Well, good day everyone, and welcome to the Great Ajax Corp Q1 2023 financial results conference call. At this time, I would like to hand things over to Mr. Larry Mendelsohn, CEO. Please go ahead, sir. Thank you. Thank you everyone for joining us for our first quarter of 2023, investor call. Before we get started, I'd like to point out page two, the safe harbor disclosure, you know, for forward-looking statements. I apologize for my voice. The allergy season in Portland is winning right now. Before we get started, I wanted to give you a little introduction. Q1 of 2023 was as expected and predominantly as we discussed on the March 2nd call. A couple of things to note before we get into the details, though. In the first quarter, loan performance continued to increase and loan cash flow velocity from reinstatements on delinquent loans and from sales of homes by borrowers, particularly in March. This continued into the second quarter of 2023 as well. Prepayments from borrowers refinancing their mortgages, however, continued their slower pace, as you would expect. The regular payment performance of our mortgage loans and mortgage loans in our JV structures in excess of our modeled expectations at the time of acquisition for loans purchased at a discount to UPB has increased previous GAAP income by accelerating the purchase discount accretion because of required application of CECL. This reduces forward GAAP interest income and return on equity thereafter. The increase in cash flow velocity in the first quarter, particularly in March, has increased even the post-CECL GAAP yield a bit. We've seen this in the second quarter as well so far. At March 31, we had approximately $49 million of cash as well as a significant amount of undercovered securities and loans, which I'll point out later in a table. On page three, business overview. Our manager's data science guides our analysis of loan characteristics and the geographic market metrics for performance and resolution probabilities. The ability to source these mortgage loans through long-standing relationships has enabled us to acquire loans that we believe have material probability of prepayment and/or long-term continuing reperformance. We've acquired loans in 378 different transactions since 2014. Only three transactions, however, in first quarter of 2023. We own 19.8% of the equity of our manager at a zero basis. We do not mark to market our ownership interest on our balance sheet. As a result, our book value does not reflect the market value of our almost 20% interest. Internalizing the management of Great Ajax Corp would result in recording a material GAAP capital gain from our 19.8% interest in our manager. Additionally, our affiliated servicer, Gregory Funding, provides a strategic advantage in non-performing and non-regular paying loan resolution processes and timelines in a data feedback loop for our manager's analytics. In today's volatile environment, having our portfolio teams and the analytics group at the manager working closely with the servicer is essential. We've certainly seen the benefit of this with the significant increases in loan performance, our consistent prepayment from property sales by borrowers, especially for delinquent loans, and with our AAA-rated structures that permit up to 40% of loans to be greater than 60 days or more delinquent at the time of securitization. Like our 20% interest in our manager, we now have a 21.6% economic interest in our servicer at a very low basis as well. In January, we increased our direct ownership in the parent of our servicer from 8% to 9.6%. We also own warrants for an additional 12%. We don't mark to market our equity interest in the servicer on our balance sheet either. Our servicer is currently evaluating a private equity round as part of rolling out some new data technology-driven programs through strategic joint ventures and MSR joint ventures as well. We still have low leverage. At March 31, our year-end corporate leverage was 3.3x. Our quarter one asset-based leverage was 2.6x. We own a 22% equity interest in GAIA Real Estate Corp. GAIA is currently a private equity REIT that primarily invests in repositioning multi-family properties in specific markets and in triple net lease freestanding veterinary clinic properties in conjunction with several large national veterinary practice aggregators. We carry our GAIA interest on balance sheet to lower of cost or market. GAIA completed an additional round of equity in the first quarter of 22 at a premium to our carrying value. Our balance sheet and income statement do not reflect any market. We currently expect GAIA to raise additional equity and ultimately become a public company. The current environment of bank runs and commercial real estate loan opportunities create significant optionality for GAIA. On page four, just some highlights for the quarter. Net interest income from loans and securities, including $0.6 million of interest income from the application of CECL, was approximately $4.1 million in the first quarter. Our gross interest income, including the $0.6 million from the application of CECL, was $18.5 million. There are three reasons why GAAP gross interest income is lower. First, we had approximately $50 million lower average interest-earning assets on balance sheet in the first quarter versus the fourth quarter of 2022. Second, we're continuing to have significantly