Greetings and welcome to the Ladder Capital Corp Fourth Quarter and Full Year 2014 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kelly Porcella, the Associate General Counsel for Ladder Capital Corp. Thank you. You may begin.

Thank you and good afternoon everyone. I would like to welcome you to Ladder Capital Corp’s earnings call for the fourth quarter of 2014. With me this afternoon are Brian Harris, the company’s Chief Executive Officer and Marc Fox, the company’s Chief Financial Officer. This afternoon we released our financial results for the quarter ended December 31, 2014. The earnings release is available in the Investor Relations section of the company’s website and our Annual Report will be filed with the SEC shortly. Before the call begins, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on management’s current expectations and beliefs and are subject to a number of trends and uncertainties that may cause actual results to differ materially from those described in these forward-looking statements. I refer you to Ladder Capital Corp’s Form 10-K for the year ended December 31, 2014 for a more detailed discussion of the risk factors that could cause actual results to materially differ from those expressed or implied in any forward-looking statements made today. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements. The company undertakes no duty to update any forward-looking statements that may be made during the course of this call. Additionally, certain non-GAAP financial measures will be discussed on this conference call. 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. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with GAAP are contained in our earnings release. With that, I will turn the call over to our Chief Executive Officer, Brian Harris.

Thanks, Kelly and thanks for joining us on our call today. I am going to break up my discussion into several parts. I will begin with a review of some highlights for the fourth quarter and for the full year of 2014. I will also mention some metrics on our loan originations and investments we made in the other products in our diversified product platform. We think you will be impressed when you see how Ladder has grown from 2013 to 2014. Then I will spend a little more time looking at our product lines hoping to illustrate to you how our dynamic business model allows us to change the emphasis amongst our investment products as market conditions change. 2014 was a year, where you can see that we actually did the things we told you we would do as the business cycle evolved. Then I will wrap up with a discussion of some corporate milestones we hit during the year and I will overlay that against market conditions as we see them going forward. First, the financials, in the fourth quarter of 2014, Ladder produced core earnings of $52.9 million, with core earnings per share of $0.32. For the full year, core earnings were $219.3 million with core earnings per share of $1.36. Our return on average equity for the year was a solid 15.4%. Also of great significance, I am happy to report that our shareholders overwhelmingly supported our conversion to a REIT with an effective date of January 1, 2015. In connection with our reelection, I am pleased to announce our intention to declare our first dividend later in this month, a $0.25 cash dividend per share payable on or about April 15. We are now operating as an internally managed REIT, a structure that allows more…

Thank you and good evening. I will now expand upon Brian’s comments regarding Ladder Capital’s financial results for the quarter and year ended December 31, 2014. Looking back over the fourth quarter, our results reflected strong origination volumes and asset growth offset by compressed lending yields and securitization margins. The $1.57 billion of total loan originations in the fourth quarter was almost 25% greater than Ladder’s previous high for quarterly loan originations. This amount included $1.3 billion of conduit loan originations, also a new quarterly high for Ladder. Partially offsetting this favorable trend are declining lending asset yields. Excluding a large loan originated and securitized in the fourth quarter, the average coupon on the loans held for sale originated during the quarter was approximately 4.5% compared to over 5.5% in the fourth quarter of 2013. The average coupon on loans held for investment originated in the quarter reflected a weighted average spread of approximately 6.5% over one month LIBOR. Securitization activities reflected similar trends in Q4. The $1.155 billion volume of loan securitized was also a new quarterly high for Ladder. The $1.15 billion asset base expansion during the quarter represents an increase of almost 25% from September 30 as we continue to deploy the proceeds from the August bond issuance. Our securities portfolio grew 29% or $638 million during the quarter. Our balance sheet loan portfolio grew 15% and our real estate portfolio expanded by almost 18% to $769 million by year end. Fourth quarter core earnings were also impacted by higher interest charges related to the August issuance of $300 million of 7-year unsecured corporate bonds and the extension of debt maturities as Ladder continued to enhance the durability of its funding base. In a review of trends reflected in the fourth quarter income statement, a number of…

Thank you. [Operator Instructions] Our first question comes from Steve DeLaney with JMP Securities. Please proceed with your question. Your line is live.

Good. Thanks. Good evening everyone, how are you. Brian, appreciate the detail commentary on the conduit activity in the fourth quarter we had seen some lower margins because of the volatility that you referenced. You gave us the margins, but could you confirm Marc, the – I am backing in you took your full year net gains affected for hedges but I don’t think in the press release that you actually gave a fourth quarter I am coming up with $27.7 million in 4Q for net gains, does that sound accurate.

