Q4 2023 Arbor Realty Trust Inc Earnings Call
Participants
Paul Elenio; Chief Financial Officer; Arbor Realty Trust Inc
Ivan Kaufman; Chairman of the Board, President, Chief Executive Officer; Arbor Realty Trust Inc
Steven Delaney; Analyst; JPMorgan Chase & Co.
Jay McCanless; Analyst; Wedbush Securities Inc.
Jade Rahmani; Analyst; Keefe, Bruyette & Woods, Inc.
Lee Cooperman; Private Investor; Omega Family Office, Inc.
Rick Shane; Analyst; JPMorgan Chase & Co.
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to the fourth-quarter and full-year 2024 Arbor Realty Trust earnings conference call. (Operator Instructions)
I would now like to turn the call over to Paul Elenio, Chief Financial Officer. Please go ahead.
Paul Elenio
Thanks, Savannah. Good morning, everyone. The quarterly earnings call for Arbor Realty Trust. This morning, we'll discuss the results for the quarter and year-ended December 31, 2023. 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 risks and uncertainties of 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 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.
Ivan Kaufman
Thank you, Paul, and thanks to everyone for joining us on today's call. You'll see from this morning's press release, we had another outstanding quarter and closed out an exceptional 2023.
2023 was one of our best years as a public company. Despite an extremely challenging environment, we managed to increase our dividend twice while maintaining one of the lowest payout dividend ratios. The industry generated a total shareholder return of 28%, outperforming our peers. Additionally and very significantly, we're able to maintain our portfolio recorded reserves for potential future losses, which clearly differentiates us from everyone in this space.
In fact, as Paul will discuss in more detail later, we generated GAAP earnings in excess of our dividend at '23 despite recording approximately $90 million in reserves. And our distributable earnings were also well in excess of our dividend, providing one of the best dividend coverage ratios industry. We're also very effective and refinancing walls of our balance sheet for our capital-light agency business.
We generated $3 billion of multi-family runoff in 2023, recaptured 56% or $1.7 billion of those loans into agency product. Our agency platform gives us tremendous strength and strategic advantage, allowing us to continue to delever our balance sheet i t generates, which is a key part of our business strategy.
We have been a significant player in the agency business for almost 20 years and now have been a top 10 Fannie Mae DUS lender for 17 years in a row, coming in at number six for 2023. It is extremely important to emphasize that our agency business generates over 40% of our net revenues, the vast majority of which occur before we open our doors every day. This is completely unique to our platform, and it's something we feel is now fully reflected in our valuation thought.
On our last call, we gave guidance that fourth quarter of last year and the first quarter and second quarters of this year would be the most challenging part of the cycle. We are in a period of stress and expect the next two quarters to be challenging, if not more challenging than the fourth quarter.
As a result of this environment, we are experiencing elevated delinquencies. One of the many reasons this is occurring is certain bars are taken to position that they will default first and negotiate second, which is not a strategy that works well with us. Second bars need to bring capital to that table to rightsize its deals, and raising capital is a lengthy process at today's climate. Therefore, you will see defaults rise initially until able to raise additional capital and and deals will often be recapped.
We feel we have done a very good job to date in collecting payments. It's been highly effective and refinancing deals for our agency business as well as getting borrowers to recapitalize the deals and purchase interest rate caps where appropriate. In fact, we had $2.5 billion of loans with interest rate caps that were expiring over the last four months, of which $1.7 billion executed new rate caps or put cash up and move caps. And we continue to work on getting new caps executed every day.
We also have long-standing relationships with many quality sponsors that we've been working with to step in and take over assets that are underperforming. And so my debt and recap these transactions as we have cancer receiving reverse inquiries from the market to purchase our assets as well. 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 a correct economic result on a transaction. With that said, we have received a lot of public criticism transition of assets to new ownership through the legal process or even two cases consent. We believe this is a very difficult and complicated work.
As I said earlier, we expect to be extremely busy in the first two quarters of this year, managing through the most challenging part of this dislocation. Additionally, we continue to focus heavily on maintaining a very strong liquidity position. We currently have over $1 billion of cash between $1 billion of corporate cash and $600 million of cash and our CLOs that results in an additional cash equivalent of approximately $150 million and have a nice level of liquidity is crucial in this environment. As it provides us the flexibility needed a managed with the rest of the downturn and take advantage of opportunities that will exist in the market to generate superior returns on capital.
