaling $1.2 billion. On approximately $710 million of those 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-accrual feature. The pay rates were modified on average to approximately 6%, with 2.5% of the residual interest due being deferred until maturity. $240 million of these loans were delinquent last quarter and are now current in accordance with their modified terms. Our total delinquencies are down 10% to $945 million at September 30th, compared to $1.05 billion at June 30th. These delinquencies are made up of two buckets: loans that are greater than 60 days past due and loans that are less than 60 days past due that we're not recording interest income on unless we believe the cash will be received. The 60-plus day delinquent loans, or non-performing loans, were approximately $625 million this quarter, compared to $676 million last quarter, due to approximately $152 million of modifications, $77 million of loans taken back as REO, which was partially offset by $110 million of loans progressing from less than 60 days delinquent to greater than 60 days past due, and $68 million of additional defaulted loans during the quarter. The second bucket, consisting of loans that are less than 60 days past due, also came down to $319 million this quarter from $368 million last quarter, due to $88 million of modifications, $110 million of loans progressing to greater than 60 days past due, and $8 million payoff, which was partially offset by approximately $157 million of new delinquencies during the quarter. And while we're making good progress in resolving these delinquencies in accordance with our objectives that we discussed earlier, at the same time, we do anticipate that there could be new delinquencies in this environment. As Ivan mentioned, in accordance with our plans of resolving certain delinquencies, we have started to take back real estate in the Q3, and we expect to take back more over the next few quarters. The process of taking control and working to improve these assets and create more of a current income stream takes time, which, as I mentioned on our last call, will likely result in a low watermark for net interest income over the next couple of quarters until we have worked through this portfolio. This is what we expected, and it's consistent with our previous guidance that this would be the period of peak stress and the bottom of the cycle. In line with our strategy of taking back REO assets, we decided to break out our REO assets into a separate line item this quarter, which was previously included in other assets on our balance sheet. As Ivan discussed earlier, we took back approximately $77 million in assets in Q3, $57 million of which we currently own and operate, which was accounted for as REO, and roughly $20 million that we had brought in new sponsorship to run and assume our debt, which was accounted for as a sale and a new loan in the Q3. The other roughly $78 million in REO on our balance sheet at 9/30 were deals taken back in previous years that were included in other assets in the past. We also continue to build our CECL reserves given the current environment, recording an additional $16 million in reserves in our balance sheet loan book in the Q3. It's important to continue to emphasize that despite booking approximately $162 million in CECL reserves across our platform in the last 18 months, $132 million of which were in our balance sheet business, we were still able to maintain our book value. This performance is well above 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 has seen significant book value appreciation over the last five years, with 28% growth in that time period versus our peers whose book values have declined on average approximately 22%. In our agency business, we had a solid Q2 with $1.1 billion in originations and loan sales. The margins on our loan sales were up to 1.67% for the Q3 from 1.54% last quarter. We also recorded $13.2 million of mortgage servicing rights income related to $1.1 billion of committed loans in the Q3, representing an average MSR rate of around 1.25%. Our fee-based servicing portfolio also grew to approximately $33 billion at September 30th, with a weighted average servicing fee of 38 basis points and an estimated remaining life of seven years. This portfolio will continue to generate a predictable annuity of income going forward of around $125 million gross annually. And this income stream, combined with our earnings on escrows and gain on sale margins, represents over 45% of our net revenues. In our balance sheet lending operation, our $11.6 billion investment portfolio had an all-in yield of 8.16% at September 30th, compared to 8.60% at June 30th, mainly due to a decrease in SOFR during the quarter. The average balance on our core investments was $11.8 billion this quarter, compared to $12.2 billion last quarter, due to runoff exceeding originations in the second and Q3s. The average yield on these assets increased slightly to 9.04% from 9% last quarter, mainly due to slightly more back interest collected in the Q3 than the Q2 from Q3 modifications, which was partially offset by some new non-accrual loans in the Q3. Total debt on our core assets decreased to approximately $10 billion at September 30th from $10.3 billion at June 30th, mostly due to paying down CLO debt with cash in those vehicles in the Q3. The all-in cost of debt was down to approximately 7.18% at 930 