Phillip Kardis: Yes. So this was a significant facility for us in terms of our desire to refinance it. It was a longer-term facility that allowed us the ability to refinance after a year. And given where we were able to find financing, it makes sense for us to do that now. I think we’re just on some of the particular terms, since it was post quarter end, we’ll have some more detail in our next statements that will go through that. But it is a limited mark-to-market with a cap on the rate, and this is where we think the savings will come from since it’s significantly below where we were financing. As far as other opportunities, right now, the market has been functioning normally. We’re able to roll that really in the next, what I would call, high-cost facility. That refinancing opportunity will be coming in early 2025.
Operator: Our next questions come from the line of Bose George with KBW.
Bose George: Actually, what’s the incremental ROE on new money you’re putting to work? And when we think about the existing returns, how long — if rates remain stable, when does that roll kind of into the new ROE? And I guess part of it, I guess, is the cost to fund the maturities you’ve been talking about. But just to kind of think about the returns on this portfolio, if rates essentially remain stable.
Subramaniam Viswanathan: So the current portfolio — this is Subra. Thank you for your question. So the current — in my prepared remarks, I mentioned that the current economic — net economic returns on our portfolio or ROE is about 10.4%. Now that’s excluding hedge expenses or excluding other administrative and other G&A and comp costs for us, right? So the 10.4% is what we are seeing, and that is on this high rate environment. Obviously, if you buy assets which are yielding higher than what we have today, that 10.4% is potentially going to grow. That’s where we are.
Bose George: Okay. And then actually, in terms of the sort of getting to a more normalized ROE, then does it really kind of depend on rates coming down or just restructuring some of the liabilities over time? Just trying to think about ways that this gets to — on a net basis to a double-digit ROE.
Phillip Kardis: Yes. Sure, this is Phil again. So as I mentioned, we had one really high cost facility that we were able to refinance, and the next one is not until the first month or so of 2025. So I think really the financing abilities in terms of restructuring high costs, we’ve done a chunk of that already. The rest of it is going to come from some rate moderation.
Operator: Next questions come from the line of Eric Hagen with BTIG.
Eric Hagen: Sorry if I missed this, but did you guys say what your current book value was through October? And then going back to the liquidity, I mean what’s the right way to think about just the incremental liquidity that’s being generated like on a monthly or quarterly basis just based on paydowns, just natural kind of CPR?
Phillip Kardis: This is Phil. On the book value since the end of the quarter, I’m going to turn that over to Dan Thakkar.
Dan Thakkar: Yes. So I think in the investor deck that we released last night, we had stated roughly down to 3%. But given the strong rally that we had in the rates market post the Fed, we are closer to down being 2% versus 3%.
Phillip Kardis: And then I think you asked relative to paydowns. Is that correct?
Eric Hagen: Right. Yes, just a way to think about liquidity that’s being generated sort of incrementally just through kind of natural paydowns.
Phillip Kardis: So I think right now, the portfolio is running around 6 CPR in terms of kind of where the paydowns are coming. I hope that’s helpful to you.