We've also done an excellent job in reducing our exposure to short-term bank debt. I have no significant pending maturity to get it down to approximately $2.8 billion in outstandings with our commercial banks from a peak of nearly $4.2 billion, and we have over 70% of our secured indebtedness and non-mark-to-market non-recourse, low-cost CLO vehicles.
As previously discussed, these vehicles provider tremendous strategic advanced advantage at times of distress and dislocation like the environment we are in today 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 at a lower risk parameters.
Turning now to the fourth quarter performance, a s Paul will discuss in more detail, our quarterly financial results were once again remarkable. We produced distributable earnings of $0.54 per share, excluding a one-time realized gain on an office property that we had previously reserved for results were well in excess of our current dividend, representing a payout ratio of around 80%.
We are very pleased with substantial cushion we have been created between our earnings and dividends, which will serve us well through the balance of this dislocation. We believe our diverse business model uniquely positions us as one of the only companies in this space with the ability to continue to provide a sustainable dividend. And just as importantly, at a time of tremendous stress, we've managed to maintain our book value while recording reserves for potential future losses, which clearly differentiates us from our peers.
On our balance sheet lending business, w e continue to focus on working through our loan book and converting our multifamily bridge loans into edge agency product, allowing us to recapture a substantial amount of our invested capital to produce significant long dated income streams.
In the fourth quarter, we were able to again highlight the highly effective with this strategy, producing another $800 million of balance sheet run off $465 million or 58% of which was recaptured the agency loan originations. As a result, we recouped over $100 million of capital and continue to build up our cash position, which again currently sits at around $1.1 billion with today's current interest rates will continue to chip away at converting loans to the agency is that if the 10-year goes below 4%.
Again, it will become more meaningful every quarter of a point drop in rates from here even more impactful. As we touched upon last quarter, we also believe we are well positioned to step back into the lending market in Ghana. Accretive opportunities continue where our platform we feel now is the appropriate time to originate some of the highest quality loans with attractive returns, allowing us to grow our balance sheet and build our pipeline of future agency deals and our GSE agency business.
We had another great quarter, an exceptional 2023 despite elevated interest rates. We originated $1.3 billion in Q4 and $4.8 billion for the full year, representing a 7% increase over our 2022 numbers. This is a tremendous accomplishment in light of the fact that the agencies were down 25% to 30% and production year over year. We have done an excellent job in gaining market share and converting our balance sheet loans at the agency product, which has always been one of our key strategies and a significant differentiator from our peers.
We also originated for unless your products for our private label business, bringing our total agency volume to $5.1 billion for 2023. Traditionally, January is a much slower month with the agencies, which resulted in us originating $250 million of loans. February numbers looking much stronger. We are very large pipeline setting us up for what we believe will be another very solid year to originations for 2024. And again, this agency business offices of premium value as requires limited capital and generate significant long dated predictable income stream and producing significant annual cash flow.
To this point, our $31 billion fee-based service in the loan portfolio, which grew another 4% in the fourth quarter and 11% at year over year generates approximately $121 million a year reoccurring cash flow. We also generate significant earnings and strong cash balances, which acts as a natural hedge against interest rate effect. We are now earning 5% of around $3 billion in balances are roughly $150 million annually, which combined with our servicing income annuity, totals approximately $270 million of annual gross earnings, or $1.30 a share.
This is an addition to the strong gain on sale margins we generate from our originations platform, providing a strategic advantage over our peers in our single-family rental business. We had a very strong fourth quarter and a full and a full year 2023 as we continue to dominate this space and have become a lender of choice in the premium market because we traffic and we had $200 million of fundings, a nother $470 million of commitments signed up in the fourth quarter and closed out 2023 was $1.2 billion of new commitments.
We also have a large pipeline remain committed to this business as one of the returns on capital for construction bridge and permanent lending opportunities and generate strong level returns in the short term, while providing significant long-term benefits by further diversifying our income streams. We're also very excited about the opportunities we think we can garner from our newly added construction lending business as we believe we can generate 10% to 12% unlevered returns on capital and eventually leverage this business and produce mid-to high 10s returns.