versus 7.53% at 6/30, mostly due to a reduction in SOFR. The average balance on our debt facilities was down to approximately $10 billion for the Q3, compared to $10.8 billion last quarter, mainly due to the unwind of CLO 15 that occurred late in the Q2, combined with paydowns in our CLO vehicles from runoff in the Q3. The average cost of funds on our debt facilities was up slightly to 7.58% for the Q3 from 7.54% for the Q2. Our overall net interest spreads on our core assets were flat. For both the second and Q3 at 1.46%, and our overall spot net interest spreads were down to 0.98% at September 30th from 1.07% at June 30th, mostly due to less CLO debt outstanding, which has a lower cost of funds from paydowns during the quarter. We also continued to improve our financing sources, adding a new banking relationship with a $400 million warehouse facility that we closed in the Q3. And lastly, but very significantly, as we continue to shrink our balance sheet loan book, we have de-levered our business 25% over the last 18 months to a leverage ratio of 3- 1 from a peak of around 4- 1. Equally as important, our leverage consists of around 65% non-recourse, non-mark-to-market CLO debt with pricing that is still well 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 over to the operator to take any questions you may have at this time. Jamie? Thank you. As a reminder, to ask a question, please press star one on your telephone. To withdraw your question, simply press star two. So that others can hear your questions clearly, we ask that you pick up your handset for best sound quality. We will pause for just a moment to assemble the queue. We'll hear first from Steve Delaney with Citizens JMP. Thanks. Good morning, Ivan and Paul. Thanks for the help with the additional details on your NPLs and loan mods in the press release t hat's very helpful. I was wondering, you've obviously built CECL reserves. I think Paul said whatever it was, $180 million over the last 18 months. One thing that's not in your release, and I guess we could find it in the reconciliation and your loss reserve, could you comment? about the actual amount of realized losses that you've taken this year as you work through the whole process? Do you think about it that way, Ivan, that there's paper reserves, but at some point in time, there's a real loss? And that's kind of what I'm getting at, if you could give us some idea of what the real losses look like compared to the loss reserves. Thank you. Sure. So, Steve, thanks for the questions, Paul. So we haven't really had any realized losses during the year. I think we had maybe a $1.5 million realized loss in last quarter or the Q1, I forget, on a small loan that we took back b ut for the most part, some of the REO we took back during the quarter, we had some reserves on, and we took those back at fair value s o until we dispose of those REO assets, we don't have a gain or a loss. So we've not seen any real significant realized losses or any material realized losses. As you know, the $162 million that I guided to on the call that we booked in CESL reserves, $132 million in our balance sheet is already reflected in our book value. But as you said, it hasn't been realized. And we don't know how much, if any, will be realized, and it takes time to work through those assets and dispose of them. But at this juncture, we just haven't had any significant realized losses at this point. Got it. That's helpful to understand. Thank you, Paul. And just note, we noted in the press release the $100 million three-year note issue at 9%. Could you comment on the purpose and use of proceeds? Just on the surface, it looks like expensive capital. But I'm just curious what your thought process was with that. We felt it was appropriately priced capital for what it is. It's three-year capital. We didn't want to go out too long-term, and certainly, it was adequate relative to where our dividend was, and it was an easy piece of capital to put in place. We're also seeing some pretty good opportunities in the mid-teens returns. So we thought it was properly priced, given where we were in the cycle, and it was also important to us to not go out five or seven years, to go out three years and not be too short, so it was just an easy piece of capital to put in place. Yeah. Steve, I'll just add to that i think that was our thought process i t is we don't really have any pending maturities coming up on any of our unsecured debt other than a convert that's coming due at the end of 2025, which is easily replaceable. But Ivan's view is correct i mean, as we said in our commentary today, we're starting to ramp back up our bridge lending opportunities. We have the SFR business that funds over time. We have our construction business w e're starting to see real solid opportunities in the market to get mid-teens returns s o we looked at that as still cheaper capital than common. And in our view, that's cheap capital for us. Yeah. And I think in my prepared remarks about our SFR and construction lending business, that's mid- to high-teens returns that we put in place a nd keep in mind that that's going to ramp up substantially next year, right? It's in place. It's slower fund in the beginning t hat will ramp up, and we'll get to leverage that up b ut having 9% capital and that's mid-teens returns and knowing it's going to be in place and not having to put too much on and doing a small