Eric Hagen: Hey, thanks. Good morning. Good to hear from you guys. Maybe a little bit more fleshing out the liquidity. Just how do you think about the liquidity relative to the size of the CECL reserve? Like what would drive you to hold even more liquidity from here, like the reserve has gone up, but it’s still relatively modest as a percentage of your total assets? It looks really manageable. So I am just trying to square up like how you think about the approach to your liquidity relative to the size of what you are reserving for?
Mike Mazzei: Okay. So thank you for the question. This is Mike. Let me give you a little clarity on the reserves, we have $107 million total in reserves, roughly about $0.82 a share. Of that $57 million of it was taken against the two Long Island City assets, both of which we have got cooperation agreements with the borrower, the same borrower on both assets, both of which were we have hired a sales advisor. And both assets are being marketed now in a short sale structure. In terms of the balance of the reserves, roughly $33 million, I believe is in the risk weighted €“ risk ranking four category, of which a substantial amount of that or a good chunk of that is against one asset, an office asset in D.C. I can’t give you the amount exactly, but it’s a more substantial reserve.
In terms of liquidity going forward, we €“ it would be unreasonable for anyone in the space in a real estate lending space to say that they don’t anticipate some future credit issues going forward. We do anticipate that there will be some movement in risk weight three assets to potentially four that just is not an unreasonable thing to think. But really maintaining liquidity is about moving assets around and potentially de-levering assets and protecting the balance sheet. And that is just an unknown right now. I think it’s very hard to sit here over the next 12 months and say we know what the Fed is going to do, we know when they are going to give relief, we don’t. And that’s been reflected in the market today. So, I think holding on more cash until we see that visibility, there is less to do with write-downs and more to do with just maintaining liquidity on the balance sheet to maneuver assets, if they need to be moved around.
Above that point, and that’s why we stress the granularity of the portfolio. We don’t have any battleship size loans. And as I have said in the prepared remarks, we stayed within our boxing weight class, meaning we look at our loan sizes relative to our shareholder equity, and make sure that the concentrations never gets so large, that if you had to move an asset that was not performing up to its business plan, that it would not affect the entire balance sheet of the company. And so we have made sure that our average loan sizes were small enough and granular enough so that we can move loans around. We do have stuff that is still weighted in risk ranking four and five. We do expect to see some movement there in the future. We have some assets that are in the risk rank five and mez loan on a hotel in New York City that’s actually doing quite well right now.
