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And based on our new dividend and yesterday's closing price, we are trading at a dividend yield of approximately 9.5%, which we believe is not merely reflective of our true value. The quality and diversity of our income streams along with the consistency of our earnings clearly differentiates us from our peers, which is why we believe we should consistently trade at or lower dividend yield than our peer group. To highlight our success further, I would like to talk about the growth we experienced in both our business platforms. In our Agency Business, we grew our servicing portfolio another 3% in the second quarter and 14% over last year and is now at $19.5 billion.

This portfolio generates a servicing fee of 44 basis points and has an average remaining life of 9 years, which reflects an 11% increase in duration over the last two years. As a result, we have created a very significant predictable annuity of income of $85 million gross annually and growing, the majority of which is prepayment protected. And this growth in our servicing portfolio also continues to increase the annuity of income from our escrow balances further contributing our growing annual run rate of core earnings. We also had a very strong originations quarter closing $1.3 billion in agency loans, and our pipeline remains strong, providing us with confidence in our ability to produce significant origination volumes for the balance of the year.

We are also very pleased in our ability to continue to generate strong margins on our loan sales despite the extremely competitive landscape. And these income streams from our agency platform continues to create significant diversity and a high level of certainty in our income sources. With respect to our balance sheet business, we've experienced tremendous growth in our loan book. We grew this portfolio 24% in 2018 and another 20% already for the first six months of this year on record second-quarter originations of $1 billion.

Our balance sheet portfolio is now at $3.9 billion, and significant growth we experienced in the second quarter will continue to increase our run rate of net interest income going forward. It is also significant to note almost 80% of our portfolio is in multifamily assets, which is clearly one of the safest and best asset classes. We also have a very robust pipeline, which will allow us to continue to grow our loan book for the balance of this year. And as a result of this strong pipeline, we elected to raise $105 million of fresh capital in the second quarter from a common stock issuance, which will be immediately accretive to our core earnings as this capital will be used to fund our growth.

And again, the income generated from our loan book is a significant component of our earnings, and we remain very confident in our ability to continue to grow this income stream. In the second quarter, we closed our 11th and largest nonrecourse CLO securitization vehicle with $650 million of assets and significantly improved terms including reduced pricing, increased leverage and a three-year replenishment feature. The tremendous success we continue to experience in the securitization arena combined with our ability to substantially reduce our debt cost in all of our borrowing facilities has allowed us to achieve significant economies of scale and maintain our margins in a very competitive market. Updating you now on the single-family rental business.

We continue to make tremendous progress in developing our platform and building out the appropriate infrastructure as we remain committed to becoming a leader in this space. We are very pleased with the talent we have been able to attract and with the continued growth we have seen in our pipeline of opportunities by leveraging off of our existing originations capacity and capabilities. We believe this is a phenomenal business with an enormous opportunities in both the bridge and permanent lending products, and we are confident that we will build this out to be a significant driver of yet another income stream and further diversify our lending platform. Over the past few years, we have outperformed our peers delivering consistent annual shareholder returns of approximately 30%.

We have a complete operating platform with a significant diversified income streams, most of which are long dated, including income from our servicing portfolio, escrow balances, balance sheet business and single-family rental investments. We are also leaders in the CLO securitization arena and continue to generate significant efficiencies from the right side of our balance sheet. We feel we are significantly undervalued given the stability and diversity of our income streams, and that we should be trading substantially higher than our current market price. And we believe there is a significant opportunity for additional appreciation in our stock price to our shareholders.

I'll now turn the call over to Paul to take you through the financial results.

Paul Elenio -- Chief Financial Officer

OK. Thank you, Ivan. As our press release this morning indicated, we had a very strong second quarter generating adjusted AFFO of $39 million or $0.34 per share. These results reflect an annualized return on average common equity of 15%, which continues to demonstrate the earnings power of our capital-light Agency Business as well as a significant growth in cost efficiencies we are experiencing as we continue to scale our balance sheet business.