deal is very appropriate for us. Makes sense. Thank you both for your comments this morning. Thanks, Steve. Next, we'll hear from the line of Stephen Laws with Raymond James. Please go ahead. Hi, good morning. I want to follow up on Steve's question there on the capital y ou mentioned the construction opportunities. Ivan, you mentioned in your prepared remarks, some of the best loans over the years have been done at kind of this point in the cycle as far as the bridge loans. Can you talk about how that pipeline builds into next year? And as you need more capital. How much more unsecured debt are you comfortable raising without equity?, or will you look at tapping the ATM a little bit? Curious to get your thoughts on how you'll raise capital to fund the growth opportunities. Okay. I'm going to meander a little bit because we've made a very strategic decision to put our effort into the built-to-rent or SFR business and construction business for a couple of reasons. Number one, the spreads were very outsized, and there wasn't a lot of competition as regional banks really got dried up. And we really became a dominant lender in that space. We were lending in the, I would say, 350-450 spread. And we were able to get a lot of commitments knowing that would be something that would be funding up in 2025. So it was a good way to look at our business. We opted not to jump into, and it's also a very low loan-to-value business i think our average loan-to-value on that's like 65 or 60%. I thought that the bridge lending on multi was a little too aggressive at that juncture, and it was higher loan-to-value. And I wasn't as comfortable, and we had the optionality of really putting our capital into that space, which we did. I will tell you with clarity that spreads have tightened over the last 60-90 days by 75 basis points. So we have embedded value in that pipeline. Now, what's really happened in the marketplace is that the securitization market has come rolling back. And maybe a year ago, you really couldn't get an effective securitization done. The CLO markets are not as tight as they were in the heyday. They're not that far off maybe they're three-eighths out. So there are a lot of efficiencies that have been drawn, and I think ramping up right now on the bridge lending platform, especially with cap costs coming down and securitization costs coming down, we like that business. About a year ago, spreads were in the 400-450 Cap costs were a fortune, and I didn't like the metrics in that business, so I stepped away from it. Now you're seeing spreads in the 275-300 quarter range with CLO leverage coming in 75 basis points to where it was, and those deals make more sense, so we'll be looking to really get more effective on that side of the business. I think the securitization market will be much more efficient, and we'll be able to tap that in the Q1, which will be very effective in the way we leverage our balance sheet. Now, we've got to manage all of this with where the interest rates are because, as I mentioned in my prepared remarks. Interest rates have a lot to do with our runoff, and we'll manage our runoff and our liquidity on a moment-to-moment basis based on where rates are. We could see if rates come back down to 375 basis points, we can see an accelerator runoff on our balance sheet, which generates enormous cash, so we'll pay attention to all those factors, and we'll tap the different avenues to increase our liquidity as needed where appropriate based on how all those other features toggle. Yeah. Steve, to add to that, our whole approach on capital has been exactly what Ivan laid out. I think we've proven over time as big insider owners, we've been tremendous stewards of capital. We're sitting on a nice amount of liquidity. We tapped a three-year debt instrument we thought was appropriate and accretive. As Ivan said, we manage based on interest rates i f we're going to see a lot of runoff. We're going to generate capital. If we see tremendous opportunities on the bridge side, the construction, the SFR, we'll look to access liquidity in the ways we always have, which is a barbell approach between equity and debt. Right now, we're pretty lowly levered. We like our spot. A lot depends on interest rates, but we'll continue to approach the capital markets like we always have and really focus on not being diluted. Yeah a nd just to jump back into one other item, not only are the NPLs important for us to manage through from an interest standpoint i f you have $1 billion of non-interest earning assets, how you can do the math as we return that back into capital. But the leverage on those assets is much lower. So we'll generate a lot of cash as we resolve that as well. So we'll keep our eye on the path to resolutions. Thank you for the color on that. And it really leads to my follow-up question. Paul, I know in your prepared remarks, you mentioned kind of a low dropping on the earnings here in this quarter, next quarter, kind of near term. As we look to the back half of next year, is it fair to assume we're going to get a decent amount of earnings look between the NPL resolutions, recycling capital, and then resolutions on those REO assets as well? Is that the right way to think about earnings kind of ramping next year? Yeah. I think that's correct, but let's go over it in pieces. I think you've got to look at things a little bit longer term than one or two