more delinquent loans than expected become performing. As delinquent loans become performing, they provide more cash flow but over a longer period. Since we buy loans at a discount, this increase in performance can extend expected duration which lowers yield. In a recession and in declining house price environment, low LTV loans provide a material hedge as increased delinquency shortens duration and significantly increases corresponding yields. The third reason for lower interest income is the design of CECL. CECL was primarily designed for banks with loans with a par basis, so that accelerating reserve capture came after a write-down. We establish an allowance under CECL when we acquire new pools of loans if the NPV of the loan pool's contractual cash flows is greater than the NPV of our expected cash flows, and that allowance is allocated to part of our purchase discount. If the expected cash flows on those loans increases in subsequent periods, we are required to reverse the related allowance into interest income. This immediate recognition of the increase in the change in cash flows reduces future yields and discount accretion. We also accelerate discount accretion when loans pay in full. Despite the application of CECL, yield on interest-earning assets increased little due to increased prepayment and reinstatement, particularly in the month of March. A GAAP item to keep in mind, though, is that interest income from our portion of joint ventures shows up in income from securities, not interest income from loans. For these joint venture interests, servicing fees for securities are paid out of the securities waterfall. Our interest income from joint ventures is net of servicing fees, unlike interest income from loans, which is gross of servicing fees. As a result, since our joint venture investments have been growing faster than our direct loan investments, GAAP interest income will be lower than if we directly purchase loans outside of joint ventures by the amount of the servicing fees, and GAAP servicing expense will decrease by the corresponding offsetting amount. An important part of discussing interest income is the payment performance of our loan portfolio. At March 31, 81.3% of our loan portfolio by UPB made at least 12 of the last 12 payments, for 74% at June 30, 2022 and 79.6% at December 31, 2022. This compares to 13% at the time we purchased the loans. Our NPL purchases over the last 15 months increased materially relative to RPL purchases. Previous increases in housing prices helps maintain these prepayment patterns and leads to decreases in the present value of expected reserves and related income recognition of $0.6 million of unallocated loan purchase discount reserves under CECL in the first quarter and the additional reserve recaptures we've had in each of the previous eight quarters. While loans become regularly paying produce higher total cash flows over the life of loans on average, they can extend duration, and because we purchase loans at discounts, this can reduce percentage yield on the loan portfolio and interest income. Loans that do not migrate to regular monthly pay status typically have materially shorter durations and therefore result in higher yields. We are seeing that prepayments from property sales for both regularly paying and non-regularly paying loans is continuing and even increasing. Our weighted average cost of funds in the first quarter was higher than the fourth quarter by approximately 40 basis points. Most of this comes from the remaining floating rate repurchase agreements on loans getting ready for securitization and some joint venture securities repurchase agreements and related increases in SOFR. We expect a significant percentage of floating rate funding will be reduced through rated securitizations in Q2. The other reason weighted average cost of funds are up is because as we've delevered, the unsecured debt that we issued in late August becomes a higher percentage of our total debt outstanding, which increases the weighted average cost of funds. Net income attributable to common stockholders was -$7.9 million or $0.34 per share. There are several items of note that had an impact on earnings in the first quarter. To make it a little easier to follow, we have a table that ties GAAP to operating income on page 16 in this presentation as well as in our 10-K. Operating earnings was negative $2.1 billion or $0.09 per share. Taxable income net of preferred dividends was $0.05 a share. Taxable income decreased in the first quarter for two primary reasons. First, significant increase in monthly performance in delinquent loans, which extends taxable income yield duration even more than GAAP yield duration, as taxable income for performing loans is based on contractual duration of the loan. If a loan has 30 years remaining to maturity, taxable income comes in equal installments over 30 years unless the loan prepays. Second, we saw prepayments increase on performing loans, which typically have a higher tax basis relative to prepayment on non-performing loans. Taxable income is not affected by the CECL-related reserve recapture. When we actually receive cash payments from borrowers and capture purchase discount because of larger than contractual payments, it creates taxable income. This is the first quarter where we've seen significant increase in property sales for performing loans versus