Ivan Kaufman – Chairman, President, Chief Executive Officer Paul Elenio – Chief Financial Officer.

Steve DeLaney – JMP Securities Ryan Tomasello – KBW Richard Eckert – MLV & Company Lee Cooperman – Omega Advisors.

Good day ladies and gentlemen, and welcome to the third quarter 2014 Arbor Realty Trust earnings conference call. My name is Lisa and I’ll be your operator for today. At this time, all participants are in listen-only mode. Later we will conduct a question and answer session.

If at any time you require operator assistance, please press star followed by zero and we will be happy to assist you. As reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Paul Elenio, Chief Financial Officer. Please proceed, sir..

Okay, thank you, Lisa. Good morning everyone and welcome to the quarterly earnings call for Arbor Realty Trust. This morning, we will discuss the results for the quarter ended September 30, 2014. With me on the call today is Ivan Kaufman, our President and Chief Executive Officer.

Before we begin, I need to inform you that statements made in this earnings call may be deemed forward-looking statements that are subject to risks and uncertainties, including information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives.

These statements are based on our beliefs, assumptions and expectations of our future performance, taking into account the information currently available to us. Factors that could cause actual results to differ materially from Arbor’s expectations in these forward-looking statements are detailed in our SEC reports.

Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today. Arbor undertakes no obligation to publicly update or revise these forward-looking statements to reflect events or circumstances after today or the occurrences of unanticipated events.

I’ll now turn the call over to Arbor’s President and CEO, Ivan Kaufman..

Thank you, Paul, and thanks to everyone for joining us on today’s call. As you can see from this morning’s press release, we had another strong quarter.

Before Paul takes you through the financial results, I would like to update you on the significant progress we continue to make in executing our business strategy and focus on our outlook for the remainder of 2014 and 2015.

We had several significant accomplishments in the third quarter which contributed greatly to helping us achieve many 2014 key objectives we established to both generate solid results for the 2014 year and produce substantial earnings growth in 2015 and beyond.

We will remain heavily focused on achieving our remaining objectives, the most significant of which are to fully de-lever and replace a number of our non-recourse debt vehicles which results in substantially reduced debt costs and allows us to access significant amounts of capital to redeploy into higher yielding investments, and we’ll also look to contain it to improve the right side of our balance sheet to enhance liability structures.

We are confident in our ability to achieve these remaining goals, allowing us to execute our business strategy of significantly increasing our future earnings while insulating us from market volatility and building a strong foundation for substantial future growth and success.

The first of our significant third quarter accomplishments was our success in accessing the capital markets to fund our growing pipeline of investment opportunities. We raised approximately $51 million of fresh capital through our second senior unsecured debt instrument for $36 million and by adding a $15 million working capital term loan.

We remain very sensitive to dilution and strategic in our approach to capital issuances, given where our stock price is currently trading. We are extremely pleased with our success in this area, allowing us to fund our business with the most cost efficient and accretive forms of capital.

As a result, we now have approximately $60 million of cash on hand, roughly $90 million of cash available for reinvestment in our CLO vehicles, and $220 million of capacity in our short-term credit facilities.

We expect to generate a significant amount of cash on the successful unwind of our non-recourse debt vehicles which, combined with our available cash and capacity in our lines, will allow us to fund future investment opportunities and grow our portfolio without the immediate need for additional capital.

Another significant third quarter item was our ability to recognize a $58 million gain related to our interest in the 450 West 33rd Street property. This aim was deferred on our books for many years and was a significant component of our reported adjusted book value per share.

The resolution of this item resulted in us recording this significant gain in the third quarter and increasing our book value per share by $1.15 to $8.81.

Currently, we are trading at a significant discount to our book value which is not in line with our peers, and we feel that the resolution of this significant item should contribute to a trading price relative to our book value that is more in line with our peers.

We were also successful in buying out the one million warrants that were outstanding from our 2009 debt restructuring for approximately $2.6 million in cash, which reflects a stock price equivalent of $6.60 per share.

We are very pleased to have extinguished these warrants at a substantial discount to both our book value and what we believe is the true value to our franchise.

We also continue to focus on improving our liability structure by financing a substantial amount of our investments with non-recourse, non mark-to-market match funded debt which remains a critical component of our business strategy, allowing us to operate efficiently in all environments.

The depth and experience of our securitization team and our strong reputation in the market has contributed greatly to our success in this area and continues to be a leader in the commercial mortgage REIT securitization market.