And as Ivan mentioned, we are very pleased with our ability to once again increase our quarterly dividend to $0.29 a share, reflecting a 16% increase from a year ago, and remain confident in our ability to increase our dividend in the future as our annual run rate of core earnings continues to grow. Looking at our results from our Agency Business, we generated approximately $20 million of pre-tax income in the second quarter and approximately $1.3 billion in originations and $923 million in loan sales. The margin on our second-quarter sales was 1.54%, including miscellaneous fees up from 1.49% of an all-in margin on our first quarter sales. We also recorded $19 million of mortgage servicing rights, income related to $1.3 billion of committed loans during the second quarter, representing an average MSR rate of around 1.44% compared to a 1.68% rate for the first quarter, mostly due to some large deals that we closed in the second quarter, which generally have a lower servicing fee.

Our servicing portfolio grew another 3% during the quarter to $19.5 billion at June 30, with a weighted average servicing fee of 43.6 basis points and an estimated remaining life of nine years. This portfolio will continue to generate a predictable annuity of income going forward of around $85 million gross annually, which is up approximately $5 million on an annual basis from the same time last year. Additionally, early runoff in our servicing book continues to produce prepayment fees related to certain loans that have yield maintenance provisions. This accounted for $3.5 million in prepayment fees in the second quarter, which was down from $5 million in the first quarter.

The earnings associated with our escrow balances also continued to grow and contributed meaningfully to our recurring income streams. We currently have approximately $885 million of escrow balances, which are earning approximately 2%, and the earnings associated with these balances are up approximately $7 million on an annual run rate as compared to this time last year. In our balance sheet lending operation, we grew our portfolio another 15% in the second quarter to $3.9 billion. And based on our current pipeline, we remain extremely confident in our ability to continue to grow our balance sheet investment portfolio in the future.

Our $3.9 billion investment portfolio had an all-in yield of approximately 7.34% at June 30 compared to 7.71% at March 31. The average balance in our core investments was up from $3.3 billion last quarter to $3.6 million this quarter due to our first and second quarter significant growth. And the average yield on these investments was up to 8.24% for the second quarter compared to 7.84% for the first quarter, mainly due to default interest collected on the second-quarter loan payoff as well as more acceleration of fees from early runoff in the second quarter. Total debt on our core assets was approximately $3.6 billion at June 30, with an all-in debt cost of approximately 4.96% compared to a debt cost of around 5.22% at March 31, mainly due to lower cost debt from our new CLO that closed in the second quarter as well as from reduction in LIBOR.

The average balance on our debt facilities is up to approximately $3.4 billion for the second quarter from $3 billion for the first quarter, again, due to financing portfolio growth, and the average cost of funds in our debt facility increased to approximately 5.35% for the second quarter compared to 5.24% for the first quarter due to $1.2 million of noncash fees that were accelerated from the early unwind of CLO VI, which was replaced with our new CLO during the quarter with much lower borrowing cost. Overall, net interest spreads on our core assets were up significantly to 2.89% this quarter compared to 2.60% last quarter. Again, mainly due to interest and more acceleration of fees from early runoff in the second quarter and our overall spot net interest spread was down to 2.38% at June 30 compared to 2.49% at March 31, mainly due to higher interest rates on runoff as compared to originations during the quarter. The average leverage ratio on our core lending assets, including the trust preferred and perpetual preferred stock as equity was up slightly to 81% in the second quarter as compared to 79% for the first quarter due to the increased leverage we obtained in our new CLO.

And overall debt-to-equity ratio on a spot basis including the trust preferreds and preferred stock as equity was also up to 2.6 to one at June 30 from 2.4 to one at March 31, mainly due to the timing of the closing of our latest CLO vehicle. Lastly, we also had a very strong quarter from our residential banking joint venture. This investment generated $2.6 million of income to us in -- this quarter compared to $800,000 last quarter, mainly due to the success we continue to have in building out the retail branch network and from the current interest rate environment. And this success continues to demonstrate the diversity of our income streams and the value of our operating franchise.

