In terms of supply, agree, there is a wave coming out right now. And I think that’ll impact some of these some of these local growth markets. But at the end of the day, all these markets are under housed. And so, it really is just a short term phenomenon in terms of digest, the market digesting those new units. And keep in mind, there’s very little behind that. There hasn’t been a lot of new construction financing available in the market over the course of the last six months or so, and certainly not readily available today, either. So you’re going to have a little bit of a blip, probably as the market goes through that. And then, it should be a pretty favorable setup after that, with the new supply really tapering off. So I would say overall, still very constructive on that market, and haven’t really seen any material signs of deterioration there.
Jade Rahmani: Thank you very much.
Operator: Our next question comes from Eric Hagen of BTIG. Please go ahead.
Eric Hagen: Hey, thanks. Good morning. I’m curious how you think your appetite for risk, maybe changes as a result of raising your reserve. Like, should one expect the parameters for your target assets to necessarily change? And is there a threshold for further reserve where it does begin to change your risk parameters more meaningfully?
Matt Salem: And Eric, you’re speaking about this new loans that we’re making in terms of how we’re evaluating like the current market, et cetera.
Eric Hagen: Exactly. Yep.
Matt Salem: Well, yes, let’s just start. Let’s start there. The one — number one, it’s a very lender friendly market right now. You’ve got a lot large participants completely on the sidelines. Commercial banks are still not actively lending in the market. Your loan-to-values have come down a fair amount, obviously, the we in that equation is down with the current interest rate market. So, we like the market right now. We think it’s very attractive. And you could see what we did last year, the vast majority of our lending activity was in multifamily industrial sectors, which we still believe in the fundamental backdrop there, as I just described with Jade. So, I don’t think that really like what we’re looking at like, or reserves or things like that are really impacting how we’re thinking about making a new loan are what we would focus on.
Some of it does come back to liquidity. And we are — as you saw in our report at pretty high levels of liquidity right now. And I think that’s more of a function of just the market uncertainty and the volatility that we’re seeing in the market, and just making sure that we’ve got plenty of excess liquidity to deal with any issues that may come up. And I think it’s a little bit less about reserves. But one of the reasons why we’ve been so front footed and trying to work out some of these loans, and you saw the modification we did this past quarter. Once we get through this, there should be a pretty good opportunity to lend on the other side of that. So, probably less about reserves and more about just watching the liquidity and working through a couple of these loans that we got a 5 rated loans.
And once we get through that, I think you that will really kind of change some of our posture in the market as relates to taking advantage of the current market opportunity.
Eric Hagen: Yes, that’s really helpful. Maybe you can share some of the things that you’re seeing from your seat at KKR more broadly about the flows of capital into commercial real estate. how much capital you see getting allocated to the sector this year? Maybe even who you see being the incremental buyer in the market with there being this layer of uncertainty that we’re all talking about? Thanks.
