Ivan Kaufman: We do. I mean I think when you look at the cash flow you get to back out certain items like changes in other assets and liabilities. And I think if you do that, we’re still above the dividend. So we do expect it to continue that way. Obviously, if the market get significantly more stressed than there is more a cool features than our now than that could change. But right now we don’t see a runway for that to be lower than our dividend.
Jade Rahmani: Thanks very much.
Operator: Our next question will come from Lee Cooperman with Omega Family Office.
Lee Cooperman: Yes. Hi. Ivan, you and your team have been really brilliant in conducting your fares in the company and I’m just curious how things are evolving in a manner that you expected? And if you were very negative a year ago and you’re very correct. And I know you have $138 million left of the repurchase program and you bought stock at 1219. If things evolve their manner where you would want to continue to buy back stock if we got back down here or do you think things should be differently than you anticipated?
Ivan Kaufman: I think buying back stock below book is extremely attractive to us. As I mentioned in my comments, it becomes very complicated because when we buyback stock and anything in a blackout period it’s done on a program basis. They’re all very, very often know this is this is very sensitive subject, very, very often most city attacks a commodity company on a blackout periods. Its an amazing. Most of the publications come out a week before earnings. And so we’re not allowed to comment for a week or month. They know we can’t comment. So we kind of defense. The only defense we have is a buyback program but we can’t be in a position will pull wakes up one day and say, I want to buy this much back that day. We have computer-driven program.
And so your comment very specifically. We have a $138 million that we will buyback, set to buyback generally when we’re in a blackout period below book. If the stock gets hit anything substantially I would go to the Board and has to buyback more. I think it’s a great on investment.
Lee Cooperman: Basically their judgment means you have confidence in the realistic value of your book. You think 64 is a real number currently for the weakness in the environment which have been very great. And I congratulate you. You’ve been a good steward of the shareholders’ money. Thank you.
Ivan Kaufman: Thank you, Lee.
Operator: Our next question will come from Rick Shane with JPMorgan.
Rick Shane: Hey guys. Thanks for taking my questions this afternoon or this morning. After $1.9 billion in mode during the quarter, I’m curious how much for loans that were less than 60 days delinquent and how much more loans more than 60 days delinquent? And what are the $1.9 billion how much were in the CLOs?
Paul Elenio: Yes. So, let me give some numbers, Rick. Appreciate the question. So as I said in my prepared remarks, at the end of the $1.9 billion we marketed, $1.1 billion then we might even with some form of rate relief. But out of the $1.9 billion, $713 million of those loans were less than 60 days delinquent and we weren’t accruing from the prior quarter. Another I think $40 million of loans were loans that were non-core performing that we were able to modify take out of our nonperforming bucket although new loans came in. So that’s the market and how we look at the modifications. As far as how many were in the CLO, I don’t have that here, because I tried to give you guys numbers. I think we’ve got a little bit off track last quarter talking about CLO delinquencies.
And I think what people care about is total delinquencies, whether they’re in the CLO or not and that’s what we’re giving you which is that $954 million I disclosed today, $464 million in nonperforming integrated and 60 and 49 that are less than 60 which is all inclusive of loans whether they’re in the CLOs on our balance sheet in a way outlined. I can’t tell you exactly, but I would say the majority of those loans will probably in the CLOs because the bulk of our loans are financed in the CLOs.
Rick Shane: Got it. Yes that makes sense. And again, I do — I would agree with you that the commentary last quarter was confusing and I think everybody spent a lot of time trying to parse it out. So I appreciate you trying to put it in sort of a clearer context this quarter. I would say — it’s interesting as you’ve been providing that on in some of the detail I’ve been trying to tie it out to on what’s stated either in the press release or the 10-Q and some of it’s there are some of it’s not, it would be great if on a go forward basis we can see that because it’s just a lot easier to sort of match up if we can see in print and understanding what’s going on there.
Paul Elenio: Hey Rick, thanks for that comment. In the press release it’s a little bit less disclosure, but in Q, it’s very robust. And I think tell me if I’m wrong and you reiterated that we do talk about the buckets of loans we moded, we have three buckets in the queue. You’ll see a subset of the loans is the $713 million than were less six. So I tried to roll it forward for you guys basically saying, hey we had $937 million of loans that were less than 60 days that are non-core bucket. That’s in the Q. That’s now at 49. And how you get there is $175 million of loans moved up, 713 loans were moded and 420 million loans were added in the same for the nonperforming bucket. So I do think it’s all there. We can have a discussion offline in every region. Again you don’t think that’s correct. Happy to take any suggestion that had approved the improved disclosure. But we tried we hard to be very transparent and we really can follow the numbers.
Rick Shane: Got it. I just wasn’t able to find the 489 I think in that. And but I’ll go back on that.
Paul Elenio: Yes it’s definitely in a paragraph there you’ll see.
Rick Shane: Strange question, was the repurchase that you guys have cited in the first quarter or second quarter to date?
Paul Elenio: I’m sorry what was that question a gain?
Rick Shane: The share repurchases, the $12 million of share repurchases, is that Q1 or Q2?
Paul Elenio: It was Q2, it was in April.
Rick Shane: Okay. Yes it’s funny. I couldn’t find it in the cash-flow statement. The way I read it, I thought it was in Q1 and then didn’t see in the cash-flow statement and that makes sense.
Paul Elenio: In the press release, you should see in April.