That’s correct.

Okay, great. And then bigger picture Brian this was obviously a big year in lending, but just within the conduit business, it looks like the volume was up about 60% in 2014 to $3.5 billion, as you see the market and you look out to this year, can you give us a sense for whether you feel that same volume or possibly something larger is achievable in 2015 on the conduit side?

Sure, Steve. I think that it’s always hard to tell, because it’s a function really of interest rates. But given our size now after the public offering and the bond deal we can certainly now do numerous larger transactions than we were able to do prior to that. So we can ramp up volume pretty quickly. But I tried to point out that the single asset securitization is especially when there are very low leveraged transactions and there are a few once in a while. They don’t make quite as much as the conduit business does. But I would say probably in the neighborhood of about the same to slightly higher, I would expect. We are a little bit concerned about credit quality right now. And I think that we have made a concerted effort to avoid transactions that look problematic even if it’s just from the standpoint of credit, but also from the standpoint of we are just not making enough of a margin to transact, if we can deploy that capital into other types of the business lines and that’s what we will do. So we are not overly concerned around volume, we suspect it will be in slightly higher than what it was. But again it’s not a statistic we chase.

Okay. And the – I think Marc mentioned that of the 10 securitizations in ‘14, two were single asset, do you have that dollar amount of those, I guess partner said was $450 million, but I can’t recall I think the other was the New York office that we are not...

You are correct, it was $350 million.

$350 million and $450 million?

That’s correct.

Okay. So, $800 million of the 3.5 a little over 25%, so I mean should we – and I know this is like we are just trying to really finance this, but if we were going to – would you think that the single asset – are you seeing more single asset opportunities and should we factor in a higher like even if you did $3.4 billion or $4 billion would it be wise for us to factor in the possibility of more single asset deals compared to this past year?

I think as I said you can – there are $300 million, $400 million, $500 million each, so if you miss one, you could miss this number by a mile, which is why I hesitate to get overly speculative. And we could also double it pretty quickly too. We have been seeing some – you have to remember too there is a lot of transactions that take place in the single asset market that we really don’t see for some of the very large hotel deals that are being financed over at Blackstone. I think we generally don’t participate in those. They have lines to borrow to banks that they like to take care of. We can participate in them in some fashion. I think we have got tremendous strength. One, it’s a single asset; two, a company that wants to borrow for 5 years at low leverage, one there are B pieces and mezzanine and preferred equity tranches we tend to be less effective, but I would say, yes, the number I keep in my head and I have no way of knowing this is about $750 million in single asset securitizations, I think we will do this year.

Okay, great. I appreciate the color. It’s very helpful.

Sure.

And our next question comes from Dan Altscher with FBR. Please proceed.

Hey, thanks. Good afternoon, everyone. I appreciate you taking my call. Little bit of a different gear I suppose to the conduit business, securities, yes early in the script you mentioned you have purchased a lot kind of optimistically. Can you just give a little sense of what you bought kind of the rating, the tender what your expected return on income with the profile was there? Thanks.

I would break our securities purchases into two themes. One is when we have a lot of cash around we will many times invest in short-term securities. This 1 and 2 years maybe 3-year AAA bonds and those are not really intended to make money on the sale, but they are really designed more in a better than cash model rather than earning zero, we will go in and lever those at the Federal Home Loan Bank very effectively. We tried to get a levered return of about 10% on average. I would say, the vast majority of everything we buy is AAA. It’s probably as high as 97%, 98%. And the other part of the theme there is once in a while we just see transactions that look cheap. We won’t buy things that we think are cheap, because if the credit is mis-priced, we will occasionally buy large pieces of securitizations when we think that the market is just too thin or not understanding the transaction. So, in the – I think it was November, the floating rate market got very messy. And what happened was the floating rate market is really designed to be sold AAAs to banks, because they are LIBOR floaters, but there were several transactions with large hotel concentrations that the banks really wouldn’t buy and we participate in the purchase of those as they got successful – progressively cheaper as the marketing effort went on. That was a particularly bad time and those are the only floaters that we fairly bought. The others are just when we see things that look like they are mis-priced and we were buying some 10-year securities, AAAs is in the 90s and 100. We saw some 5-year bonds at 100 over at one point also. Those are historically very wide margins. We didn’t think that there was anything fundamentally wrong with the market. We just felt like there was too many securities for sale for two little receivers of paper at that time. So, we stocked up on those. I think largely what’s going on right now some of the transactions that are being placed in the market with the insurance companies with new allocations you may have seen the ETFs are picking up a lot of cash. So, we are feeling like there is more demand now. When you get towards the end of the year, especially in the year like last year, some funny mechanics can take place. So, we try to take advantage of those. And as I said, we are very optimistic. We believe rather than trying to create yields through buying securities that are illiquid and higher risk we would rather buy AAAs and take advantage of our financing lines to leverage those comfortably into high rate returns. So, we try to get about a 10% return on AAAs.

