James Flynn: Jim, you want to go ahead?
James Briggs: Yes. No, I wouldn’t say there’s anything one-timer in there. As we talked about, the economics around prepayment and fees there. We’re relatively flat quarter-on-quarter. Some of that is coming through a reduction in expense reimbursements, but I don’t consider there going to be anything material in there, Steve.
Steve Delaney: Okay. Great. And just one final point. The $7.1 million that you pointed out, discount specifically to LMF 2023-1. Should we look at that – I don’t know if there’s – those loans were already originated, but would a 3-year average life, would that be a reasonable approach to accreting that money into the net interest income?
James Briggs: Yes, I think that’s reasonable, Steve.
Steve Delaney: Okay. Well, great quarter and good job on the big financing, and we look forward to fourth quarter. Thank you very much.
James Briggs: Thanks Steve.
Operator: Our next question comes from Matthew Erdner from JonesTrading. Please go ahead.
Matthew Erdner: Hey. Good morning guys. Thanks for taking the question. So, could you just talk a little bit about what the opportunities you are seeing out there currently? I know you guys focus on multifamily, but can I just get an idea of what you guys are looking at, at the moment and just the health of the pipeline?
James Flynn: Sure. Well, look, I mean the opportunities are less than they have been in the prior quarters as we have discussed, just in terms of transaction volume being so significantly down. So, assets aren’t trading in. So, that opportunity has significantly declined. But so has – so have lenders and lenders that are either can or willing to make new loans. So, when we have seen assets come in, we are looking at generally speaking, more conservative looking underwriting, lower leverage high-quality sponsors. It does have an impact. I think with rates being so high, spreads have kind of stabilized around 4%, but you have seen a lot of pressure on that – I am sorry, spreads before, but I think you have seen a lot of pressure on that to be lower when you have gone with very low leverage bridge loans and kind of pushing things down towards 3% for those high-quality loans.
I think you will see lenders probably take a look at those deals and trade a little spread for risk or low risk. In terms of some of the things we have talked about in the past around subordinate debt opportunities around mezz financing, preferred equity, etcetera. There is a lot of market chatter around those particular products. There is a lot of lenders and people looking to participate in that market, including us, both at LFT and in our broader platform. The reality is that there is not a tremendous amount of deals that, that works for today, given where the rates are expected to be for that product in the teens, mid-teens even. And it’s hard to replace your prior debt capital if you are kind of refinancing something with a mid-single digit with the 2x on preferred.
And so there is just – I think that we haven’t yet seen kind of the dam break, so to speak, of transactions. I think as values – buyers and sellers kind of accept values, the spread between buyers and sellers narrows, I think we are going to see more opportunity for new loans, for bridge-to-bridge transactions that are kind of moving finishing off a prior strategy at a different cap stack transitioning some of these assets that are being delivered off of construction loans to lease up bridge loans. And I think you will see opportunities both on the bridge space, it’s not going to be 2020 or 2019, but I do think we will see some opportunity increase. And I also think that other space of mezz capital as you start to see actual transactions, assets change in hand that there will be more opportunity there, but we really need that transaction flow to tick up.
And for that, I think we need buyers and sellers to except where values are and come to agreement and narrow gap and then we will see some of those opportunities. And as we noted, we retained some of the low-investment grade rated bonds in our last transaction, and that was because it was an attractive spread. So, there is – there might be some opportunistic trades in the secondary market for some of these CLOs that are out there, but that’s going to be very portfolio specific.
Matthew Erdner: Got it. Thank you. That’s good color there. I appreciate that. And then on the recent CLO, I don’t know if you mentioned it or not, but is there a reinvestment period? And then if there is, when does that expire? And how much of it is open at the moment? Thanks.
James Flynn: It’s 2 years. And to be clear, I may have said CLO, but it’s a financing transaction. It’s not technically a CLO, just to clarify, but it is a very similar structure, and it has a 2-year reinvestment period.
Matthew Erdner: Thank you.
Operator: [Operator Instructions] Our next question comes from Christopher Nolan from Ladenburg Thalmann. Please go ahead with your question.
Christopher Nolan: Jim Briggs, just a clarification. Were there any non-recurring expense items in the quarter?
James Briggs: No, nothing unusual or one-timer, as I pointed out, we did have the big one-timer last quarter for that deal cost for a widely distributed public CLO that we expensed in Q2, but nothing I would consider one-time in the current quarter.
Christopher Nolan: Great. And then I guess, for just the panel in general, any change in non-accruals in the fourth quarter to-date?
James Briggs: Nothing to-date.
James Flynn: Yes, no.