We continue to build up a pipeline of potential deals and now have roughly $43 million, $44 million under application, another $400 million and analyze and a significant number of additional deals we are currently screening will leave. This product is very appropriate for our platform as it offers us the returns on capital for construction, Virgin permanent agency lending opportunities.
Lastly, I would like to spend some time talking about the shore reports that have been written on our Company on our loyal investors base to understand that these reports are written in a way that we purposely designed to drive down the Company's stock price to achieve the desired goal of profit from a short position such the facts and assumptions, predicative future events and market conditions a s well.
Conclusions to these reports are exaggerated leases and complete and accurate data slanted only to provide a negative view on Arbor and again, truly for personal gain. And while we will not get into a back and forth on inflammation in these reports or have detailed discussions and any specific loans will point out is that the short report state that our sale of delinquencies were 16.5% in December, 26.6% in January. When an RIA validate the rate of 1.3% for December today as of today.
More importantly, the 30 day delinquency numbers or 0.9% from December to 1.2% for January. As of today, which are the numbers the industry focus on is a perfect example of using shortage. Select data as of a point in time, does not contain a full picture of represent the industry's focus only to inject fear into the market for personal gain.
We urge our long-term shareholders to know these one-sided self motivated reports and focused only on our results and public disclosures and the fact that we've consistently outperformed our peers. It is also very important emphasized a significant portion of August lending is multifamily focused, specifically in the workforce housing part of the market.
As we all know, Fannie Mae and Freddie Mac have had a specific mandate to address the workforce slash affordable housing needs, which is a major issue in the United States making offer a great partner. This product requires a level of high level of management, tremendous expertise, which we have been very effective at for decades because this product may not have the same curb appeal as other multifamily product types we have been criticized for.
We have been extremely effective at and we'll continue to fulfill a very important mandate for the federal agencies as well as social needs for society. Again, we thank you for your continued support. And now I will turn the call over to Paul to take you through the financials.
Paul Elenio
Okay. Thank you, Ivan. As Ivan mentioned, we had another very strong quarter, producing distributable earnings of $104 million or $0.51 per share and $0.54 per share, excluding a $7 million for one-time unrealized loss in the mall property that we had previously reserved for.
These results trended and translated in the industry, high ROE is again an approximately 17% in the fourth quarter and 18% for the full year of 2023. Equally as important, we closed out 2023 with GAAP EPS of $1.75 a share, which was in excess of our dividend, despite booking approximately $90 million of reserves for potential future losses.
And of course, with distributor learning, our demand may we provide a very strong dividend earnings coverage ratio for our investors. Our fourth-quarter results were positively affected by a $5 million distribution from our Lextar investment, which was recorded in income from equity affiliates. We also had higher gain on sale income as our agency bonds are typically stronger in the fourth quarter, and we continue to benefit from strong earnings on our outgoing cash balances from elevated interest rates.
As Ivan mentioned, we do expect to continue to experience strength as we manage through the most challenging part of the cycle. As a result, we continue to build our reserve recording an additional $23 million in CECL reserves and our balance sheet loan book during the quarter, which was slightly offset by a $3 million recovery had from payoff of the non-performing loan that we are fully reserved for previously.
As we expected in this market and our delinquencies in fourth quarter of approximately $115 million. And as discussed earlier, we are expecting that we will experience additional delinquencies over the next few quarters. Very important to emphasize that despite booking approximately $90 million CECL reserve across our platform in 2023, $4 million of which was in our balance sheet business, we still grew our book value 2% to $12.80 a share from $12.50 a share last year.
And we are one of the only companies in our space that has significant book value appreciation over the last three years with roughly 30% growth from around $10 a share to nearly $30 a share and our agency business, we had a very strong fourth quarter with EUR1.4 billion origination and $1.3 million in loan sale.
Margin on these loan sales came in at 1.3% this quarter compared to 1.46% last quarter, mainly due to some larger deals in the fourth quarter. We were very we're incredibly pleased with the model since we generate in 2023 or 1.48%, which exceeded 2022 base of 1.34% by 10%. We also recorded $21.1 million of mortgage servicing rights income related to $1.4 billion of committed loans in the fourth quarter, representing an average Amazon rate of around 1.55% compared to 1.16% last quarter, mainly due to a higher percentage of Fannie Mae loan commitments in the fourth quarter, which contain higher servicing fee.