Alright, that’s great. I appreciate that. I guess switching then gears back to the conduit business, I mean, I don’t think anyone is going to deny the businesses – certainly, there is a robust amount of volume, but the margins are challenging. Am I still right to think that this was probably still the best use of your capital when it comes all in, I mean, if you can turn 5, 6, 7 securitizations a year, [indiscernible] still probably the best use of capital regardless, right?

Yes, that’s true. It’s from an ROE standpoint certainly. From our – we participate in 10 securitizations if you run the numbers on that, even at 2.5 points you are making close to a 50 ROE. So, it’s a very attractive business. From our standpoint, we suffer more when we don’t match terms of other lenders, because we are concerned about the principal column. It isn’t so much the rate column that bothers us, it’s when these assets are being overleveraged or structured poorly that we try to avoid them. So, I think there is a limit to how much we will sign up just because of our credit skills. Sometimes, we like to say we are burdened by common sense. But so to the extent that borrowers are borrowing money with reasonable credit standards applied and there are plenty of them that don’t want to be over-levered, then I think we will be very active, but yes, it is absolutely the highest ROE product we own.

Okay. And then just one final from me, you are not basically a REIT here I imagine shifting more incremental capital into REIT businesses, probably REIT qualified businesses wouldn’t make a lot of sense. Over the last two quarters, we have seen a lot more actual hard asset real purchases into net lease. We think about capital deployment going forward into those REIT businesses should we think about real estate as really being the primary or still on balance sheet loan originations?

I think it will be a split between those. I think that when we purchased net lease properties, there have to be a few dynamics that exist regarding how we can finance them, the quality of the tenant in the space. The real estate profile if it has that makes sense from dollars per foot standpoint. To the extent you lose a tenant, you don’t want to lose large amounts of principal invested. So, we are pretty sticky around the credit that we will finance. It’s not necessarily rated credits, but its credits that we are comfortable with. And it’s the juxtaposition of the cap rate, the interest rate that we fund at and how much we can export into the CMBS market when we securitized those debt instruments. So, I think that as you see a flat yield curve, I think you could see us very active in the net lease space, because what happens is the property cap rates don’t come down as much as the prevailing interest rates in the mortgage market. On the other hand, the bridge loan market is a business that is still just not terribly competitive on an isolated basis. And so – and I think that’s largely as a result of the banks not being terribly involved in those businesses, because there are oftentimes buildings that have challenged cash flows. And I think from a regulatory standpoint, they don’t like it. So, I would expect to continue to see us. We will always look to put durable, sustainable high-quality cash flows on our balance sheet. In the REIT format, yes, you are correct, you saw us picking up those businesses in the last couple of quarters in anticipation of conversion. And the markets really despite the fact that the debt markets from the conduit standpoint got a little bit aggressive and difficult, those are exactly the markets you want to borrow money in, because as a lender, you don’t like lending money there, because you would feel like it’s a little uncomfortable, but as a borrower, you certainly enjoy that. So, we take great pains to avail ourselves of both products.

Thanks for all the comments, Brian. I really appreciate it.

Sure.

Our next question comes from Steven Won with Deutsche Bank.

Hi, good afternoon. I think the conduit questions have been covered. To follow-up on your own balance sheet in a REIT portfolio, is there a leverage level you target for given the high-quality assets that we should think about as your portfolio ramping to that leverage number or really how should we kind of think about that on balance sheet portfolio growth over the balance of this year?