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. Norma?

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from Steve Delaney with JMP Securities. Your line is open.

Steve Delaney -- JMP Securities -- Analyst

Thank you. Good morning, guys, and congratulations on the strong quarter. I'd like to start with the bridge portfolio, that record of $1 billion, I mean, that's quite a move up from the last record, which looks like it was 780 -- $186 million in 4Q '17. So didn't just skip by a little bit, you nailed it.

What I'd like to know is we get an average loan size of about $25 million, is there anything -- some big lumpy loans, anything really large in there that caused the volume to be so much higher than it had been previously?

Ivan Kaufman -- President and Chief Executive Officer

So Steve, thanks for your comment. It's Ivan. We had one large loan in there. I think it was, what was it Paul, about $250 million?

Paul Elenio -- Chief Financial Officer

$265 million.

Ivan Kaufman -- President and Chief Executive Officer

$265 million, which was really a number of multiple properties. But what really happened overall was, with our execution and lowering our borrowing cost, we were able to drop our spreads and maintain our margins and be a little bit more competitive in the market. And we also made a little bit of an aggressive move because a lot of our loan book has LIBOR floors. And we thought that we'd pick up a lot of income in the future and have a real nice opportunity if we were a little aggressive in the last quarter.

And as LIBOR would drop, we'd be able to enhance our margins going forward. So there's a little bit of a strategic decision stimulated by the fact that we're able to have very good execution into the CLO market.

Steve Delaney -- JMP Securities -- Analyst

Got it. And was that -- is that the largest bridge loan that Arbor's ever made?

Ivan Kaufman -- President and Chief Executive Officer

I think it's the largest bridge loan that we've made, but it consists of multiple properties, I think, of financing portfolio. And for us, it was not just a bridge loan what was attractive, what's attractive is that we'll be executing that portfolio into either Fannie/Freddie or CMBS market over a 24-month period. So not only will we have the opportunity to have the spread income, but we'll be able to have a new potential servicing and gain on sale in the future. So it's another strategic move on our part.

Steve Delaney -- JMP Securities -- Analyst

And we noticed -- yes, Paul.

Paul Elenio -- Chief Financial Officer

OK, Steve, financing was our biggest bridge loan and it is collateralized by 56 properties in multiple states.

Steve Delaney -- JMP Securities -- Analyst

OK. Thank you. That's good color. And obviously, we noticed possibly because of the large loan, possibly just because of new loans versus old loans that the weighted average coupon fell by about 37 basis points down to 7.34%, about 4.94% over a LIBOR -- spot LIBOR at June 30.

Just curious if the trend in spreads, if you're continuing to see pressure and if you could comment sort of on what the general range of spreads over LIBOR that you're currently able to achieve on your new bridge loan production?

Ivan Kaufman -- President and Chief Executive Officer

Sure. I think spreads are generally in the 2.75% to 3.50% range. And that's down from maybe 3% to 3.75%. And that's offset by reduced borrowing costs.

But as I said, a lot of that is mitigated by having a higher LIBOR floor. I think that spread probably will maintain that level, but the LIBOR, as you know, is dropping. And our outlook is -- it's down to about 2.25% now. And I think it wouldn't be a surprise if it dropped to 2.00% to 1.75% over the next six months.

So I think that will keep spreads a little bit where they are. I don't see that much of a tightening maybe 25 basis points at best.

Steve Delaney -- JMP Securities -- Analyst

Got it. And then just one final thing for me. With -- Chris was looking at the credit risk rating table in the 10-Q, and we noted that the land bucket appeared to be moved up to special mention from a previous weighted average rating of substandard, and on the other hand, the self-storage sector was moved down to special mention from pass/watch. I was just curious if you could give us any color on kind of what's going on in those buckets? If there were any significant movements there on particular loans?

