Good afternoon. Welcome to Ladder Capital Corp's Earnings Call for the Q1 of 2023. As a reminder, today's call is being recorded. This afternoon, Ladder released its financial results for the quarter ended March 31st, 2023. Before the call begins, I'd like to call your attention to the customary safe harbor disclosure in our earnings release regarding forward-looking statements. Today's call may include forward-looking statements and projections, and we refer you to our most recent Form 10-K for important factors that could cause actual results to differ materially from these statements and projections. We do not undertake any obligation to update our forward-looking statements or projections unless required by law. In addition, Ladder will discuss certain non-GAAP financial measures on this call, which management believes are relevant to assessing the company's financial performance.
The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. These measures are reconciled to GAAP figures in our supplemental presentation, which is available in the investor relations section of our website. We also refer you to our Form 10-K and earnings supplement presentation for definitions of certain metrics which we may cite on today's call. At this time, I'd like to turn the call over to Ladder's President, Pamela McCormack.
Thank you. Good afternoon, everyone. We are pleased to report for the Q1 of 2023, Ladder generated distributable earnings of $47.2 million or $0.38 per share, reflecting an after-tax return on equity of 12.3%. Our dividend remains well covered from net interest margin and net rental income. As of March 31st, Ladder had over $600 million or more than 10% of our assets in cash and cash equivalents, with $950 million of same-day liquidity, including our unsecured revolver. Ladder remains modestly levered with an adjusted leverage ratio of 1.8x and 1.1x net of cash and securities at quarter end.
Subsequent to quarter end, we further deleveraged the company by paying down loans and securities repo by $87 million, both bringing our adjusted leverage ratio down to 1.7x and reducing our interest expense by approximately $1.2 million per quarter. In the Q1, we originated a $15 million multifamily balance sheet loan and funded $19 million on existing commitments. We've continued to see liquidity for our existing loans. Repayments in the Q1 and through April totaled over $147 million, with $72 million of repayments on office loans, including the full payoff of 5 office loans. As of March 31st, Ladder's balance sheet loan portfolio totaled $3.8 billion with a weighted average coupon of 8.72%.
In addition to strong liquidity, we have modest future funding commitments of $290 million, More than half of this commitment is contingent upon accretive good news leasing. We are well-positioned to transact when activity resumes in the market. In the meantime, we've been keenly focused on asset management, and our significant insider ownership in Ladder helps ensure our full alignment with shareholders in proactively managing any potential risk on our balance sheet. We're currently seeing stable performance in our loan portfolio, including for our office loans, which currently comprise 24% of the portfolio. Notably, 76% of our office loans were originated post-COVID, and 56% are located in the Sun Belt. While we'll continue to monitor the pressures on real estate valuations, we did not have a need to take any specific impairments in the quarter.
As Paul will discuss, the increase in the general portion of our CECL reserve reflects our view of macro-market conditions. Our focus on dollars per foot or basis lending in the middle market continues to allow us to both demonstrate the meaningful distinction between a default and a loss on a given loan and further distinguish Ladder with sustained credit performance. Turning to our other business segments, our real estate portfolio continued to contribute to distributable earnings by generating $13 million of net rental income in the quarter, and our securities portfolio ended the quarter with a balance of $520 million. In furtherance of our goal of becoming an investment-grade company, we have maintained a modest use of leverage coupled with a thoughtful composition of unsecured and non-recourse non-mark-to-market debt, anchored by $1.6 billion of long-term unsecured bonds.
Our nearest bond maturity is not until October of 2025. During the quarter, we repurchased $59 million of our outstanding bonds at a discount, resulting in a $9.2 million gain and highlighting the dynamic nature of our business model. We like our positioning. Our dividend is well covered from a primarily senior secured asset base that is demonstrating stable credit performance, and we delivered an ROE in excess of 12% with modest leverage and robust liquidity. With that, I'll turn the call over to Paul.
Thank you, Pamela. In the Q1, Ladder's diverse business model performed well, generating distributable earnings of $47.2 million or $0.38 per share. Our net interest margin continued to increase and benefited from rising rates and a liability structure of which approximately 50% is fixed rate. Our $3.8 billion balance sheet loan portfolio is primarily floating rate and diverse in terms of collateral and geography. The portfolio decreased $97 million in the Q1 due to $131 million of proceeds received from loan paydowns, offset by $34 million from the origination of one loan and funding on existing commitments. In the Q1, we increased our CECL reserve by 25% to $25.5 million, driven by the current market outlook.