We continue to make substantial improvements to our structure with each new deal, including reduced pricing, longer replenishment features, greater asset diversification, as well as increased leverage and ramp-up capacity for future investments.

As I mentioned earlier, our primary goal will be to completely de-lever and replace most of our legacy and early non-recourse securitization vehicles, resulting in increased future earnings and the ability to recycle capital to fund our investments.

With the closing of our third CLO in the second quarter, we now have approximately 87% of our debt stack in match funded non-recourse vehicles which are not subject to mark-to-market provisions, including the trust preferreds, our preferred stock issuance as equity.

We will also continue to pull collateral for additional securitizations when available, allowing us to continue to fund a significant portion of our investments with these non-recourse vehicles and deliver mid-teens returns on our capital.

We continue to demonstrate tremendous success in growing our originations platform, allowing us to effectively replace our run-off with higher yielding investments.

We originated approximately $240 million of loans in the third quarter with an average yield of approximately 7.61% and generated low to mid-teens returns on these investments as a result of financing a bulk of them in our CLO vehicles.

This volume, combined with the $448 million we originated in the first six months of the year, puts our total originations for 2014 at approximately $688 million through September 30.

We also have an active pipeline and now expect our total originations for 2014 to be around $875 million to $900 million, an increase of approximately 45 to 50% from our 2013 originations.

We remain extremely disciplined in our lending approach, continuing to focus mostly on multi-family home loans, allowing us to invest in the appropriate part of the capital stack and generate strong risk-adjusted returns on our invested capital.

We continue to experience accelerated runoff in our portfolio, a fair amount of which is in our legacy CDO vehicles.

We had approximately $218 million of runoff in the third quarter, $50 million of which was in our legacy CDOs, and had a total of approximately $685 million of runoff in the first nine months of the year, $270 million related to our legacy CDO vehicles.

It continues to be very difficult to accurately predict what our runoff will be, due to continued improving market conditions, although based on our current information, we do expect our fourth quarter runoff to be at a similar level as our average pace in the first nine months, with more of it occurring in our legacy CDO vehicles.

This runoff in our legacy CDOs continues to temporarily reduce our margins but is accelerating the de-leveraging of these vehicles, which should allow us to fully de-lever and replace a number of these vehicles by the end of the first quarter of 2015, which will significantly increase our future earnings and allow us to recycle capital into new investments.

Overall, the commercial real estate market continues to improve, especially in the multi-family sector. Significant amounts of capital are constantly being invested in this space, which has resulted in an increase in the competitive landscape with continued deal compression.

We expect this trend to continue, and therefore we remain disciplined and patient in our approach, focusing mainly on the multi-family bridge loans.

We believe we are well positioned and have a competitive advantage in the market by levering off of our manager, who provides us with a consistent pipeline of multi-family bridge loan opportunities from its significant agency platform.

Therefore despite the increasingly competitive market, we feel confident that our pipeline of investment opportunities will continue to grow and are confident in our ability to continue to generate strong levered returns on our investments by financing them with our non-recourse CLO vehicles, allowing us to increase our core earnings over time.

In summary, we are extremely pleased with our third quarter results and the significant progress we have made to date in achieving our overall objectives.

We will work exceedingly hard on completing our remaining goals by further enhancing our liability structures through continued access to the non-recourse securitization market, de-levering and replacing a significant amount of our legacy non-recourse debt vehicles, and continuing to grow our origination platform and replace our runoff with higher yielding investments.

We are confident we’ll be able to achieve these objectives, which will result in substantial growth in our core earnings for 2015 and beyond and allow us to achieve the ultimate long-term goal of increasing shareholder value. I will turn the call over to Paul to take you through the financial results..

Thank you, Ivan. As noted in the press release, net income for the third quarter was $63.4 million or $1.26 per share, and FFO was approximately $7.4 million or $0.15 per share without the large non-cash gain on the 450 West 33rd Street transaction during the quarter.

As Ivan mentioned, we had a very successful quarter, including recording the $58.1 million GAAP gain related to the 450 West 33rd Street transaction.

As we’ve mentioned on many calls, this deferred gain was a significant component of our adjusted book value and the resolution of this item has increased our book value $1.15 to $8.81 per common share at September 30, and significantly narrowed the gap between our book value and adjusted book value of $9.14 per common share, adding back the temporary losses on our swaps.

We also recorded $2.9 million in loan loss reserves related to two assets in our portfolio and had $1.5 million in recoveries of previously recorded reserves during the quarter, resulting in a net loan loss reserve of approximately $1.3 million in the third quarter.