Ivan Kaufman -- President and Chief Executive Officer

I don't think -- on the self-storage, I can comment on -- I mean, what you're seeing, which is typical is anything that can be exited to more permanent financing is being exited. So you're perhaps seeing a movement on the self-storage where the best stuff is moving out. The stuff in the middle is still maturing and that will be moved out over time. And that probably is what the trend is on the stuff.

Paul Elenio -- Chief Financial Officer

And on the land side, Steve, it's just a product of -- that's a weighted average rating for all the land deals. And we did a land deal, I think, in the first quarter, which is brand new and performing well. So it just picked up the weighted average to a better rating for that bucket.

Steve Delaney -- JMP Securities -- Analyst

Got it. So just sort of a transitioning of stuff, and when you get weighted averages and something large moves, I get it, I get it. So -- but generally speaking, would you say that in the quarter that -- were there any material new credit problems that you identified that you have some concern about?

Ivan Kaufman -- President and Chief Executive Officer

No. We're quite comfortable.

Paul Elenio -- Chief Financial Officer

Yes. Not at all.

Steve Delaney -- JMP Securities -- Analyst

Thank you both for your comments. Appreciate thank you

Operator

And our next question comes from Jade Rahmani of KBW. Your line is open.

Ryan Tomasello -- KBW -- Analyst

Hi, everyone. This is actually Ryan on for Jade. Ivan, just given the strong half of the year, first half of the year for the GSEs, I was hoping you can give us your thoughts on just your outlook for the GSE market overall in the back half. Have you seen any -- either agency change pricing recently to manage the volumes and the caps? And do you think there is any chance that we see the caps adjusted considering the strong volumes year to date?

Ivan Kaufman -- President and Chief Executive Officer

I think that they are definitely widening the pricing step-by-step, and they'll continue to do it to slow the volume a little bit. That, in many ways, is beneficial to us because I think it will enhance our margins because as they compete on margins, that means we also have to compete. And I think they -- my prediction is there will not be a raise in the cap at all. A lot of our business is uncapped.

So we're not as affected as other people. But I don't predict there'll be any raise in cap whatsoever.

Ryan Tomasello -- KBW -- Analyst

OK. And then just on the overall multifamily environment fundamentals. Any changes with respect to your thoughts on the fundamental environment in underwriting and credit quality? I think, Ivan, in past quarters, you've alluded to an increasingly frothy environment and the need to continue sharpening your pencils.

Ivan Kaufman -- President and Chief Executive Officer

I think that my concern is the amount of liquidity in the market and the competition. And that's what would cause it to be frothy. With respect to the fundamentals of occupancy, they are still very solid. Rent growth seems to be continuing.

We're not that active in the luxury end of the market, which I feel is the most vulnerable part of the market. We are more workforce house and B&C type housing, and that market continues to be strong. And cap rates are still, especially with the drop in interest rates, still at very tight levels with maybe even a little tightening coming our way given the drop in the tenure.

Ryan Tomasello -- KBW -- Analyst

And with respect to the New York City rent control legislation, could you give us your thoughts on what you perhaps might think would be the longer-term impact in the market from there -- from that on cap rates and values? And Paul, maybe if you can let us know, if you -- if Arbor has any direct exposure there? And I'm wondering if you've seen any transactions yet in that space post the legislation?

Ivan Kaufman -- President and Chief Executive Officer

Sure. Well, if you're dealing with the rent-regulated side of the business, you're going to see some cap rate expansion since you're not going to be able to see significant increases in income. So the way we've been looking at it -- assets, we're trading in the cap rates around 3.5% to 4%, probably 3.5% more with the opportunity to raise rents, improve apartments and get to a stabilized 5% cap. That was the way people were buying.

