That to me is always my crib and a fallacy in the sense that if there is equity to protect, they will act in their economic interest and protect it. And you have to have eyes wide open when you are making the loan. And you have to have eyes wide open when you are asset managing the loan as to what you think those borrowers will do. So, in terms of strategic defaults, we just think borrowers are going to act in their own self interest. And you are really not a prepared lender. If you are not on the other side of that, expecting the borrower to do so as you game theory out the outcomes. We have got a number of situations here. For instance, in Long Island City where we have cooperation agreements with the borrowers to work with them on trying to use them and help their assistance and their knowledge of the asset to have a more seamless sale.
So, we will cooperate with the borrowers, and then maybe some concessions that you make with them in doing so. But that’s all part of the €“ it’s whole part of the alignment and trying to maximize the financial return. So, this whole notion that people are doing that just to see what the lender will do, I honestly think that in some scenarios, most scenarios, this is reality, some lenders are unable to get refinancing. And they are looking €“ borrowers are unable to get refinancing, and they are looking to their lenders for assistance. And I think that’s going to be the case for the next 12 months to 24 months.
Jason Sabshon: Got it. Thank you. So, as a follow-up to that, just more generally speaking about the market, are there any particular asset types or geographies where you are particularly concerned about credit, other than office, which has really been at the forefront?
Mike Mazzei: Look, I have been listening to the calls that have happened prior to us and Jade has made reference to certain markets where we are finally starting to see development going on in these southern markets that have experienced some neck breaking rent growth. And while we do recognize that, that there are rents that are potentially going slightly downward in areas like Phoenix, for instance. When you look at markets like that, multifamily in Phoenix probably has roughly 40,000 plus or minus 50,000 units under construction right now. But they have got a population growth that is surging still. And right now population in the larger Phoenix market is probably 4.5 million, 5 million, and it’s expected to grow over the next several years to something like 7 million.
And so when you look at the number of units under construction versus the population surge, we still think that those markets are better markets to land into, albeit while there is some supply coming and albeit some softening of rents temporarily. On the other side of that there are markets that we would avoid. And I hate to single out a state, but we will not lend in the State of Illinois, because the migration out of the state is high. It’s reaching a tipping point in terms of corporate real estate and personal income taxation. And the services that the state is offering, and certainly the City of Chicago, that are offering are diminishing in the light of a shrinking population, and growing tax burdens. And so it becomes very difficult to make a loan, where when you are looking ahead 5 years, you are saying the population is going to be several percentage points lower.
