And I think while the benefit I noted earlier of lower SOFR, lower LIBOR for a period of time benefited these capital structures were versus where the cost of carry is simply higher than what some projected by underwriting their assets. So, when you combine that element of stress at the capital structure level with some slower leasing intervals in certain assets, that’s really what I was speaking towards. But Tae-Sik, do you want to talk through on the interest rate side, what our thoughts are and some of the impacts that we’ve seen from what we did proactively a couple of years ago?
Tae-Sik Yoon: Sure. No absolutely. Eric, great question about our thoughts on interest rate hedging. Just a little bit of context in history, and I’ll just keep this very, very brief. But our thoughts on liability management, has always been focused on match funding, right? So when we have 98% floating rate assets, we want to match that with floating rate liabilities. And really the reason, we did a very, very large hedge about two years ago, was not really to forecast which direction interest rates would move. But again, consistent with our policy and consistent with our goal of match funding, we have a fortunate situation where we have significant in the money, interest rate floors on our assets such that even though technically they were floating rate loans, they were economically behaving like fixed rate loans, because we were so deeply in the money with LIBOR floors that were 150 to 250 basis points when LIBOR was 10 to 20 basis points.
So they were behaving like fixed rate loans. And so we felt it very consistent and very appropriate to therefore match fund are now economically behaving fixed rate assets with some fixed rate liabilities. So that’s when we enter into a very large interest rate hedge about $1.3 billion, if I recall about two years ago. And obviously we are very fortunate to have done that not knowing of course which direction interest rates would move. Of that, we still have around third of that about $410 million of notional no hedges in place today. In addition, we were I think take advantage of the interest rate curve. And when we refinanced our $150 million — I am sorry about my voice here — $150 million secured term loan, we did decide to take that on a fixed rate basis.
And we’re able to lock in a very low interest rate there as well. I would say going forward I think we’ll continue to be guided not by our prediction of where interest rates are headed, but really our policy of match funding our assets and liabilities. And right now, again, we have a 98% floating rate asset base. And so I think we will focus in the future on a floating rate liability base.
Eric Hagen: Got it. That’s helpful. Thank you guys very much.
Tae-Sik Yoon: Thank you.
Operator: Thank you. Our next question today is a follow-up question from Jade Rahmani from KBW. Please go ahead. Your line is now open.
Jade Rahmani: Thanks. Just a quick clarification, I think, Rick Shane said, there’s $45 million of loans on non-accrual as of year-end. I thought the value was around — the carrying value was around $99 million. I just wanted to check that number.
Tae-Sik Yoon: Jade, I think it’s a good point. So we had one loan that’s $57 million, a second loan that is $35 million. And then, the one loan that has been subsequently resolved again the LA residential the Los Angeles California residential asset of about $14 million. I think those are the three loans that were on non-accrual at year-end. Obviously, the California loan has been resolved, but the other two are remaining.
Jade Rahmani: Okay. Thank you very much.
Tae-Sik Yoon: Yeah. I think the $45 million was as of year-end 2021. And so maybe there was some thought, but it is $99 million as of year-end 2022.
Jade Rahmani: Thanks.
