Jade Rahmani: Thanks very much. The West Hollywood multifamily deal. Sorry, I didn’t hear before. But did you provide any color on that deal? And if not, could you talk to just some overall statistics or give some sense of what characterizes it? I see that the average unit value is something like 2 million per unit and you make some cap rate assumptions, you’re talking rents north of 15,000 a month. So, any colors you can give there and why that deal was downgraded to risk-rated 4?
Matt Salem: Yes, sure. I can give a little bit of color there. You’re right, in the sense that it’s a very high-end luxury, multifamily property is actually conduit , it was built for condo. It is basically top of the market. And great location in West LA, as you highlighted there. And the reason we downgraded that was really around modification, discussions that we were having around interest rate caps and just try to get to, make sure we got to a good place as those discussions were ongoing. And this again, comes back, a little bit back down to — comes back to value. And so, I think we feel pretty good about our bases and the overall value of that asset. But they just downgraded it as we went through modification discussions on interest rate caps.
Jade Rahmani: Thanks. I have one more. If there — are there any other questions in the queue? Because just wanted to ask it, I’ve gotten some investor questions on this.
Matt Salem: Sure, go ahead Jade.
Jade Rahmani: Just on the CMBS exposure, which is a joint venture. What’s the risk of any write-down there? And I believe those positions are B pieces. So there would be special servicing rights? Is that really just a marks model kind of calculation? What would drive any value designation there that we can see?
Matt Salem: Got it. Yes. So that’s an investment in a fund that owns 2017 and 2018 Vintage conduit, conduit B-pieces. The marking process on that is same as — pretty much everything we do at KKR, that’s a third-party service provider that that marks that. We don’t work that internally on a model or anything like that. That’s a purely outsourced marketing service. And obviously, the two main things that could impact that market are number one, just risk premium increasing in the market. And number two, fundamental — fundamentals and defaults. What we’ve seen in our overall CMBS portfolio, I would say, again, keep in mind, it’s a tiny, tiny part of what’s within KREF. So I’m speaking more broadly about funds we manage outside of KREF, is continued strong performance there, especially on the conduit side, where these borrowers have locked in 3.5% fixed interest rates for 10 years, the going in coverage was very high, typically over 2.5 to 3 times coverage on those lower interest rates.
And they’ll enjoy that interest rate for quite some time. So another called seven years or so in some cases. So I think that we continue to see strong performance across that portfolio with really de minimis delinquencies.
Jade Rahmani: Thanks very much.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jack Switala for any closing remarks.
Jack Switala: Great. Thanks, operator. Thanks everyone for joining today, and please follow up with me or the team here, if you have any questions. Take care.
Operator: The conference has not concluded. Thank you for attending today’s presentation, and you may now disconnect.