I think that you'll see rent regulated apartments being more like in a 4.5% cap. So just if you do the math on an appraised value basis, you'll see diminution of value for rent. People who -- that were loaned to rent-regulated apartments are around 20%, that's the way we -- our outlook probably will give you the numbers. We have a very, very little exposure to this sector.

But Paul, do you have a little -- do you have some numbers?

Paul Elenio -- Chief Financial Officer

You're right, Ivan. We have -- Ryan, we've done this math, scrubbed our portfolio. We have a $3.9 billion balance sheet portfolio. As you know, we're an active multifamily lender in New York City.

We have very little exposure to rent control. Rents stabilized. In fact, right now, our exposure is probably under $140 million on that $3.9 billion. It's probably two or three deals.

Ryan Tomasello -- KBW -- Analyst

And anything in the servicing book?

Paul Elenio -- Chief Financial Officer

On the servicing book, we look at that as well. It would just be the Fannie book obviously. So on the Fannie book of $14.1 billion, we have less than $300 million of those type of assets as well.

Ryan Tomasello -- KBW -- Analyst

And on the balance sheet book, do you have the LTV on those $140 million of loans?

Paul Elenio -- Chief Financial Officer

I don't know if I have that with me currently.

Ivan Kaufman -- President and Chief Executive Officer

Actually, I'm looking at them. We don't see any significant impairment. With respect to the Fannie Mae book that we have, loans that are underwritten on our current cash flow are not a projected value. So cash flow that exists has not been impacted.

It's really the future growth, and I would be on the bridge portfolio. On our bridge portfolio, loans that we have, it's not a majority of the units, it's partial units in buildings. So the amount that we have is very negligible.

Paul Elenio -- Chief Financial Officer

Yes. And I'm seeing LTV is somewhere around 70%.

Ryan Tomasello -- KBW -- Analyst

Great. Thanks for all the color.

Operator

Thank you. [Operator instructions] Our next question comes from Lee Cooperman of Omega Advisors. Your line is open.

Lee Cooperman -- Omega Advisors -- Analyst

Thank you. You guys have done a masterful job of raising new capital, employing it intelligently. Ivan, you seem very enthusiastic about the outlook. You feel your stock is very mispriced.

But we continue to raise capital. So I'm just curious how you look at the cost of capital embedded in your stock price versus the prospective returns in capital you see? And obviously, part of that question is how do you feel about capital adequacy currently? If somebody wanted to buy $100 million of stock from you right now with the sale, would you do it? Can you put that capital to use?

Ivan Kaufman -- President and Chief Executive Officer

So raising capital is a complex matter for us, and in various ways, we've been able to raise capital. And we look at our loan book, we'll look at our other needs to grow the business. And we look at the economies of scale by the way we grow our business. And we look at what's in the pipeline.

So we do it very strategically. And we try and be very stingy about when we do it, and we make sure it's accretive. Right now, we put the capital to use. I think we put it to good use.

We think it's going to be extremely accretive. And depending on how the pipeline continues to come in and pay off and the plan needs to grow our business will dictate what our capital needs are. So if you put $100 million in my hand today, I'd have to evaluate our ability to deploy that, how accretive it would be to our dividend and what it would do to our business. And these are things that we're consistently evaluating.

Lee Cooperman -- Omega Advisors -- Analyst

So what you're saying is if you do raise capital, you would do it on a basis where you'll be accretive to the distribution looking out?

Ivan Kaufman -- President and Chief Executive Officer

We only do what we feel is accretive.

Operator

Thank you. And our next question comes from Rick Shane of JP Morgan. Your line is open.

Rick Shane -- J.P. Morgan -- Analyst

Hey, guys. Thanks for taking my questions. Two things, one is obviously we saw a nice pick up in gain on sale margin this quarter. I'm assuming some of that has to do with the move in rates during the quarter and the value goes on -- going up.