At September 30, we had approximately $116 million of loan loss reserves, representing approximately 7% of the UPB of our loan portfolio.

Looking at the rest of the results for the quarter, the average balance in our core investments increased slightly to approximately $1.68 billion for the third quarter from approximately $1.64 billion for the second quarter due to the third quarter originations outpacing our third quarter runoff.

The yield in these core investments increased to 6.99% for the third quarter, up from 6.22% for the second quarter largely due to significantly more accelerated fees from early runoff during the third quarter combined with our third quarter originations having a higher yield than our third quarter runoff.

The weighted average all-in yield on our portfolio also increased to around 6.14% at September 30 compared to around 5.93% at June 30, again due to the third quarter originations having a higher yield than the third quarter runoff.

The average balances on our debt facilities also increased to approximately $1.23 billion for the third quarter from approximately $1.21 billion for the second quarter, primarily due to the closing of our additional senior unsecured notes and new term loan facility in the third quarter, partially offset by runoff in our legacy CDO vehicles, the proceeds of which are used to pay down CDO debt.

The average cost of funds in our debt facilities increased to approximately 3.97% for the third quarter compared to 3.73% for the second quarter, and our estimated all-in debt costs increased to approximately 4.06% at September 30 compared to around 3.75% at June 30.

If you were to include the dividends associated with our perpetual preferred offerings as interest expense, our average cost of funds for the third quarter would be approximately 4.27% compared to 4.06% for the second quarter, and our estimated all-in debt costs would be 4.35% at September 30 compared to 4.08% at June 30.

This increase was primarily due to paying down our lower cost CDO debt with proceeds from runoff in these vehicles and the issuance of our senior unsecured notes and term loan facility in the third quarter.

Additionally, our overall debt costs have increased in 2014 largely due to the issuance of our senior unsecured notes and perpetual preferred stock offerings, which carry a higher interest rate than our overall debt facilities. As we’ve mentioned earlier, we remain very sensitive to dilution and strategic in our approach to accessing capital.

As a result, we made a strategic decision to raise capital in the form of debt as an attractive alternative to raising dilutive common equity. Additionally, this increase in our overall debt costs is temporary as we have the ability to call both the senior notes and preferred stock instruments over the next several years.

Overall, our net interest spreads on our core assets on a GAAP basis increased from 2.49% last quarter to 3.02% this quarter.

Including the preferred stock dividends as debt cost, our average net interest spreads also increased to approximately 2.72% for the third quarter compared to approximately 2.16% for the second quarter, largely due to increased fees from accelerated runoff during the third quarter partially offset by increased debt costs.

Our overall spot net interest spread, including the preferred stock dividends as debt, was 1.79% at September 30 compared to 1.85% at June 30. NOI related to our OREO assets decreased approximately $400,000 compared to last quarter due to the seasonal nature of income related to a portfolio of hotels that we own.

We believe that our OREO portfolio should produce NOI before depreciation and other non-cash adjustments of approximately $4.5 million for 2014, resulting in an estimated net loss of approximately $500,000 for the remainder of the year.

The projected NOI in our OREO assets combined with the net interest spreads on our loan and investment portfolio gives us approximately $48 million of annual estimated core FFO before potential loss reserves and operating expenses at September 30.

This was flat compared to the same analysis at June 30 due to a significant amount of capital we raised in the second and third quarters from our senior unsecured notes and term loan facility not yet being fully deployed, as well as from a temporary reduction in our net interest margins from the accelerated runoff we are experiencing in our legacy CDO vehicles.

As we’ve discussed before, although this accelerated runoff continues to temporarily reduce our earnings run rate, it does continue to de-lever our vehicles which will allow us to execute our strategy of creating efficiencies from replacing our legacy CDOs, resulting in an increase in our earnings run rate in 2015 and beyond.

Additionally, we are very pleased to have been able to replace all of this accelerated runoff to date with higher yielding investment opportunities, which has allowed us achieve a very significant goal of maintaining our earnings and dividends in this transitional year and sets us up for substantial growth in our core earnings going forward.

Operating expenses were relatively flat compared to last quarter, other than a non-cash charge of $1.25 million in the second quarter, compared to $300,000 in the third quarter related to the vested portion of restricted stock that was granted to our directors, employees, and employees of our manager.