IP-based servicing portfolio also grew another 3.5% in the fourth quarter and 11% year over year to approximately $31 billion at December 31, with a weighted average servicing fee of 39 basis points and estimated remaining life of the years. This portfolio will continue to generate a predictable annuity of income going forward, around $121 million growth annually.
And this income stream, combined with our earnings on our ASK growth and gain on sale margin represented over 40%. Many of our 2023 net revenues in our balance sheet lending operation, a $12.6 billion. Our investment portfolio had an all-in yield of 8.9% at December 31 compared to 9.12% at September 30, due to a combination of an increase in nonperforming asset and a 34 that we did that fully accrued for the average balance in our core investments was $13 billion this quarter compared to $13.4 billion last quarter due to one-off exceeding originations in the third and fourth quarter.
The average yield on these assets increased slightly to 9.31% from 9.28% last quarter due to us slight increase in silver, which was offset by an increase in nonperforming loans in the fourth quarter. Total debt on our core assets decreased again to approximately $11.6 billion at December 31 from $11.9 billion at September 30th. The all-in cost of debt was relatively flat at 7.45% at 12/31 versus 7.41% at 9/30.
The average balance on our debt facilities is approximately $11.8 billion for the fourth quarter compared to $12 billion last quarter. And the average cost of funds and our debt facilities was 7.48% for the fourth quarter compared to 7.37% for the third quarter, primarily due to increases in the benchmark index rates. Our overall net interest spread than our core assets decreased to 1.3% this quarter compared to 1.91% last quarter. And overall spot net interest spreads were down to 1.53% at December 31 from 1.71% at September 30.
Again, you're doing increase in delinquencies and nonaccrual loans during the quarter. As and as I mentioned earlier, we are expecting to experience additional delinquencies over the next few quarters, which could further reduce these margins. Lastly, as we continue to shrink our balance sheet loan book by moving on to our agency business, we have delevered our business 18% and 2223 to a leverage ratio of 3.3 to 1 from around 4.0 to one last year.
Equally as important, our leverage consists of over 70% nonrecourse non-mark-to-market CLO debt with average pricing of one 70 over, which is well below the current market, providing strong levered returns on our capital.
That concludes our prepared remarks this morning, and I'll now turn it back to the operator to take any questions you may have this time. Operator?
Question and Answer Session
Operator
(Operator Instructions) Steve Delaney, JMP.
Steven Delaney
Good morning. Thank you. Good morning, Ivan and Paul. I'll start off if I may with a quick question for Paul. Thanks to the details on the NPLs up to 16 assets from 12 foreclosures is something we haven't is certainly part of your to get, but not something we've seen a lot. Should we expect on the next several quarters as you attempt to maximize your outcome that we will see more actual you actually taken over properties?
And do you how are you confident you have the internal ability to operate those projects and resolve them without the current borrower? Thanks, Paul.
Paul Elenio
So I mean, again, the first half of your insurance from Volvo, we have options to either go through the legal process for closure to do them consensually. So we better do things consensually, if you can, but sometimes surprises as an alternative. And certainly in certain jurisdictions, it's very easy to do so with respect to us, taking over the management of the assets, we do have the capability, but that's not what's that's not what's taken place effect.
Demand from our borrowers to step into some of these assets is so strong that we've had to set up an internal process to limit the number of actual borrowers that we have because we're getting inundated with requests. We set up an internal process that when we do have a stressed asset or a stressful or bar, we dose of don't think it's going to bring it into a borrower. And whether it be through a consensual process or the legal process, we have somebody lined up willing to step back, and that's how we've done it. So maybe six to nine months ago when there was a lot of fear in the market will value is going to go in a lack of liquidity. It was much harder to get somebody to the table.
Steven Delaney
Got it. Clearly to get people to the table is very easy. And as you can see, people are raising distressed funds and there's plenty of capital, plenty of liquidity to step in. So we have that capability and we set up the process excellence. Paul, do you want to add there? I think Ivan behaving definitely take us through cookie from everything that we work through internal.
