And even more importantly, the 30-plus day delinquent numbers, okay, were 6.3% on December. So of that 16.5% of total delinquencies, 6.3% was 30 days plus, and that number is down to 0.9 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 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 the 60-day delinquencies are 0.8. So the way the industry looks CMBS and all the other industries look at delinquencies they look at 30-plus and 60-plus, all we’re telling you is the numbers that you’re seeing in those reports are total delinquencies, most of which you can gather by the numbers we’re giving you are less than 30 days and are subsequently cured.
That’s what we’re trying to give you the information on.
Jade Rahmani: And what was the 60 day as of 12/31?
Paul Elenio: As of 12/31, the 60-day delinquent number was 0.8 and it’s still at 0.8 because those are some of our non-performing loans.
Jade Rahmani: And the 30-day is now 1.2%, down from 9.1%.
Paul Elenio: The 30-plus 1.2% for 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. First of all, I mean, that level of delinquency is surprising to me. Understanding that some borrowers may just pay late, because different loans pay in the 15th 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: On a lot of loans, there’s no grace period. People pay late, they collect rents late it’s not a number that we give a lot of credibility to what we give credibility is 30-plus days. Bars are struggling. These are more difficult times and if there’s a shortfall between the rents that come in and where the capital is, they’ve got to raise the capital, they got to put it in. But keep in mind, there’s really no grace period on these loans so they do it at a certain point in time. If delayed on the payments, what we focused on, as Paul reiterated, is really the 30-plus days. So I would say it’s definitely more challenging times. But our focus is on the 30-plus days, and we work hard to make sure that the borrowers stay within that 30 days.
Paul Elenio: The other thing I’ll point out, Jade, 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 1 of the only lenders left in the space that have replenishment vehicles with cash in those vehicles. So as we said in our commentary, we have $600 million of cash still ready to be deployed in those vehicles. The way these numbers are calculated for those reports is based on the delinquencies over your total investable assets. But we can make the argument that, that $600 million of cash is a performing asset and will be invested into a qualified performing asset. So if you up the denominator by using the cash as well, just not the loans, the numbers dropped by 1.5 points.
I’m just telling you that there are ways these things are reported, ways we look at it. But more importantly, the 30-plus delinquencies are where we focus and the industry focuses and those numbers are significantly lower than those total delinquencies.
Jade Rahmani: You mentioned peak stress is in the next two quarters. A couple of things, that 30-day number, that’s what you want us to focus on. It’s 1.2%. Where do you expect that to peak? Or what do you expect the cumulative delinquency will be?
Ivan Kaufman: We don’t — we’re not going to project on that. But what we will say is that expect this quarter and next quarter to 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 stressed trip into the third quarter as well. There was a little bit of an outlook that rates would begin to decline at a certain level, which would de-stress the environment. We think if rates continue to rise a little bit as they are in this area, we may have continued stress to trip into the third quarter.
Jade Rahmani: Okay. I appreciate that. I was actually going to ask that. And then finally, just to clear some other notions, rent-regulated New York multifamily. Its own troubled asset class. First of all, could 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 with all these rent control and rent stabilized. And the impact on valuation on those banks have been dramatic. I think everybody’s followed the CLOs Signature portfolio and the haircut that the rent control or 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, we’re 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 they would be able to kick out these tenants and bring them to market and rehab them and the numbers going in didn’t make sense nor we really like the concept of kicking out rent control to rent-stabilized tenants.
We thought that was inappropriate. And therefore, we had very, very little exposure to that asset class. We think that in the long run, a lot of that housing will be respite out of discounts and come back to the market. But we do not, as a firm, have any significant exposure to the rent control or rent stabilized on the one hand. On 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 our view. It will return once the assets could be split out to the market at the right valuations with good operators. We do have some really good operators internally that we do business with, we’ll be very effective in those asset classes at the right basis and the right lending parameters.
Jade Rahmani: Thank you very much.
Operator: Our next question will come from Leon Cooperman with Omega Family Office. Please go ahead.
