Michael Roberge: Yeah. Maybe — this is Mike. Maybe I’ll take you back where, as I said before, is if you think about it in US GAAP, is we had revenues 5% year-over-year in the quarter. We had expenses up 4%. We had earnings — pretax earnings up 7% in the quarter. And then there’s deferred comp and the stock price, which comes through the P&L for IFRS perspective. And so from a US GAAP, in terms of the model that we manage to the business performed as you’d expect, with revenues up, as ANA was up, some operating leverage relative to that. And the things that run through the P&L from a deferred comp true-up on the stock price side are issues that impact longer-term compensation, and they’ll come in and they’ll come out of the profitability of the quarter. But we think US GAAP is a better representation from our perspective of how the business is being managed.
Paul Holden: Okay. So again, really just IFRS noise. Okay. One more I want to sneak in, if you don’t mind. Just on SLC, wondering if you can provide us an update on the capital fundraising outlook for the year? Thank you.
Steve Peacher: Yeah. Thanks, Paul. It’s Steve. You saw in the quarter that we raised — garnered new commitments of about $3.5 billion. We were a positive net flow, which also takes into account our ability to put money to work of about $2.9 billion into fee earning AUM. And we would expect fundraising to increase over the year for a couple of reasons. One — and that’s largely related to some big funds that we have. We’re initiating fundraising on. So in particular, we have two large Crescent funds, one that is on its fourth series, one that it’s on its ninth series. We should be seeing first close this year for both of those funds. So that will have an impact. One thing I would say, though, in general, especially on the real estate side, is that with interest rates over the last couple of years having gone from effectively zero to slightly above 5%.
On the real estate side, that is a headwind for fundraising. So we think fundraising will increase given the different funds we have in the market, which are very specific industrial fund, cold storage fund and Asia fund that’s done very well. We are facing a headwind, especially in real estate in terms of interest rates. And obviously, there was a projection in the market going back a few months that we would see the Fed cutting rates and interest rates going down that would have obviously help us. I think those expectations have been tempered. And so we have to deal with that reality in the marketplace. But we do have some big funds coming online, which will help us over the course of this year and into next.
Paul Holden: All right. That’s it for me. Thank you.
Operator: The next question is from Lemar Persaud with Cormark. Please go ahead.
Lemar Persaud: Yeah, thanks for taking the questions. So I’ll start off on SLC. I wonder if you could talk about what gives you the confidence in this — in the $235 million by 2025 in the context of higher for longer rates? Like is there a real risk that we could be talking about more mark-to-market losses in this business kind of weighing down earnings? Or is the rate outlook not a material consideration in getting to this $235 million?
Steve Peacher: Well — thanks, Lemar, for the question. I would say a couple of things. One is the rate environment is a significant market environment that comes into play. And it has some puts and takes for us. But I would say net-net, higher rates are negative for us like they are for most investment businesses. On the negative side, it makes — it’s tougher to raise real estate funds when rates are higher. Rates impact the ability to deploy money because of the dislocation, especially in real estate between buyers and sellers. And deploying money is important to us because we have a big $20-ish billion of committed, but yet uninvested capital, and we generally get paid fees when we invest that capital. It can have an impact, obviously, on valuations in real estate and in fixed income and our fees are paid on valuations.
So that can be a headwind. It can help us, though. So it makes fixed income assets in general more attractive on a relative value basis. So we’ve seen good demand for our fixed income capabilities. And the other thing is on our private credit capabilities, those tend to be floating rate. So you can earn 10-plus-percent on private credit portfolio today, and that’s attractive for investors on a relative value basis. But that’s certainly a headwind that we have to face. I think what gives us — a couple of things that give me confidence as we go into next year. One is that we have a — I think this was intentional as we built SLC. We have a very diversified platform. So our asset classes go from investment-grade fixed income, both on the public and private side, the low investment grade, both public and private in fixed income, real estate equity, but also real estate debt, which is an important area for us, and that’s particularly attractive to be a real estate lender in this market.
We’ve got infrastructure, of course. So I think you see the diversity of that, of SLC when you look at how our fundraising changes quarter-to-quarter. And I think that gives us confidence that while we have to deal, we’re always going to have to deal with some headwinds and tailwinds in the market, and that it should allow us to do that. The other thing that I’ll say is that we’ve intentionally really managed what we call the affiliates, so BGO, Crescent, InfraRed, separately during this interim period between our initial investment and the back end of those deals. We’re approaching the back end of those deals we call it the — we internally refer to them as to put-calls. As we do that, as we start to announce leadership that will transcend the put-call, I think we’re going to start to think increasingly about what are synergies across the platform, what are dots we can connect across the platform.