Next, our overall leverage ratios on our core lending assets remained relatively flat at approximately 63%, including the trust preferreds and perpetual preferred stock as equity for both the second and third quarter, and our overall leverage ratio on a spot basis, including the trust preferreds and preferred stock as equity was down from 1.8 to 1 at June 30 to 1.6 to 1 at September 30 due to the significant increase in equity from the large gain related to the 450 West 33rd Street transaction in the third quarter.

We did have some changes to the right side of the balance sheet this quarter, including CDO debt declining by another $62 million mainly due to our second quarter CDO runoff that was used to repay CDO debt in the third quarter, and increases to our unsecured debt and credit facilities from the additional senior unsecured notes and new term loan facility we issued in the third quarter.

Lastly, our loan portfolio statistics as of September 30 show that about 70% of the portfolio was variable rate loans and 30% were fixed. By product type, about 73% of the portfolio is bridge product, 12% junior participation, and 15% mezzanine and preferred equity.

By asset class, 67% is in multi-family assets, 21% is office, 8% land, and 4% hospitality. Our loan to value was around 76% and geographically we have around 35% of our portfolio concentrated in New York City.

That completes our prepared remarks for this morning, and I’ll now turn it back to the operator to take any questions you may have at this time.

Lisa?.

[Operator instructions] Your first question comes from the line of Steve DeLaney with JMP Securities. .

Thank you. Good morning ,Ivan and Paul.

How are you?.

Hey Steve, how are you?.

Great. So you guys told us early year, you described this as a transitional year. You’ve been candid about that and explaining the challenge with the CDO runoff, but I have to say that the results—if this is a transitional year, the results have been pretty darn good, so congratulations on the scrambling. I know it hasn’t been easy..

Yeah, we’ve scrambled a lot—.

That was a good word, yeah..

--effectively operate in this environment..

Understood. Just a couple things here. In the originations, which look like they’re—the 240, obviously a big jump from second quarter, and it looks like the second-highest ever.

The fab loans that were not bridge loans, I guess about $30 million, should we assume those were mezz loans? And I guess what I’m really interested, are you putting—if they are mezz loans, are any of them mezz loans that you’re putting on behind the senior loan that you wrote?.

So I’ll answer the first part. Those loans were mezz and PE, and I’ll let Ivan talk about the strategy there..

Sure. We always do a percentage of mezz and PE. It’s a small part of our business but an important part of our business.

One of the unique things that we’ve been able to do is we’ve been able to get actually superior returns in this market for levering senior debt, which is a better risk-adjusted return than lending on mezz and PE, and that’s why it’s such a small part of our book.

But the mezz and PE, some are behind some of the loans we’re doing and some are just in the normal course of business. The mezz and PE tend to be a little bit longer dated on yield, but you’ll always see it as a percentage of our book. It probably represents anywhere from 2 to 8% of our book..

And I assume, Ivan, that’s just part of being a relationship lender, right? I mean, you have to sit down with your borrower and figure out how you can partner from meeting the full financing needs of the project..

That’s correct. It’s just another part of our book and provides another offering. You just can’t be a bridge lender and be in the market. You’ve got to offer a variety of product..

Absolutely. Then the second thing I wanted to ask about, we really are seeing some interesting financings this quarter on these earnings calls, which is good, I think, for the business going forward.

But I’m really impressed you were able to get term financing on these legacy CDOs, which is not easy collateral for people to analyze or get comfortable with.

I’m just looking at that – I assume that $15 million, when you put that line on, that essentially freed up $15 million of capital that you could deploy elsewhere in your senior lending business, and also I assume it probably helped the ROE on those investments as well.

So my question is, I don’t know exactly what the $15 million was as far as an advance rate on the carrying value, but my simple question is, is there room to do any more of this with your legacy CDO book?.

We’re quite pleased with the efforts and responses we’re getting in de-levering our legacy CDOs and being able to leverage some of those on legacy assets, so we think that we’re going to be able to free up a substantial amount of boxed-in or trapped equity, which is going to really significantly impact our ’15 earnings in a positive way, so we’re very optimistic about the ability to do those kind of things..

Steve, it’s Paul. To your specific question on the line, we did pledge some of the CDO bonds as collateral.

I don’t know how much more we can do of that, but to Ivan’s point, which is we were really pleased with that result, but to Ivan’s point which is more significant, as you know, we have been getting accelerated runoff in these CDO vehicles and we’ll continue to see that more so in the fourth quarter.

