Jade Rahmani: Okay. But just overall, your feeling about cash flow performance is that it remains strong and steady. Is that how you would characterize it?
Paul Elenio: Yes. That’s how we look at it. I mean distributable earnings were $0.55. I mean that’s the best representation of cash flow, right? It’s the item, the metric we use to cover our dividend, right? So we look at it with a tremendous coverage ratio 55% versus 43%, but we’ve not seen a significant decline in cash flow. Obviously, we have a few more nonperforming loans. So that puts your cash flow a little bit. But again, we’re ramping up our SFR business, we’re putting out some Mezz and PE. We’ve not seen a significant decline in that cash flow number yet.
Operator: And we have our next question from Rick Shane with JPMorgan.
Richard Shane: First, can we talk a little bit about the $70 million restructuring? What is the advance rate that you received on the facilities that you pledged it to? And was any of the mezz that was funded during the quarter associated with that restructuring?
Ivan Kaufman: Paul, before you answer that question, I want to give a little perspective on that Paul, because it kind of touches upon some of the questions that were asked, and I think it’s a good case study. That was a very, very good asset and a very good market that required a certain execution of business plan. The borrower 100% failed on his execution. 100%. Couldn’t execute. Whether it was distracted by other issues. We have no idea. We were able to bring in another operator and within this short period of time, he’s already transitioned this asset because he knows the market, knows the asset quality and has done a remarkable job. So that’s kind of the overview of that transaction. Great asset, great opportunity, bad management, bad execution, replaced with a good operator and a recapitalization. Paul, you can go now give the specifics.
Paul Elenio: Yes, sure. So exactly what Ivan said, right? Great asset, just sponsor was not getting this asset to plan like we thought he would, was behind on his payment last quarter had gone delinquent 2 months, and then we have the 3 months this quarter, which is 5 months. We restructured the deal and that we were able to get a payment of 3 months in back interest, so we did get recovery this quarter in interest. We structured a deal in which the property was sold to a third-party borrower, a third party, a new borrower assumed our debt and as part of the assumption of our debt, we modified our loan to a 3-year loan. The first 18 months, the interest rate is 6% fixed, and then after that 18 months, it reverts back to its original plus 340.
And as Ivan mentioned, a quality sponsor that has committed $10.5 million to the project, $2.5 million was funded day one as an interest reserve. And the other $8 million is capital improvements that are going to be made into the asset over the next 15 months. And if those are not made or if they’ve come up short, the borrower needs to post a rental reserve of the lesser $2.5 million and the difference between the $8 million capital improvements in what he spent. And it’s also important to note that he’s guaranteed those $8 million of capital improvement. So that’s a perfect example of what we’re capable of. We took a borrower, who wasn’t executing as planned. We brought in a new borrower who’s committed significant capital to the asset. It’s going to improve the asset, get it to stabilize value quicker.
Took a slight reduction in interest rates for 18 months, but then it goes back to its original rate, and that’s kind of the whole structure.
Richard Shane: Got it. And that is Paul now carried apart, did you provide any mezz associated with that?