delinquent loans. We recorded a loss on investments in affiliates of $100,000 as a result of the flow-through of the mark-to-market decline in price of our common shares owned by our manager in the first quarter. Our manager receives a significant portion of its management fee in shares, and changes in market value of those shares flows through to us based on our 20% ownership interest percentage. Other income declined as we recorded $3 million loss from the sale of Class A senior debt securities in one of our joint venture transactions in February, as we discussed in our subsequent events section in our March 2 earnings call. $2.2 million of this was already reflected in book value at December 31. In our joint venture structures, we and our partners buy loans into multi-tranche securitization structures, and we each retain a pro rata vertical slice of each tranche of securities, including the equity tranche. The Class A senior is usually the lowest coupon and is priced at market coupon and yield at that time. This Class A senior bond thereby had a low coupon and had negative carry from repurchase agreement funding. It made sense to sell the Class A senior security and redeploy the capital for higher returns. Book value per share was $12.58 at March 31. Book value decreased primarily by our GAAP loss and dividends paid with an offset from positive mark-to-market adjustment of our joint venture debt securities. There's a table on page 17 in this presentation that details the change in book value. We do not mark to market our ownership interest in our manager and servicer and are close to a zero basis on their balance sheet. Their market values are significantly above zero, but book value would not reflect that. In February, we refinanced our unrated 2019 E, G, and H joint ventures into Ajax Mortgage Loan Trust 2023-A. 2023-A is a rated joint venture structure. We retained 5% of the AAA securities as required by vertical risk retention rules and 20% of the AA through B-rated securities and equity of the structure. At March 31, we had approximately $49 million of cash. For Q1 of 2023, we had an average daily cash and cash equivalent balance of approximately $50 million. We had approximately $44 million of cash collections in the first quarter. At March 31, we also have a significant amount of unencumbered securities from our securitizations and joint ventures and unencumbered mortgage loans. We'll discuss this more in detail on page 12. Approximately 81.3% of our portfolio by UPB made at least 12 of their last 12 payments compared to a small fraction of this at the time of loan acquisition. This increased from 79.6% at December 31 and June 30 of 74.2%. This is despite buying significantly more NPLs and RPLs for the last 15 months. This increases life of loan cash flow, the duration extension reduces yield and interest income in the current quarter. More purchased delinquent loans reperform rather than prepay or default, this lowers current taxable income as well. We go to page five, purchased RPLs represent approximately 89% of our portfolio at March 31. They represented 96% a year earlier. We primarily purchase RPLs that have made less than seven consecutive payments and NPLs at a certain loan level and underlying property specifications that our analytics suggest lead to positive payment migration, early property sales, and related prepayment on average. We typically buy well-seasoned lower LTV loans. Since November 22, we have seen residential loan prices increase materially, especially for regular paying loans, but also for non-performing residential loans. For residential loans, we continue to see stronger performance than expected in our portfolio. Given the increase in interest rates, credit tightening, and the potential for material economic slowing, we would expect an increase in delinquency and default at some point, and therefore an increase in availability of sub-performing and non-performing loans. We have been hesitant to be aggressive in residential loan acquisitions as we expect a better opportunity set will develop. One thing we have seen is that significant home price appreciation and the resulting material increase in absolute dollars of equity made borrowers more engaged and financially attached to their properties and therefore more determined to maintain regular payments. Historically, we have frequently seen mortgage borrowers pay credit cards and auto loans and HELOCs before paying first mortgages in times of financial stress. However, as a result of significant increases in absolute dollars of equity for older loans, we are now seeing increased delinquency for their credit cards and auto loans and the opposite for their first mortgages. Commercial real estate loans have not fared as well, and we are beginning to see opportunities. We believe there will be significant opportunities of sub-performing and non-performing commercial real estate loans in many markets as we get later into this calendar year and thereafter. As we mentioned on the third quarter and fourth quarter 2022 earnings calls, we see one of the material market risks as the Fed breaking the system. We have seen a preview of this in the last few months and is having a less-talked-about effect on midsize and sub-midsize bank liquidity and loan portfolio performance. They frequently have higher percentages of their loan portfolios with commercial