So we plan on for closing in November and probably market the property for sale in the New Year.
Frank Saracino: And to answer the second half of your question, yes, we would charge-off the CECL related to that in the fourth quarter.
Sarah Barcomb: Thank you
Operator: Our next question comes from the line of Stephen Laws with Raymond James. Please proceed with your question.
Stephen Laws: Yeah. Hi. Good morning. I just wanted to touch base really around, how you think about capital allocation decisions, a number of options, you CRE loans, you can repurchase part of your capital stack, comment our debt, you can look at liquidity and paying down lines. Mike, it seems like that’s what you kind of pointed to maybe in your prepared remarks is just maintaining liquid given this environment. But you can also look at things outside of CRE loans, other equity investments or securities. So when you look out there at this opportunity set, kind of what do you think looks interesting? And what do you think the time line is of starting to maybe do more new originations?
Mike Mazzei : Thanks for the question. I think what looks the most interesting to us is closing the gap between market value and book value. Right now, the market is clearly pricing in uncertainty. So our job is to provide as much transparency and certainty in execution on the assets and the balance sheet to close that gap. So in terms of allocation of capital, first and foremost, it’s liquidity and staying working with our warehouse lenders are working with our borrowers, to make sure we know what’s coming, and we have ample liquidity to address anything that may be required. Secondly, when you look at the opportunities out there, yes, there are going to be a lot of opportunities or regional banks are all cutting back. They are the largest component of construction lending in the market.
So with them cutting back, we expect construction loans to fall dramatically, which will be beneficial for the market as they work through vacancies, especially on the multifamily side over the next couple of years. So we think the opportunity is out there between regional banks cutting back and between this Basel endgame that’s going to be enforced at the bigger banks, there’ll be plenty of runway to execute on new transactions. But right now, I think our best focus is, as I said, is closing the gap between market and book value for our shareholders. And that’s really that bridge is bride of liquidity.
Stephen Laws: Great. Appreciate the comments. And maybe as a follow-up around the modifications. It seems like at a simple level, it’s bars putting in more capital in return for more time. But can you talk about some of the other gives and takes that you’re seeing come up consistently, and around floors and the loans if you’re not moving those to market in the modifications have you thought about using some of your high coverage on the dividend to maybe buy your own floors in case rates move the other way and lock in some of this outsized asset yields?
Mike Mazzei: So why don’t we — for the modifications, why don’t we turn that over to Andrew, and then we’ll go from there.
Andy Witt: Great. In terms of modifications, I mean, they’ve been relatively consistent with what we’ve seen in previous quarters. Some of those modifications are just addressing at maturity, a rate cap and interest reserve to carry the loan through the subsequent term. Others are more complicated and may include a pay down some modification of future hurdles and so forth. But I think in terms of what we’re seeing quarter-over-quarter, it’s a lot of the same types of modifications, giving the borrower runway to complete the execution of their business plan and ultimately, get to a better capital markets environment. So that’s what we’ve been trying to facilitate, and we do that in connection with the borrower, generally doing something to move the asset forward, whether that’s a paydown, whether that’s funding reserves, buying interest rate caps, which is a prerequisite for extension.