Rick Shane: Okay. Again we’re moving pretty fast in press releases for me. Last question, I think you talked a little bit about some of the competitors, some of the peer performance, et cetera. One thing I would note is that you guys in the quarter modified $1.9 billion of loans and retained the $45 million of infusion primarily in the form of caps. They’re not a lot of pure disclosure on that, the only one that equates to about a 2.4% consistent with your 3% of replacement of expiring caps. The only other peer that we can find had $525 million of margin in the quarter, $125 million of capital infusion, so almost 10 times the amount on a percentage basis. I’m just curious if you clearly are getting additional interest rate caps but given the movement in cap rates, does it make sense to be more aggressive in terms of gaining additional equity paydowns and equity investments bond paydowns as well.
Paul Elenio: I would love to get as much as we can. So you have to be very pragmatic about how to improve your position on each loan. And you have to keep in mind that we have a lot of good borrowers who are failing their assets substantially. I can’t speak for the other peers. I can’t speak for the assets you’re referring to. I can only speak to our book and the fact that we continue to prove our book and we look at each one individually and trying to improve the position of each individual loan. So we’re satisfied with the work we’ve done and you have to look at the context of what we’re doing in each particular circumstance and we’re trying to improve our position on that loan. We’ve got a good job with it.
Rick Shane: Got it. And I apologize. But the nice thing about getting to go last is that I might get to ask one extra question. Look you guys have been very clear about the opportunity associated with rates coming down, presumably you have a lot of borrowers who are – had been bullish on rates. And I do wonder with the change in tone over the last two or three months. Are you finding that you have borrowers who are hang on waiting for an inflection in rates and are now throwing their hands up and saying wait a second, we’ve been paying out of pocket for a while and this no longer makes sense, is that a conversation that’s picking up?
Paul Elenio: This has been going on for two years and has been extraordinarily volatile. And clearly we’ve had a recent move up in rates and rates are volatile. They go up. They go down. It was as high as 5% went down to 3.5% and volatility is good. It gets people to move off of the dime. The biggest and hardest thing right now is extraordinarily inverted yield curve is net of 5.25% SOFR and if you had 4% or 3.5%, you pay 8.5% as opposed to a fixed rate loan, which maybe you’re paying high-fives. It’s a lot to carry. People have been carrying for a long period of time. It’s my early remarks, if you combine the economic occupancy people have [indiscernible] rise in expenses. It’s been a lot of loan to carry and people have been carrying it, it’s a lot of stress.
I do think we’re seeing movement on economic occupancy. I think the trend is clearly our friend, they take insurance costs, finally a stock price and more significantly, I think people are focusing on improving their assets and the performance to their assets, I think there was a period of time where now people are putting a lot of time and effort to buying assets, but not running their assets. I think the attention has changed a bit now, they’re really running their assets, improving operations. So a lot has to do with where the yields curve is, but volatility is volatility. People feel lousy one day then the next day, they feel better. And right now, I will tell you that you’ve seen a 20 basis point drop in the 10 year in the last five or seven days.
I can guarantee if people are going to lock in some loans and convert bring capital to the table, and they’ll have a nice fixed rate loan. If you see further drop in the 10 year, I think you see a lot more optimism. The best thing that we can say is a drop in the short-term rates, cap rates. Cap costs went up significantly when the mood changed. I mean, we had a borrower who was ready to buy a cap and bring money to the table. He was waiting. He waited. It cost another $500,000. I think when the trend changes in terms of what cap costs are going to be, it’s going to be a lot easier for borrowers. So it’s not an answer in a vacuum.
Rick Shane: No, I appreciate that. It’s funny. As equity investors, I suppose, we look at optimism as a good thing, and I understand what you’re saying from a rate perspective is perhaps it’s pessimism as a lender to get your borrowers to start to move.
Paul Elenio: I can tell you one thing. The borrowers who didn’t take a 4% tenure and lock in their rates 60 days ago, when it hits 4%, they’re jumping. Also keep one thing in mind. A 4% tenure spreads for about 20 basis points tighter. So a 4% is almost equivalent to a 375, 380 spread for about 20 basis points tighter right now. So a 4% is a lot more attractive than it was six to nine months ago.
Ivan Kaufman: Hey, Rick, I appreciate the questions. We’ve got to get to another one. But I do want to mention, and I don’t know if it’s apples to apples. I don’t think it is. I don’t know what peer you’re referring to that disclosed more capital injected, but if that peer has a significant amount of office exposure, that capital injection is going to be at a different ratio than for multi. But that’s just something to think about.
Rick Shane: It is, and it is.
Operator: Thank you. Our final question will come from Crispin Love with Piper Sandler.
Crispin Love: Thanks. Good morning, everyone. I appreciate you taking my questions. Following up on, I believe, Stephen’s question earlier, in the 10-2, it looks like you’re deferring interest until maturity on about $1 billion of the modified loans. So just looking at the first quarter, you had $320 million of total interest income. Can you just break out how much of that was PIC on a dollar basis and how you’d expect PIC to trend over the remainder of the year?
Ivan Kaufman: Yeah. And that’s what I tried to do earlier, Crispin. So on that billion one that we had about 1.86% deferral, that number for the quarter, because it wasn’t a full quarter, the mods was like $4 million, but only $2.5 million did we actually take through income. We deferred $1.5 million. So you’ve probably got to just annualize that. And it’s hard for me to give you a number because new loans will come on, other loans will get resolved. And in addition to that, we’ve done a nice job with strong collection efforts of collecting non-equal loans in the subsequent quarter. So if we have some success in the second quarter on the non-equal loans of $489 million that we’re not accruing interest on, then that will help that number.