real estate exposure. We are beginning to see CRE loans for sale from these institutions and expect that opportunity set will grow. We also expect that resulting bank consolidation will stimulate this as well. We have joint venture partners that would like us to find $1+ billion of commercial opportunities as they develop. From these same banks, we are seeing agency and non-agency MSRs being put up for sale in sub-$1 billion UPB increments, as well as large MSR offerings from larger banks and originators. These banks look for predictable liquidity, they are marketing MSRs as MSR sales take two to four months to settle. One thing to note, however, is many of these small offerings now are not actually trading as the MSR bids are below current marked value at these banks. We think there is also going to be significant MSR opportunity set, and having Gregory as a servicer and owning 21.6% economic interest in it will be beneficial. We are in discussions with several institutional MSR investors on joint venture structures. On page six, we own lower LTV loans, but we did not buy many loans in the first quarter. Our overall RPL purchase price is approximately 42% of current property value and 90% of UPB. We have always been focused on loans with lower LTVs with certain threshold levels of absolute dollars of equity and in target geographic locations. This has become even more important in the recessionary environment. On page seven, since the third quarter and fourth quarter of 2021, we significantly increased our NPL purchases versus RPLs. NPLs, on average, can have shorter duration than RPLs. For NPLs on our balance sheet, our overall purchase price is 89% of UPB, 84% of the owing balance, including arrearage, and 47% of property value. As a result of the low loan-to-value and higher absolute dollars of equity on average for our NPL portfolio, we have seen significant reinstatement and reperformance on our NPLs. As I mentioned earlier, for both RPLs and NPLs, purchasing aged low LTV loans at 50% discounts to property values and that have significant absolute dollars of equity provides a natural credit hedge to housing price declines and recession as resulting increases in delinquencies, shortened duration, and increases corresponding yields quite materially. On page 8, at March 31, approximately 78% of our loans were in our target markets. California continues to represent the largest segment of our loan portfolio at approximately 22%. However, California has been nearly 40% of all prepayments in 2021, 2022, and first quarter of 2023. Our California mortgage loans are primarily in Los Angeles, Orange, and San Diego counties. Florida represents approximately 17% of our portfolio. Miami-Dade, Broward, and Palm Beach counties are approximately 75% of that. We continue to see demand for homes in our price range targets in our markets, both from potential homeowners and single-family rental buyers. On page nine, at March 31, approximately 81.3% of our loan portfolio made at least 12 of the last 12 payments as compared to under 74.2% a year ago. Approximately 72% of our loan portfolio made at least 24 of the last 24, compared to 69% three months ago. Over 83% have now made at least seven consecutive payments. This compares to a small fraction at the time of purchase. The significant increase in monthly performance is more notable given that since Q3 of 2021, we purchased primarily NPLs rather than RPLs. Much of this is likely due to Gregory Funding working with delinquent borrowers on a personal basis and to absolute dollars of home appreciation, as our target markets are significantly determined by data analytics that predict forward home price appreciation for each market in dollars. Historically, we have seen that when our purchased loans reach seven consecutive payments, excuse me, they typically get to 12 consecutive payments more than 92% of the time. Seven consecutive payments have been the statistical turning point. Subsequent events on page 10, we have 18 million UPB of RPLs and NPLs under contract at a price of approximately 83% of UPB and 54% of underlying property value. We expect these to close in the next week. We declared a cash dividend of $0.20 per share to be paid on May 31 to holders of record on May 15. We expect that taxable income will likely exceed GAAP income as a result of CECL as cash yields on loans exceeds CECL-impacted GAAP yields on loans. To the extent the Fed continues significantly raising rates, the impact on remaining floating rate financing will have some offsetting effect on taxable income. Credit tightening and resulting recession will likely increase taxable income by shortening loan duration and the securitizations we have in the pipeline will replace more expensive floating rate funding and thereby likely increase taxable income also. We also see investment opportunities set brewing as a result of recession risk and banking sector risk issues as well. On page 11, some financial metrics. Average loan yields and average yields on beneficial equity interest in our joint ventures increased a little, primarily due to significant loan cash flow in March and also so far in April. For debt securities and beneficial interests, remember that yield is net of servicing fees and yield on loans is gross of servicing fees. Debt securities and beneficial interest is how our interest in our JVs are presented under GAAP