The second is, there is definitely some distressed bridge where some of the banks underwrote them more aggressively than what we had done. And there’s negative leverage, let’s say on multifamily. So, those are portfolios which have good properties, but because of the negative leverage i.e., the bond – the interest rate on the loan is greater than the cap rate on stabilization. It has issues for refi. And so, the sponsor has to put in more equity, which is exactly what we love. We love good sponsors, but a little bit too much financial leverage. So, those are some of what we’re seeing. And the third category I’d say is some of these private lenders that were more pop-ups in 2020, €˜21 and early ’22, have hung warehouse lines that at some point will have to be disposed of.
Adam, if you’d add to that, but that’s kind of the cocktail of what we’re seeing on the pipeline.
Adam Zausmer: Yes, I think supply of this product, these acquisition portfolios is going to be up, given bank inventory and kind of shock to the market. So, I expect majority of the opportunities will be in less attractive asset classes, hospitality, retail offers, as these banks are really de-risking their story deals. So, we expect to evaluate portfolios where more hands-on asset management is required to monetize returns. And it’s really where our firm originally cut our teeth in terms of working through distressed portfolios. So, yes, we expect to see quite a bit of volume coming through from the acquisition side and certainly already seeing that, as Tom pointed out.
Crispin Love: Great. Thank you for taking my questions.
Operator: Our next question is coming from the line of Stephen Laws with Raymond James. Please proceed with your questions.
Stephen Laws: Yes. Hi, good morning. Tom, maybe to follow up on a previous question. What leverage is currently on the Mosaic assets, or will you be adding leverage to the BRMK portfolio, or will you just look to maybe take up leverage in other areas to kind of increase the blended leverage from the pro forma level?
Tom Capasse: Yes, well, the pro forma reduction is on gross leverage, around 1.7 times and a half a turn on the recourse leverage. But Andrew, why don’t you talk a little bit about the post-merger capital market strategy, both as it relates to Broadmark and Mosaic?
Andrew Ahlborn: Yes. As Tom said, the transaction is going to reduce leverage by basically a turn and a half immediately. Upon close of the transaction, we certainly expect to apply asset level financing on certain subsets of their portfolio. So, pulling out somewhere between $300 million and $500 million of liquidity pretty shortly after the close of the transaction. And as we look forward, as we continue to scale, the potential to bring down overall leverage from where we’ve been running historically and look to access a different rating and potentially different debt markets, is certainly something we’re considering. But the combination of that asset-specific leverage portfolio runoff in a turn of corporate leverage is what will supply the liquidity we talked about in our prepared remarks.
Stephen Laws: Great. Thanks, Andrew. And a couple of quick ones on the deal, but how much in deal-related expenses should we expect RC to incur in the first half, or I guess between now and closing? And then, does the deal structure allow Broadmark to continue paying their dividend through the close?
Andrew Ahlborn: Yes. So, deal expenses on our side are roughly $10 million, and yes, the deal does allow the dividend to be paid through close.
Stephen Laws: Great. And then one last one, switching gears. Residential mortgage banking, kind of volatile year in income contribution, even with volumes declining, but can you talk about the outlook for profitability in that segment, kind of given where we are with mortgage rates and outlook for mortgage volumes?