But what that does for us is clearly when we do replace these vehicles with normal leverage points on those loans, we will be able to extract a significant amount of that trapped equity and trapped cash to put to work, and that will allow us to not have to go to the markets and raise equity for time period here and really be able to grow the book.

So we’ve had our challenges, as you know, over the last year and a half accessing capital in the most accretive way, and we’ve been very creative in doing that because we knew this day would come.

We knew that we were putting in our time to be very creative and selective in how we raise equity to continue to grow our book to maintain our earnings, but we knew eventually the day would come when we could extract that trapped equity and we would get our share there and not have to worry about dilutive capital at that point..

It sounds like that day, based on Ivan’s comment of hopefully being fully de-levered by March 31 of next year, the horizon is coming in closer to you..

Yeah, we think—I mean, it’s public information. We think it will be in January. If things go correctly, we think that January will be the time for us to do that..

To do the clean-ups on the legacy CDOs?.

Yeah, a majority of that..

All right. Well, great job guys. Thanks for taking the time to answer my questions..

Your next question comes from the line of Ryan Tomasello with KBW. Please proceed..

Hi, yes. Thanks for taking my questions.

Regarding the incremental yields you guys saw during the quarter, can you comment on the differentiation between those by product type, both on the first mortgages and the mezz that you did during the quarter?.

Yeah, Ryan, are you focusing on the differential in what yield, in the growth yield on the assets we originated or on the increase in the interest income side from quarter-to-quarter?.

Just the gross yield on the new assets..

Yeah, the gross yield on the assets was 7.61% in the third quarter, and for the most part as Ivan mentioned, we target to lever our returns to generate levered returns in the low to mid-teens, and we did that in the third quarter again.

The bridge product tends to come in obviously at a lower yield because it’s a much more attractive product from a risk profile, and the mezz and the PE usually come in anywhere from 12 to 15% on yield. So mezz will get 12 to 15%, and the bridge product will get a rate that allows us to get a levered return of 13 to 15%..

So is the mix of bridge products versus mezz and PE what drove the loan yield up pretty largely quarter-over-quarter, and going forward would you expect loan yields to remain stable from where they are?.

Okay, so let’s talk about that. The yields on the—the gross yield on the loans actually was down slightly in the third quarter from the second quarter, not a lot.

Our gross yield on our second quarter originations was 7.75, and in the third quarter it was 7.61, so we did a really good job with the yield compression and continuing to have strong gross yields.

But the reason, as I mentioned in my prepared remarks, that the interest income was up so much during the quarter is when you have accelerated runoff, and we do get it and we’ve gotten it in the last several quarters, you do get to accelerate fees that you’re accreting into income over the life of those loans.

It just so happened in the third quarter the amount of accelerated fees we were able to receive, which was cash, was much higher than it was in the second quarter and maybe going forward. We always get some acceleration, just the timing is not something we can ever predict or control.

So the way I look at it if you’re going to guide yourself to your model is look to the numbers that I gave in my prepared remarks on what the spot yield is going forward on our portfolio at September 30 and what the spot debt rate is, and then layer in whatever you think you need for runoff and originations or any accelerated fees to get to your new number.

.

Okay, got it. That’s helpful – thanks.

Then just switching gears, would you be able to provide any update on a potential internalization, which I know you guys have spoken to in the past?.

Yeah, unfortunately we can’t. We can only guide you to what’s in our 10-Q at this point, and if and when there is something to talk about, we will be able to talk about it with you..

Okay, fair enough. Thank you for taking my questions..

Ladies and gentlemen, as a reminder, to present your question, please press star, one. Your next question comes from the line of Richard Eckert with MLV & Company. .

Good morning. Thanks for taking my call. I had a follow-up to an earlier question. I believe earlier this year, maybe the first quarter conference call, you spoke of intensely competitive conditions and they’ve probably only gotten more competitive, and that you intended to see the bulk of your originations in the first half of the year.

That seems to—I mean, you just seem to keep on going. There doesn’t seem to be—I know it’s out there, but there doesn’t seem to be any competitive pressures on your new loan volumes.

Can you speak to what we can expect to see in terms of origination volumes in the fourth quarter and maybe 2015?.

Sure, let me comment on that and Paul will be a little more specific on the numbers.

We continue to be surprised at our ability to originate the business we’re doing, and a lot of that has to do with the manager having such a good footprint in building his business and getting not only its market share but probably bigger than its market share in being a nationwide lender.

