Michael Bellisario: Got it. And then just one follow-up on Nashville. Where do you think your basis is going to be relative to where select service hotels are trading today in the market?
Justin Knight: Meaningfully lower. I mean, we’ve disclosed, and again, remembering that the property is still under development, meaning we’re still finalizing actual key count and some of the [indiscernible]. But we’ve given what we anticipate to be the highest potential purchase price, and a good approximation for where we think the number of keys will line up. That puts us well over 100,000 key less than comparably marketed select service hotels in the same area. So I think we feel very good about our bases in the market, and incredibly good about the location, which is really in the heart of Downtown, Nashville with — within very close proximity to major demand generators.
Michael Bellisario: Helpful. Thank you very much.
Justin Knight: Thank you.
Operator: [Operator Instructions] The next question comes from Chris Darling with Green Street. Please go ahead.
Chris Darling: Thanks. Good morning. Justin, going back to the transaction market, you previously talked about a, call it, 5% to 10% bid ask spread. Your comments make it sound like that spread is beginning to close. So is that accurate in any way for you to quantify the changes you might be seeing?
Justin Knight: It is. I think and it has been driving our increased interest in specific transactions. Interestingly, while we’ve seen a slight movement in cap rates, in most cases that movement has been offset by improved fundamentals for the assets. So we haven’t seen a corresponding adjustment by and large in terms of valuations for assets. That said, we’re competing with fewer people in the marketplace, at least, at price points where sellers would be willing to transact, which is put us in a position to really have serious conversations with potential sellers about where a transaction might happen. I think as has always been the case, as we look at an underwrite potential acquisitions, we’re looking to achieve near-term yields, comparable to the yields we’ve achieved on recent transactions.
But as importantly pursuing assets, where we anticipate future growth to be in excess of our larger portfolio, or the anticipated growth rate for our larger portfolio. And generally, where we anticipate the hotel to need less in the way of near-term CapEx. Looking at the two projects we have under contract, I think they’re great examples, and that the asset we recently closed on in Cleveland had just come out of a full renovation. And so, I think near-term CapEx needs for that hotel will be close to zero. And it’s been effectively repositioned in a way that we think will enable it to increase market share in a market where we see meaningful growth on a go-forward basis.
Chris Darling: Got it. That’s all very helpful. And then maybe switching gears just thinking about some of the new brand concepts that Marriott and Hilton have introduced recently. Can you speak to your level of interest in gaining some exposure there? And are you in discussions with any of your development partners to pursue some of those newer concepts?
Justin Knight: So, well, Motto is, I guess, technically a new concept for Hilton, meaning that there are very few of them that exist. And certainly we’ve demonstrated interest there. Speaking specifically to the — that the lower tier, new brands that have been announced, whether it’s Spark or any of the lower tier extended stay brands, we are not currently actively pursuing deals in that space, though. We have regular conversations with the brands about the positioning of that new product and how it relates to other assets within our existing portfolio. I think we’re likely to track that space. But generally speaking, I think our model and our strategy has been very successful for us. And it’s been to invest in the product in the upscale and upper midscale space where we feel we can achieve the best balance rate potential, while with ability to drive strong cash flow and margins.