Overall, we continue to believe the credit of our loan portfolio benefits from granularity with an average loan size of $25 million and vintage with over 84% of the portfolio originated post-COVID, with limited exposure to any single sponsor or market. Our $900 million real estate segment also continues to provide stable net operating income to our earnings. The portfolio includes 156 net lease properties with strong investment-grade tenants that have long-term leases, representing 73% of the segment. As of March 31st, the carrying value of our securities portfolio was $520 million and was comprised of 84% AAA-rated securities and 99.5% investment-grade rated securities. In the Q1, we received $60 million of pay downs on these positions as their seniority and short-dated maturity continues to demonstrate steady amortization.
As of March 31st, we had $950 million of same-day liquidity, and our adjusted leverage ratio was 1.8x. This liquidity represents cash and cash equivalents, plus our undrawn corporate revolver capacity of $324 million with a maturity in 2027. Unsecured corporate bonds anchor our capital structure with $1.6 billion outstanding or 38% of our debt. The weighted average maturity of these unsecured bonds is 4.5 years, and they maintain an attractive fixed rate cost of capital at 4.7% average coupon. As Pamela discussed, in the Q1, we repurchased $58.7 million in principal of unsecured bonds at 83.6% of par. The retirement of such debt at a discount generated $9.2 million of gains.
As of March 31st, our unencumbered asset pool stood at $2.9 billion, or over 50% of our balance sheet. 74% of this unencumbered asset pool was comprised of first mortgage loans and cash and cash equivalents. We believe our liquidity position and large pool of high-quality unencumbered assets continues to provide Ladder with strong financial flexibility and is reflected in our corporate credit rating that is one notch from investment-grade from two of three rating agencies. During the Q1, we repurchased $2.3 million of our common stock at a weighted average price of $9.14. Our share buyback program authorization of $50 million has $44 million of remaining capacity as of March 31st, 2023.
Our undepreciated book value per share was $13.64 at quarter end based on 126.9 million shares outstanding as of March 31st. Finally, our dividend remains well covered, and in the Q1, Ladder declared a $0.23 per share dividend, which was paid on April 17th, 2023. For more details on our Q1 operating results, please refer to our earnings supplement, which is available on our website, as well as our 10-Q. With that, I will turn the call over to Brian.
Thanks, Paul. We are particularly pleased with our strong performance in the Q1, especially considering the stress in the banking system that we witnessed toward the end of the quarter. As a few bank failures roiled the financial markets in March, we took comfort in the strength of our balance sheet. When volatility in the corporate bond markets caused indiscriminate selling of bonds and for sellers trying to raise liquidity, we stepped in and purchased about $59 million of our outstanding corporate bonds, generating a $9 million gain in the quarter while decreasing our overall leverage and interest costs. This action was open to us because we had over $1 billion of liquidity at the time, strong credit performance from our asset base, and very modest adjusted leverage of 1.8 times.
Our strong balance sheet allowed us to take advantage of the market dislocation in March, and we will continue to seize upon opportunities like this as the year unfolds. We expect that our careful attention to credit, liquidity, and leverage will continue to lead to strong performance at Ladder. Because our earnings are positively correlated to increases in short-term interest rates, we again saw a meaningful increase in our net interest margin that rose to $43 million in the Q1 versus $37.3 million in the Q4 and versus $9.2 million in the Q1 of 2022. We easily covered our quarterly cash dividend of $0.23 per share with our $0.38 per share of distributable earnings per share.
Our 12.3% ROAE also compares favorably to last quarter of 10.2% and versus 8.4% in the Q1 of 2022. We stand ready to lend on quality assets that carry modest leverage. Transaction activity has been somewhat slow. We are seeing loan requests and are not having any arguments over the level of interest rates that we charge. There is still a sticking point in the size of the loan requested. Borrowers are consistently requesting higher loan amounts than we are comfortable making, regardless of the rates offered to us. We expect to see lower loan amounts to be acceptable as time goes by and a likely mild recession takes hold.
