Haendel St. Juste: That’s helpful. That’s helpful. I appreciate that. One more, if I could, just on the expense side, maybe some color on the building blocks for the pressure you’re seeing. And then, I guess, just looking ahead, are you expecting to return to a more normal kind of low single-digit level beyond this year? I mean, obviously, that’s been a hallmark of the platform last several years. So I’m just wondering this year is more of an anomaly? Or if there’s something structural that perhaps could prevent you from going back to those lower levels? Thanks.
Paul Beldin: Thanks, Haendel. This is Paul. And I appreciate the question. I mean you’re very right to point out that our guidance for expense growth next year is very abnormal and atypical for us, our portfolio. There are really two factors that are driving the increase in our expense expectations. The first is an real estate taxes. And so before talking about ’23, I just want to focus on the past for a second real estate taxes. Not only we did we have negative growth in real estate tax expense in 2022, but if you look at our compounded growth rate for the past three years, it has only increased on average by 1.7%. And so what we are seeing in 2023 is a catch-up in valuations in many markets and the impact of two large tax appeals that occurred in 2022 that we don’t have as part of our guidance in 2023.
And when we combine those two factors, you get an expectation of a real estate tax growth next year in the 7% to 8% range, which, if you look at our long-term trends, should moderate in future years, especially when you consider that 40% of our portfolio roughly is located in California and protected by Prop 13. So the second factor in increasing expenses is on the insurance side of the equation. As I’m sure you’ve learned from talking with other multi-family companies and just through your industry context, you know that the property market right now is very difficult. It’s hard and premiums are increasing. So we think we have a potential for a sizable increase in insurance costs in that line of business. And that’s really what’s driving our expectations for this year.
Haendel St. Juste: Very helpful Paul. Thank you guys.
Operator: Thank you for your question. The next question comes from the line of John Kim with BMO Capital Markets. You may proceed.
John Kim: Thank you. I wanted to follow-up on the lease growth question because it is a bit of an outlier in the sector. I was wondering if you could break down what markets are driving that high lease growth rate? Is it just Miami? Or are there other markets that are giving you above your peers at 9%? And also how much capital enhancements or revenue had some CapEx, how much of that split additive to these growth rates?
Keith Kimmel: Hi, John, I’ll start with it, and then maybe I’ll turn it to Paul. But when we go through the lease to lease rates, we see it strong across the board, quite frankly. Miami would be – the highest would be in the mid-20s. But we have lots of other places that are coming in 8s to 10s, I think D.C., our Los Angeles portfolio that’s also in the 10 to 13 range. So we have a variety of places that we’re getting high rents and those new leases, not just any one particular spot.
Paul Beldin: John, and to address the capital enhancement spending, in 2022, we invested about $90 million in capital enhancements. The vast majority of that was in K&B programs across the portfolio. And so as we underwrite those projects, we anticipate not only a high yield on the initial investment but we underwrite an expected internal rate of return or an investment of 10% on our money in the way that the majority of that is manifested is through higher revenue growth. And so you are seeing a benefit of that investment in our – in the lease rates.