Sure, Steve. It’s our bridge loan portfolio, which is definitionally not just real estate, but it’s also the endorsement of a business plan, because you are expecting that borrower to do something, not just sit there and collect rents. So, we underwrite the borrower closely. And as a result of the lack of liquidity in that space, most of the LTVs are much lower than they would be in the conduit space. I can tell you that we generally target about 65%, but we can sometimes go to 85% also. I don’t see us chasing the market to do that. We will usually do that when we feel like there is a great opportunity for us to have equity like returns as opposed to normal standard debt returns. And the other thing that we do to try to create good value is we oftentimes will relax prepayment penalties, because we feel like when we do that we get the funds out of the business, because of the funds to deploy capital and it has to be upper period of time. Otherwise, when it pays off, they have to return it to their investors. So, sometimes, we will create options for the borrower. And what we are really trying to do generally is to convert that loan into a conduit loan that is a very efficient execution for us. If something comes into our balance sheet for a year or a year and a half and then converts to a fixed rate loan, that’s where the ROE really gets turned up at Ladder.

Great. And for your equity investments specifically I guess multifamily down in Florida and the investments in Nevada, can you maybe give us an update there on those properties and cash flows and any sales that have taken place?

Sure. You know what I may ask Marc Fox to help me here. I generally know how they are going and they are going right along schedule, but Marc you have specifics if you want to give them to?

Yes, sure. We have two complexes as you know in Las Vegas we have Veer Tower. Veer Tower, in the quarter we sold 17 units, and for the year we sold 113 units. And for the quarter the gains that we had on those units at Veer Tower were $2.7 million. And on a core earnings basis and year-to-date or through the full year there were $17.9 million.

I think you are asking about dollars per foot aren’t you Steve?

Yes, just valuation of dollars per foot would be a great way to look at it.

Okay.

Do you have it Marc?

Yes.

Okay.

Absolutely, the – we have been – our remaining investment basis is $306 a square foot. When we started out it was $296 a square foot, we pretty much been in that kind of range. We have 220 units left at Veer Tower. We have been selling the units recently for approximately anywhere between $482 a square foot to over $500 a square foot.

The Las Vegas property is appreciating rapidly. And those prices have been increasing, whereas the Florida property is – its very basic housing. They are all the same size, there are no penthouses and so the profit margins are – they are fine. But everything prices the same way. I believe in Florida we own them at $225 a square foot. We tend to be selling them at $315 to $330 a square foot, whereas in Nevada we picked them up at $190 a square foot originally and I know I have seen some sales go by over $600 a square foot. But at the margin they are probably $450 to $500 in Las Vegas.

Great, that’s great color on that, I appreciate it. And finally if you can maybe just talk about what you are hearing on the FHLB price, fairly the sunset provision for REITs over 5 years, I know they are in the process I think they have been into the process of receiving comments or letters on the topic, can you maybe talk about what you are hearing and your views of how that may play out going forward?

I won’t speculate. We hear things all the time but often times they are turned around in just a few days. So I could tell you that as of now, we have been able in the year to increase our size limit with the Federal Home Loan Bank. I think our limit now is $1.9 billion. And we primarily use it for securities as well as first mortgages that we are going to securitize. But as far as the political end of things, I don’t hear anything other than the common period has ended. The 5-year sunset situation is something that we certainly view as a possibility, but we have also seem to – it does seem as though it’s less urgent for some reason, we don’t hear quite as much about it at all. On the other hand its one of our sources of financing and obviously we have bank lines and we have unsecured debt also. So, it’s just one of the things we use. And we are hopeful and we have been borrowing by the way very comfortably in excess of 5 years. So if that were to happen I suspect it’s a situation that will be not problematic, but it will have to be dealt with over a 5-year period of time. And I think there is a reasonable possibility that nothing changes.

Great. Well, I appreciate those comments there. Thanks for taking my questions.

Our next question comes from Jade Rahmani with KBW.

Hi, thanks for taking the questions. I want to ask about your views regarding the current business mix and whether you are considering avenues to further diversify the company beyond bridge loans and net lease. For example do you think that the B piece buying and special servicing business is attractive and also I would be curious about your thoughts about GSE multifamily lending business, which is also – will generate conduit income?