With not much further to add in a quarter that speaks for itself, I'll leave you with two data points to consider when comparing our stock to other investments. The first is our dividend coverage of 165%. The second is our modest adjusted leverage of just 1.7x today. With unencumbered assets of $2.9 billion, including cash of $626 million at the end of the Q1, we are very well positioned to take advantage of market dislocations or the return to more tranquil market conditions. As the regional and community banks contract a bit, now fully aware of how mobile their deposit base is, we expect demand for our type of mortgage lending program to increase in the years ahead. We're very well capitalized. The competitive forces in the current market are rather muted. This should bode well for Ladder going forward, and we're looking forward to meeting that demand with our lending capabilities. Let's now turn to Q&A.
Ladies and gentlemen, at this time, we'll begin the question and answer session. To join the question queue, you may press star and then one using a touch-tone telephone. If you are using a speakerphone, we do ask that you kindly pick up the handset prior to pressing the numbers to ensure the best sound quality. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We'll pause momentarily to assemble the roster. Our first question today comes from Jade Rahmani from KBW. Please go ahead with your question.
Thank you very much. Not sure if the 10-Q is filed. I didn't see it, so apologize if it was. Any credit changes of notes, risk ratings , watch lists those types of things? Any updates that we should be aware of?
No, Jade. This is Brian. Paul, go ahead. You can answer it.
Yeah, I was gonna say no, no non-approval loans, no specific impairments.
How would you say that the credit cycle is playing out versus your expectations? Clearly, there's a lot of headlines, but there are, you know, sizable increases in non-performance. We've seen earnings from the banks. They're taking up reserves quite meaningfully. Some of the mortgage REITs have booked either losses or meaningful uptick in reserve. A couple others have not. Just curious as to how the credit trends are faring versus your expectations for the market.
Sure. I would say that obviously you move interest rates up at the pace that they've been moved up over the last year, you're gonna feel obviously a lot of dollars going into the lender column as opposed to the equity column. There's a little bit of stress in the system for sure. I find though that there's a lot of equity and a lot of capital in the system also. If sponsors are having trouble extending or refinancing, it does seem to me that if they have capital available, they're willing to protect the assets at this point. When I say the assets, I'm really talking about multifamily and office here. The industrial sector, we're not seeing a lot of stress in that area at all.
Retail is holding up very well also. I don't think I've seen hotels doing much better than this in a long time. Again, everybody worries about the office side. I think the office side is a little overcooked on the media side, where they're telling you the world is ending. I do think there are some big cities and there are some big loans where this is a bit more of a social story more than it is a real estate story at this point. You've got depleted amounts of the population returning to work in some of these cities. I don't think it's necessarily a return to work problem necessarily. I think it has more to do with the specific cities.
For instance, San Francisco, I don't think could be doing worse. Whereas New York's doing okay. Miami's doing very well. It all depends really on where you are and what the population trends are as far as their attitudes towards returning to work. So far, at least as far as the performance in our portfolio specifically, we do see leases being signed. Anybody who tells you no one is signing leases is wrong. We are seeing it being slower in the office side in particular. However, oddly, the rental rates that are being charged by landlords are actually higher than we were anticipating in most cases. It's a little bit of a mixed bag certainly. I would say that so far, at least with the portfolio of Ladder, if sponsors have capital, and most do, they are protecting. So far, most of the, what I would call the damage is being incurred on the equity side of the equation as opposed to on the debt side.
Thank you very much for taking the questions. I'll get back in the queue.
Our next question comes from Sarah Barcomb from BTIG. Please go ahead with your question.
Hi, everyone. Thanks for taking the question. You mentioned earlier, in the script, you know, you have a little over $40 million of capacity on the stock repurchase authorization. That's something that you guys have been doing pretty consistently. I'm just curious how you're viewing the stock price now and, you know, if we, if we could expect the pace of stock repurchases to ramp up in the near term and how you're thinking about that.
We have usually plenty of room for that. The board of directors, you know, gives us a lot of leeway there. We look at the stock as another investment, and at various times, and depending on what our capital situation is around cash and what our expectations are for disbursements of investments, you know, we become more or less aggressive in the area. Given the current pricing conditions where I see things at this point, at least over the last couple of weeks, I'd imagine we'd be back involved in the next quarter also. I wouldn't try to indicate to you that an already undersized company is looking to get a whole lot smaller. You did see us buy a sizable portion of our debt back. At that time, the debt was yielding pretty close to what the equity was yielding. We had a preference for the debt side.
Just to kind of move over to the the multifamily book. We, we've received some questions on, you know, some of the perhaps more aggressive Sun Belt multifamily lending that might have happened, you know, during the rapid rent growth and ultra-low interest rate period. Can you speak to any exposure that you might have to perhaps negative leverage deals that might have been done during that period and any risk there might be in the portfolio?
