If we have a hard landing and all bets are off, right? I mean what drives multifamily demand and any demand for any product ultimately is economy [technical difficulty] economy today is good. The job have been plentiful, and they’ve been primarily in the Sunbelt. And I think as long as we have a — the same kind of economic construct or a soft landing scenario, then work demand to take up the supply and our numbers will be what our numbers are. But on the other hand, if you have a hard landing, and we lose 2 million or 3 million jobs [technical difficulty].
Alexander Goldfarb: Okay. Thank you.
Operator: The next question comes from Eric Wolfe with Citibank. Please go ahead.
Eric Wolfe: Hey, thanks. I think you said that you expect a 10 bps contribution from occupancy now. So just trying to go through the math, I think that means that you’re expecting like 95.4% through the year, which would mean they call it, like 95.5% through the remainder of the year just based on what you’ve done so far. Is that the right way to think about sort of what you think occupancy will average?
Alex Jessett: That’s exactly right. So we are assuming that we’re going to be at about 95.4% for the second quarter, 95.5% for the third quarter and 95.4% for the fourth quarter, so exactly in line with your math.
Eric Wolfe: Got you. And then you touched on this briefly, but you said that the sort of forward indicators of occupancy were telling you that there could be some improvement. I was just wondering if you could maybe go through like the lease rate, the percentage of tenants renewing just sort of anything that you’re seeing it sort of gives you confidence that occupancy should continue to rise?
Ric Campo: Yes. So what I was referring to, Eric, is the — when we think about making adjustments to strategy, obviously, we were — we use YieldStar and YieldStar is forward-looking. It’s always looking at least 8 — 6 to 8 weeks out for trends. It projects kind of what future occupancy is going to be based on where our portfolio is at the time, renewal — lease renewals that are upcoming, et cetera. So when we have — when we are making strategy changes, it’s in conjunction with our revenue management team who are using the tool that we have, which is you’ll start to inform us about not like what’s on the ground today. That’s obvious. We know what that is. The question is, what is it going to be if we continue on this path and either don’t make a strategy change or we do make a strategy change, what does that project our occupancy to be 8 weeks out.
So when we look at — as we look at it today, we are encouraged that to the point where we are going to — the tool and the algorithm that is YieldStar is going to say, you have the opportunity to increase rents across certain markets, and we will take advantage of that. But that’s — that’s all I was referring to is that the model is forward-looking. We used the model and obviously, with a lot of history and experience and judgment applied to it to help us make decisions about strategy.
Eric Wolfe: Got it. Thank you. That was helpful.
Keith Oden: You bet.
Operator: The next question comes from Jamie Feldman with Wells Fargo. Please go ahead.
Jamie Feldman: Great. Thank you and good morning. So I’d like to go back to your thoughts on just capital allocation. I know you had mentioned buying the stock near 6 and cap rates near 5, but if you’re thinking you get red spikes a couple of years out, I know you had mentioned 450 million or so left on the repurchase plan. But just how do you think about the next 100 million, 200 million as you think about what’s going on in the markets. And if this is the window to actually buy or do any kind of — I know you don’t love JVs, but any kind of investment across the capital stack versus buying back shares?
Ric Campo: Well, the — you’re right, we don’t like JV, so we won’t be doing that. We have the most pristine balance sheet from a ownership perspective. We own 100% of everything we own. We don’t have any partners, so we do what we want when we want to do it. The issue of capital allocation, it’s one of those interesting discussions. We’ve always said that if there’s a big disconnect between our stock price, our stock price is 20% plus below what we think the value of the underlying assets are and that it’s persistent over time when we can sell assets and buy stock, that is something we do. And we obviously did that in the first quarter, and we’ll be considering that again as we go forward into the — through the rest of the year.
And then ultimately, when we decide to move to offense, in terms of starting new developments and potentially acquisitions as well, I think this market is an interesting market. If you look at just the — maybe the [indiscernible] tenure today is going to improve people’s outlets on transaction volumes because it sort of people came in at the beginning of the quarter when the tenure was doing pretty well at the beginning of the quarter and then all of a sudden had the big run up that sort of flashed [indiscernible] the energy that people had in the transaction market because if you look back, we are at transaction levels that haven’t been seen since 2014. So there’s just not a lot of deals going on. But there should be some interesting opportunities to buy and sell where we sell some of our properties, buy other properties just to move the textures around our — on our portfolio to improve the quality and ultimately, the growth rate going forward, maybe market concentration.
So we will look at all those things. But like I said before — the — in order for us to go on offense, we really have to — have to — have the peak leasing season come through the way we think it will.
Operator: The next question comes from Michael Goldsmith with UBS. Please go ahead.
Unidentified Analyst: Hi. This is Ami on with Michael. I was just wondering, it sounds like you’ve made a lot of progress on the bad debt, so that’s good. Is this pace of bad debt reduction sustainable? And is there potentially room for you to improve bad debt below the historical average with the enhanced screening processes?
