The 3-rated loan that we sold, that was just more opportunistic, right timing. We were able to sell it at par. It created liquidity. We’re not out in the market actively marketing it. That was not marketed. That was just kind of based on a conversation with a counterparty with whom we do a lot of business. So again, it was just opportunistic and situational, but there is no programmatic strategy here on loan sales.
Sarah Barcomb: Okay, appreciate the comments.
Operator: Thank you. The next question goes to Rick Shane, of JPMorgan. Rick, please go ahead. Your line is open.
Rick Shane: Thanks. Can you guys hear me this morning?
Richard Mack: Yes.
Priyanka Garg: Yes.
Richard Mack: Yes. Thanks, Rick.
Rick Shane: Okay, great. Sorry, this question won’t really come as a surprise to anybody who has been listening to these calls, but would just love to hear a little bit about combination of dividend policy and appetite for repurchases. I am assuming that the loan sales were contemplated when you reduced the dividend for the third quarter and going forward, but all things considered and with the stock trading at such a huge discount, does that dividend policy makes sense, or should you be more aggressive on the buyback? And I would just observe that you guys own on a relative basis a great deal of stock compared to many of your peer companies. So, I think the incentives are pretty aligned.
Mike McGillis: Sure, Rick. It’s Mike. Thanks for the question. I think from a dividend perspective, in terms of the decision to reduce it, it wasn’t so much tied directly to the decision to sell this loan, but it was really looking at our portfolio, looking at distributable earnings profile on a go-forward basis assuming there was going to be some potential deterioration given a higher for longer rate environment. And we are trying to be proactive in making that dividend cut to reflect where we thought distributable earnings before any net realized gains and losses would be on a forecasted basis and allow us to substantially cover that go-forward dividend, given the situation that we would significantly overpaid our minimum distribution requirements under the REIT rules.
So, that was – those were all critical elements of that decision. With respect to share buyback, I think right now liquidity is key. We really are focused on preserving and maintaining liquidity and protecting the portfolio in this environment, even though we have the ability to buy back shares. I don’t expect that we would say never, but I don’t expect that we would do it unless we were really, really comfortable that we had a lot of excess liquidity. And that was the best use of capital relative to redeploying into what we think is a very favorable market right now, but we are being very, I think conservative. I think it’s also to keep in mind, we do have, as Jai mentioned, significant future funding commitments on our existing loans, which we are very comfortable with the performance of that portfolio.
And it’s important to highlight that those loans have a weighted-average spread to SOFR of 473 basis points over SOFR. So, in excess of a 10% current coupon unleveraged, so that we feel like is a very good use of excess liquidity as we have it. So hopefully, that’s responsive to your question.
Rick Shane: It is. That’s helpful. And when we think about those undrawn commitments, the comment had been made that multifamily development in a lot of cases has really stopped. Does that suggest to you that in the near-term the draws against those commitments will be relatively modest? And so there is a little bit of a – that liquidity won’t be drawn until the environment improves a little bit? Is that the sort of check and balance there?