Well, we did see a big run-up in prices, and we saw a lot of loan requests for 80% leverage on a purchase price of a property that sold 3 years prior at half the price it was being sold at in 2021. We tended to avoid those transactions unless there was a reason that we could point to concrete-wise as to why we would expect the population of that area and the demand side of rental apartments and the income side that might be able to to, you know, get into those apartments at those rents. We didn't do a lot of that. In fact, we pretty much toward the end of 21, I believe, we noticed that spreads were widening in the CLO market.
I think a lot of lenders interpreted that to mean it was just the end of the year, and that's what happens when LIBOR and SOFR get to the end of the year. We did not interpret it that way. We pretty much began bowing out of stabilized debt yields of 6, around that time. Yeah, we began using an 8 on stabilized debt yield for on the exit. We don't have a lot of it. We also introduced a program because caps were so expensive where we were funding construction loan takeouts, where we were funding brand-new apartment buildings with CLOs, and the only thing they had to do was lease them up. We were writing 2-year fixed rate loans. A lot of our exposure is in that area, and they'll be coming due in 2024 in all likelihood. I've seen the business plans, they're doing fine. You know, we've had a couple of management misses where, you know, you saw some delinquencies pop up inexplicably, they solved it the following month. It was a computer problem. We don't have a lot of exposure that I'm worried about.
If I told you, and I don't have a number for you here, but if I had a concern, it would be on the Class C garden-style apartment in a high-crime neighborhood from 2019 where 80% levered, $30,000 a unit going into the property because there's a belief that the crime problem is gonna be solved and they're gonna be able to charge higher rents. I would look to the vintages of 2018 and 2019 that have not refinanced yet as potentially, you know, where trouble could be lurking. As far as where we are, we're very attuned to, you know, the debt yield on the exit and began addressing that in late 2021. I don't really feel like we have a lot of exposure there.
Great. Thanks for that color.
Yeah.
Our next question comes from Matthew Howlett from B. Riley. Please go ahead with your question.
Thanks for taking my question. First on repayments, I mean, there were 131 for the quarter. I mean, it's pretty steady. What's the outlook on the repayment rate? You know, Brian, I mean, how much are you willing to delever the company? I mean, you talked about, you know, the origination are gonna come back. Just a little, would you look to buy securities? How low would you look to take leverage if these repayments keep coming out and the market for origination isn't back yet?
I feel like we're as delevered as we need to be at this point. You know, you never like to say the word you feel overcapitalized, but because it could bite you in the butt one day. You know, to me it feels like, you know, given the opportunity set that's out there, the return to borrowing at levels that we're comfortable with has been a little slow. I think it's inevitable that it's coming. I want to hang on to a lot of dry powder at Ladder, and we're ready to make loans. I do think that there is a bit of a plateau here where buyers and sellers are not quite in sync, although the lenders are beginning to push the issue a little bit.
I think we'll start seeing a pickup in activity there. Interestingly enough, we actually did start seeing some loan quotes go out the door in the last month or so. We were fine on rate. We were not getting to the proceeds requested. We did see other lenders getting to the loan proceeds that were requested, at least in the application phase. They haven't closed yet. Interestingly enough, several of the lenders that were getting to those proceeds number I had never heard of. There is also a group of investors I think that's getting into the business now thinking it's a great time to make a loan. I tend to agree with that, but it still, you know, it still requires caution. As far as leverage goes, you know, I feel on an adjusted basis below 2.0x. You know, we have an unusually high amount of cash laying around right now. You don't need as much cash when you're not terribly leveraged. You know, when we saw the opportunity to repurchase some of our debt in prices in the low 80s, that seemed a little bit too attractive to avoid.
You're buying back debt, you're buying back stock, you've always been opportunistically. Would you look at buying securities, real, you know, real estate? I mean, obviously, First Republic, there's talk of, you know, $100 billion coming out from them, CMBS. I mean, anything opportunistic-wise that you could do with the excess capital?
Yeah, I mean, I'd love to. We're on the FDIC list for taking a look at some of the portfolios, especially here in New York, out of the Signature Bank portfolio. We haven't seen anything. A hundred billion dollars coming out of First Republic, I mean, obviously, we're not gonna tangle with that. We do think it's almost everything is opportunistic right now. There is no regular way lending going on at all. Nobody is borrowing 65% at SOFR plus 300 on an acquisition. It's very much a special situations market. Sometimes those special situations involve our own debt when the high yield market is selling off indiscriminately, and those prices have bounced back quite a bit here, although still quite attractive, in my opinion.