It is noteworthy though that in the quarter, your loan sales -- your commitment exceeded your loan sales by more than any other quarter we can track. That suggests that there is a lot of dry powder to sell in the third quarter. Should we continue to see the strength in the gain on sale margin on those incremental loan sales given the movement in the rates?

Paul Elenio -- Chief Financial Officer

Rick, it's Paul. So you're right in one aspect that if you look at the -- and the best measure for that is look at the held-for-sale balance. So you're right. We did have a significantly more committed loans in sales, which tells you that our June was a significant quarter.

We have $600 million sitting in held-for-sale. So we did have a very, very strong June agency month. So that will dictate that plus whatever we close in July and August will dictate what your sale volume is. As I said in my commentary, we've been unbelievably impressed with our ability to maintain our margins and actually have our margins grow considering how competitive it is.

It's all -- it's a product of many things, and Ivan will comment on the market, but it's also a product of size as well. And in the second quarter, at the end of the quarter, we did some larger deals and that's why you saw that my MSR rate had dropped quarter-over-quarter because we had done some larger portfolio deals in June. Those normally will come with a little lower margin, but they also come with a lower commission. So based on what I see of June, the margin may come in a little bit.

I don't know what July and August are going to show. But that's kind of the indicator that we see based on where margins will go. And I'll let Ivan comment on what he thinks the market is showing.

Ivan Kaufman -- President and Chief Executive Officer

Yes. So in prior calls, we spoke about our strategy to have similar volumes on our Agency Business as we did last year. And most of the market, it was going to be showing increases in volume. We could have shown increases in volume, but we elected to manage our margins, manage our volume and manage our staffing.

And I think that is a very good reason as to why we've been able to maintain our margins. Very often, people fight for late charge. And when you fight for late charge, you want to do business at less, and it doesn't affect your incremental business, it affects your entire business. And as a firm, we decided not to go after the late charge, not to worry about whether we're the eighth, seventh or sixth or fifth largest lender but to maintain the integrity of our margins, our staffing and not get sloppy.

And I think that has a lot to do why we were able to maintain it. And as Paul mentioned, in the loan sizes which we traffic, there's a little less sensitivity on the margin side. As you go to bigger loans, they become more competitive and people are willing to work for a lot less. So I put those two factors together and our ability to maintain our margins in a competitive environment.

Rick Shane -- J.P. Morgan -- Analyst

Got it. That's helpful. So what I'm hearing -- what I -- the way I'm understanding this is volume should be -- loans sold in the third quarter should be particularly strong given the strength of June volumes, but probably unfair to read through that you would see further margin increases likely given the larger loan sizes in the month of June, a little bit of compression from the good number, particularly high numbers you saw in -- on gain on sale in Q2.

Paul Elenio -- Chief Financial Officer

Yes. That's right, Rick. And as far as your first comment, June was the first month. So we wanted to leave our sales volume.

We would be very strong in with the third quarter, but we got to see what July and August come in. But we got off to a great start with June being as strong as it was.

Rick Shane -- J.P. Morgan -- Analyst

Great. Thank you for the clarity, guys. Appreciate it.

Operator

At this time, I'm showing no other questions in the queue. I'd like to turn the call back over to Mr. Ivan Kaufman for closing comments.

Ivan Kaufman -- President and Chief Executive Officer

OK. Well, thanks everybody for your participation today. It was another fantastic quarter. And as I mentioned in my scripted remarks, the pipeline is strong.

We have a lot of momentum, and we're very optimistic about the balance of the year. Everybody, have a great weekend and the rest of the nice summer. Take care.

Operator

[Operator signoff]

Duration: 33 minutes

Call participants:

Paul Elenio -- Chief Financial Officer

Ivan Kaufman -- President and Chief Executive Officer

Steve Delaney -- JMP Securities -- Analyst

Ryan Tomasello -- KBW -- Analyst

Lee Cooperman -- Omega Advisors -- Analyst

Rick Shane -- J.P. Morgan -- Analyst

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