[loftyai]

Yes, your interpretation is correct!

1. we hedge on both broader market REITs/ETFs as well as localized ones, depending on how many contracts we have in the local market.

2. Because we hedge on both, the probability of this is very low. Since a more granular hedge is an imperfect hedge due to the nature of these REITs/ETFs, it might not cover 100% of the localized recession. However, it should cover a large portion of it. So, our company will be on the hook for that remainder percentage.

We can cover it in 2 ways. Number 1, just use our own capital. Number 2, the profitable contracts in other areas not hit by recessions should be able to offset the ones hit by the localized recession.