Adam Kramer: Hey, guys. Thanks for the time. Wondering where you’re sending out lease renewals for — after November and December at?
Ben Schall: Yeah, Adam, we sent them out at 6% for November, December, which is relatively consistent with what we quoted for where we were for the 2 months of Q3 on the last call. We have seen in some markets a little more degradation in terms of the committed offer to realization, but it’s still within sort of the 150 to 200 basis point range what we’re seeing renewals come in at 4% to 4.5%, depending on the more recent time period you’re looking at.
Adam Kramer: Got it. Helpful. Yeah. And then maybe just another quick one. Just remind us kind of where — or in the most recent quarter, where what the percent of move-outs to buy a home was?
Ben Schall: Yeah. As I mentioned in my prepared remarks, has been trending below 10% all year. It’s about 9.5% in Q3. I think we’re roughly 9% for Q2. So it has been trending down. As I mentioned, the long-term average is kind of in the mid-teens, and it’s been as high as the sort of high teens kind of pre-GFC.
Adam Kramer: Great. And maybe just one last quick one for me, if that’s okay, which is just on the bad debt kind of progression and not ask me for kind of a specific time frame or number necessarily. But if you think about kind of the recovery path back to pre-COVID levels, first of all, I guess, is that kind of the goal to kind of — or is it achievable, I guess, to kind of get all the way back to pre cover levels? And then kind of what’s the rough kind of time frame for getting back there?
Ben Schall: Yeah. Good question. In terms of pre-COVID levels, which are typically call it, 50, 60 basis points for us, the question is whether it’s going to be a new normal or not. I think probably the industry expectation is given various regulatory changes that have occurred in most markets across the country that it might be ideal to get back to 50, 60 basis points, maybe 70, 80 is more realistic. I don’t think we really know yet. And in terms of the time to get there, certainly, what I would say is I don’t believe we’ll get back to full stabilization by the end of 2024. I would expect it to carry into 2025. And what we really need to see is a little more movement as it relates to cases moving through the courts, particularly in markets like Maryland, D.C. and the Greater New York region.
As I mentioned earlier, we’ve seen significant progress in Southern California. 6% bad debt down sub-3% now. We haven’t seen anything like that in terms of percentage improvement in some of the other regions I just mentioned.
Adam Kramer: Thank you.
Operator: Our next question comes from John Pawlowski with Green Street. Please proceed with your question.
John Pawlowski: Thanks for taking the question. Just a follow-up on the — just the delinquent tenant conversation. As you work through the backlog, evictions and long-term delinquent units, do you expect a meaningful acceleration in repair and maintenance costs next year?
Ben Schall: Yeah. Good question, John. We can. We have seen some of that this year as reflected in what we’ve posted in terms of cost because there’s yeah, just greater damage in the units. And obviously, you might do billing damage receipts back to the resident, but then you’re pretty much immediately writing it off because you’re not collecting it. So I would say that, that has been elevated this year, and I would expect that along with legal and eviction costs to also remain elevated in 2024. It may not be a significant growth rate from 2023 to 2024 but it should remain elevated in both categories.
John Pawlowski: Okay. Sean, one market level question. Can you just give us a color – some color on the large sequential revenue decline in D.C. proper this past quarter?
Sean Breslin: Yes, D.C. proper there’s a number of issues there. As it relates to primarily, what you’ve got is sort of a seasonal issue. We have probably three assets there that have exposure to the student population near AU or other universities. And so you typically see that occur sequentially during that quarter and then it bounces back in Q4. That’s the most meaningful component. There are other miscellaneous things as it relates to supply and number of submarket and other things that you could overlay on top of that but by far the sequential change for the student population is the most meaningful one.
John Pawlowski: Okay. Thanks for taking the questions.
Operator: Our next question is from James Feldman with Wells Fargo. Please proceed with your question.
James Feldman: Great. Thank you. I guess for my first question, can you just talk more about the acquisitions both in the quarter and the October acquisition? I guess, what I’d love to hear about is how distressed were the sellers – how much did pricing move before you decided to buy the assets? Just any color on what the market looks like in pricing?
Matt Birenbaum: Sure. It’s Matt. I’ll speak to that one. So again, just taking a step back here we sold $445 million worth of assets this year including one – our last dispo, which will close at the end – close next week. And those were at a kind of a blended average cap rate in the high 4s. And those were kind of sold and priced throughout the year better pricing earlier in the year, softer pricing later in the year. We bought three assets for about $275 million, all in the last 60 days. Those cap rates were more like mid-4s. And I would say in no cases where the seller distressed. One of those cases we did assume some debt, which probably gave a little boost to the price. So – and all of those assets, if we – if they were to price in today’s market would certainly price at a higher cap rate than that I don’t know how much higher.