quarters, right? That's what we talked about s o we're at the bottom. I've guided to a low water mark on interest income because, as Ivan said in his prepared remarks. We're doing a great job of resolving our delinquencies, but we do expect new ones to pop up. Our goal is that our resolutions will exceed the new delinquencies and will continue to have our total delinquencies come down, hopefully in a similar fashion as they did in this quarter. Obviously, where SOFR goes obviously affects the model as well, as you know. But I think over a longer period of time, a longer outlook, that's correct, that as rates move in favor and we're able to resolve our NPLs and our agency business originations go up, all those things move in our favor, right? There's some things that move against you short term when rates come down, and there's things that move with you as the cycle progresses s o I think I look at it, and Ivan looks at it as a more long-term view. In a more long-term view, we think over the next 10- 2 months. We start to really see a lift from those non-performing loans getting resolved as long as we don't have significant additional delinquencies. We see a lift from rates being more cooperative and launching our origination business, our SFR business, our bridge business b ut it's over a longer period of time, Steph. Right. Well, appreciate the comments this morning a nd you guys have done a great job kind of managing through a pretty difficult environment the last year. And certainly, we'll show the successes you've had managing through that s o appreciate the comments and stay here. Thanks, Steph Appreciate it, Steph. Next, we'll hear from the line of Rick Shane with J.P. Morgan. Please go ahead. Thanks, everybody, for taking my questions this morning. Just a couple of things. Ivan, you talked a little bit about the backlog associated with the agency business. And given the run rate through July, which I think last quarter you guys had said was about $360 million, we were surprised not to see an acceleration there. I'm curious how this actually works from a pipeline perspective d o your borrowers lock rates? So is this just a deferral? Or if they didn't hit that window where rates were below 4% for two months, which you've sort of signaled is the big number, is that basically lost opportunity until the next time we see rates tick lower? Okay. I think it's a great question. And I'm intimately involved in it because it's a little bit of a new quirk that the agencies would be so backlogged. And normally, things would move much quicker. When agencies don't turn around your loans, you can't rate lock them, right? So there was a period of time where you were eager to rate lock these loans t hey worked well, but you couldn't get in position. That cost us roughly, in my estimation, $200 -$300 million worth of loans that if rate locking would have closed. Now, unfortunately, rates moved against us s o loans that would have worked at 4% or 375 don't work today. Okay. So the question is, are they lost or are they not lost? We have a $1.8 billion pipeline roughly, and we have normal fallout. We gave a range based on where interest rates would are and where they could be. And our range is $1.25 -$1.5 billion. So that number of 250-300, what I mentioned earlier, which is interest rate sensitive, is the toggle feature of loans that are in the pipeline that if rates come down, will close. So we think if rates stay 4.25%, 4.20%, we'll hit $1.2 billion for the quarter. $1.25 billion. If rates migrate down to, 3.80%, that 300 million, which was previously on the drawing board with those rates. Which don't make sense because borrowers have to put cash back in, those will only happen if rates come down. So that's how we look at it. Great. It's very helpful context i appreciate that. Just pivoting quickly to distributable income. Paul, when we look at that number and think about the mods and the loans that are PIKing, I am assuming with the way you report numbers that PIK income is included in distributable. I apologize. I'm bouncing around a lot this morning i f you mentioned this, how much PIK income was there that was reported that is non-cash in the Q3? Sure. Good question, Rich a nd you're right. We are including the PIK interest on the mods in distributable earnings because I think there's a high probability of collecting it and it's timing. To answer your question, for the Q3, there was $15 million of PIK interest in our numbers. But I want to break that number out for you to give you a little context. So of the $15 million that was PIK interest for the quarter, $3 million was related to a group of assets we modified in a prior year that we have substantial guarantees from the equity behind that we feel very, very strong we're going to collect. On top of that, another couple of million dollars of that was Mezzanine PE, which part of our Mezzanine PE product, whenever we're doing Mezzanine PE and we're doing it behind agency, that always has a PIK feature to it t hat's just normal cost s o you have a pay and you have an accrual. The rest of it, which is about $10 million, was related to mods that happened in the Q1 and Q2 and Q3 of this year, with $4 million coming from our Q3 mods and $2 million coming from our Q2 mods and $4 million coming from our Q1 mods. That's the breakout of the numbers for the Q3, if that's helpful to you. It's very helpful. And I'm scanning