Christopher Muller: Got it. That’s helpful. And it sounds like we could see another possible sale or two this year. So we can read between the lines there. I guess the other question I have, it looks like cash balances picked up a little bit quarter over quarter. Was that just related to the timing of redemptions or are you guys trying to build a little more liquidity? It was largely the result of redemptions. We had roughly $120 million of debt investments that redeemed during the quarter, which net of the related tob financing that got paid down was a significant increase in cash during the quarter, which we’ll look to deploy here into our investment commitments in the next, probably one or two quarters.
Operator: The next question comes from Steven laws with Raymond James. Please proceed. Hi.
Stephen Laws: Good afternoon. Appreciate the commentary so far. Ken wanted to circle back. You talked about the higher rate and just kind of impact that was having on bars and developers that you work with. You know, can you, can you talk a little bit more about that as far as discussions and that impact, you know, is it, is it stabilizing rates as opposed to this up 50, down 50 every three months that we seem to be seeing? Is that more helpful or do you know, is there some magic number of rates going back to four and a quarter or four or lower that they really need? Kind of. Can you talk a little bit more about the stress they’re experiencing and what, what rate environment would benefit them?
Kenneth Rogozinski: It’s a combination of factors, I’d say, Stephen, the first is if you look at the normal capital stack of one of our new construction 4% lihtc transactions, you not only have the debt, but you have the value of the equity that they’re syndicating there as well. And so as yields in other markets, those low income housing tax are going to be looking to achieve higher yields as well, which translates into lower pricing making the sources and uses harder to foot because getting less dollars coming in the form of equity of credits that should otherwise add. So I think that’s one area where just the overall level of rates is having that negative impact because of, of how tax credit investors are pricing. The other thing is the level of rates that we see, for example, the Freddy tell forward perm loans that are part of our financing structure.
Higher rates there are translating into lower perm loan proceeds for sponsors, since in our experience, most of the deals end up being debt service coverage constraint from a perm loan underwriting perspective. And so you have lower permanent sources of capital there as well. And so if developers get this squeeze of lower perm loan proceeds, lower liHTC proceeds, their normal solution to that is deferring more of their developer fee. At some point in time, you hit the limits of the ability to do that based on the tax parameters and what the state housing finance agencies have as their criteria for deferred developer fees. So it’s really a combination of all of those factors. Generally, no surprise lower rates would be better for them. But kind of this 50 basis point trading range on the ten year that we seem to be stuck in versus the Fed cutting rates on the short end of the curve.
I think everybody would love to see lower construction financing costs, but quite candidly, we don’t see a lot of our project sponsors, particularly on the low income housing tax credit deals, doing floating reconstruction financing because their tax credit equity investors don’t like seeing that risk in the transaction. So, a long answer, but I think generally overall lower that I think will ultimately translate better dynamics for the industry. And I think we’ll just have to wait and see that if and when these first round of fed happen this year, what the market reaction, whether we see kind of a breakout from this trading range that we’ve been into.
Stephen Laws: Great. Appreciate the comments on that. Ken. I wanted to touch on in this higher rate environment with multifamily cap rates moving a little higher. I know you’ve mentioned you don’t control the sale on decision on these assets, but when you talk with Vantage, do they look at, are they in the business more to recycle capital and they want to look at exits to fund their next development? And you mentioned how it’s an attractive time to start those given deliveries in three to five years? Or do you think any of these assets Vantage would look at it as holding for a couple of years, just given to look to sell into a more attractive cap rate, environmental, multifamily?
Kenneth Rogozinski: As you said, Stephen, the decision is there. It’s not something that we control, but their business model historically has this merchant build strategy. They’re not really long term owner operators of these assets. So speaking only from our perspective as their limited partner on these deals, I think our expectation would be that that business format continues. We really don’t have a mechanic within our operating agreement that would, that would allow for them to sort of opt to switch to a long term hold. So I believe that from our perspective, the strategy would look to stay consistent going forward. And I think the real value that can be added in this process is called the, the maximization of gross rent and fine tune the projects as they get rig for sale, but also looking for a potential different investor class to buy these assets.
We’re not necessarily focusing on the same family office or 1031 exchange investors who may have historically been purchasers of our projects look at either nonprofit purchasers or purchasers or people who have access to different sources of capital that might not be pricing the same way that bridge loan financing might for your typical for profit institutional owner.
Stephen Laws: Great. Appreciate that color. And one final one. You mentioned now being a good time potentially to continue to, to build out additional JV multifamily. Do you think you’ll do that with the existing sponsors? You know, it was vantage for a long time. You added, you know, Freestone, Camden, you know, ISL on the senior living, you know, do you think the, you know, future deals will be with your existing partners or are you looking to expand the partners you’re working with as well?