We're mortgage lenders at heart. We understand the securities business too. The securities business is attractive, but it does require quite a bit of leverage, and I'm a little bit concerned about some of the attitudes towards leverage in some of the banks. It's not that they're not lending. They started charging a lot. You might have heard Pamela mention that we paid off a lot of our securities repo subsequent to the end of the quarter. The reason why is, you know, banks are charging 6.1% for financing triple A bonds that we're earning 7.3% on, and they have 85% subordination because they're CLOs from 2019.
We just think that rather than pay the 6.1%, we'll just pay that off, and we'll collect the 7.3% unlevered. They're very attractive. You can lever yourself into the twenties if you want. Obviously, that's a situation open to us. To me, I'm a little bit concerned when I hear that First Republic might be selling $100 billion of loans and securities. That is not a constructive environment for us to be stepping in thinking that, you know, spreads can't widen because they certainly could.
Makes sense. The last question. A lot of your competitors up here, they talk about just only doing multifamily because you have the GSE takeout there. Does it... It sounds like that you're, you're open to everything. Were you quoting, you know, hotels? You look at offices? Long term, is there any major impact on your model if the banks will end up, you know, with higher regulation or they curtail their lending?
Well, the regional banks are certainly gonna wind up with curtailed lending and higher regulation. I think in the initial phase of whatever they're gonna go through, I don't believe they're gonna stop lending. I mean, they're still banks. I think that they have now noticed that their deposit base can be pretty tricky. I think they'll all be running. They'll be paying higher deposit rates to hang on to deposits. They'll also be lending more conservatively. That will cause maybe some difficulty in refinancing our loans, although, frankly, we haven't seen that yet. We might. There's also plenty of other lenders too, and there's tons of small banks that don't have any problems along the lines of what you read about in the newspapers. In the long term, I think it's a positive for us because I think it's another example of regulation, leverage, and past mistakes forcing a lot of the mortgage lending apparatus in the United States outside of the banking system. Since we service that mid-market borrower base, I think it'll come right to us, and that's very helpful. Short term, not helpful on refis. Long term, extraordinarily helpful.
Great. Just on the quote, are you still lending to all sectors or something that you won't do now?
Yeah. Well, we haven't made a loan other than multifamily in the last quarter. It's gonna sound wacky. I like office. I don't like office 'cause I believe office is gonna do fine and rents are not coming down, and everyone's going back to work tomorrow. I just believe the story is a little overdone. Yeah, I've got a portfolio of office loans that are doing okay. You know, we pick more office these days rather than supply and demand, as opposed to, we really look at where they're located, and I don't mean what corner, I mean what city. I can't imagine making a loan in San Francisco. I might buy a building there. I think Ladder could do that because I don't think it's kind of a binary outcome.
The good part about all the problems that are taking place in some of these larger cities that are having difficulty with office is the problems are quite fixable. I think that they will ultimately get fixed over time. Chicago just took a step backwards, they won't be, you know, fixing their problems anytime too soon here. I don't expect us to be a lender in Chicago, San Francisco, Portland, Seattle, Los Angeles, D.C., and parts of New York.
Makes a lot of sense. I really appreciate.
The hotel sector, by the way. I'm sorry I didn't get to that one. They're doing fine. I do believe we're gonna go into a mild recession here, and rates are quite high. I think the American consumer wants to get out and wants to go vacation. I sorta like the... We've always favored the drive to market and the resort market as opposed to the inner city. You know, I saw a property change hands the other day, like 700 rooms in an inner city. That's difficult.
Yeah.
Those I think we would avoid. We like the Garden Inns, we like the Courtyards.
The destination. Yeah. Make those have held up very well. I really appreciate it.
Sure.
Once again, if you would like to ask a question, please press star and then one. To withdraw your questions, you may press star and two. Our next question is a follow-up from Jade Rahmani from KBW. Please go ahead with your follow-up.
Sure. I wanted to ask, just 2 strategic questions. One, do you see an opportunity to raise a fund, raise third-party capital, and maybe invest in office repositionings or some kind of contrarian or distressed-oriented fund, since de novo pools of capital tend to do, you know, pretty well at this point in the cycle?
