It’s evolved like the mall business, the excellent malls people, tenants fight to get in them. They’re raising rents, Simon [ph] reported. The crappy malls, you will find become something else. So it doesn’t — it’s great for the media and the press to say office is in this. And again, I believe that people are going to come back to the office, especially as management, if we have the recession — it’s going to be shallow, I hope. But if we have — I think management and most CEOs, I know, are back in their offices and they just aren’t forcing the young people to get in. But in a downturn, as I mentioned, I think maybe not on this call, the CEO of a major bank said to me, the first person I’m going to fire in a downturn is the one working from home.
So maybe these people think the job market has been served us historically, that didn’t care. In a downturn, they will care probably, we’ll do what we all did when we were kids, we’ll go back into the office and wave to our bosses and try to impress them that we’re there working hard. So we don’t get like — so we’ll see. The chapter is not over. This is not — and again, I mentioned before, I got chewed up on TikTok. But across the world, workers are back in office. It has become an American thing and it’s really only in some cities and it’s different in different parts. And I was really encouraged to see Amazon say they want people in their headquarters and Virginia 4 days a week and hopefully, they’ll convince the federal government to people come back to work in the federal government which has been the last of the major employer groups not to come to the work.
So that would be helpful. We have a couple of assets in D.C. and fortunately, they’re going to be resi soon [ph].
Operator: Our next question comes from the line of Rick Shane with JPMorgan.
Richard Shane: I’d like to talk a little bit about the special servicing at LNR. It looks like the active special servicing went up about 10% quarter-over-quarter but the name special servicing declined about 5% I’d just like to talk about sort of the movements there and also how we should expect that to play through the P&L over the next 6 to 12 months?
Jeffrey DiModica: Thanks, Rick. Yes, you’re right. The active will move around as you start to see roll off. So one gets to the other. So you had about $5 billion or so of maturities and we’ll start to see maturity take up. So our named special servicing absent us continuing to buy new deals and we have recently been investing in newbie pieces. So we will add to that at the same time it gets subtracted. But for a long time, deals weren’t maturing, so our balance only went up of named special servicing. Now you’re getting into those the end of the 2013 maturities. So you’re seeing maturities that we had about $4.5 billion or so roll off and mature. I think we’ll have another $3.5 billion or so for the rest of this year. Some percentage of that $4.5 billion rolls in, right?
And if 10% of that rolled in, then that’s the $500 million increase in active; so one creates the other. And I think that this cycle will continue now for the next few years as you had more originations in 2014 and into 2015. You’ll start to see the runoff pick up a little bit and you should see the active pick up a little bit. And obviously, we get paid on the active. So we’ve been saying for the last few quarters that we expect the revenues to really be a 2025 phenomenon as the 2013 and 2014 is mature and run through the special. So we’re expecting the increase on the revenue side to sort of be later next year. So we always say it’s sort of 18 to 24 months of lag. So, more of a 2025 revenue thing but it’s playing out just as we expected it.
The percentage of that runoff that rolls into active is what will be interesting. The more office we see, the more you’ll probably see roll in and that was a bulk of what we did see come in this period but we will pay attention to those maturities. And most of our company is hoping that you don’t have a lot of distress. This is the one part where we’re hoping that there is distress and we will make money off of that distress which makes this great carry hedge for us. So we’re staying fully staffed, getting ready for the opportunity but it will really pick up over the next 12 to 18 months.
Operator: Our next question comes from the line of Don Fandetti with Wells Fargo.
Donald Fandetti: Can you talk a little bit about multifamily in terms of the outlook at your largest exposure in CRE lending? I know there’s a couple of factors like higher cap rates and also just hire debt service burdens given Fed rate hikes. How do you feel about that, especially if the 10-year were to go higher?
Barry Sternlicht: Started the basics. I mean the Fed’s actions in a strange way will hurt inflation longer term because they’re creating a bigger dearth of housing stock and the lack of single family — existing single-family home sales have created a really odd outcome with the new construction being not only robust but at good prices. And I think everyone’s been surprised at the strength of the new home building. When — I’m not sure in history, you’ve ever seen a situation like this where rates go up and existing — new home sales go up not higher than they were but the backlogs are growing. People are still moving. They want to buy a new house and nobody is selling their old house. So they have to buy a new house. And that’s relevant to multis.
Multis — we stress this book, I personally sat down with the team. I think we’re selling today multis, there’s no attractive debt in the 4.75% range. Because it’s really good long-term juicy debt, you can get low force. And why are people buying it, they do think you’re going to see rents accelerate again. They are slowing down. Nationally, rents are almost flat. And that came from Fannie Mae which obviously has loans on pretty much every asset in the country. And they vary from down in California up in Florida, it’s up in New York, up in Boston, you saw that recent report, I think, came out last week on the housing market. They are softening but they’re still, as I mentioned, positive and we have 120,000 apartments, some of which is significant chunk of it is affordable but our market rate stuff.
