Haendel St. Juste: Hi, good morning, guys. This is Ravi Vaidya on the line for Haendel. I hope you guys are doing well. Just thinking broadly here, how do we – from a modeling perspective, how do we think about acquisitions going forward on a run rate basis. Like, would you say, I mean, I understand there’s volatility and it’s kind of tough to pin down, but would you say, $100 million to $150 million a quarter is fair given what you have in your current pipeline?
Brett Asnas: Yes. I think as an annual goal, that’s probably a pretty good goal for the market as choppy as this one. Again, I think we’re a little bit disappointed. We came into the year feeling really good that last 50 basis points knocked a few deals that hopefully will come back if the markets settle down. But these deals typically have a little bit of margin error. They don’t have 50 basis points of cost on their debt, margin of error. So it’s going to come down a little bit to, how the market sentiment around future rates is and we see that reflected in the 10 year and 30 year almost every day now. So I know Tim and the team, we’re going to build our way back towards the kind of volumes we’re used to, but it’s going to take some time. And $100 million a quarter as a base would be a good starting point to start building back.
Haendel St. Juste: Got it. That’s helpful. Just one more here. And can we assume that all these acquisitions are going to come in through the JV? How much capacity do you have left in that JV? And are there any accordion options that we should be aware of?
Jay Sugarman: Yes. I mean, right now there’s about $200 million of third-party capital from our sovereign wealth partner that we can tap into. And yes, they are actively looking at the deal flow, so we expect, other than some relatively small deals that they’ll play. As I said, it’s not the best thing for us. We think today is one of the best investment environments for what we do in a long time. So we’d like to put out more capital. But given where equity cost of capital is right now, I think the JV is still a valuable piece of the story.
Haendel St. Juste: Understood. Thank you.
Operator: Thank you. Our next question is coming from Mitch Germain with Citizens. Your line is live.
Mitch Germain: Thank you. Can I get some details around the redemption? Did I – Do I understand that it was done at a discount to what the purchase was at?
Jay Sugarman: Yes. So let’s take a step back on that one. That first round was really to get some people involved who we think understood how Caret could play out. Some of them were venture capital type investors who had a very short-term time frame and wanted to see if monetization would happen quickly. Unfortunately, the market hasn’t really developed as quickly as we’d hoped. We have had some success with the ultra-high net worth families, and that’s really where we think the future lies in terms of Caret and building a book of investors that can really show the value of that asset. We gave them a redemption option. After two years, they did decide to use it. So that first round was going to be mostly redeemed. And we just decided it’s probably, we gotten all the benefit from that round, we should just clean it up entirely and not have a couple dribs and drabs still out there.
So we’ve redeemed that that round. So you can stop thinking about it. But the redemption price was the original purchase price, less any distributions and we had a Caret event in the interim. So they got their original purchase price minus the distributions they had already received.
Mitch Germain: That’s helpful. Longer-term capital plan, you’re at 1.9x leverage. I think you’re approaching 2x. Would you guys consider any ground lease sales as it means to raise some liquidity?
Jay Sugarman: Yes. Look, I think the strength of the balance sheet and the JV partner has given us a little bit of flexibility here to look at some alternatives. Sales don’t take place quickly, so it’s not something you turn on and off. But we certainly think there is some small portion of the portfolio that maybe we can redeploy into higher rates. So we’ll look at a couple of those alternatives. I don’t think that’s the long-term capital solution, but you’re right. We could squeeze some money out and extend the runway here.
Mitch Germain: Thank you.
Operator: Thank you. Our next question is coming from Rich Anderson with Wedbush. Your line is live.
Rich Anderson: Thanks. Just a follow-up on the Caret. Jay, to what degree does the redemption sort of impact your future efforts around selling Caret, securitizing Caret or whatever. Is there no change? Or would you say you look at the rationale behind the redemption? It makes maybe for a more difficult sell going forward. I’m just curious where your mind is now at the Caret with this event happening.
Jay Sugarman: Yes. Hey, Rich, I will tell you, the biggest driver of Caret at this point is getting the deal flow back turned on. Lots of questions around that. That seems to be the major driver. The first round, I think everybody understood it was a first step towards a much bigger game. We do think after two years, we really have identified this ultra high net worth family network as the perfect investor. So, I don’t think anybody is too worried about a couple of venture capital firms that had different timeframes. I would say, again, the number one variable that I look to and I think is really the key to monetizing Caret is getting the growth rate turned back on.
Rich Anderson: Yes. Okay. And then in terms of the growth rate, I know it slowed down quite a bit, but is there perhaps a larger element or a changing element of the types of deals, whether it’s originations for some type of transaction that happens? But are you seeing more in the way of preexisting ground leases that are becoming available that you might consider as part of – a bigger part of the overall pipeline going forward or has that not changed sort of the makeup of the pipeline?
Tim Doherty: Hey, Rich, it’s Tim. The makeup of the pipeline stayed relatively the same. I mean, you see the focus on multifamily in terms of existing ground leases. With over our history, we bought a number of them. They don’t come to the market very often. It’s pretty spotty market and that remains the case. So, we see those opportunities and our, the right person to play in those. But the bulk of the pipeline is new originations.
Rich Anderson: Okay, thanks for that.
Operator: Thank you. Our next question is coming from Kenneth Lee with RBC. Your line is live.
