Operator: The next question comes from Stephen Laws with Raymond James. Please go ahead.
Stephen Laws: Patrick, I appreciate the comments on the loans. I may have missed it, but could you give us an update on the Minneapolis office and what the outlook is and options there?
Patrick Mattson: Sure, Stephen. Good morning. So, we didn’t have any comments specifically on that asset, not too much to report from last quarter. As you know, we’ve done the modification. That asset on the new senior rate covers. We’ve got lease term in place for some considerable duration. And so, — and that loan’s got term through 2025. So, no real update. We continue to actively work on that asset, particularly just on — around of some of the leasing activity, but no sort of further updates on the market.
Stephen Laws: Great. And can you talk a little bit about the restructuring for the modification process? I think if I’m looking at my notes correctly, maybe one received a short-term extension. I think it was three years, so maybe on the restructuring on the new senior. Can you talk about the considerations that go into how much additional duration you’re willing to give? Is it certain property types, certain borrowers, certain business plans? Can you maybe talk a little bit about how the modification and restructure discussions are going as you look at what six or seven loans left to address?
Matt Salem: Sure. Stephen, it’s Matt. I can jump in there. I would say, first of all, as you’re highlighting, every modification or negotiation is very facts and circumstances dependent. And a lot of it is related to what your borrower is willing to do, obviously what the occupancy and cash flow is at a particular asset, et cetera. Where we’ve given longer term is — that typically is around a more holistic solution. Where you’ve got a committed sponsor, there’s typically dollars coming in the door to delever us at times in conjunction with us writing down or subordinating some of our mortgage to induce that payment and get to a capital structure that makes more sense. And our sponsors can then lease — have a lower basis and lease from that new basis.
So, that’s really what it comes down to. When you see short term extensions, that’s just a way for us to try to effectuate a broader, either modification or loan sale or foreclosure or typically we’re in the middle of just effectuating something else, and we need a little bit more time. So, I kind of think about it as the longer terms or you’ve basically reached a resolution to that loan, at least in the intermediate term and then any of these short term ones as you’re trying to get to that moment in time.
Operator: The next question comes from Don Fandetti with Wells Fargo. Please go ahead.
Don Fandetti: Hey Matt. Can you talk a little bit about your thoughts on multi-family credit? If the Fed has to raise, let’s say another 50 basis points, is that a manageable situation?
Matt Salem: So, I think that taking a step back, even beyond multifamily, obviously this rate environment, as we mentioned in our prepared remarks is creating a lot of pressure on values, pressure on sponsors and you’re going to need a lot of liquidity to carry these assets through. As it relates to multifamily, specifically in our own portfolio, we haven’t seen any real challenges yet from the rate environment on that component of the multifamily portfolio. We’re watching it closely and certainly understand that the longer this period goes, obviously the more stress or pressures is in the system. But I’d say, right now, we’re not really seeing it within our own portfolio. I do expect over time taking a step out of KREF, but just broadly in the sector for floating rate loans secured by multifamily to have some issues, especially if you have a sponsor that doesn’t have a lot of liquidity to carry the asset through to a more or a lower interest rate environment.