So we’re seeing continued opportunities, and we’re not chasing big loans. It’s consistently doing loans in the $5 million to $25 million area which we’ve built a tremendous reputation. So we’re quite pleased and surprised we’re not as impacted by the competitive landscape as others have.

We are seeing some compression on yield, but the firm’s reputation and the ability to close loans efficiently and work with repeat borrowers has allowed us to really have continued supply of consistent originations. With respect to the fourth quarter, we were—we actually just revised up internally our own numbers on the fourth quarter.

We thought it would be a little lighter. Paul, why don’t you walk through the fourth quarter a little bit as you put some guidance in our remarks..

Yeah, so Richard, good question. As Ivan mentioned, we are pleasantly surprised at our ability to continue to compete in this market. We did expect our originations to be a little more front-loaded in the first couple of quarters. A couple of things. In the second quarter, we did $170 million; in the third quarter, we did $240 million.

If you remember our last quarter call, we did expect the second quarter to come in a little bit higher, and some of the loans just timing-wise ended up early in the third quarter, so that shifted the volume a little more in the third quarter than it did in the second quarter, but it was really just timing.

As far as the fourth quarter, we do expect, as we guided, to end up the year somewhere between 875 and 900, which would put fourth quarter originations just under 200 to just over 200, so we could do a little more, a little less. However, we’ve been pleasantly surprised, as Ivan said. We’ve also been surprised on the runoff side.

We did expect, as you remember in our last quarter, for runoff to start to slow a little bit, and that has not occurred, so the runoff has been a little bit more excessive than we expected, and again we’re guiding the fourth quarter runoff to be in the 230 range, which is the average we’ve had in the last three quarters.

We didn’t originally expect that. Things have been paying off earlier, but again it’s been positive. It’s been temporarily painful to the margins, but it’s been positive because it’s de-levering these vehicles significantly quicker, which is going to allow us to replace them early in the first quarter..

Okay, thank you very much for the detail. .

You’re welcome..

Your next question comes from the line of Lee Cooperman with Omega Advisors..

Thank you, good morning. Just my favorite question, maybe you can update it.

What is a realistic return equity for you guys to be earning, and when is that likely to occur? Secondly, your sense of the timing of a dividend increase, given your optimism about 2015, when that’s likely to occur? I guess third, you’ve kind of addressed it, but can we assume that equity is off the table at anywhere near current prices?.

Paul, I’ll let you take a stab at all three, and I’ll fill in..

Sure. So Lee, this year we’ve done quite well with many components, and I think through the nine months we ended up generating an AFFO of just under $31 million or $0.61, which is a return of over 10% on average common equity. To your question of what the right return on our equity is—.

Hold on, did you say 10%? I’m looking at $9 book value..

Yes, I understand. I was looking at our average common equity. So what’s a good—you’re looking at the adjusted book value. So on the adjusted book value, it was certainly lower than that. To your question of what’s a good return, obviously we’d like our return to be in the 7 to 10% range on our adjusted book value.

It will take us time to get there because we have to un-trap this cash and put it to work, and that leads into your second question, which is when will we see an increase in the dividend.

We certainly expect our ’15 earnings to climb, and more importantly I think and more significantly, we expect our 2015 run rate at some point, whether it’s earlier or later, into ’16 to be even greater.

So we can’t predict exactly when the dividend will increase, but we do expect ’15 to be more positive and obviously ’16 extremely more positive, so we expect that as it grows and gets more positive, we will evaluate the dividend of ’15 and grow it. To your—I think the third question that you asked—.

The equity financing..

Yes, the equity financing.

So the third part of your question is a good one, and I think we’ve made it clear in our prepared remarks that if we’re successful, and we fully expect to be, to unwind these vehicles in January or February of the first quarter, that we will generated a significant amount of cash coming out of these vehicles, and that equity is in our opinion completely off the table at these prices for a period of time, that we’ll be able to deploy that capital into the new investments.

Ivan, is that correct?.

Yes. We feel very comfortable at de-levering these vehicles, and freeing up all that trapped equity will give us the ability to fund originations and growth in our originations business for a good period of time. .

Thank you. Good luck, guys. Thank you..

There are no additional questions at this time. I would now like to turn the presentation over to Mr. Ivan Kaufman for closing remarks. Please proceed..

Well thank you everybody for taking the time to listen to our call. We think the first three quarters we’ve done an outstanding job, and the fourth quarter is lining up to be very positive to complete what we believe will be a great 2014 leading into ’15. Enjoy the rest of the day. Bye bye..

Ladies and gentlemen, that concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day..