We’re around 4, 4.5. And some markets are accelerating and some markets are decelerating. The cap rate where we will have issues will be north of 6.5. So we think our breakeven to our book is like 6.5. And if our assets got there, we’ll turn ourselves into iStar, will gobble up every single multi and own them for you forever, couldn’t wait, best thing that ever happened to us because they are brand new projects and we’re getting the $0.65 or $0.60 on the dollar. It adds to that happening are less than 5%. There’s one problem we mentioned it in our earnings. We have 1 asset in Portland, I think it is, that is not renting at the pace and the rents we would have hoped. Obviously, Portland is 1 of the 2 cities that was most affected by the racial [ph] George Floyd incident.
So that’s the only issue we have. And again, our basis is about brand-new fractions replacement costs usually is an attractive place to enter a market. Nothing else can get built until rents move to a place to make your new bases attractive. So you have — rents would have to increase but there will be no new supply in the Portland market and there’s still people there. So it’s funny as I travel the country and go to these cities, you would think that San Francisco is a bowling alley. There’s no one there. There’s still, I don’t know, nobody — these cities are still thriving. They’re still active. And I think you have to be careful because the media just wants to create news as they do in the political environment, they book hysteria, craziness and at everybody.
There’s a funny thing that people want to pick on New York or they want to pick on San Francisco because they had a big run in New York right now. I mean, it’s busy and the restaurants are busy. And that’s amazing. I mean, the only useful city like where the kids want to go and all the problems in California are helping New York. So then that’s what you see. You see the stores re-tenanting. I can’t tell you the rents they’re having, they’re high but — these cities are dynamic and they’re vibrant and they will survive and there will be good lending opportunities in them. So — and the office is — I’m in a building. We are our offices in New York are 100% leased, leased in pandemic and 1 floor came up for sublet and was released in 2 days. So it’s actually like you call it like a stock pickers market, that’s what this is in real estate now.
You have to build — have the right building with the right ESG footprint in the right location with the right floor plates and you can lease it. And if you have the wrong building, you just it’s nothing — that you have no hope.
Jeffrey DiModica: I’ll throw on looking at our portfolio, right? The area we probably built up the portfolio was 2021 and that was the lowest cap rate. So you were taking 4 cap assets that we thought had 5%, 9% [ph] or 6% exit debt yields. You pushed rents in ’21 and early ’22 by 10% or so. In the last 12 months, our portfolio has seen 7.8% rent growth. So by pushing those rents, your exit cap rates have now gone into the mid- or mid- to high 6s. So for a moment in time, on a roll on that loan in 2024 or 2025, if the silver curve [ph] stays right here, for a moment in time, you’d be negative carry for a couple of months but if the forward curve is at all right, you will be positive carry. And over the life of it, it’ll be significant positive curve.
So we have great escape velocity at today’s forward curve, even against those sort of 4 cap assets that were at the highs because we pushed rents and expenses haven’t gone up nearly as much. So exit debt yields are higher. And we think right now, we have plenty of escape velocity to get out all those loans as they start rolling in ’24 and ’25.
Operator: Our next question comes from the line of Jade Rahmani with KBW.
Jade Rahmani: You look back to early March and the Siri, the storm was really taking hold, then we had the bank distress. Fast forward to today and we’ve gone through second quarter results and it seems no huge shoes to drop a couple of big credit losses in the mortgage REIT space. You all took up the CECL reserve on macro nothing really new, that large on specific loans. So my main question would be, given the category 5 hurricane as you put it, are you surprised that there have not been huge new shoes to drop of late? And do you think it’s just a timing issue? Or do you think this represents kind of a green shoot in your view?
Barry Sternlicht: Sorry, it’s a timing issue. Again, if you have caps, your loan is not maturing, it’s not blowing up until it matures but it could be offset by what I’d expect to see a lowering of short rates maybe early next year. But I don’t — I know you on going to see a month [ph]. If we have a complete crack every time that’s happened, the Fed has gone to 0 on short rates. That would be good news and bad news. That would be the opposite of collateral damage. That’s the windfall for the property sector. It is what — if he is measuring his success by rising unemployment, I just think that is really hard. That is a very — I guess, the additive is a blood tool. It’s more like a sledgehammer because the — you can only get the unemployment in certain industries, the service industries, manufacturing industry.
