Michael Mazzei: Well, I think that we’ve had a policy in the past. I know that we’ve had a policy in the past. We want to maintain minimum cash. We really we have a revolver and we really have never tapped the revolver and we don’t look to doing that. So I think in terms of minimum cash, it’d be probably something like circa 100 million bucks in this market. I think previously before the Fed’s hikes, we were looking at more like 75 million. So I think we want to have a little bit more cash because of the uncertainties I outlined earlier. And as I said, there’s a lot that we can tap into. Certainly the REO, our largest asset is also probably the least levered asset on our warehouse lines right now. So if that asset resolves itself, which we expect, then we should free up capital there that we can re-lever.
And then overall, our leverage at 1.8 times is among the lowest in the peer group. Some folks are hovering around mid-twos. Some folks are hovering in the fours. We’re at 1.8. So we have to figure out a way to level up the portfolio. Some of that will be by just doing new loans and putting 75%, 80% leverage against those. So right now, $200 million of cash. Hopefully we’ll harvest some of this REO over the next several quarters and be able to redeploy that, get resolution on our largest loan, which is very under-levered. And I think minimum is probably something about maintaining about $100 million cash on the balance sheet, at least through the early parts of 2025.
Matthew Erdner: Yes, that’s helpful there. And then in terms of new loans, are you guys kind of scouting out or looking at some deals in the marketplace, even though you might not take them until second half? And if so, what’s kind of the asset type and geographic region that you guys want to target when you do go back on offense?
Michael Mazzei: Yes, I would say that the periscope is up and we are looking. Absolutely. We’ve been attending all the conferences. Our originators have stayed in contact with their constituents and are actively involved in getting color on the market today. I think much like some of the other guys in the peer group have stated, we are focused on multifamily hotel and not really office. It would have to be a very, very unique opportunity for us to be involved in putting on an office asset. And we would need our bank lenders. It would have to be such an opportunity that our bank lenders would have to agree with us and they’d want to finance that. The CLO market, we’ve seen all multifamily come through to date and that’s a great vehicle for financing.
That’ll guide us to doing more multifamily as well. I think that the opportunity is going to be construction. The banks, as I said, normally did the mini-perms. I think the banks are going to be running away from that. In terms of region, everyone talks about the oversupply in the Southeast and Southwest, but I would still say that there are certain states that are doing the best that they possibly can to chase residents out of the state. We think that’s going to actually continue. As long as that continues and we’re seeing quality of life issues and budget soaring in some of these states, we think, and taxes potentially going up, while there is supply that is in the Southeast that everyone is talking about, we think over the horizon, as Andy said in his prepared remarks, you get out 18 months, the pipelines really dissipate.
We think those regions of the U.S. are still the best regions to lend in. Not to say that there won’t be pockets that you’ll do in other areas, but from a macro perspective, the South side is better than the North side.
Matthew Erdner: That’s helpful. Thanks for taking the questions.
Operator: Thank you. I would like to turn the call over to Mike Mazzei for closing comments.
Michael Mazzei: Well, thank you all for joining us today and we look forward to speaking again in May where we hope to make some progress on the items that we outlined. Thank you all for joining.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.