Yeah. Certainly, there's an opportunity to do that. I will tell you, we haven't been overly active in that area because it comes with systems and controls that. You know, we have had outside funds in the past before we went public. We do think it's a good opportunity for that. Right now we think, given the asset base that we work off of. Keep in mind, we were the lending operations in two big Swiss banks in the prior 15 years. We do see a lot of large loans and a lot of good opportunities. I think we kinda work backwards, Jade.
I think if we wanted to do a $400 million recap on a office property that we thought was really cheap, we would probably just buy it and then distribute it, you know, to some high net worth individuals or funds or insurance companies and syndicate it that way, as opposed to just raising money for a fund. Because in my experience anyway, to a startup, I mean, you take an organization that's a real asset manager, they raise money very quickly. They have a whole system of people who go out and do it. We're a small operation with about 60 people, and we don't have all of the slides and all of the accounting systems that a lot of people that do investments institutionally like to see.
I do think we can do a lot of that right inside where we are right now. I think we'll participate in it, and I think we'll do larger than bite-sized transactions, and we'll syndicate it after the fact as opposed to having the money in hand. It takes a long time to raise money that way. Oftentimes by the time. I mean, when we first opened Ladder in 2008, securities were so cheap, it was ridiculous. We went about raising an outside fund. Ultimately, the funds we did raise were for rich people as opposed to institutions. The institutions all knew, you know, that we knew what we were doing, but we had to go through their advisor, and then we had to go through their due diligence periods.
By the time they got around to saying yes, the opportunity had passed. These markets move pretty quickly. I think we specialize in things that move quickly. You know, we have enough capital at this point to at least get started on things. If things look particularly attractive and we feel like we need more capital, I don't think we'll have any trouble getting that. We're not anticipating a fund just yet.
Okay. Then on the M&A side, is merging with another company something that is interesting to you? you know, there are plenty of mortgage REITs trading at below your valuation, bigger seems to be better, although it could jeopardize the investment-grade goal. just wanted to get your thoughts on that.
Yeah. I mean, there's a couple of names that I have written on the back of my hand that I think about once in a while. It really isn't so much that I think I understand the company so well, it's just I understand the people who run the company pretty well. Some of them are pretty talented people, and I doubt that the problems they're seemingly having are nearly as bad as what the stock prices would indicate. You know, I think about it. It's certainly not outside of our wheelhouse.
You know, I always thought by this point the first thing we might look at would be a residential platform. The residential platforms seem to have a lot of leverage in them, and you've seen us get away from that over the last few years. Unless something just walks through the door that looks pretty cheap, we're not gonna do it as a capital raise where we buy a residential platform and just sell all their loans and then use the cash for commercials. I do think we could run a very attractive residential platform, especially now with some of the changes taking place in residential lending. It is a long duration asset. You know, I think we've said before why we haven't been in that business, and here it is again. It's that long duration, risk interest rate management is very difficult to do. You see a couple of banks now in some trouble, and you see a couple of banks not in trouble that have huge losses that have not been realized yet. This is a good time to get into the residential space though.
Thanks for taking the questions.
Sure.
Our next question comes from Chris Muller from JMP Securities. Please go ahead with your question.
Hey, guys. Thanks for taking the question. I just had a quick one on what would make you guys more comfortable on getting aggressive on the lending side? Last year you guys were able to put out some pretty big origination volumes. Is it more the Fed pausing? I guess, what type of things would make you more comfortable stepping back on the gas there? Thanks.
I think if we You know, Pamela McCormack mentioned transaction volume has been muted. That sentence can represent a lot of things. There's a lot of people looking to refinance loans that, you know, the loans were written in a 0 interest rate environment, and there's difficulty, you know, with... Unless they've executed perfectly and possibly even done better, it's very difficult for them to handle today's rates based on the size of the loan they want. I think where we'd get much more comfortable is seeing acquisitions of assets today. With today's underwritings, with new equity going in and a very sober, you know, loan request. But whereas the... When Pamela McCormack mentioned the transaction volume has been muted, not only has the loan side been slow, but the acquisition side has been very slow too.
You even see it in the residential side, you know, like new mortgages are falling, you've got because rates have gone up. It isn't that we're uncomfortable. We're very comfortable lending in this kind of a market and even going into a recession. I tend to believe it's hard to write a very bad loan in a market like this because every assumption you use is probably a little bit worse than what will actually happen. We're just not seeing a lot of properties change hands. What we're primarily focused on right now is acquisitions, and there just aren't many of them.
