Jay McCanless: Great. Thank you, Willy. With all the buzz recently about rent-regulated properties in New York City, is there any exposure on Walker & Dunlop’s balance sheet to those rent-regulated entities and/or are there going to be some potential opportunities with the debt fund you recently raised to get involved in that market?
Willy Walker: Number one, no, as it relates to our – first of all, we don’t have a lot of exposure to New York in our agency portfolio. Agencies have never been terribly competitive in that market. So, as it relates to our Fannie Mae at-risk portfolio, I don’t have an actual number in front of me, but I can tell you from having been in this company for a very long period of time, we do not have anything in that, I can’t say anything. We have very limited exposure in our at-risk portfolio on Fannie Mae loans in New York City. And as it relates to our bridge portfolio, I am quite certain we have none. So, no rent control risk as it relates to New York City. Is it a market that we would like to dive into, that’s a good question.
In the affordable housing space, we actually love the affordable housing space and with operators who understand how to work in a rent-controlled market, those are great loans. On more market-based deals, you have got to make sure that you are lending to the proper operator who understands the market they are in. And so while there is probably opportunities, I go back to what I have said to Steve previously. We are going to look at everything. If we like the risk-adjusted returns, we will do the deal, but the investors shouldn’t expect Walker now off the back of the bus on risky deals in challenging markets just because we can do a loan.
Jay McCanless: Great. And then the last question I had, I think when I have asked you about this before, Willy, you were kind of not as positive as some people, but office conversions continues to be a topic of conversation in the general press and looks like there are some funds being committed towards it. Would love to get your updated thoughts on that space? And are there opportunities for Walker & Dunlop to get involved there if you feel like – if you have a more positive outlook on that now?
Willy Walker: Look, I mean we did a deal in Q4, Jay, that was in L.A. It was an office conversion and we did the takeout loan. Wells Fargo had done the actual construction conversion loan and we did an agency takeout on the property, fantastic property. It had a couple of very unique things to it. The owner had owned it since the early 1990s, so the cost basis in the building was exceedingly low. The second is, it was a small footprint. So, the conversion from office to multi was very, if you will, applicable or doable given the smaller footprint. And the final piece to it is, he had the zoning to be able to do it. And we love doing that. And we will continue to do that on people who are as talented and successful as that borrower has been in the office to multi conversion.
I think the reason I have been somewhat, if you will, tempered on my comments about it is just that lot of people are saying, oh, that’s the solve for all this office inventory and I don’t believe that it is. There is a ton of office buildings that are impaired because of the footprint, because of the location and because of the cost basis. And so what I am just saying is people shouldn’t think that this is the panacea for creating a whole bunch of new supply in multifamily by converting these office buildings into multifamily properties. But I do see an opportunity for us to do good loans like we did in Q4 and the one that I just outlined of a takeout loan of a very good conversion. And then the final thing is, would we put construction debt into the actual conversion process, sure.
With the appropriate operator and with an asset that was primed for conversion, we find the capital and put it into that type of a deal to help someone get that done.
Jay McCanless: Great. Very helpful guys. Appreciate it.
Operator: It appears there are no further questions at this time. I would like to turn the conference back over for any additional or closing remarks.
Willy Walker: I thank everyone, particularly those who asked questions this morning. Thank you very much for your time and interest in W&D. Congrats again to the W&D team on a very solid Q4 and 2023. And we look forward to talking to you all after Q1 2024 and I hope everyone has a great day.
Operator: This concludes today’s call. Thank you again for your participation. You may now disconnect and have a great day.
