But we also are seeing offsetting strength in the Virginia Beach and Baltimore market. I would say, yes, you should probably see low single-digits blended on a go-forward basis, driven by stronger renewals and improving new lease numbers.
Peter Abramowitz: Got you. That’s helpful. And then another question on multifamily. You talked about a pretty strong cap rate on the disposition that you’re expecting. I think you have mentioned that the asset is in the southeast, where a lot of the supply issues are happening and I think your occupancy is lower than the rest of your multifamily portfolio. I guess just trying to get some context around the cap rate there, because it would seem that, the pool of capital is still pretty deep. The pricing is still pretty attractive. Is it simply buyers or just brushing off the supply and looking through to the next year or two, or just some context around how you can still get the strong pricing despite the supply challenges?
Louis Haddad: Peter, I’ll let Shawn answer that specifically, but I want to make sure I reiterate what we said earlier. The occupancy, what looks like a dip in occupancy in those properties down there is solely due to the insurance claim. We left those units in the denominator and perhaps maybe we shouldn’t have, but we wanted to be as accurate as possible. We expect those to lease right back up once they come back online. There really wasn’t a dip in occupancy. Go ahead, Shawn.
Shawn Tibbetts: Yes. I think what you’re referring to Peter is on Page 17, the Southeast Sunbelt looks like it’s our dip to 91.1 right in that range. And again, there are 41 units not contributing to the occupancy there. To Lou’s point, we thought that, given there is an insurance effort moving forward, we thought we should keep in the denominator. We can cut that either way, but again adjusted holistically high level macro, we’re at 96.2% when adjusting for those 41 down units. To your question about the strength, I would say that, the interest in our asset is due to the quality and due to location as is typical with our properties. The strength of that particular asset has been great for us. But we believe, as Lou said earlier that, and as I alluded to, yielding or harvesting that capital at those types of cap rates is probably the most prudent move for us in terms of capital.
Peter Abramowitz: That’s helpful. And then, one more for me. I just want to go back to Lou’s comment a minute ago about office build-to-suit. It sounds like you’re hesitant to kind of get started on those. Is that a more a factor of just not wanting to increase office exposure, or is it more about the construction costs? And then, once the tenants understand the premium rents they have to pay, they’re a little hesitant and the deals won’t pencil?
Louis Haddad: It’s really the latter, Peter. We would engage with a credit tenant that would honor the spread we need to make in order to launch. Today, that number is outside the realm of what people are willing to pay. I expect that will change at some point. I expect trophy office buildings to go back to normalized cap rates, in a not too distant future or in the next year or two. We’ll be on the lookout, but right now, they just don’t pencil. We don’t want to — we’ve seen some real estate companies play the game of looking at year four or five as far as stabilization and saying that they’re making a spread. That’s just not a game we’ve played for 40 years and are not going to start now.
Peter Abramowitz: Got you. That’s helpful. I guess one more while I have you. Any particular markets where those requirements are kind of most active right now?
Louis Haddad: It’s really in our ecosystem of mixed use. You can guess. There’s still a lot of activity in Baltimore. We’ve got a couple of tenants that would love to get into Harbor Point. We just don’t have the room. Here in Virginia Beach, we are still trying to shoehorn in tenants in a 99% occupied building. But again, you just can’t launch.
Operator: Your next question comes from the line of Camille Bonnel with Bank of America. Please go ahead.
Camille Bonnel: Good morning. You had mentioned dispositions are your preferred route to raise capital today. Just wanted to expand on this a bit more. How big do you expect this program will be? What kind of assets are you looking to sell? If you started marketing assets, how has interest been?
Louis Haddad: As I mentioned, we are looking at two, at most three assets for disposition. I can tell you that, interest is strong. We are waiting. These are non-core assets that we’re waiting on a few brokers’ opinions of value, before we decide where to pull the trigger. But we’re getting unsolicited offers on just about everything we own in the southeast of a multifamily variety. Again, as Shawn alluded to, quality is everything. For an investor that’s looking for multi-year hold, they’re viewing the current environment as an opportunity to pick-up quality real estate at a discount and then operate it for years to come. The growth markets are still where that activity is going to happen. We’ll be making some announcements in a not too distant future on where that stands.
But as you might expect, at the kind of cap rates we’re looking at, it’s by far the most efficient way to raise capital. As I said, with as many as five properties coming online and maybe a subtraction of two, the company will be substantially larger next year in any result.
Camille Bonnel: Shifting to the balance sheet. How are conversations with your lenders going on around your extensions? Are there any updates on how you plan to address any near-term maturities? Just trying to get a sense of how far you’re looking across your debt expiration profile, when you’re doing your capital planning?
Matthew Barnes-Smith: Good morning, Camille. Yes, a lot of interest from lenders initially when we’ve looked at a couple of the term loans and we have capacity on them to syndicate. I would say, that it’s still limited. The lenders are slowly coming back to the market to have those conversations. It’s better than it was last year when I would say that there was probably very limited lending activity, but that has eased up here in the first of the year. We have a couple of small maturities this year that we’re going to pay off at maturity and we had a construction loan that we were able to extend. We have two one year extension options at a relatively good rate that we pulled the first one year extension option on. Nothing for us really too much to concern until we get into the end of 2026. But yes, we’re in constant contact with all of our lending partners to make sure that the debt side of the capital is available as and when we may need it.
Camille Bonnel: Okay. When you think about those 2026 maturities, is the idea to wait, or is there opportunity to address those maturities today? I think you’ve seen mixed strategies across the REITs in terms of how far they’re looking out.
