Mike Mazzei : So I have to be careful about what I say there, because we don’t own the hotel. But as I said, I can’t speak on behalf of the borrower, but there is a process — it’s a public process. It’s in the newspapers, so you can read about it in the various local Berkeley or San Jose papers. The buyer is supported by the ultimate user of the tower and that ultimate end user is San Jose University. We’re not privy to exactly the structure between the buyer and San Jose and the entity that’s going to buy it. That will result in a pretty good paydown of the loan and we’ll get a decent amount of that capital back to us because, as you said, there’s a less than 50% advance rate, I think it’s like 47%. With regard to the rest of the hotel, that really is up to the borrower.
There have been protective advances that have been made. There’s a mezzanine on the loan, the mezzanine has made protective advances, the operator of the hotel has helped and assisted the borrower where they could. But I do think, ultimately, there has to be a resolution on the larger asset, the remaining asset. I can’t speak on behalf of the borrower. That could be a sale in the second quarter of next year. It could be a substantial recap of a hotel where some of our loans stays in place and new capital comes in. In a sale, obviously, we would be taking out in full, and that would be a lot of capital that would come back to us that we can redeploy.
Matthew Howlett: Look, it could be a windfall for you on that final note, I mean, we’re scratching our head with the
Mike Mazzei : Yes. That would be — yes, it would be — it could be a substantial amount of liquidity that comes back. But then if the borrower whether recap the entire property is such that it would be attractive for us to stay in the financing, we would – we could consider that at that time, but we’d have to be presented with the facts when that happens.
Matthew Howlett: Mike, you’re maintaining the dividend and covering it, but the disconnect with the stock price at NAV, which actually was up in the quarter, how – how eager are you to just start buying back stock? Do you foresee a scenario, if you look at 2024 and liquidity – you’re getting more liquidity from the portfolio. Could you just commence a buyback? I mean it seems like that’s – that would be the best way to kind of close the gap between NAV and both…
Mike Mazzei: No. There are differences of opinion on that. We have seen folks buy back stock, and it’s a great investment, and we think it’s a very compelling investment at these levels, given – if you just do the math, book value versus where the stock is trading and what the implications of that are. So we think there’s a massive gap there. Having said that, the best way to harvest that gap to close that gap, to harvest the discount here is liquidity. And so kind of buying back stock is a one-time thing that really, at the end of the day, it might move the needle for a day or might have a nice halo effect for a quarter. But in terms of the long-term mission of really closing that – that book gap versus market substantially, we think you need the liquidity to do that.
And so spending money on a one-time purchase of stock, the metrics look fantastic. It’s still something that from a corporate finance perspective, we would earn the side of the longer-term view, maintain liquidity, so the market has confidence in your balance sheet, and we think that will have far greater impact on market price than buying back some shares.
Matthew Howlett: Look, look, in these times [Technical Difficulty]
Operator: Our next question comes from the line of Steve Delaney with JMP Securities. Please proceed with your question.
