Rick Shane: Hey, guys. Thanks for taking my question. And I apologize, if this is redundant, like I have been and my peers bouncing around featuring calls this morning. Just want to talk a little bit about the migration between the Structured business and the Agency business to the extent historically you put loans on balance sheet, worked with borrowers to complete the projects, and then to securitize those or sold them to the agencies. I’m curious if you think in this environment, there is — how that compares to other commercial mortgage REIT models where the ultimate takeout is in the private term markets as opposed to the government term markets?
Ivan Kaufman: So as you know, our business model on every we do is for an Agency takeout. That’s how we are built, that’s how we are structured, that’s how the economics of the firm really flows and that’s the value of our franchise. So each and every loan that’s in our portfolio was underwritten accordingly. So in this kind of yield environment, when you have an inverted yield curve, many of the borrowers have the decision to make. Did they pay higher interest costs when their caps burn off? Can they cash in their caps and use that as equity and recapitalize some of their assets? Go with a fixed rate? If you’re a floating rate individual, you are paying anywhere between low of 8% and high of 9.5% and you factor in the capital costs of — or cap costs, you may have a great opportunity to go into a 10 year fixed rate.
And we were putting people onto 10 year fixed rates in the low-5s on an basis and the savings are so considerable. And the stability is so significant that people are willing to come out of pocket with cash, lower their principal balance and go into Agency debt. And so, in accordance of those circumstances, we have laid on some preference on mez, which has been very accretive for us as well. So that’s our business model. It works very, very well. Some borrowers like to write it out. I think borrowers are more conservative. So it’s a whole mixture. But unlike our competitors, our model is built in that manner, it’s multifamily debt, it’s Agency eligible. And that’s one of the primary exits every time we do a loan.
Operator: Our next question comes from Jade Rahmani with KBW.
Jason Sabshon: Hi, this is actually Jason Sabshon on for Jade. So question, we’re starting to see a few cases of what looks like strategic defaults from borrowers in order to extract concessions from lenders, since they know that lenders don’t want a foreclosure on their hands? For example, Blackstone, this large multifamily deal in New York just said special servicing. And we know that Arbor’s borrower relationships are unique, and to be repeat borrowers, but can you comment on whether you’re seeing this trend at all?
Ivan Kaufman: It’s definitely a trend in the market. And in a competitive lending environment, many lenders strip away certain structures on their loan. And without those structured loan, if the asset value is close to the debt and the lenders don’t want to take back those assets, it gives a lot of strategic advantage to the borrowers, if they care — if they don’t care about their profile. For us, we have a long history of originating loans, and we have tremendous structure on our loans within the industry. We’re treated a lot differently than other people, because we’re very prudent when we made these loans. And the borrowers need to come work with us for a variety of reasons. One of them is a structure on loans. The second is the number of loans we do at particular borrowers.
