Stephen Laws: Hi, good morning. First off, congrats, another strong quarter, another dividend increase, a lot of those in the past couple of years and a lot of positives in the quarter. But Ivan, I wanted to follow-up on your comment. You started with talking about the next two to three quarters being the most challenging. And I think it’s likely due to the issues you just mentioned in your answer to Steve Delaney. Is it interest rate caps rolling off? I mean can you talk of it, is it behind business plans, the good operators, bad operators. Do we think about this being really a wave of stress from originations, say, 2 years ago? Or is it a bigger sample size given differing maturity dates?
Ivan Kaufman: So let me give you a little bit about macro view on this one that we’ve had for quite some time. And one that has obviously put us in a very favorable position in terms of liquidity and strategy and personnel and resources. It’s been our view that generally, these downturns last 18 to 24 months and on the outside of it. And if it’s a downturn, that’s a short-term, it’s 15 months. We’ve been at this already for at least five quarters, and that’s why we think that there could be another two to three quarters left. Having been for multiple cycles, we feel now we’re pretty much on the bottom of the cycle and that we’re going to work our way out of it shortly. But the bottom is the most difficult period of time.
Our borrowers are working really, really hard to manage their loans and their portfolios. And this is a peak of their stress right now, we feel it. They are working hard to raise capital, get their assets in a good position. So we’re just thinking and planning for a little bit more elevated than it’s been in the last quarter and we think the next two quarters given where we are in the cycle and what our outlook is going to be a little bit tougher. So the bars are – put a lot of resources in, stretched on their resources. Interest rates have remained elevated. The cost of labor, even though it’s coming down, put a lot of stress on people’s portfolios. And the other aspect, which is beginning to fade a little bit, which people don’t talk about, but I’ve talked about on our prior calls, is the economic vacancy specifically in areas like New York and New Jersey and other I’ll let areas like that, where the economic vacancy, the ability to get rid of non-paying tenants has been extremely elevated and it is going to begin to come down.
In certain markets, we have physical occupancy of 97% to 98%. You have economic vacancy of 10% to 12%, and that’s been putting a lot of stress, so we think the economic vacancy is going to begin to come down. Our outlook in terms of interest rates is at this point, a little bit more favorable than it was 6 months ago and 9 months ago and the ability for people now to really put their time and attention to managing their assets that become much more focused. But we do think that the next two quarters will be the worst of the quarters and that’s what we’re seeing. But economic vacancy has played a pretty significant part in terms of making – having these borrowers struggle.
Stephen Laws: Thanks, Ivan. And a follow-up, Paul, can you given the outlook for kind of a couple of challenging quarters to continue through this. What gives you confidence that the current reserves are appropriate? How are you looking at the losses? And what’s the risk that those reserve levels need to increase possibly materially in the next couple of quarters?
