Katie Keenan: Yeah. I think a lot of it comes down to quality. I mean, we are in a dynamic environment. So we look at the data and the trends we see today, and that informs what we do with our reserves and our overall risk-rating process and we identified the fives and the fours where we see more susceptibility. But I think in particular with some of the markets you mentioned, there is really a difference in the dynamic between San Francisco and in Nashville. There is still growth in Nashville, may be coming down a little bit. And –but you think about rents and mark-to-market of where those assets were renting out historically versus today and the overall fundamental long-term dynamics. Combine that with the quality of assets we are focused on.
I mean, Austin our large office there, is going to be the newest office building in the market. It’s a mixed-use project, 62% of cost with an outstanding sponsorship and it’s really going to be the most premier asset in the market. And I think that that’s part of why we feel good about the overall office portfolio. It’s really looking at quality. We are seeing in most markets is just a continuation of an accelerating flight to quality and so you see the larger market statistics and certainly they have challenges and our portfolio is not immune from that. That’s why we have the fours and fives. But by and large, the very high quality assets in the market. We broke our sort of new and recently constructed at 2015 vintage. Those assets are seeing very different dynamics.
They’re seeing good net absorption, growing rents, 5 point to 10 point differential and availability, and while the overall market is slowing, those assets we think are going to continue to outperform.
Jade Rahmani: Thank you.
Operator: And the next question is coming from Eric Hagan with BTIG. Please go ahead.
Eric Hagan: Hey. Thanks. Good morning. How would you describe the approach to reserving and even potentially modifying loans, because of the fact that price discovery is so weak in the market right now. Like how do you handicap for that, in cases where you think there could be more meaningful discrepancies between where you think value sits and where sort of the unknown of where it could realistically transact?
Katie Keenan: Yeah. And I think for office, we are in a very liquid market, there’s not a lot of transaction activity that’s going on. There is small amounts of transaction activity are generally in the more distressed category. And sorry, I think, it’s fair to say, no one can be perfect in that context. But that said, we have an extremely rigorous process. We do a full deep dive underwriting in coordination with our broader real estate team, using all the best available information we have on our assets, on the market, all of the constant information flow we have coming into Blackstone, both transactions that have occurred and transactions that have not occurred and we inform that all through our process, which has been thoroughly vetted by our senior leadership.
The reserves also go through an audit process, so there is a third-party auditor element to it and so it’s an extremely rigorous and detailed process that we think reflects the appropriate level of reserves that we see today.
Eric Hagan: Great. Thanks. That’s helpful. And how would you maybe describe the outlook for sponsors to capture NOI growth, as a result of the capital investment or the business plan that they are pursuing? Would you say that your sensitivity has changed with respect to unfunded commitments or construction financing in general?