the Q2 transcript as you were speaking. That $15 million, I can't find the number in the transcript at the moment i s that comparable to, I think you said, $9 million last quarter? I think it was about $10 million last quarter t hat's right. So it's just up a little bit because it's up a little bit because the Q1 mods. I'm sorry, the Q2 mods are fully in the Q3 now because some of them were modded mid-quarter a nd then you've got your Q3 mods. And then those Q3 mods will have a bigger impact in the Q4 if they were modified late in the Q3. So you're correct. It's about $10 million n ow it's $15 million, and then we'll see where it goes going forward. Great. Thank you guys for taking my questions. In addition to that, though, I just want to point out, Rich, that there are a certain amount of loans that we have modded with a pay and accrual that we've chosen not to book the accrual and not track the accrual. And that's $2 million that's owed to us. That's not in these numbers as kind of an offset if we get it. Okay. Great a nd actually, Paul, you're going to regret keeping talking because I will ask one last question that occurred to me. Please remind me your policy on REO. Do you, when you, and we noticed this differs company to company, do you realize any loss when you take property REO? So it depends on what the value is. So the way REO works in the accounting world is you take back an asset. The time you take back the asset, you have to do an appraisal, and you have to allocate the value between land and building. And if you're carrying the loan at X and the appraisal comes in at Y, then you either have a gain or a loss for accounting on your REO. But for us, that gain or loss is not a realized loss until you dispose of the REO asset or gain. Okay. Got it. Thank you. You're welcome. And we'll turn now to the line of Jade Rahmani with KBW. Please go ahead. Thank you very much. And really great to get all those answers to PIK. Very helpful. I know investors have a lot of questions about that. Wanted to ask on cash flow performance. It dipped in the Q3. If we exclude timing of agency originations and loan sales, operating cash flow was $68 million, down from $94 million last quarter. I know there's some seasonality a gain, this excludes timing related to the agency business, but it is below the dividend. Typically, you do have a pickup in the Q4 s o can you just talk to the cash flow operations outlook and if the dividend you expect to be sustained? Sure. Let's talk about the cash flow. I don't have the numbers you have in front of you, Jade i think you're doing it on a quarterly basis. The 10-Q, which was filed this morning, has a nine-month cash flow of $415 million cash from operations. If you adjust for the timing of the held-for-sale loans and adjust for the timing of the changes in other assets and other liabilities, it's at $328 million t he dividend for the nine months would have been 265. So we cover. There are dips, and there are increases. Obviously, it depends on cash collection. There are certain loans that pay historically late, and you get those cash in the subsequent quarter. But we do feel like we have adequate cash flow from many, many sources to cover the dividend. Great to hear. Regarding liquidity, how much liquidity do you expect to use of the $600 million to take back the $250 million of REO that you mentioned? Do you expect it? And also, I assume there'll be further modifications. Yeah. I think that we're in the thick of it now. And as I mentioned, a lot of these NPLs are very lowly levered relative to the rest of the business we've done, which has impacted our cash b ut it's going to be a turning event. There are many loans that we have REO that we have slated for sale a nd once you have a slated for sale, you can relever those loans up. There are a lot of loans we're seeing dispositions on, and that's pure cash. So at the moment, I think that it'll be somewhat consistent with what we've done. And I think where we are is a pretty good outlook based on being in the bottom of the cycle. Thank you very much. I also wanted to ask about loan putbacks from the GSEs i think one of your competitors has had putbacks and another made some disclosure. But I don't believe there's been any disclosure from Arbor. Have you experienced any of that? No. No, we have not. Thank you very much a nd lastly, just because investors ask about it, is there any comment or update you could provide regarding the DOJ inquiry that was reported? No. We've covered everything in our prepared remarks before a s Rich said, we don't comment on that. Thank you. Thanks, Jade. Next, we'll go to Crispin Love with Piper Sandler. Please go ahead. Thank you. Good morning, everyone. Ivan, you mentioned in the prepared remarks that now could be the time to start ramping up the bridge lending program. So just looking at this quarter, originations are down to around $15 million or so. Which have come down in this environment, which completely makes sense b ut they were $100 million in early 2023 and significantly higher than that previously. So curious on what you're seeing right now, how the demand is from borrowers right now, just how some of those conversations are going and how you might expect originations to trend down the bridge side t hank you. I think what we're looking at to some degree is a lot of the loans with construction loans, which you're getting to see in