Bryan Donohoe: Yeah. It’s a great question. And all of those avenues are available to us, and hopefully, that came through in the remarks just the balance sheet allows us that flexibility. I think with respect to this asset, there are some unique attributes, right? It has a fixed income like cash flow stream in terms of the credit quality of the tenants and the duration of the leases. But there is some upside that we think may be available through property management and leasing as we touched on. I think what we would — if we think we’re getting fair value, then absolutely, a sale would be part and parcel with what we have looked to do historically. And whether we participate in that from a mezzanine perspective, allowing longer-duration senior debt to go in front of us, right, because it does fit better into a fixed rate takeout rather than floating, which would be our core competency.
So the point being, all these channels are available to us. But first and foremost, was getting our arms around the asset, hopefully enhancing the cash flow profile and resolving it in one of the ways that you put forth. So sorry, I don’t have a more specific path. I think what we like about it is that it is all available to us right now, and we’ll do what’s best for the company.
Richard Shane: Got it. No, actually, there is something interesting in there that I did not fully appreciate, which is that this is an asset that, in fact, may qualify or may fit better for a different type of financing. And in some ways, that makes more sense because probably, if you guys see value there, locking in long-term uncallable financing right now is probably not the way to maximize long-term value.
Bryan Donohoe: Certainly, that’s a key consideration, absolutely.
Richard Shane: Okay. That’s it from me. Thank you everybody.
Bryan Donohoe: Thanks.
Operator: Our next question is from Jade Rahmani with KBW. Please proceed with your question.
Jade Rahmani: Thank you very much. I know Ares does a lot on the equity side. So I wanted to ask your thoughts on multifamily. If you can give an update. Quite a few of the multifamily REITs have been citing a significant change in the market in September and October with respect to the Sunbelt signing new lease rent growth, negative 8% to 9%, attributing some of that behavior to so-called merchant developers who are making price concessions in order to lease up their projects, maybe they’re under pressure from floating rate loans increasing or something else. But how are you viewing the overall multifamily markets? Are you nervous about credit there? Or do you view this more as an opportunity?
Bryan Donohoe: It’s a great question. I think certainly a dynamic landscape out there, and the more acute reduction in rents that you’re seeing in markets that were oversupplied, right, like a Phoenix, for instance, we are seeing that. We don’t have a lot of exposure to those. There are assets that enjoyed outsized rent growth beyond what a lender would have underwritten for the past couple of years. And so we’re a little bit in the digestion phase of the multifamily market, where you’re seeing rents normalize, maybe dip where you’ve had that purposing of supply. I think long term though, we sit here with a patient approach to assets and valuations resetting. And if you look and you fast forward a little bit into the reduction in supply that you’re going to see based on the capital markets interruption that we’re seeing, right, if you’re borrowing against the construction loan today, that’s a low double-digit cost of funds.
So as you see that supply shift and really go back to lower than historical levels based on that capital markets interruption, and we remain at a housing deficit throughout the country, the long-term fundamentals are supportive. But certainly, over the next 12 months to 18 months, we’re cognizant of the digestion phase of the supply that we are seeing in certain markets. So I think it’s a little bit TBD, but we expect to participate in the re-levering and the re-equitization of this market for the foreseeable future.
