Brian Harris: Sure. Almost in opposite to what we said years ago when I think I mentioned that when interest ran you’re borrowing money at 3% if you need to get a mezzanine loan, you’re probably overleveraged. So we pretty much stopped writing mezzanine loans. The opposite is true today. This is a market that is ripe for mezzanine lending, obviously, in special situations. So we are actually touring around with the possibility of refinancing, floating rate loans with a fixed rate component because of how much lower the tenure is. Now the conduit market is not in the 10-year business just yet, but I think it will be. And if we can get a sponsor into a 10-year loan on a pretty safe credit, then that frees up a lot of cash flow and rate for the higher rate mezzanine.
So I think we are kind of looking to parse that to get – to staple those two together. And I don’t know that it’s necessarily refinancing our positions as opposed to others. It might be. We’ve historically not really written mezzanine loans over the top of somebody else’s senior. So my guess is if we were to refinance somebody else’s loan, it would come with a complete refi, where we would break the refi into a senior 10-year fixed rate and a mezzanine loan that we would hold behind it. The second question, I think you said was real estate. It’s a very good time, I think, to purchase certain types of real estate. In particular, I think we’re looking at multifamily because what a multifamily was purchased in 2021 and ’22. And because of the rate movement and cap movement that went with it, they probably have too much – too high of a basis.
So that creates capital tension within the structure. We – you might remember, we started writing 2-year fixed rate loans to avoid the cap cost of floating rate loans. And almost all of those loans are now fixed rate coming up for refinance, but they’re mostly on brand-new properties, pretty comfortable owning apartments in a housing shortage. And being in a REIT vehicle as opposed to a bank where we spent the rest of my career, it’s a good vehicle to own them in. So I think that we will be – interesting question. I think both of those topics will both be relevant going forward. I would like to acquire some more real estate. But right now, there’s just a lack of transactions. But because of the little hidden poison pill, I think, in the market right now is taxes and insurance.
So operating expenses are rapidly accelerating higher. And you throw on extra interest rates too high of a basis and high operating expenses. And you’ve got a situation as Pamela described, the Pittsburgh property that we’re going to take title to, it has a bunch of brand new apartments. And in a matter of a month, we think that the debt yield will approach 7%. And I don’t know if we’re going to be able to take that to an agency for financing, but we might. And I don’t think we’re necessarily in a hurry to sell anything like that. I think those are good REIT assets going forward and being purchased at the right cap rate. So I think your question is prescient [ph] I think we’ll be adding both of those, and I would probably throw a triple net lease in on top of that.
I can tell you this is probably a better time to be buying triple net than I’ve seen in a long time.