loans and leasehold w e kind of like that business. And that's where we're putting a lot of our attention. I mean, the math didn't work for me before when spreads were 400 over 450 and SOFR was a five and a quarter, and people had to buy caps and their costs were enormous. Spreads, we just did a bunch of loans at 275 over, and SOFR was lower and cap costs were substantially lower. So I think we closed about $80 million, and we have another couple hundred in the pipeline. So I would say that I'd like to see about $300-$400 million closed on the bridge lending side between now and year-end and then ramp up that pipeline. We're also going to continue to do the build-to-rent construction lending. So you have to look at it in its totality. In addition, we are putting a lot of money out on the pref and mezz, and that's been a 14% business, and that's been a very attractive business s o we have a lot of flexibility here in terms of where we want to put our capital. But with the securitization market returning and with rates on the short end going down, we think that'll be more viable. All right. Thanks I just want to make sure I got that d id you say that you'd expect $300-$400 million of bridge originations between now and year-end? About $300 million is what we're expecting. Yeah w` e did $84 million in October, as Ivan referenced. And then we had $240 million of fundings in the Q3 from our SFR business, which, as we had in our prepared remarks, our committed volume is very, very high. So we got $1.8 billion outstanding on our balance sheet, net, and that continues to fund us. So we do expect that to ramp up. And plus, we did $84 million already, and hopefully, we'll do a couple hundred million more by the end of the year t hat's kind of the way we're looking at it in the different product lines. On top of that, as Ivan said, we're active in the construction lending side. We did our first deal, $47 million this quarter. Again, that funds over time, so it'll take time to fund. But we could have a few more committed volumes closed by the end of the year on that. Yeah. I think it will be impacted if you see short-term rates come down 50 basis points i think that business will see a lot of growth, and the Q1 could be very substantial if that moves in the right direction. Great. Thank you i appreciate all that color. And then just one last question for me. Just curious on your confidence in the current dividend level. You've been covering it with DE. DE has softened a little bit. So it seems like there could be some near-term pressure there, but kind of more confidence as you look out 10-12 months, as you said s o I'm just curious on how? you and the board are feeling about the current $0.43 dividend in the environment right now t hank you. So we have a pretty diversified business and very resilient business. And there are a lot of things that go up and down in our business. Clearly, if rates come down a little bit on the 10-year side, you'll see a dramatic growth in the agency business, which produces a substantial amount of revenue. On the other side, we'll see a little bit of decline on our escrow balances. So they kind of offset each other. If rates do come down, I think you'll see the NPLs resolutions really decline, and that'll be a great contributor to the way our future income comes. So those are the kind of factors that we'll look at very strong. So there's going to be some offsets, some benefits, and some negatives. So I think we're in a pretty good position based on where rates are today. But if rates continue to decline, I think you can see a little bit more optimism on those numbers, even though there'll be a decline on interest-earning escrows. Now, also keep in mind the securitization market has come roaring back, and there'll be a lot of efficiencies on our borrowing costs if we do decide to issue in the beginning of next year i mean, we're paying on our warehousing lines, probably 250 over to 275 over. I think the securitization market, you can see 50-75 basis points of improvement on our borrowing cost and better leverage. So those are the kind of things that we're evaluating and looking at. Crispin and Paul, Ivan laid out all the macro different scenarios of what goes up and what goes down you and I've talked about this in the past. Timing's never perfect, right? Some things may go down earlier and stuff goes up t he way we look at it, the way the company and the board looks at the dividend is you look at it more of a long-term y ou don't look at one or two quarters at the bottom of the cycle. We're confident we have things that will offset. It could be over a period of time, but we're real confident where we are today that over a longer period of time, that's sustainable. Great. Thank you. I appreciate you both taking my questions. Ladies and gentlemen, that will conclude today's question and answer session. I'd like to turn the floor back over to Ivan Kaufman for any additional or closing comments. I just want to thank everybody for their participation. This has definitely been a very challenging time for us and most people in the industry. I think we've outperformed our peers, and I really appreciate your support and your commitment to the company. Thank you, everybody. Once again, ladies and gentlemen, that will conclude today's call. Thank you for your participation. You may disconnect at this time and have a wonderful rest of your day.