Got it. That's helpful. Just quickly on the dividend, can you just remind me when you guys would address either a special dividend or a dividend increase? Is that an annual thing you look at or is it quarterly the board will look at that? Just seeing the pace of distributed earnings above that dividend, it looks like there could be something that needs to be done there. Thanks.
We look at it quarterly, usually right before the dividend declaration date. I'd imagine the first couple of weeks of June, we'll take a look at it again. Last year, we raised our dividend twice for a total of 15% versus where we started the year at. We're gonna revisit it again in June here. You know, we took a look at it in March, and, you know, earnings look pretty good. Then I guess with Silicon Valley Bank got in trouble around March 10th, I think all of the bonds and all of the stock we bought back took place after March 10th. When we were figuring out our next dividend, you know, calculation, the market was a little bit up in the air. We wound up supplementing the earnings of this quarter greatly in the last two weeks, largely as a result of the turmoil in the banking sector. I think we'll be revisiting it again in June, in the first two weeks of June.
Got it. Thanks for taking the questions, guys, and congrats on a nice quarter.
Thank you.
Our next question comes from Derek Hewett from Bank of America. Please go ahead with your question.
Good afternoon, everyone. You had mentioned earlier bank behavior with securities repo tightening, caused you to repay that source of funding on the securities book. What about the bank behavior on the loan repo facilities? Are you seeing any changes in the bank's behavior in regards to maybe advance rates, maturity extensions, requiring higher spreads, in terms of their thoughts on the loan repo facilities?
Sure. Pamela, I think you deal more with that than I do. I can answer it, but I think you'd do a better job with it. I'm gonna ask Pamela to catch it.
Yeah. Paul, feel free to jump in. The short story is, first of all, let's start here. We have very limited repo outstanding. We haven't really, in the Q1, I think Paul confirmed we did not have any margin calls. I think, there is at least one lender who's looking at their multifamily exposure and looking at debt yields and may make some adjustments there across the industry, as we understand. To date, we have not funded a margin call.
Okay. Thank you.
Yeah, I can answer a little more there. I think it would be hard to replicate the lending criteria that we've got right now in place on some of those. You know, I think that they're tighter now in standard. The rates are higher. On the security side, the only thing that really happened was rate went up. The spread went up. They didn't pull back on the advance rate. It's not a credit conversation, it's a liquidity conversation. As a result of that, we just pulled back.
To be clear, we funded some additional repo. I think it was important for us, you know, to demonstrate the capabilities we have there and the capacity. We funded some repo recently and have a ton of capacity there. If anything, I think it's probably true for us and our peers, we're seeing people looking to open up new lines with us at this time. They're anxious to lend, is the way I would describe it.
Okay. Thank you. Within the office portfolio, is there any way to kinda, kind of segment what the kind of the higher risk, like risk-rated 4 or 5 office loans are since you the 10-Q is not out yet?
We don't use that kind of criteria. Paul, I think you have some information about how many of our loans were written after the pandemic. If you hear my dog, I'm sorry, that's live calling. But Paul, didn't we have, like, 76% of our loans were the office sector was written after March of 2021? Yeah. We don't have them rated the way other people do. But last call, if you remember, we went through our five largest exposures. In fact, today, I think it was today or yesterday, I saw an article in the Wall Street Journal saying some of the Sun Belt office markets look like they're losing some of their momentum.
The place where we have our most exposure was on the bottom of that chart is, in Miami, not losing its momentum. We're not having a lot of trouble with office, despite what's in the news. We're reviewing business plans. We're sending people out to see properties. There are leases being signed, even in New York City, even in mid-block buildings in the Garment District. It is just not as bad as what's being portrayed in the press.
Okay. Thank you.
Ladies and gentlemen, with that, we'll end today's question and answer session. I'd like to hand the floor back over to Brian Harris for any closing comments.
I'll just wish you all well, and thank you for, you know, getting on the call and missing the Amazon action today. I know that they're releasing too, but thanks for hanging with us. This is a good market for us. We don't mind rough weather. As long as we keep our focus on credit quality and liquidity and leverage, we expect to be very, very profitable in the year, in the quarters ahead here. Thank you.
Ladies and gentlemen, with that, we'll conclude today's conference call. We do thank you for joining. You may now disconnect your lines.