Michael Sarner: And also the cash — the PIK-Pay toggles are generally only for a few quarters. Those are not indefinite for the loan. So, those will either roll off because they’ve reached the end or they will be choosing to take a lot of cash along the way.
Erik Zwick: Got it. And then one just last one for you. You seem fairly optimistic about the opportunity to make new commitments and fund new loans, at least for the next quarter. So, wondering if you — as you look at the pipeline, if you could just provide a little commentary, is there any commonalities in terms of kind of the industries where you’re seeing strength today, or is it more broad-based at this point?
Bowen Diehl: It’s pretty broad-based. It’s an interesting question. It’s pretty broad-based. The activity is pretty robust right now, which is a good thing. The vast majority as we talked about, the vast majority of our business is family-owned, entrepreneur businesses that are selling to private equity firms, that are buying controlling interest in the business and heavy rollovers from the founders situations. But it’s pretty broad. The other thing — the other thing is we’ve got a decent amount of add-ons going on in the portfolio, too, which is kind of a steady drumbeat over the last several quarters and should be continuing in the future. I mean just add-ons are probably one-third of our originations on kind of a regular basis. And so the activity this quarter since quarter end is definitely on the new platforms but it’s also up as well.
Michael Sarner: And that’s been a trend. We’ve seen that over the last probably four quarters. And I think the portfolio of the size it is today, we expect that to continue.
Bowen Diehl: Yes. Aspect of the business model. I mean these prime equity firms buy a controlling interest in the founder or family-owned business and the family — our founder rolls over a big chunk of their equity to the business, as we talked about. And then one of the things that the founders and families like is the ability to then have a private equity firm by three or 4 of their competitors. And it’s one of the reasons they want to roll over and keep that equity in the business because of the accretion and opportunity that entails. And so because that’s generally a nature of our deal flow, we should expect to continue to always kind of see a meaningful amount of add-ons. And that’s great because it’s additional credit commitment in businesses that we know. It’s not new platforms that we have to learn about. But it’s business we know, we’ve seen performance. And so it’s a very attractive portion of deal flow in journal.
Michael Sarner: And these are generally not delayed draw term loans, i.e., we are doing diligence on these add-ons to making a new investment decision.
Bowen Diehl: Yes. That’s right.
Erik Zwick: Yes. Sounds great. Makes of lot sense. Thanks for taking my question today.
Michael Sarner: Thank you.
Operator: Thank you. Our next question comes from the line of Vilas Abraham with UBS. Your line is open.
Vilas Abraham: Hey, everybody. Just one for me. You guys mentioned in your prepared remarks, competition coming back, where it was about 12 to 18 months ago. Can you just give a little bit more color on the nature of that competition and how you think that translates into a spread over the next few quarters?
Bowen Diehl: Yes. I mean the competition has definitely strengthened the market. It’s just a reflection of just overall health in the financial markets. It is mainly from non-bank lenders. But it’s kind of like I said, it’s kind of back to where it was 18 months ago, which is competition we’ve been dealing with for eight years. So it’s not really necessarily new players. And so I feel pretty good about the spreads. I mean, kind of where they are this quarter is kind of where they’ll stay. And so it’s not like they’re tightening to a point where we have an earnings issue or anything like that. It just I wanted to express that for the last several quarters, I mean, the competition has been lighter, and it’s starting to — it’s coming back, which I don’t necessarily think the bad thing.
We’ve certainly — based on our cost of capital and our institution, we can compete fine for quality deals and so and generate nice risk-adjusted returns. But — but I would say spreads are kind of where we should expect them to be kind of the next few quarters.
Michael Sarner: Yes, we actually looked at like the last 12 months, we had 24 deals that closed, and the spread was essentially $750-ish but the last nine deals of September have been just a little over 700 and the LTVs for the whole year were around — well, in the first half of the year were 25% to 30% and the overall is around 30% now. So we saw maybe the LTV is kicking up to 35% and 40%. So it’s just things — I think Bowen is correct, it’s about where it usually is. It was significantly lower for a period of time.
Vilas Abraham: Got it. That’s it for me. Thank you.
Operator: Thank you. I’m showing no further questions in the queue. I would now like to turn the call back over to Bowen Diehl for closing remarks.
Bowen Diehl : Well, thank you, everyone. As always, we enjoy talking about our business, your business and your questions. And so we appreciate everybody’s time and look forward to continuing to give you all quarterly updates.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.
