And so when you look at how this bad debt number has improved, as Paul just went through the walk of a one, 1.6% to 1% to a 60 bps, and where we get to at ’24, there’s a lot of very specific things we do. The one sort of flying the ointment, I would tell you in bad debt, is that courts have been a little bit slower coming out of the pandemic, so we’ll see how that plays out in the future. But we’re optimistic about our process. Going to the retention, we – what we have implied in our guidance of the 3.8% is essentially more of the same. I just reported that we are at 62.3%, which would be our best number that we have ever marked. We would anticipate something similar, if not better. Remember, when I say if not better, every single day we have a very strong emphasis around longer staying residents, less turnover, avoidant costs and creating total contribution to the bottom line.
Terry Considine: Haendel, if I could join in, it’s Terry. I just want to emphasize two points. Part of it that Keith touched on is the credit worthiness of our customer. And so we’re just less exposed to bad debt because we have people who have a track record of paying their bills. The second is I want to throw a bouquet to Paul because we did not make accruals based on optimism during the pandemic. We were very disciplined in our accounting. And so we don’t have to reverse those accruals. We don’t have — we’re operating where anything — any news is basically good news. And so our bad debt for the fourth quarter was above flat zero. So net of those recoveries. Now, we’re not going to stay at zero for the year. I’m not trying to say that, but I just want to point out two things that you can use in thinking about the future. One is that the AIR customer is much less likely to have bad debt. And second, the AIR accounting is much more likely to be connected to cash.
Haendel St. Juste: Very helpful. Thank you.
Operator: Thank you. And your next question comes from the line of Rich Anderson from Wedbush. Your line is open.
Rich Anderson: Hey, good morning, I guess. So I can’t help it. I’m a cynic, right? The 2.4% earn in is way above your peers. 2% new lease growth is above your peers. These are all really good operators of multifamily real estate. And I am so — I need to be a believer here, but is there an element of luck? And I don’t mean that in a derogatory way, but supply is on everybody’s mind, of course, particularly in the Sunbelt. Are you finding yourselves just not positioned in a place where others are getting a lot of headwinds from new supply? What — besides the fact that you’re good at your job and all that sort of stuff, what is causing sort of this outsized level of relative growth for you guys, relative to everybody else, from a same store perspective?
Terry Considine: Rich, as usual, my dear friend, you’ve got great questions, and I look forward to the headline you attached to it. But it’s really two things. They’re really two, and they’re very different and — but they’re measurable and you can call them out. The first one is operations. We have a customer that, as I just said, has better credit. So it’s more likely to behave the way we expect, more likely to be a good neighbor to the other residents. We have — as a result, we do more of our business at higher renewal pricing and less of our business at lower new lease pricing. And that’s just a — those are structural advantages. We have a record of cost control that is superior, and we give great credit for that to Keith.
But I just have to say that that’s Keith and Matt Holmes who’s here in the room, and hundreds of teammates around the country that have done a really good job and are highly productive and highly stable. So one of the most important metrics about operations is the turnover of our teammates, and what you see is high tenant — high teammate engagement, and stickiness, and stability. They’re well compensated. They have good — great job satisfaction, and they do a better job than our — than the peers. So that’s one. The second one which goes with it is portfolio composition. That is intentional, and — but it’s also a very difficult exercise because we’re subject to political wins and economic changes that go back and forth. And at times when a concentration pays off, you’ll see that in the outperformance of an investor in California concentrated there, did great for 10 or 15 years, levered by (ph) COP13.
That was a terrific moment. You can see concentrated investors in Sunbelt markets did great during the pandemic when you had this influx of — in migration. We’re more of the steady Eddie. We want to avoid — we’d love to have those benefits, to say that, but we want to be balanced against those risks. And so we’ve made independent decisions. We’ve made decisions about Florida that were different than peers, made decisions about Philadelphia that were different than peers. They both have pluses or minuses, but that’s part of a differentiation which provides — which results from diversification, which ends up with lower risk. And so that’s how we get there.
Rich Anderson: All right. Second question is entirely unrelated, but on run rate FFO, is there — I need another FFO definition, like a hole in the head. I think I’m speaking for a lot of people. Why didn’t you just put this swap gain in core FFO, and then there would have been a lot less misunderstanding about how people were growing 2024? Is there a structural reason why you didn’t just handle it that way? And two, can we get rid of it run rate FFO for now in 2024, since it’s the same thing as core FFO? This is a little self-serving, but I’d love to hear your comments about those. too.