and have increased in 2020, 2021, and 2022 relative to loans. Since we purchase loans at a discount, the increased reperformance of delinquent loans materially in excess of expectations can extend duration and reduce yield. The significant absolute dollars of equity for our loans, both from the types of loans we buy and the home price appreciation in our target markets on average, both accelerated prepayment from home sales on delinquent loans and led to material reperformance in excess of expectations which reduces ongoing yield for loans purchased at a discount. The sale of underlying properties by borrowers with delinquent loans with certain minimum absolute dollar amounts of equity and underlying geography and borrower demographics has been steady, but it was marginally lower in January and February and has increased again in March and April. Leverage continues to be low, especially for companies in our sector. We ended the first quarter with asset level debt of $2.6 billion, which is lower than it was at year-end 2022. Our total average debt cost was higher in Q1, primarily the result of rising SOFR-based rates for repurchase agreement funding and the issuance of our unsecured notes in August, since they were a higher percentage of total outstanding debt as asset debt pays down from loan prepayment. Fixed-rate securitized debt at March 31 is more than 60% of our total debt. We expect fixed-rate debt to continue increasing as a percentage of our total debt, as we have three securitizations in the pipeline. Far in 2023, we have seen a significant recovery in securitized senior bond credit spreads relative to the fourth quarter, as well as in rate levels for those bonds. On page 12, our total repurchase agreement-related debt at March 31 was approximately $418 million, down from $446 million at December 31. $209 million was non-mark-to-market, non-recourse mortgage loan financing, and $198 million was financing primarily on Class A-1 senior bonds in our joint ventures with remaining expected lives of less than two years. We also have significant unencumbered assets. We expect the amount of our floating rate debt to continue declining relative to fixed-rate debt significantly now that securitization markets are more functional. With that, I'd be happy to answer any questions anybody might have. Thank you, sir. Ladies and gentlemen, if you have a question, please press star one on your telephone keypad. Once again, that is star one if you have a question. We'll pause for just a moment. We do have a question. It comes from Matt Howlett, B. Riley. Hi, Larry. Thanks for taking my question. Absolutely. On the, you know, I'm intrigued by the comments on, you know, your expectation in the residential and of course, the commercial loan market. Just walk me through. I mean, residential home loan prices are still well bid, but do you think there's gonna be, you know, when these banks start selling, I know they've already started, what do you think the catalyst is to, you know, to see, you know, sort of more supply come out? I mean, when do you think it'll come out? Where do you think, you know, prices can go? Do you think you could get unlevered yields in the teens from these whole loans or commercial? I mean, some people out there are saying 15%, 20%. I mean, what type of products are we talking about if you believe that's the case? Sure. It's, it depends on the specific type of commercial. I don't think you're gonna see unlevered teens in residential. You will, however, I think, see more supply as delinquency increases as it leaks from credit cards into single family and as you see bank consolidation. One of the things we've seen both in residential and commercial over the years is when bigger bank buys smaller bank, it wants to cross-sell its assets off the balance sheet of smaller bank before closing. That way it can flush through the loss in the purchase price in a one-time charge. The. Right. In commercial, depending on what it is, and what kind of liquidity risk profile it has. For example, on $500 million office buildings, people are gonna need to make a lot more than they will off of buying a portfolio of business purpose, you know, DSCR loans, for example. I think you're gonna see a significant opportunity, definitely double-digit unlevered, in some, you know, strip mall loans, in some mixed-use loans. You'll see them in some urban office, not just loans that you'll see in double-digit teens unlevered. No question about that. When will you start to see that? We're starting to see it leak as banks are looking for liquidity. Although the one thing we're seeing is that the banks are selling the things they can sell the quickest and the closest to their current mark versus other things. We think that probably in by the Q3, Q4, and 2024, it's really gonna be picking up in probably 2024 more so than 2023. It depends on the number of waves is how I'll describe it in this what's going on in banking land. You know, one of the things we've seen like in 1994 and 1998 and 2004 and 2008 is everything was multiple waves that went over periods of time. The question is how many and how long and what's the severity and between them all? It's a pretty interesting time. We certainly have had a bunch of our big institutional partners and also bond investors reach out to us. We've set up, you know, kind of here's what we want to buy together type