So that’s really what was driving those the two office and the two hospitalities, it wasn’t any sort of specific borrower behavior. On your second question, on non-accruals, yes, it of course it increased to 4.8%. It’s the four loans, two the same as the prior quarter and the two that it got added, or the same five rated loans that Jai mentioned that have the specific CISO reserves. In terms of looking forward, again, we’re cautious. Borrowers are dealing with a very challenging environment. We’re really cognizant of that. We’re working with borrowers. So I can’t say either way what’s going to happen, but I will say that there’s several reasons that we feel very good about the strength of our portfolio composition. Number 1, our office exposure is only 15%, which is I think the office is the one sector where we think there might be a real fundamental shift in values, and our exposure there is limited, and it’s limited really to office stock.
That’s non-commodity, which we feel better about. The second point I would make is the same point Mike made, which is 60% of our exposures in the multi-family and hospitality sectors. And Mike went through that, and talked about how they’re performing quite well. So we feel good about that and as a defensive posture in this environment. And then the third point I would make is that third of our portfolio is construction. So that means that sponsors are going to have best-in-class real estate upon completion, which means that we’re going to fare better in an uncertain environment, and it reduces our risk on repayment. So put all of that together. It’s all borne out by borrower behavior. They’ve been protecting their interests, they’ve been doing everything that they’re supposed to do in the loan documents, funding debt service shortfalls, rebalancing, construction loans purchasing the replacement rate caps we just discussed.
So to me that means that sponsors believe in their long-term business plans. So while we’re cautious and I hesitate to make a statement either way, and where non-accruals go, we do feel good about where the portfolio stands today.
Operator: Our next question is from Jade Rahmani from KBW.
Jade Rahmani: Reviewing the multi-family exposure, there’s quite a lot of loans in some of these high growth markets, which will have extremely elevated unit deliveries over the next probably 18 months, including Colorado, Arizona, Texas, Tennessee, Utah. So just wanted to see if you could provide an update on that exposure, as some of those loans were potentially originated during sort of the peak frothiness of the market.
Priyanka Garg: Yes. Jade, it’s Priyanka, I’ll take that. We’re very focused on exactly the risk that you’re pointing out. We’re certainly seeing negative rent growth. The pace of growth is swelling, but we’re still seeing positive trade outs. So the assets in those markets are also generally catering to a less transient population. So we’re actually seeing our borrowers greatly benefiting from higher retention rates. I think in an uncertain environment, people are less likely to move. And of course, home ownership, you know, has become a little bit more out of reach for people as rates have risen. So that’s helping our borrowers really maintain and focus on economic occupancy. That said, the long-term thesis there in many of those loans that were made in the markets you mentioned were really about investing a little bit of capital and moving it from a Class B asset to a Class A asset.
And we think that the borrower still continues to believe in that long term thesis. And that’s been borne out by the fact that a lot of those same assets had interest rate, or sorry, had interest reserves. And so those have required replenishment given the, you know, pace of increase of underlying rates. And borrowers have been replenishing those. So, so we think that while the growth is certainly slowing, borrowers are continuing to believe in their long-term thesis. Richard, do you want to jump in here?
