Marcos Alvarado: Yeah. We’re seeing the appraisers start to move cap rates up. They’re drifting upwards on all property types. And I think they’re taking a little sharper pencil certainly to some of the underlying assumptions on the operating side. So appraisals don’t move in jump steps, they move in waves and we’re definitely seeing the appraisal community begin to push those cap rates up. So we’re not surprised by it. We expect more of it and we’ll see the impacts of that slowly. But we’re still going to be in that 10-ish range, it feels like, with some parts of the cycle like this where you’re going to get more downward adjustments than upward adjustments.
Ron Kamdem: Great. And then my last one, if I may, just on the income statement, the provision for credit loss, what was that related to, the $336,000 I see here and any other sort of assets or anything like that that you guys are looking at for potential more provisions? Thanks so much.
Brett Asnas: Of course. Yeah. We adopted CECL this year. So we take a provision on amounts we fund based on the relative risk there, which is we take a host of factors and use a model to determine that. But typically, we take in the range of, call it, 1 basis point to 4 basis points on new funding. So that’s primarily what drives it.
Ron Kamdem: Great. Thanks so much.
Brett Asnas: And Ron, it’s on no specific assets. It’s just across the portfolio.
Ron Kamdem: Got it. Okay. Helpful. Thank you.
Operator: Your next question is coming from Caitlin Burrows with Goldman Sachs. Please pose your question. Your line is live.
Caitlin Burrows: Hi. Good morning, everyone. Maybe you could just start with kind of the properties that did transact in the quarter and October and the ones that are in the pipeline. I know from what we can see, they were multifamily, kind of some other details of maybe what made those properties the right ones. And as you look forward, does it continue to be a multifamily focus?
Jay Sugarman: Yeah. As I go back to the remarks, the lack of liquidity is really a driving force to get any sort of transaction done and there is a little bit of liquidity in the agency space, in the housing space broadly. So I think we’re going to continue to push on multi. We’re believers in sort of the supply-demand imbalance long-term and it’s an asset class we want to continue to scale and grow in. If I think about those particular transactions, a couple of them were student housing assets. We’re seeing in our portfolio, as well as on these specific assets, some pretty incredible same store revenue growth, almost double digits. And so I think customers, although cap rates are wider for student housing, are able to underwrite a decent amount of growth and so that they can tolerate a capital structure that is more expensive and so that’s probably the reason those transactions have been successful.
Caitlin Burrows: Got it. And then it looks like the originations in the quarter in October, the economic yields were in the low 7%. So I’m wondering if you can talk a little about how you think about kind of in this rate environment today that you’re making those deals, but that they’re long-term agreements and kind of how you balance that today versus 99 years.
Jay Sugarman: Yeah. We — I think the first premise for us is we always look at the long-term benchmarks and where those are trading, what that cost is today and they have increased, obviously, over the last few quarters, but they’re in the 6% range. And so our bogey is, can we make 100 basis points spread above that and then, obviously, we get the benefit of inflation and the benefit of Caret on top of that. So that’s kind of how we generally think about our unlevered pricing bogey.
Caitlin Burrows: Got it. And then just a quick one on the joint venture. You went through how there’s I think $462 million left total. So could you just go through again kind of the benefits of having the JV structure and confirm that all investments will be done in the JV until that amount is kind of used up?
