Rick Shane: Got it. Look, I appreciate having a very imperfect crystal ball. I certainly struggle with that as well in terms of what we do. From a mechanical perspective, look, I appreciate that the intellectual integrity of when you restructure the loan, creating a subordinated loan and writing it off immediately, as opposed to sort of carrying that on balance sheet and sort of extending and pretending. If and when you are to take possession of properties, do you — would you, generally speaking, expect to realize losses then, or does it get deferred further as part of that resolution?
Patrick Mattson: If we go to title, we would take realized loss at that moment in time, based on an appraised value.
Operator: [Operator Instructions] The next question comes from Steve Delaney with JMP Securities. Please go ahead.
Steve Delaney: I apologize, I was on mute. I was to say good morning and congratulations on this Chicago office loan workout. It’s not one that we had on the watch list loans of 4 or 5, but it’s nice to avoid a potential problem down the road, which is why I assume you took that action. Leads us to the discussion, Patrick’s comments about the Washington DC loan that is being reworked that that may be a fourth quarter item. In that rework — and I know you’re limited probably in what you can say, do you anticipate that that — reworking that would involve in any kind of a write-off to KREF as you put a new facility in for the borrower?
Matt Salem: Yes. So, two comments there. Thank you for joining today. Just one — just to clarify, the Chicago office loan where we received a $15 million pay-down and then $15 million subsequent write-off on our loan — subordination and write-off, that was a 4 rated loan. So, that is one of the watch list loans that…
Steve Delaney: Correct. That was watch list loan.
Matt Salem: So I just want to make sure, that was clarified. And then, on the Washington DC loan that you’re highlighting, it’s not our anticipation that there would be any kind of write-off or consideration in conjunction with that modification.
Steve Delaney: Just as a side comment, it would be great. I know there’s legal issues with all this, but like the Chicago item of $0.22, I mean, we could argue whether that’s material, it’s certainly not with respect to book value, but I’d just ask you to consider like an 8-K when you have one of these workouts. One, it shows progress; and two, it gives the analysts a chance to go quickly, go in and update an estimate before we get to the earnings call. So, just a request, and we can follow up offline on that. So no write-down expected on DC, Matt, you had comments about rates and sort of the strategic thing. The Fed has kind of signaled late last week that maybe they’re done, not — there’s never done forever, but it feels like they’re saying the bond market is at 5% has kind of done their job for them.
I’m just curious if on the private equity side of KKR, if in fact there’s a consensus that this is the peak of rates and that they have nowhere to go but down over the next one to two years, wouldn’t that encourage some flows of private equity and strategic money coming into the U.S. commercial real estate market, once we get the Fed — get its foot off the throat of the market? Just curious, what the connection you might see between where we are with rates and the rate cycle and the hope that some capital will flow into U.S. real estate? Thank you.