structures. Let's I'm assuming on the residential side, you'd look to the securitization market. You have it open. You know, it's open to you. I'm assuming these are private deals that you're doing. I mean, just give us an update on the state of, you know, the securitization market and, you know, is it still? What's your outlook for it? Do you think it's gonna be? Sure. AAA will come in more? The, the AAAs have tightened, and obviously the Treasury curve has come in significantly in what I'll call kind of three-year, four-year type expected lives. Most of our AAAs that we issue are expected lives between, you know, call it high twos and four years. That those rates have come in dramatically, and AAA spreads have tightened somewhat. The transaction we did in February, we did it + 150 to the expected life of, I think, three, four years. That market has been pretty strong for our RPL deals. We have what I'll call a regular group of buyers. For two of the three deals, 80% of the seniors are pre-subscribed. It's really the other on two of the three deals, the other 20%. The third deal, which is actually the first one we're going out with, we'll just bring out to fully to market. Gotcha. no, thanks for the color. It makes a lot of sense. Sure. I guess the last one, Larry, I have for you. I get this phenomenon. The prepayments are, I think, you said are starting to pick up in March, and I get this phenomenon, what's going on, what's weighing. The yields are on the performing loans are weighing on your taxable, your GAAP and- Sure. even more so your taxable income. Of course, you have the, you know, the repo, which is just about probably done here. The Fed is probably done here. If not, they're probably going to be cutting, you know, in the next move, if not sooner rather than later. My question to you is how should we look at taxable income and, you know, the and the dividend, how we think about... Sure. -that trajectory the rest of the year? Sure. Taxable income, when you think about prepayment on performing loans, okay, since we have a higher tax basis on performing loans, actually generates less taxable income than prepayment on non-performing loans. Okay. Right? Which is, you know. It's really tax. You know, if you pay more for non-performing loans than performing loans. If you pay more for performing loans than non-performing loans, you have a higher tax basis prepayment, you capture less discount sooner, and the taxable income from prepayment is all about the tax, the discount to tax basis. One of the things that's weird is for taxable income, when loans pay like clockwork, you take it over the contractual life of the loan, unlike GAAP, which is over the expected life of the loan, right? Prepayment's just accelerated. That's. Right. Until the loan prepays, you know, a 360 month loan, you're taking one three-sixtieth of the tax basically. Actually you're taking based on the principal that's received, which is very little in the early years. Right? It's either going to be level yield with a fixed prepayment. Right. assumption regardless, and it's dictated by the deal document. Right. -for a securitization transaction. We have other pools of loans where every time you get a payment, you basically take a percentage of discount, and it recovers literally if it's a 780 month mortgage... Over 780 months. -780 months. Right. Yeah. It's not based on expected life like GAAP. Yeah. When loans pay like clockwork, taxable income is less. When loans don't pay, and you all of a sudden get big lumps from, you know, for example, liquidations or property sales, that accelerates taxable income. Unlike GAAP, with, for taxable income, you're required to fix your yield and prepayment assumption at closing. It may not change over the life of the pool of the loan. Right. Unless the loan goes away. Unless the loan goes away. Right. It's, unlike GAAP, where as borrowers change behavior, expected life changes. In tax, expected life doesn't change. I got you. At some point, they all have to converge, right? I mean, at some point. Yeah. Yeah. Yeah. Yeah. Yeah. When both loans are gone, they're the same. Right? So- When a borrower pays off, tax and GAAP are the same for that loan. Right. Well, as we get more velocity... Right. It sounds like taxable income's... Right. Absolutely. Taxable income should be moving up as we get more velocity. Right. That's sort of. We We all think that. Starting in late 2021, we started buying specifically low LTV, high absolute dollars of equity, non-performing loans because we thought that recession was gonna come, and that would cause more delinquency and shorter duration, and you pick up discount faster. Okay? Yep. What we didn't anticipate is that so much HPA would change borrower behavior and cause them to pay their mortgage before their credit cards, their auto loans, and their HELOCs. If you look historically, it's usually the other way around. You pay your revolvers first- Right. You always maintain access to credit, and you pay your car loan so you have your ride to work. What we've seen in our borrowers is credit card delinquency has increased, HELOC delinquency has increased, auto loan delinquency has increased, and mortgage delinquency has decreased. Yeah, we've seen that across the board. I mean... Yeah. Our NPLs as a result have become extremely performing, which decreases taxable and decreases GAAP. It should be the other