Steve Delaney: Good morning and thank you for taking my questions. I wanted to ask about loan sale activity. We’ve observed that Claros and TRTX, TPG, have been the two commercial mortgage REITs and most active in this market. And it’s — so I wanted to ask about that. The $172 million, Mike, that was on the books at March 31, how many loans does that represent?
Richard Mack: That is, it’s two loans to the same sponsor on some separate pieces of cross-collateralized, so.
Steve Delaney: Okay. And then you sold three in the fourth quarter, I believe, as well?
Richard Mack: We put three loans. No, I was going to say we put three loans into the loans held for sale, wellQ4. And then we view this other one that we completed the sale in April that’s in loans held for sale at the end of Q1 to do that as sort of one loan, even though it’s two loan, same sponsor cross-collateralized.
Steve Delaney: Got it. Next question is — this is a bit of a new topic in the — as part of the asset management, it’s part of working through the problems, and I guess working through this down cycle that we’re in, in real estate. But if you could just offer your observations, having done this for you and Richard for many years, how deep is this loan sale market? And who are the buyers? Are they credit hedge funds — or are these real property investors that are looking to use a loan-to-own type of strategy to acquire attractive properties for investment. I just appreciate your big picture thoughts on that topic?
Richard Mack: Sure, Steve. You want to go to it, Mike?
Mike McGillis: You can go ahead, it will be the same.
Richard Mack: Okay. So I think it’s a combination. There’s many different buyers. As it relates to loans that we’ve sold kind of very close to par and there’s been quite a bit of them, or at par. Those are primarily hedge fund type of buyers who really are having a hard time trying to play what they view as a very — as a distressed real estate market because there’s not as much to do in the market as one would expect. As it relates to certainly, the sale that we just made at a significant discount. That was to a family office with a development — with a developer in tow and their feeling is this is a way to get into an asset at a significant discount, understanding that they’re going to have to cut through quite a bit of hair to make that happen.
So I think that there are a lot of people out there searching for really high returning opportunities, and in a market where there’s very little transaction volume, we’re just — they’re just not that much distress out there. And so the market feels quite deep relative to the product that’s available. I think if more assets were available for sale, that might feel a little bit different. But right now, there does seem to be adequate, if not extensive demand to buy loans, whether they be kind of at relatively large discounts or at par.
Steve Delaney: That’s very helpful color. And probably the most encouraging comments I’ve heard about the capital flows around commercial real estate and the commercial mortgage REITs in some time. So I appreciate the opportunity to discuss it and thank you for your comments.
Richard Mack: Thanks Steve.
Operator: Our final question comes from Jade Rahmani with KBW. Your line is open. Please go ahead.
Jade Rahmani: Thank you very much. On the Connecticut office loan totaling $150 million, could you please give an update? It was originated before COVID. So presumably, the underwriting did not factor in today’s environment. Additionally, the maturity date was in February of this year. I was wondering also it’s $150 million, so sizable loan, which would suggest it’s in a large market, perhaps Stanford, Hartford, and also if you could comment on what’s going on with the leasing of that asset?
Priyanka Garg: Yes. Jade, thank you for the question. It’s Priyanka, I’ll take that one. So — it’s in — it did mature during the quarter. We are very close to extending that loan. There’s a lot going on at the sponsorship level where I don’t want to disclose too much, but there is a transaction coming down the pike. So are — our modification with the borrower is likely to be a short-term one, followed by then a more significant modification after that, depending on the status of this transaction that I’m referring to. That said, it has — leasing clearly has not been in — on par with what was originally underwritten. That said, they have done a very good job of retaining tenants. Tenants are very happy in the assets and are renewing leases, albeit short term, so the WALT has not been as attractive as we would like to see.
But I think that the most important global comment I can make here is that there’s a tremendous amount of credit support here, primarily in the form of repayment guarantees from creditworthy loan bodies. So it is a large loan, we’re very focused on it, but the sponsor has not done it as well for the reasons I just mentioned.
Jade Rahmani: And are you able to indicate which market it is?
Priyanka Garg: It is — it’s in Stanford.
Jade Rahmani: Okay. What about other upcoming 2024 maturities. It’s quite a number of large ones like the New York condo loan. One of your peers had some issues in that segment, specifically the higher end of the market. There’s also New York land loan and on the California hospitality?
Priyanka Garg: Yes. So I’ll just speak broadly about just the maturities that we’re seeing coming. Most of 2024 is there is very few initial maturities and — sorry, final maturities. And so on those final maturities, we’re in this — we have a path to pay off here for many of them. We understand the transactions that our borrowers are working on. And we also have line of sight into modifications with some of those where we’re going to need to extend beyond that final maturity date. In terms of our initial maturity dates, more than half of those loans are going to meet all of their extension tests as of right. So, we’ll have to do a few modifications. We’ll work with borrowers, going back to Mike’s comment, if they’re willing to put some capital in and they have the operational expertise.
We’re going to work with the borrowers. We’re not in the business of owning these assets, but we’re happy to modify them for the right, right transactions. In terms of some of the specifics that you mentioned, there are no — we don’t have any high-end condos in New York City. There’s a very small condo New York City condo loan that has maturity in 2025 that was extended, but we feel very good about our exposure on the condo front in aggregate.
