Katie Keenan: So I think it certainly depends on the asset class. We still feel very good. As I mentioned about the prospects on the majority of our portfolio, multifamily, industrial, hospitality, some other segments that are seeing good growth. On the office side, the majority — the vast majority of the future funding is a new build office. And as I mentioned earlier, the new build office elements of the portfolio, which is naturally where most of the future fundings are, those assets continue to see very strong growth. There has been just recently in the last month, good leasing coming out of Hudson Yards including at The Spiral, which is our largest office loan. As I mentioned, seeing continued very strong rents on new build offices across markets.
And so I think when we look at, think about, our fundings going into new build office buildings, which are also just because of the way we make construction loans tend to be lower leverage on average than the rest of our portfolio, and again by definition, the best quality assets coming into the market. We feel good about continuing to invest capital in those assets.
Eric Hagan: Yeah. That’s helpful. Thank you guys very much.
Operator: The next question is coming from Derek Hewett with Bank of America. Please go ahead.
Derek Hewett: Good morning, everyone. Kind of following up on some earlier questions, could you provide any update or color on the LTVs for the risk weighted five loans?
Katie Keenan: Well, I think that, the best indication and where we sort of see that today is really around our reserve levels. And as I mentioned in the call script, we are pretty cautious and pretty sober about where we think values are for the most susceptible or sort of the most vulnerable commodity office assets. We have taken 20% reserves on those assets, reflective of asset values down 50%. That is specific to the assets that we see as most challenged, older vintage, markets that are really tough, situations with the individual assets, where they were addressing a segment of the market that has really changed, the government tenant segment being most significant. So I think that’s really how we think about the metrics on those assets.
Derek Hewett: Okay. Thank you. And then I realized that BREIT is principally an owner of a real estate, but is there any investment overlap between BXMT and BREIT?
Katie Keenan: No. It’s a totally separate vehicle.
Derek Hewett: Okay. Thank you.
Operator: The next one is coming from Stephen Laws with Raymond James. Please go ahead.
Stephen Laws: Hi. Good morning. Katie, can you talk about, what’s your expected resolution path to be for the five-rated loans and how we should think about the timing of those specific reserves moving into realized losses through the — through distributable earnings?
Katie Keenan: Sure. So I think that, with these loans and the benefit of what we have here in the platform being the largest owner of real estate in the world, we are really taking a deliberate and thorough approach. These loans do generally cash flow, as Tony mentioned, they all paid interest in the fourth quarter, they are on cost recovery. So we continue to see cashless coming in which will apply to our basis. And in the meantime, what we are doing is assessing the various potential outcomes, whether it’s a sale in due time of structured solution, taking them REO and we are going to make the decision that we think is, most beneficial for long-term value preservation for our shareholders. I think that’s a process that’s going to take some time, because we really want to be deliberate about it and make the right decision and these are a very small part of our portfolio that supported by the tremendous earnings power we have throughout the rest of the portfolio and so our goal is to preserve the most value we count on these assets over time using an ownership mentality.
