Financial Data and Key Metrics Changes - For Q1 2025, GAAP income was $1.1 million or $0.02 per diluted share, while earnings available for distribution were $7.07 million or $0.02 per diluted share [8][9] - The first quarter dividend paid was $0.06, with expectations for future growth [9] - Cash and cash equivalents totaled approximately $97 million, with total equity at $295 million and a GAAP book value of $5.4 per share, while the stock trades at about $2.85, indicating significant undervaluation [10][11] Business Line Data and Key Metrics Changes - The company deployed $65 million in various commercial real estate (CRE) debt during the quarter, including $47 million in AAC CMBS bonds with an approximate 11% yield [11] - A $35 million loan was split between Rhythm Capital and Rhythm Property Trust, yielding a 12% to 13% unlevered return [11] - The company sold $21 million of legacy residential assets during the quarter [12] Market Data and Key Metrics Changes - The company has no legacy commercial real estate exposure, positioning it favorably in the current market environment [6][15] - The market has seen wider spreads across various asset classes, with increased deal flow opportunities despite volatility [21][22] Company Strategy and Development Direction - The company aims to grow earnings by focusing on opportunistic investments and diversifying across different asset classes, including CMBS, senior loans, and mezzanine investments [16][27] - The management is looking for strategic acquisitions to enhance earnings and capital growth, while being patient in deploying capital due to market volatility [12][15] - The company plans to maintain a clean balance sheet and continue moving away from legacy assets [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to create shareholder value and grow earnings, despite current market challenges [10][15] - The management highlighted the attractiveness of REITs in the current market, noting that the company trades at a significant discount to book value [33] - Future growth is expected to come from third-party partnerships and potential M&A opportunities [60] Other Important Information - The company raised $52 million in capital during the quarter, indicating strong financial positioning [11] - The management emphasized the importance of maintaining dividend policies while also focusing on capital deployment for growth [34] Q&A Session Summary Question: Has market volatility changed seller motivations and activity levels? - Management noted that while wider spreads are observed, there is still a robust deal flow from various counterparties, indicating ongoing opportunities despite market conditions [21][22] Question: How is the $17.5 million subordinate mortgage investment categorized? - Management clarified that this investment is viewed as opportunistic and part of a diversified portfolio strategy [26][27] Question: When will the company start paying down higher coupon corporate debt? - Management indicated that the 9.5% corporate debt will likely remain outstanding until the company scales further, with potential for a rate drop upon an upgrade [29][30] Question: What is the current status of the legacy portfolio? - Management stated that the ability to sell legacy assets is limited, with only about $25 million remaining that could potentially be sold [40] Question: What percentage of the balance sheet is focused on commercial real estate? - Management indicated that the core balance sheet will increasingly focus on commercial real estate assets as capital is deployed [50] Question: What is the experience level of the team focusing on CRE? - Management highlighted the extensive experience of the team, including partnerships with established firms, ensuring a robust approach to commercial real estate investments [52] Question: What are the banks' current lending activities in the CRE space? - Management noted that banks are still lending on the senior side and are looking for partners, although they may sell non-performing loans if credit deteriorates [55]