Rick Shane: Got it. It’s a very helpful answer. Thank you very much.
Katie Keenan: Sure.
Operator: And the next question is coming from Arren Cyganovich with Citi. Please go ahead.
Arren Cyganovich: Hey. Thanks. I was wondering, if you could just talk a little bit about the office market and how much of this is driven just by rates and required cap rates versus the actual fundamentals. Obviously, folks are going to the toughest is less and using less office space. I am just kind of thinking about what could turn this around, it is only REITs or do you really have to see a dramatic change in the fundamentals of folks in the offices themselves?
Katie Keenan: It’s a great question and it’s really a combination. I think that there are assets that are outperforming and doing fine even in the context of higher rates, whether that’s in the multifamily or industrial sectors or new build office, where we continue to see good leasing at strong rents. There are assets that have real secular issues, assets that just targeted a component of the market like government tenancy. As I mentioned, that just really is not a growing or it’s a significantly shrinking part of the market going forward. Commodity, obsolete physical quality office has been something that’s been challenged for years long before COVID and so there is a continuation of the trend. And then there are assets in the middle that cash flows perhaps were not growing or not as substantial as they once were.
But they work okay, in a low interest rate environment and less so in the environment that we have today. So I think interest rates become a decision point for assets. Some assets that we are experiencing some challenges, but not really sort of permanently issues, and so as rates fall, you may see some of those assets crossover. But there’s certainly a number of assets in the market and a few in our portfolio that were just built and targeted at a part of the market that has had lasting change and I don’t think rates are — there’s certainly a contributing factor, but I am not sure that lower rates are really going to change for some of those assets. But again that’s a really small part of our portfolio.
Arren Cyganovich: Okay. Thank you.
Operator: And our final question is coming from Jade Rahmani with KBW. Please go ahead.
Jade Rahmani: Thank you very much. Just wondering if you could walk through liquidity post the convert repayment, what are the primary sources of liquidity, is it just undrawn available borrowing capacity and do you expect to issue any form of capital to potentially replace that convert, whether it would be a preferred securitization or something else?
Tony Marone: Sure. I will start with the second part of your question. So we think of the term loan that we issued earlier this quarter as effectively the replacement for the convert. We thought that was a good time to issue that in the market, so that was a bit of a pre-refinancing. So we would not expect at this point that we are going to handle the convert maturity other than paying it in cash. As far as the sources of liquidity, we always keep some cash on hand, but the majority of the liquidity is under our credit facilities and those are revolving credit facilities where we can as of right borrow that money in 24 hours. That is not some sort of contingent availability that the banks need to approve or need to approve assets. So it’s really as good as cash. We just don’t keep the cash drawn to manage the interest expense.
Jade Rahmani: No plans to issue a CLO in the near-term. I think, Katie, you did talk about some of the improvement in spreads that we have seen in that market.
