Matt Salem: I would say, yes, we anticipate that once we get through this rate hike environment and the market understands where that’s going to settle out, that transaction volume is going to pick up. I would say that’s not just in real estate. I think we’re seeing that across the broader KKR complex including private equity, corporate credit infrastructure. So, it does feel like we certainly could be moving into somewhat different market environment as it relates to, again, transaction activity and acquisitions. At the same time, I think we’re seeing good progress overall in the market as overall just in terms of capital coming into the system from different fundraises. I think the market — everybody understands that there’s some — there’s going to be a pretty good opportunity in commercial real estate over the course of the next year. So, that just broadly is a consensus and you’re seeing capital formation around that.
Operator: The next question is a follow-up from Jade Rahmani with KBW. Please go ahead.
Jade Rahmani: Thank you for taking the follow-up. Just on CECL, in the third quarter, the economy performed really well, including on the employment side. That’s a tailwind for the CECL macro component. In 4Q, things should slow and we also have the treasury rate spike. So, do you think that alone drives an increase in just the macro component of CECL in the fourth quarter?
Matt Salem: It’s Matt again. That’s a tough one, Jade. I would say it’s hard to predict what the macro output’s going to be at this point and how those different paths look. And part of the model is not just macro in terms of GDP, employment, interest rates, it’s also CRE prices, which have adjusted a fair amount, as you know. So, it’s difficult to say, certainly could happen, but it’s not something like we spend a lot of time thinking about or forecasting in terms of like what the next macro modeling CECL reserve is. I think we’re much more focused on loan by loan, outcomes from an asset management perspective and what we can control.
Jade Rahmani: Thanks. I just have a office question. In the third quarter, there were definitely some green shoots in leasing within certain markets and also within a subset of best in breed type properties. Some landlords also have said they’re going to moderate TIs and it looks like there’s a little bit of relief in our tracking on free rent. How would you characterize the major office trends you’re seeing?
Matt Salem: Well, I think that the numbers you’re referencing are likely a better indicator of what’s going on in the broader market, because we don’t have that big a portfolio. And there’s only really a handful of sold assets that we’re focused on there. I would say that our general impression across our assets in the office space is that the leasing environment has been better than the capital markets anticipates that there is demand for office. And while it’s costly, it’s not uneconomic at a lender’s basis. So, that’s where we — our general impression has always been that things are a little bit better than people think.
Jade Rahmani: Thanks for that. And then a technical question, when I look at the slide deck, it shows $152 million of repayments, but the cash flow statement subtracting the nine months from the six months implies $43 million. Is the difference timing related or something else?
Patrick Mattson: Jade, it’s Patrick. That has to do really with the Oakland partial pay-down that Matt had referenced. On that deal we originated a whole loan, sold a first mortgage and we retained a mezz. So, that difference is due to the fact that we own a mezzanine loan. And so, while we’re showing that pay down reflective of that full loan balance, the reality is we just own the mezz portion.
