Katie Keenan: Yes. You’re asking about the BXMT providing preferred equity to our borrowers to stabilize credit situation, just so I understand the question.
Jade Rahmani: Yes.
Katie Keenan: Yes. I mean, look, I think it’s certainly something that we look at. As you know, historically, our business model has been very focused on senior lending. But in this environment, we are a very creative and opportunistic lender, and we’re looking at a lot of those types of situations across the business, whether it’s in BXMT or other platforms. And I think that you’re exactly right, that there is going to be opportunities for, GAAP financing, rescue capital, whatever you want to call it, where, you have the situation where an orderly deleveraging is required, otherwise good assets, but loans that are, too high leverage relative to where they should be, maybe a previously 65% loan is now 75% or 80% today. There’s a need for capital to come in at an accretive investment level.
You might have a borrower that’s like less able to invest capital. I think the good news is for our portfolio, when we’ve seen those types of situations come up we’ve seen our borrowers want to make those investments. So a lot of these pay-downs look a lot like that. They’re effectively buying the bottom of our loans at a reasonable return in order to de-lever their capital structures. And because we lend to borrowers that have a lot of capital, they are able to invest their capital themselves. But I do think that could be a very interesting opportunity in other portfolios, as a new investment opportunity going forward from here.
Jade Rahmani: Thanks very much. And on the new investment side, since you have such great credit performance thus far and such a strong liquidity position, why not kick-start originations to capture some of these outsized opportunities? And if you were to do so, where do you see the greatest opportunities? Would not Office be the best opportunity since there’s still very few lenders out there looking at office and you can make such strong risk adjusted returns there?
Katie Keenan: Yeah. So I mean, I think we’re really pleased to be in the liquidity position that we’re in, which gives us a ton of optionality in terms of looking at new investment opportunities or really just continuing to maintain that optionality. We start from the perspective where we have very strong earnings power, very strong dividend coverage, and so we can afford to be patient and make sure we have a very high bar for giving away some of that optionality. But it’s certainly something that we’re looking at. As far as where we like the investment opportunity, I think we are seeing really attractive fundamentals in industrial, in data centers, in certain multi-family markets. We’ve talked in other venues about the attractive nature of the fundamentals in European industrial and the dislocation of capital markets from fundamentals in that market.
And we’ve actually done some of that, going back a quarter or two in BXMT. So I think we’re going to look more in those areas. I think office is certainly an interesting area and we’re spending a lot of time thinking about how and when investment would go on there. But I do think that from a portfolio management perspective in BXMT we’re going to look to be more active in some of those other sectors that I mentioned.
Jade Rahmani: Thank you.
Operator: And our next line, Don Fandetti with Wells Fargo has our question. Please go ahead, sir. Your line is open.