I will try to pass those Jade in one by one. We are always looking for other alternatives where we can build up the product suite and diversify our income stream. We do have a lot of expertise in the building on residential real estate as well as multifamily as well as B-pieces. I think they are all very different products. The GSEs are clearly trying to become more active. I don’t see us getting at that business in an aggressive way. Keep in mind we operate from the standpoint of an investor not from the standpoint of a competitor. So to me when you have got a government guarantee that’s not even implicit effects worsen at this point. I think for the private sector to try to compete with that would be a little bit crazy. If we wanted to get into the lending business where we delivered to those parties, that’s a very high-volume business and it probably does dovetail nicely and with owning servicer which we do not presently. So we will always look at things like that. There is nothing on the horizon right now. I think if I had to name some things that are sort of interesting, but I don’t want to indicate to you these are likely to happen. Europe is certainly a more attractive column in the things that you are naming. B-pieces are something that we feel very well suited for to invest in. They are still a very cyclical instrument. And in addition to that with the new retention rules, these B-pieces and going to get larger and so there may be room for us to play almost in a senior capacity in the B-piece markets, it sounds like that doesn’t make sense. But I think that we may very well team up with some B-piece buyers because we do have permanent capital. And if we were to do that we might very well get into the special servicing business, which acts as a very nice hedge during a downturn in your stream of cash flows. But I don’t have any of those on the front burner right now. And lastly I think the world of asset management always pops up on our radar. Often times we are asked to manage money for people. And we haven’t done that just yet, except in some small private accounts, some sidecars. But we generally don’t want to create a situation where we have any competition with those investment vehicles. So if we were to created sidecar that invested in B-pieces or mezzanine loans then we would probably put all of our B-pieces and mezzanine loans into that fund along with those investors. I think that’s a possibility down the road. And we might do it.

Great, I really appreciate that. It looks like you bought back some debt during the quarter, and I want to see if that’s something you think you might continue to do?

There was sort of unusual moment in time and that if you remember when the high yield market got into some freefall specifically related to the petroleum bill and the gas makers. So what happened was those bonds were dropping dramatically in price and some high-yield players were getting margin calls on those, so they were selling assets that were trading at nice prices. Given that the bonds that we bought are 5-year bonds that were done in 2012. So they are going to be refinanced or bought back in ‘17 anyway. The spread to a 2-year which is the way we looked at it was very wide. And we felt like latter was a very comfortable credit, I don’t think anybody was selling it because they thought we were having a problem. I think they were raising money because of something that was going on in the oil patch. So we are rather agnostic as to our investments if we can make the right rate of return. So we acquired $5.5 million of those. Would we buy more, sure, I would be happy to. We have to refinance them all anyway one day. But if we are able to deploy capital at acceptable levels, obviously we would not do that.

Okay. With respect to equity issuance you guys have been extremely disciplined in my view since going public, I wanted to see if you could provide your views around the parameters you use in deciding whether the company might issue equity or issue equity linked capital?

I think it’s really a function of what are our capital, what’s available to us from a capital standpoint and what are the opportunities available to us. I think if you just look at our cash position it might indicate to you that at some point we are going to need some more capital, but keep in mind we have got a very large portfolio of securities, many of which are very short in duration. So we would probably sell those before we would go to try to raise more equity in the capital markets. The debt market is also an alternative to us. We are 2.8 times leveraged presently, but we don’t generally like it. We prefer to avoid it if we can. We are going to try to grow this company for as long as we can with acceptable returns organically, but – so we don’t have any plans right now for issuance. But should we have a need for additional capital, it’s certainly one of the things we would consider. But I think you do know that management as well as many of our Board members are significant shareholders in this company. So for the very same reason that some shareholders don’t like when you continuously issue, we feel the same way about that. I think you also have to – I think you have to take into account that I am trying to figure out how to right way to say this, but the short story is that I don’t see that in the very near future.

Okay. Thanks for that. And you commented on credit quality, wanted to see if you could elaborate, where do you think the greatest area of slippage is? Do you think it’s in the credit metrics, such as LTV debt service coverage ratios or do you think it’s to do with the actual underlying real estate being able of a lesser quality?

I think it’s all of the above, I think the automatic default stands for most originators right now. Let’s give the borrower an interest-only period. Many of the loans that did not get into trouble in the last downturn were really as a result of the amortization associated with some of those loans. I don’t feel like hotels are terribly over-leveraged, but I do see some retail products that are little scary to me. I think that the consumer is doing okay, not great. And I think gasoline prices really do matter, especially in retail, but we are seeing some pretty stressed LTVs. We are seeing interest-only periods, where the borrowers barely covering his debt service now. So, we think about what happens when it’s 5%, 6% rates. If you can’t grow the rents, how do you get out of that loan and I think that, that’s a concern. So, if I had to tell you a place that I am more concerned than others, it’s in retail, less selling hotels and apartments.

Okay. And with retail, are you referring more to ship malls and that sort of thing rather than actual shopping centers or you group those together?