Ivan Kaufman
And so yes, it sounds like the the opportunistic private capital and your relationships in the industry that you're going to have opportunities to resolve to working with the existing borrower, bringing in a new player that we probably won't see a lot of dead foreclosure and REO properties on your balance sheet where you are trying to figure out a plan, seems like you've got the plans in place very early.
We are on the asset generally, not generally by the time we foreclose thing has been of prepaid and pre done in that insurance, you really get to see assets. We haven't had the right management and that's why it's so important to us when an asset isn't performing to not just I'll kick the can down the road because the asset will deteriorate, but to really accelerate or change any material change in ownership. As I said, we don't have a lot of REO and a book.
As you know, we did this quarter and we didn't put it in our commentary. We did have an office asset that we had reinsurance alone. We took back that asset this quarter. It is in REO, and we bought in a very sophisticated partner who has a lot of experience in converting that building to condo. And so we're working through that process over the next couple years. And that's an exception where we will take an asset back in REL. It is not a big part of our businesses items that you will see that in our filings when we file our K.
Steven Delaney
Okay. Thanks. So I think on your point, this kind of give strategic and I am speaking directly with some of the short reports, I think early on maybe we'll switch Houston assets. Someone uses the term slum lower, describe your portfolio on your three bites at the apple strategy that you've used forever. Do you have any concern that the overall cores and I don't mean a large percentage, but do you think you have some assets loans in your portfolio that are not of sufficient quality to be refinanced into with permanent financing into Freddie Mac and Fannie Mae? That's it for me. Thanks.
Ivan Kaufman
Well, clearly, our our agenda is when we do a bridge loan for the sole purpose of creating an agency loans, yes, I know you have to have a quality sponsor and you have to have a quality asset. So our idea, of course, is that a response that we take on as group from correctly that all sponsored through that, a lot of it is sometimes of a sponsor who couldn't hit his business plan, although at other problems or isn't what we thought and they qualify that system knows nobody's perfect.
We're not perfect with respect to the assets, if you're improving and ask that you had hoped that has certainly got to get it up to industry standards and agency standards. If it doesn't, it won't meet that agency eligible.
So we have a $16 billion portfolio that all 16 is going to make that mark. I mean, I think it's 75%, 80% of them get for agency status of our has pretty good. In other cases, when they don't do that, the assets will be sold on or put into new ownership will get that asset up to spec.
So that's kind of the way we look at the world. It's not it's not it's not a perfect situation addition where every asset that we've taken and meeting our execution. But you have other options to resolve. It sounds like product, we have a viable other options and bring them into ownership very often. They can get the assets up to speed and get it repaired and get them fixed.
And we've had many assets where on the one one, one form of ownership that couldn't get you bring another form of ship against a very, very quickly. In fact, one of the assets that we transitioned in Atlanta, we had four ownership. And I think within nine months, the assets almost related to the agency, whereas with the all other ownership, we had no chance between the owner and the way it was operating in only took nine months 20, as I said around that.
Steven Delaney
Thank you for your comments this morning. Thank you.
Operator
Jay McCanless, Wedbush.
Jay McCanless
Hey, good morning and thank you for taking my questions. Through provisioning was a little less than what we're expecting this quarter. But it sounds like things may get a little rockier heading into the beginning of 24. Could you maybe talk a little bit more about why some borrowers fields better to default negotiate first, that seems to be a little backwards and given the environment that brand right now?
Ivan Kaufman
I can speak from experience society with a lot, but I'm pretty involved in the asset management side with Sigma asset management group. I think they're being canceled with that. If your default, the lenders will pay more more easy to work with, they don't want default on their books. That's number one and that may work with other lenders. It doesn't work with us. We're not afraid of defaults to forestall intimate details and it may intimidated auto lenders.
That's number one, number two, for whatever reason. And I'm not sure why actually people don't think that the recourse provisions on loans are up applicable and when they get notification of what the triggering, they really wake up very, very quickly. I don't believe other lenders on the prior year's had the structural enhancements.
