Paul Elenio: Yes. So let’s try to take them in order. The first — let’s stick to the second question, first. As far as the tax code goes, rightly you are required to distribute 90% of your taxable income as a REIT. If you don’t distribute 100 you’re paying corporate tax on the difference between 90 and 100, so that’s a leakage. I think the advantage we have over everybody else in the space is that we have what we call a REIT over TRS. So we have a taxable REIT subsidiary that pays taxes on the Agency business. And because of that, we’re able to retain that capital FTP tax and not have to dividend it up. So that’s one piece of it. So your question, will we have to pay a special dividend to the entity or the answer is no. But we will continue to evaluate where our taxable income goes both in the region TRS going forward and that will certainly be one of the contributing factors to where our dividend goes in the future.
But right now, we have the ability to retain capital and don’t — and are not running afoul of those . As far as the third question on capital, we’ve done, I think, a masterful job as you said, Lee, and we really appreciate your comments of really looking at this world correctly, and knowing that you have to be properly capitalized when you enter into these challenging environments. And so we’ve done a really good job of accessing capital. We’re probably one of the companies — you know, one of the only companies in the space that has access to different levels of capital, both in debt and equity, because of our reputation, because of our brand and mostly because of our performance. We are viewed best-in-class by a lot of the investors. So that’s really helped us.
We will just evaluate it. Right now, like you said, we are sitting with a bunch of cash. I think we are in a really strong liquidity position. And we will just continue to evaluate whether there is a need for capital going forward. But at this point, we like our position, right, Ivan?
Ivan Kaufman: We do. We will evaluate our runoff first originations because runoff exceeding our originations creates a lot of capital for us. Given the benefit of our low liability structures, it puts us in a position to continue to have outstanding earnings. I mean, if we leverage our existing liability structures, with assets, we have a real cushion and a real benefit. There are a lot of firms in the industry that lock up their liabilities, which we think is not the right way to run a business and we don’t do that. We get the benefit of having higher earnings on those assets, and especially in replenishable vehicles. So I think we got to wait and see how each month goes and where the yield curve is, and where the opportunities are. But we are sitting in a pretty good position, Lee.
Paul Elenio: And to your first question, Lee, about the return on equity certainly our return on equity has been unprecedented as you said, a lot of that has to do with obviously the run up in interest rates and earning more on our capital. I think everybody in the space is seeing that. We are seeing a significant increase in the escrow earnings, because of where rates have gone. And obviously our Agency business is capital light and therefore the ROE on the Agency business is much higher than on the balance sheet business. To answer your question on whether we think that’s sustainable, that will depend on a lot of factors. It will depend on the mix between the balance sheet business and the Agency business. And if we can keep pace, keep close pace to where the Agency business was last year, I think that will be a meaningful contributor, but it also will depend where rates go because obviously if rates at some point down the road, and I don’t think it’s happening in ’24.
