Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Don Fandetti with Citigroup. Please proceed.
Donald Fandetti – Citigroup
Hugh or Bob I just let me get your thoughts on sort of the broader commercial real estate debt market and the liquidity. Do you think that liquidity will come back in? I just wanted to get your thoughts on the market [inaudible] etcetera.
Hugh
It is very difficult to forecast when any semblance of call it normal liquidity return. It is pretty, today was not a great day in the debt markets and it continues to be sort of negative rumors swirling around about SIBs which is a real drag on the willingness of people to jump in. We have been very measured in our approach and what we have been buying focusing on good credit and the utilization of our term financing but, in terms of a broader increase in demand that’s going to really support a functioning market and a bigger scale, there are no discernable signs that we see in the sort of the short tern that that’s going to come together.
There is enormous interest in various pockets of capital, a lot of it from opportunistic investors etc, putting together pools of money. Although, that tends to be more focused on the riskier end of the spectrum so there are lots of folks who are trying to put together money to buy, call it BBB on down, that sort of thing. What’s really missing in this market is AAA buyers. That’s the vast bulk of the capital structure that they could put together and those are the guys that in many ways that have been hurt most but, with things like the news with NBIA etc floating around out there it’s hard to see where those AAA institutional investors are going to step in and buy and with the dealers curtailing the amount of leverage they can provide it’s hard for leveraged investors to come in and be that source of capital.
Donald Fandetti – Citigroup
Okay great. And then Bob, lastly the add back to FFO for the CDO purchase, was that clear cut? Or, did you think about not adding it back?
Robert R. Foley
We thought it was fine. How’s that? It’s just what GAAP tells you to do.
Donald Fandetti – Citigroup
Well, I guess the implication is that there would be a big hole but, I guess as you said the new investments were back end weighted and so you sort of feel like there’s an offset there. Is that the implication?
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