And we at all, but do have I'll say, do now they've learned, but we've always had the structural enhancements on our loans, which include, in many cases interest reserve replenishment, recourse obligations on a rebalance and caps very, very significantly majority of our default interest on loans or 24% satellite, maybe when there was other lenders lenders act differently than we do. But this is our course of conduct for Barr has probably advise them.
Let us know if you were issuing this, we're happy to figure out how to train come up with a solution in a proper way. And that's always the best tech. And then we'll give you time to figure out if we can work with you. But we did definitely see a spike of a mentality of default. And here the key is it's your problem. And you know, immediately we'd like to know their obligations and it will bring that mentality and collect that mentality.
Jay McCanless
Thank you. Opened the deal question than I had when we look at multifamily rents, especially in Texas and Florida, we've started to seize some of the cities are holding up with some of the cities are starting to see year over year rent declines. I guess could you maybe talk about what type of geographic risk we should be monitoring right now? And how you're feeling about that part of the country in terms of potential delinquencies and workout you're going to have to address there?
Ivan Kaufman
I think we're through the worst of it. And I think in my prior calls, I talked a little bit about the economic vacancy that exist specifically in certain areas. And I think there's a large economic vacancy which has been created from COVID of backlog and across a mentality with some of the renters that they can be in an apartment, not pay rent and that get affected.
I also think that there was a period of time from COVID that people got rent subsidies and those rent subsidies right out. And that also accelerated a lot of those delinquencies. The courts to start a be a little easier to work with our tenants are being affected much more rapid pace.
And I think that you'll see on the economic vacancy start to diminish without a doubt, I do want to differentiate between the product type that we have, which is a lot of workforce housing, which I think there's a huge shortage. First Class A market, which I think is suffering from different endpoints, I think if you look at the deliveries in 2023 new construction and then the deliveries in 2024, I think you'll see continued headwinds for Class A.,
I think for the workforce housing, there is a shortage. We all know there's a shortage. I think when the court system for us being more efficient, I think that the economic numbers will look a little better. I also think there's another shadow issue, which we've talked about internally. I mean, basically you have eight and nine millions of people come across the board of all of our hotels.
These people have to go live somewhere. They can't live and hotels forever. We think they once they start to begin to get work permits and start to work. I think that that'll have a positive impact on the vacancy factors and workforce housing.
Jay McCanless
That's great. Thank you.
Operator
Jade Rahmani, KBW.
Jade Rahmani
Thank you very much. On the delinquency statistics you gave our maximum, there's a Lowe's and I wanted to ask what the what the main discrepancy is there that you see. I'm Justin, we're clear the numbers you gave those the 30 day plus delinquency rates. Is that when you want us to focus on? Yes, if you could just clarify that?
Paul Elenio
This is Paul. So yes. So the delinquency numbers that I reported with the CLOs, as we said in our commentary, were 16.5% in total delinquencies for December and 26.6% in total delinquencies for January. Those numbers. Total delinquency numbers are down to 1.3, as we said in our commentary today. So we resolved a lot of loans. Okay. And they're down to for the for the January numbers. I have them right here. On now they're down to 5.6%.
However, those and total delinquency numbers, the industry normally looks at anything 30 plus and really more importantly, 60 plus. So we're telling you is does total delinquency numbers that were reported on those days are down significantly from when those numbers reported and even more importantly, the 30 plus day delinquent number of.
Okay. Some were 6.3% on December second at 16.5% of total delinquency, 6.3 with 30 days plus. And that number is 2.9 today. Okay, so that's what we're telling you. And 60 day delinquencies are down to 0.8. So very, very nominal on January. Same thing type of thesis, the 26.6 in total delinquencies is down to 5.6.
Today as people have made their payments, the 30 day delinquencies on that day, 30 plus day delinquencies were 9.1%, and that's down to 1.2% today and a 60 day delinquencies of point being. So the way the industry looks CMBS and all the other industries look at delinquencies, they look at 30 plus and 60 plus of all we're telling you is the numbers that you're seeing those report, our total delinquency, most of which you can gather by the numbers we're giving you are less than 30 days. And our subsequently, and that's what we're trying to give you the information on.
Jade Rahmani
And what was the 60 day at 12/31?
Paul Elenio
As of 12/31, t he 60 day delinquency number was 0.8 and it's still in planning because those are some of our nonperforming loans. And the 30 day is now 1.2%, down from 9.1%, the 30-plus day or 1.9% the January down from 9.1%.