Leon Cooperman: Thank you. Let me just say this, nobody has given you a shout out. I’ve been an investor in the company for well over a decade, and I speak with you periodically. And I got to tell you, a year ago, you told me you were very pessimistic about the outlook and you were getting very defensively postured, which was a brilliant call. And then three years ago, you started moving the company into multifamily. And everybody is now looking at multifamily like they’re looking at office, it makes no sense to me. You get all these immigrants coming over the border, they have to live somewhere, and they’re employed and we’ve seen to me that you’re in a good sector. So that’s an observation. I’m just going to give you a shout out.
My question is as follows. I have a lot of money with the guy that’s done a sensational job for me in doing real estate lending. And I’ve noticed many times when he has a foreclosure, he makes a profit. So I assume if the assets are well underwritten, you may even be a beneficiary of foreclosures. What is — do you feel comfortable that the book value of 1,280 or 1,250 [ph], wherever it is accurate? And how do you feel about the quality of your underwriting, given the environment. I congratulate you on being very correct in your assessment of the environment. Thank you.
Ivan Kaufman: First of all, the multifamily market is still a great asset class, a phenomenal asset class. And in 2009 and ’10, when we were 35% multi and we did all the other asset classes, we came to a quick conclusion that even though there were defaults and even though there were losses, all the significant losses came on the other asset classes. And eventually, multifamily, the right management returns and every high is 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 multifamily and we’re glad we did. I’m not sure how and why they’re comparing multifamily office, the losses on office could be extraordinarily significant. Ensure there were cars of office and cities that are strong, but they’re not the dominant part of the market.
And when you lose on an office, you lose big multi your losses — your losses are not that dramatic on a relative basis. With respect to the foreclosure process, do we win, we lose do we lose, do we win? The fact is we went on some lose on a little. We think we’re going to lose, we put up reserves. Our reserves have been pretty accurate, the history, the firm, we’re very comfortable with the reserves. We’re very comfortable with our book value and we’ll continue to put up reserves as we feel it’s appropriate. So there are many times that we’ll head towards the foreclosure and say, okay, there’s a gain here. There are many times we’ll head towards a foreclosure, and we have a reserve and we’re properly reserved. So far, we’ve done a great job.
There are a lot of borrowers and it’s funny, somebody asked me why do borrowers default first? I mean we’ve had a few defaults recently where the borrows defaulted and the assets are worth significantly more than the debt and we’re like, we’re not even going to talk to you guys, right? You’re going to pay us 24%. We’re going to foreclose. And by the way, we’re going to get a default judgment against you, too. Don’t forget about that. We got a 4, 5, 6 bars with guarantees on loan. And if I’m short, we’re going after those borrowers, and I promise you, we’re hiring staff just to pursue the judgments, and we’re going to collect all our money. So nothing is perfect. We feel really comfortable with our book value. We feel really comfortable with our process.
Make no mistake about it. This is not easy work. It’s hard work and it takes a lot of management and a lot of discipline but we will achieve the best economic result, and we’re doing a pretty good job, and I can deploy my asset management staff and the company as a whole for the amount of work they’re putting in and the results they’re getting.
Leon Cooperman: I’m just curious if you can comment on this, I just got an e-mail from a Peter Buckler [ph] and the headline on the e-mail is Multifamily Construction is Collapsing. I’ve been a great believer that excess returns brings within new competition and inadequate returns drives our competition. So are we heading — is this headline reasonable from what you’re seeing? Is multifamily construction turning down quite a bit next in response to the increased supply?
Ivan Kaufman: Took too many deliveries — too many deliveries. I think there’s 670,000 units being delivered in 2024 to like 370,000 you have way too many deliveries. The costs were high due to COVID. So of course, we’re way out of line. If you listen to the economic reports, these units should be being filled up hand over fist. I don’t believe that the employment is where people say they are. Otherwise, we wouldn’t be having this 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 the housing at the cost basis in which we’re landing. And I believe the workforce housing, even as it goes through this period of difficulty will emerge in a very strong manner.
Leon Cooperman: Well, I congratulate you again on your very intelligent call about a year ago and the way you’ve positioned the company. Thank you. I appreciate it.
Ivan Kaufman: Thanks.
Operator: Our next question will come from Rick Shane with JPMorgan. Please go ahead.
