Sarah Barcomb: Thanks for the comment.
Operator: Our next questions come from the line of Don Fandetti with Wells Fargo. Please proceed with your question. Mr. Fandetti, your line is live for question, perhaps you’re mute.
Don Fandetti: Yes, Jeff, should we expect continued growth in infrastructure lending relative to CRE? And also can you talk about the competitive dynamic in infrastructure and how those assets would perform if we did go into a recession?
Jeff DiModica: Sean’s [ph] sitting next to me. We do expect to have continued growth here. We think it’s tremendously attractive as I was saying before. Where I started was to say that our asset spreads what we’re earning have gone up commensurate with what our asset spreads have gone up in other asset classes like CRE lending. The liability side hasn’t increased by as much. The banks aren’t retrenching the way that they’re retrenching in CRE. So, we’re able to earn sort of the highest yields that we’ve had in a while. A couple of other headwinds — tailwinds excuse me, global power demand is going up massively and it could double or triple in the next 15 years or the estimates that you see. So, the power plants that we have that start off with a low loan to value generally deleverage over the life of the loan they’re going to be worth more not less.
I think the transition to more ESG, solar, wind, royalties is going to take a lot longer last quarter I talked about the fact that even if it doubles every year it still will get to low 20% of total energy demand in the next 10 or 12 years. So, the rest has to be done somewhere. The traditional markets are not there in depth to finance the power plant assets in mid midstream storage and transmission assets. We believe that this transition is going to take a lot longer. It’s going to be a great opportunity. And the structural nature of these assets where we get significant amount of deleveraging over the life end up at $1 per kilowatt that feels really cheap on the role makes this a super-attractive asset class for us. Sean Murdock is sitting to me.
Sean anything to add to that?
Sean Murdock: Not really Jeff. The only thing I’d add is just the Jeff’s view of the energy transition it’s going to take longer. Banks have decided with their lending strategies that’s going to come sooner if it hasn’t already come. So, I think that’s where we get the tailwinds in this sort of market for putting new loans out. Most banks have decided the transitions happened and they’ve reduced their lending to traditional energy assets.
Don Fandetti: Thank you, guys.
Barry Sternlicht: Thanks. Just I want to go backwards just on one thing. I talk about multi — the key is that the wave of construction will be over next year and construction starts from multis have dropped to 250 from $600,000 or so. So that should bode really well for rental growth going forward. So we — real estate is a long-term game. Also construction is in the downtown. It’s not in the Cyber so much. So it’s pretty concentrated. You understand a lot of these deals were built for a different rate environment. So there will be a lot of opportunity I think to take advantage of that if you’re a long-term player and you have the capital to do so. I think we have both. And then on infrastructure, yes, I mean infrastructure has been our highest returning asset class.
So yes, we will continue 90% of our book as mentioned is post acquisition of the GE business. So the team is intact and finding great stuff to do and a lot of our investments are behind that platform right now. Safer — a safer place to be.
Jeff DiModica: Thanks Don. Next question, operator?
Operator: Next question is from the line of Jade Rahmani with KBW.
Jade Rahmani: Thank you very much. Good to hear the comments around Starwood Solutions. I was worrying that Star might miss this moment. So the banks we estimate their season reserves and NPL ratios are 1.5% to 2.5%. And which on their balances of CRE loans is massive and are still increasing up 25 to 90 basis points per quarter. Do you see working with the banks to special service assets as the biggest opportunity in front of the Starwood Solutions initiative?