Jade Rahmani
So in terms of moving it down by that, I mean, this looks dramatic that there was that level of delinquency personal. I mean that level of delinquency is surprising to me understanding that some borrowers may just pay late because you don't different loans paying 15 versus at the end of the month. But that's a high delinquency rate, but it's down sharply. What is the main means of getting it down sharply?
Paul Elenio
Ivan, do you want to talk to that?
Ivan Kaufman
I don't know on a lot of loans is no grace period. People pay late cycle like rent slate? No, it's not a number that we will give a lot of credibility to what we give credibility is 30 plus days fell bars are struggling or more difficult times. And if there's a shortfall between the rents that come in and whether where the capital as they got to raise the cap I got to put it in, keep in mind is really no grace period on these loans that are due at a certain point in time before.
As Paul reiterated, it's really the 30 plus days. So I would say it's definitely more challenging times, but our focus is on the on the 30 plus days. And we work hard to make sure that the bar stable within 30 days. The other thing I'll point out just quickly, it's just a little bit more granular. We're not looking to change the way things are reported with the CLOs, but we are one of the only lenders left in the states that have replenishment vehicles with with cash and those vehicles.
So as we said in our commentary, we have $600 million of cash still ready to be redeploying those via of the way these numbers are calculated for those reports is based on the delinquencies over your total investable assets that we can make. The argument that that $600 million of cash is a performing asset and will be will be invested into a qualified performing assets.
All of you getting up the number and either by using the cash as well, just not the loan, the numbers dropped by 0.5. I'm just telling you that there are ways these things are reported leads. We look at it, but more importantly, the 30 plus delinquencies are where we focus and the industry focuses in those numbers are significantly lower than those total delinquencies.
Jade Rahmani
You mentioned the stress is in the next two quarters. Couple of things that 30 day number, that's what you want us to focus on its 1.2%. Where do you expect that to peak or what do you expect?
Ivan Kaufman
The cumulative delinquency will be, but we don't we're not going to check on that. But what we will say is that we expect this quarter or next quarter have continued stress. I want to add one more commentary is that if rates stay at these levels a little bit longer, we could have stress drip into the third quarter as well.
There's a little bit of an outlook that rates would begin to decline at a certain level which were distressed environment. We take if rates continue to rise a little bit as they are in this area, we may have continued stress to the third quarter.
Jade Rahmani
Okay. I appreciate that. I was actually going to ask that. And then finally, just to clear out some other notions rent regulated, New York multifamily assets on troubled asset class. First of all, can you give your views on that? Are there any opportunities you see emerging there? And if you could quantify any Arbor exposure, which I believe is minimal.
Ivan Kaufman
Yes, I'm glad you brought that up because clearly signature New York Community Bank are loaded up portfolios, rent-controlled or rent-stabilized. And the a big impact on valuation of those banks have been dramatic. I think everybody's followed the sale of signage portfolio and the haircut that the rent controlled rent stabilized. I think it was somewhere in the $0.58 level.
That's really had a dramatic impact on that asset class. We as a lender was not a very active participant in that space. We were not active because they were being acquired at a very low cap rate with the concept that it would be able to kick out these tenants and bring them to market oriented than the numbers going. It didn't make sense nor did we really like the concept of kicking out rent-controlled or rent-stabilized tenants. We thought that was an appropriate and very little exposure to that asset class.
We think that in the long run, a lot of that housing will be spread out at discounts and come back to the market. But we do not have firm have a significant exposure to the rent controlled rent stabilized. On the one hand, the other hand, there will be opportunities on the lending side at the right valuations with the right operators in that asset class and that will return in ours. It'll return once the assets that we split out to the market is the right valuations with good operators.
We do have some really good operators in China that we do business with. We have a very effective in those asset classes at the right basis. Right, lending parameters.
Jade Rahmani
Thank you very much.
Operator
Lee Cooperman, Omega Family Office.
