Q – Sarah Barcomb: Hey, everyone. Thanks for taking the question. Maybe to just pivot from office to multifamily for a second. On last quarter’s call, you spoke to a sort of breakeven cap rate on the multifamily book of about 6.5% and a willingness to take over those assets at say $0.65 on the dollar where sponsors walk away. I was curious, if you could provide some updated thoughts there just given the forward curve has come up since then we’ve heard Powell reiterate that he’s not thinking about rate cuts yet. Also just curious, where the debt yields are looking on for those assets. Thank you.
Jeff DiModica: Barry, do you want to start?
Barry Sternlicht: Yes. There’s probably no — it’s interesting as you think about 30 years of doing this, capital flows sometimes are overwhelmed fundamentals. And the rent growth is slowing and in some markets like Austin, they’re negative. For apartments, the asset class is definitely going to be a favorite for institutional investors going forward. You can’t take a $3 trillion office class — asset class like office. Shut it off from an investment, and the real estate capital is going to have to go somewhere. And hotels are kind of bought for voting [ph] for a lot of institutions. So retail, maybe — I mean nobody is rushing to do tons of retail deals today, even though the markets are relatively healthy. Industrial, possibly it’s a bond and the economy was slow.
So rents will come down and the pace of rent increases are coming down, also in industrial. So I think multi-benefit and that was why the comment was we’d be happy to take assets back and we are taking one back and selling it immediately it, looks like someone in Portland, on one of our troubled multis. I think in general, what we said before is true, we will make more money in my view, if we can take these assets back and we will just staying as a lender, though we will stay as a lender that’s our primary job. So if we’re in fact at 65% of value or 65% of construction costs or 65% of the renovation totally renovation cost city-by-city, I look at that as sort of an opportunity and not a bad thing. They are — they’re not going to be empty. We took back an office building in DC.
It’s an interesting building. We have it on our books. It was bought by a household name. They emptied the building, reskin the building and then realize that the amount of capital they have to put into retenant the building, justify them walking away from $100 million of equity. That deal is empty. So, that’s a drag. Any multis, we get back are partially full and probably yielding 5.75% or 6%. So, not terrible. And if we like the assets which hopefully we do we lent against them this should be good opportunities for us going forward.
Jeff DiModica: Yes Barry I don’t have much to add. I did make those comments about our breakeven cap rate being around 6.5%. As I look at our portfolio our in-place debt yields are mid-6s today and we expect they’ll stabilize significantly higher than that. But obviously as Sarah, as you mentioned the forward curve it’s gone up. So, a lot of this is going to depend on what does the forward curve look like a year out in a year if people are faced with the refinance. Will they make the decision to hold on or not? And I think that decision to hold on will be mostly about liquidity. I think that people will think that they’re going to have an opportunity at a lower cap rate in the future to be able to sell it. And will they be able to hold on?
Will they have the cash flow available to buy a cap and wait it out. We obviously do. We will support the assets. As Barry said the have debt yields that almost that would almost cover today even on the lowest debt yield assets it would not cost us a lot to stay in those assets and for the right to own them at 65% of cost. And wait for a better environment to either refinance them or to sell them. I think that’s something that would be a great investment for us and we would do that in defense.