I think it’s very specific, real estate very local. I think that there are certain tenants that we have more concern about than others seem to. We do believe there could be some bankruptcies coming in some tenants that are fairly large occupants in some of these shopping centers. And as a result, we are a little cautious around that. We don’t generally tell people what we think those names are, but some – other types of you saw in our net lease portfolio, we are buying a lot of grocery anchors. We like necessity retail as opposed to discretionary retail.

Great. Thanks very much for taking the questions.

Sure.

[Operator Instructions] Our next question comes from Joel Houck of Wells Fargo.

Good evening. Could you talk about the spread widening you saw in December and the impact if any that had on the commercial bank activity in the CMBS market as it spilled over into 2015?

My observations, Joel, were a little, I am a little surprised at what I saw. We saw transactions there was frankly too much supply going into year end. And I think that combination along with what was going on with oil prices, the high-yield market was causing spreads to widen unnaturally, I would say into December. The markets seemed to be originating loans anticipating a tightening of spreads into the New Year into 2015. The market was right. They seem to have tightened. And I think it was an oversupply problem, not necessarily a credit problem anywhere. On the other hand, I think at Ladder the way that it impacts us is if we think AAAs are going to tighten and that’s most of the capital stack in the securitization, we don’t write loans that we think are going to tighten and we have to be right for 120 days when we securitize them. We will simply buy the AAAs. And that’s what we did. So, we would just express that view a little differently than some loan originators, but we did see loan originators pricing loans at extraordinarily thin profit margins based on where transactions were taking place at the time. Did that answer you?

That makes sense. Yes, that’s very helpful. Thanks, Brian. And then if you could switch gears a little bit, I don’t know if you have the exact number of percentage of floating rate loans within the on balance sheet portfolio, but I guess more broadly, how should we think about Ladder’s interest rate sensitivity if we do see Fed increases in 2015?

Well, I will let Marc answer on what we are holding in inventory, but I think that you have heard probably from some other mortgage REITs that there is a view that the floating rate assets will increase cash flows, because the interest rate will go up. That’s one of those double-edged swords on interest rates to up to the point where you are having your problem refinancing it, because the rates are too high. But I think at Ladder, we generally have LIBOR-based floaters with a floor, which is fixed rate. And I think our rates would not start increasing until LIBOR went up by 50 basis points, because we put a little bit of room into where LIBOR is presently for it to move up without changing the rate, but if LIBOR were to get up around 1.5% or 2%, we would certainly see an increase in cash flows and net interest margin for sure. So, Marc, if you want to talk about the coupon or the volume, how big is our position in?

Yes, our balance sheet loans are $1.358 billion at the end of the quarter. And the mezzanine loans are $162 million. And on those rates as we mentioned during the call as we have been originating the ones we have been originated have been spread about 6.5 points over LIBOR, I don’t know what else you want…?

The mezzanine position has a rate between 10 and 12.

Yes, that’s good. 6.5 is the weighted.

That’s all I need. Okay, and then lastly the timing of your CMBS purchases during Q4 resulting in kind of spread tightening, did that have any or you can quantify any positive impact to book value thus far in Q1?

We bought them in two different ways. We bought short term floaters and 5-year AAAs. We bought an occasional group of single asset securitizations that we felt were pretty attractive and in the 90s, but keep in mind we also owned a very large portfolio of loans at that time. So they probably moved back out to where we bought them way back when. So I would say it has certainly been a positive impact in the first few months of 2015. But given the large portion of our assets are 5-years and lower, I don’t think it's a very volatile number. I would up but not up significantly.

Okay. And I apologize its one last clarification, I think earlier on the prepared remarks you mentioned the payout ratio of 50%, and I assume that’s on the total core EPS, not just the taxable portion of your estimated earnings for ‘15?

Where we are focused on was on the core and also factoring in the fact that it’s our intention as we discussed on our REIT announcement call, to pay out $100 million worth of dividends over the course of the year in cash and the remainder in stock.

Okay. Thank you very much.

At this time, I would like to turn the floor back over to Brian Harris for closing comments.

That’s it from our end. I appreciate you taking the time to hear us today. And we look forward to operating as an internally managed REIT going forward and picking up. But we hope to be as a group of shareholders that we haven’t met yet. Thank you.

Thank you. Ladies and gentlemen, this concludes today’s conference. You may disconnect your lines at this time. Thank you all for your participation.