As Katie noted earlier, loan resolutions are focused for BXMT. They’re also an important catalyst for future earnings generation. As a reminder, we currently do not recognize any income from impaired loans. But the interest expense associated with these loans continues to burden our results, impacting 1Q earnings by $0.16 per share. Over time, we expect we will recoup these earnings as loan resolutions generate capital that can be immediately applied to repay debt and eliminate this earnings drag in events of eventually redeploying capital into new investments. In the interim, we expect to benefit from the cash flows currently generated by many of these loans, $0.10 per share this quarter, that is not recognized in earnings, but instead reduces our loan principal balance and support its book value.
In the near-term, the net impact of new cost recovery loans, loan modifications, and net portfolio contraction will contribute to more variability in BXMT’s earnings and outweigh the longer term earnings tailwinds from inherent loan resolutions. As we’ve discussed in the past, we determine our dividend each quarter with our Board of Directors, focused on the long-term earnings power of our business, considering a variety of factors including interest rates, a range of credit outcomes, and the environment for new origination. More broadly on credit, we upgraded nine loans this quarter, reflecting continued business plan progression within multifamily and hospitality assets and the resolution of two impaired loans that are now once again performing.
For these two loans, borrowers injected new cash equity and capital structures were reset to improve our basis and sustain strong current income generation. We also downgraded 13 loans this quarter, seven of which were U.S. office loans that were placed on cost recovery and impaired [ph]. Our CECL reserves increased by $174 million quarter-over-quarter to $766 million, largely reflecting these new impaired loans. Our aggregate CECL reserves of $4.40 per share are embedded in our book value of $23.83 as of March 31st. Importantly, our balance sheet remained solid and is built to withstand the pressure we face in the current market environment, diversify funding sources, term mass financings, no capital markets driven mark-to-market provisions.
These are the key tenants on which we constructed our balance sheets, BXMT’s business launched in 2013 and which continue to underpin our stability today. Over the past year, BMXT increased liquidity to near record levels of $1.7 billion, while also reducing asset level and corporate financings by $1.8 billion. This included $60 million of senior secured note repurchases, which we executed at a significant discount at face value, generating $8 million of gains over the past four quarters and $3 million in Q1 specifically. Debt-to-equity has increased slightly this quarter to 3.8 times as a result of higher CECL reserves, but have remained within our target range, and we remain in compliance with all financial covenants. Repayments continue to exceed loan fundings, $1 billion collected versus $353 million funding Q1.
This dynamic has yielded net cash proceeds that have fortified our balance sheet and liquidity position for five consecutive quarters. And while repayments can be lumpy, we see this overall trend continuing with clear indications of demand for highest quality collateral, including an office. Looking ahead, we expect near-term results will reflect the realities of a higher interest rate environment and also the proactive portfolio management measures we are taking to pursue the best long-term outcomes for our investors. Our business is well-positioned with strong liquidity, a stable balance sheet, and a substantial current income generated by our portfolio. Thank you for joining the call. I will now ask the operator to open the call to questions.
Operator: Thank you. [Operator Instructions] We’ll go first to Doug Harter with UBS.
Doug Harter: Thanks. On the loan extensions that you completed this quarter, can you talk about how long the extensions were you typically granted?
Katie Keenan: Doug, are you referring to the extension that sort of credit positive mods that we’re doing where we’re getting pay downs and giving borrowers more time or specifically on the multifamily I referred to?
Doug Harter: Just kind of in general on that pie chart you had with the 1Q maturities, and just kind of getting a sense of — additional time is being granted?
Katie Keenan: Sure. So, it falls into a couple of categories. So, when you look at that pie chart, the loans that are extending and passing their tasks, that’s generally just a one year extension that’s provided for under the typical structure of the loans. For situations where borrowers are putting in more equity, and we’re granting them more time, it’s really a continuum and it comes down to how much equity we’re getting. And we’re really just making an investment decision at that point about where our basis is, where our credit position is, what we see as the business plan for the asset, is it capitalized appropriately based on the new equity we’re getting in. And how do we optimize our outcomes between return and recovery over that period of time? So, it’s one to two years, generally, we’re not talking about longer than that. But within that continuum, it’s really about making an investment decision at the point when we’re doing the mod.
Doug Harter: Great. Thank you for that, Katie, and then just on the loans that were downgraded this quarter, kind of what changed during the quarter that led to a downgrade in 1Q versus kind of how they were positioned in 4Q?
Katie Keenan: Sure, so each one of these loans, obviously has specific situations that can change over time, but it’s largely U.S. office, reflecting the well-known challenges we’ve seen in the market, but also some changes in occupancy and sort of tenant dynamics in the individual assets. And then on the multifamily side, as I mentioned, really looking at temporary impacts of supply in certain markets compounded by higher rates, but there — those are watchlist assets, just 1% of the overall portfolio and where we expect it to be pretty marginal.
Doug Harter: Great. Thank you, Katie.
Katie Keenan: Thank you.
Operator: We’ll go next. Stephen Laws with Raymond James.