way around. Right. Thanks for the explanation. I sort of look forward to. Sure ... you know, Right ... return to growth here with the environment. Thanks a lot. Thanks. Yeah, no, we're, you know, we're getting a lot of. We think that commercial is gonna be a significant opportunity. It's brewing right now. It's not completely here yet, but it's coming. You're starting to see it's gonna increase in velocity. I think that's pretty clear. Certainly a lot of the big investors like, you know, like Starwood has made the same statement and some others. They obviously look at much bigger you know, type properties than we do. We like diversification in specific locations and things like that. There's gonna be a significant opportunity set in commercial, we think, as well as in MSRs. We're working with a bunch of MSR funds about joint venturing on MSRs and have Gregory be the sub-servicer in MSR land. On those, you wouldn't have to really put any capital up, right? A lot of that's just the third party, right? You guys get paid. Uh, the, the, the- Is that how to think about that? It. Right. In those, the third party would be 95%. Wow. That could be incredible in terms of the, you know... Yes the accretion to Ajax. Yeah, yeah. Great. ... to the, to the, to the kind of forward market value of, Gregory as well. Right, which you own 20+% of. Which... Exactly right. Thanks a lot, Larry. I really appreciate it. Sure. Absolutely. Absolutely. A reminder that it is star one if you have a question. We'll hear from Eric Hagen, BTIG. Hey. How we doing? Good. How are you? I think I just got... Yeah, I'm good. Thank you. got a couple here. You know, just how are you thinking about the severity of losses in this environment versus, say, you know, a year ago or even when rates and mortgage spreads were tighter just in general? How does that drive how aggressive you get, especially in the JV structures where it sounds like you'll be maybe the most active? Sure. Hopefully, you can also talk about some of the sources of leverage in the JV structures. Sure. The second kind of question here, the warrants that you hold in the servicer, what are the conditions by which you think you'd exercise those warrants? Sure. Okay. Let me answer the last one first 'cause that's the simplest. The warrants are based on valuations, so you would exercise them in a monetization event or in case of a special dividend. Okay. Okay. That's helpful. Okay? Yeah. For loss severities, in residential land, for our portfolio, we tend to buy at 50%+ discounts to property market value. And we tend to like having at least $130,000 of equity on average and minimum target dollar amounts of equity. If you have a 20% across the board decline in home prices and if you had 100% defaults of our portfolio, it would actually increase unlevered yields by 350-400 basis points in our portfolio because of duration changes. For most of our portfolio, a default is a prepayment in PAR, actually PAR plus arrearage. The bigger risk I think in residential is much newer. We've seen a number of pools of loans of what I'll call newer origination, where they're kind of 80 LTVs, but when we look at the properties, we really think they're kind of 90, 92 LTVs. We think that there's more loss severity risk in those than there is in kind of the things we own. We've been somewhat hesitant to be out buying kind of brand-new, kind of push the envelope 80 LTV, you know, alternate document stuff and things like that, just because we think there is gonna be some increase in loss severity for newer versus older loans that have had the benefit of HPA. On the commercial side, we think there's gonna be significant loss severity in the commercial side, and that loans are gonna have to trade at material discounts. You know, we're obviously very focused on buying things to property value, and we have a kind of fundamental rule is that you have to buy the loan at a discount to what you'd be willing to buy the property at on a commercial portfolio. Because one thing that you don't have in commercial to the extent that you have in residential is in a foreclosure in residential, there's a lot of single-family rental buyers that buy in, at foreclosure sales, especially, moms and pops that buy at foreclosure sales. You don't have moms and pops doing that in commercial land, and you don't have moms and pops in $20 million office land. That's gonna have to be more institutional. It's less predictable and less liquid, it creates a little bit more severity. You know, from a opportunity set, we like it 'cause the more thinking it requires you to do, the more opportunity there is. The less liquidity there is, the more opportunity there is in the, in the going inside. In residential land, we kind of wanna wait for it to melt a little bit before we get too involved. Always appreciate your perspectives, guys. Thank Thank you very much. Absolutely. Sure thing. Everyone, at this time, there are no further questions. I'll hand things back to our speakers for any additional or closing remarks. Thank you, everybody, for joining us for our first quarter presentation. I apologize for it being the same time as Apple's call. Feel free to reach out if you have questions. Look forward to talking to you over the next few weeks. Best regards. Once again, everyone, that does conclude today's conference. Thank you all for your participation. You may now disconnect.