Lee Cooperman
Thank you. So let me just say there's nobody is giving you a shout out. I didn't invest in the company for well over a decade, and I speak with you periodically. And I'd say a year ago you told me were very pessimistic about the outlook. You gave very defensively postured, which was $1 billion, call it three years ago, you started moving to come into multifamily and everybody is now looking at multifamily, likely looking, you know, if it makes no sense to me, you know, these immigrants coming over the border have to live somewhere new employer. It seems to me that you're in a good sector. So that's an amortization is going to give you a shout out.
My question follows I have a lot of money with a guy listeners sensational job for me in doing real estate lending. I noticed in many times, we as a foreclosure makes a profit. So I assume if the assets are well underwritten, you you may even be a beneficiary of foreclosures. What do you feel comfortable that the book value of 1280, which will 50, whether it is, is accurate? And how do you feel about the global underwriting given the environment? And I congratulate you on the very correct in your assessment that environment. Thank you.
Ivan Kaufman
First of all, the multi-family market, there's still a great asset class. A phenomenal asset class in 2009 and 10 were 35% multi. And with all the other asset classes, we came to a quick conclusion that even though there were defaults, even though there were losses, all the significant losses came on the other asset classes, eventually multi-family, the right management returns in every highest, generally followed by another high just as long as you have good management and we made a decision as a firm that we wanted to be predominantly multi-family, and we're glad we did it. I'm not sure how and why we are comparing our multifamily office losses on office.
There could be extraordinarily significant. I'm sure there are cars of offices, CityCenter strong, but they're not the dominant place bets on multi your job losses. Your losses are not that dramatic on a relative basis with respect to the foreclosure process that we when we lose that we lose do we win. The fact is we went on some we lose on a little what we think we're going to lose with put up. Reserves of reserves have been pretty accurate in the history of the firm are very comfortable with the reserves were very comfortable with our book value and will continue to put up reserves as we feel it's appropriate. So many times that will head towards a foreclosure and say, okay, there's again, here many times will head towards a foreclosure, and we've have reserve would probably reserves so far.
We've done a great job. There are a lot of bars is funny. Somebody asked me a wider borrowers to fall far standing. We've had a few defaults recently where the bars defaulted and the assets are worth significantly more than the debt. And we feel like we're not even going to talk to you the guidance, right? You're either pay us 24%. We're going to foreclose. And by the way they were going to get into for judgment against YouTube. Don't forget about that. We have four, five, six bars with guarantees around.
And if I'm sure we're going after those borrowers, I promise you, we're hiring staff just to pursue the judgments and we're going to collect all our money. So nothing's perfect. We feel really comfortable with our portfolio. We will feel really comfortable that process Make no mistake about it. This is that you work it hard work and it takes a lot of management and a lot of discipline, but we will achieve the best economic results and we're doing a pretty good job. And I applaud my asset management staff. The company itself, amount of work that we're putting into the results are getting.
Lee Cooperman
I guess curious, any color on this? I just got an e-mail from a period, but work headline anemia is multi-family. Construction is collapsing. I've been a great believer in excess returns brings within new competition in the genetic tools drives our competition. So we'll be heading. Is this headline reasonable? Who are you seeing multi-family construction turning down quite a bit in your neck in response to the increased supply, took timely deliveries to many deliveries that it has 670,000 units being delivered in 2024 through a slight 370. You have way too many deliveries.
Ivan Kaufman
The costs were high due to COVID. So costs were way out of line. If you listen to the economic reports issued, a chip is being filled up hand over fist. I don't believe that the employment is what people say they are otherwise, we wouldn't be having an absorption issue, but there is an absorption issue without a question from what we see, we're not very active in that side of the market. As we say, we're workforce housing and there's a shortage of workforce housing you can't produce to housing at the cost basis of which were lending. And I believe the workforce housing, even a business goes through this period of difficulty will emerge in a very strong manner.
Lee Cooperman
Well, I congratulate you again, very encouraging.
Ivan Kaufman
Going back a year ago. We've positioned the company. Thank you.
Operator
Rick Shane, JPMorgan.
Rick Shane
Thanks for taking my questions this afternoon, or this morning. I think you talked in Paul, you referenced the delinquency data. I believe that's related to the CLO I estimate represents about six about two thirds of the assets. If we look at if that's the correct description, if we look at the overall portfolio, can you provide the delinquency statistics for the total portfolio, not just the CLO Okay. (technical difficulty)
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