And therefore, it’s easier to sort of create a model that works financially today with a falling rate scenario in the next 2 or 3 years. But we’re not there yet for sure in terms of that inflection point.
Operator: The next question will come from John Kim with BMO Capital Markets.
John Kim: I wanted to ask about dispositions. I guess, this month, you’re going to be selling Camden Vantage in Atlanta. Why this particular asset is not old. It’s in one of your core Sunbelt markets. We calculated the cap rate north of 7%, so I didn’t see like pricing was that great. But going forward, where else do you see this decision activity, will it be in California or focused on more of your older products?
Alex Jessett: So I’ll take the cap rate question first and then I think maybe Keith can opine on the disposition choice. But for Camden Vantage, we are showing this at using actual CapEx and a management fee at a 5.75% cap rate. Tax adjusted 5.65% cap rate and an AFFO yield before management fees of 6.09%. So definitely a lower yield than you’re calculating.
Keith Oden: Yes. And on the dispose side, I mean we keep a list of and have ongoing conversations with our operating groups about if there were to be a sale out of one of your markets or submarkets which assets would be in that conversation. And Vantage almost always came up as 1 that would be on the list of management’s list of assets that they would rather someone else take care of. So I’ll just leave it at that.
John Kim: Can I just follow up what was the CapEx consumption on the on Vantage?
Alex Jessett: Yes. The CapEx on that one, I think it’s probably around $1,800 a door but I’ll have to get back to you the exact.
Operator: Next question will come from Rob Stevenson with Janney.
Rob Stevenson: Just on the dispositions, given how low your leverage sizeable free cash flow and the minimal development spending remaining. How aggressive are you willing to be and sell more assets without corresponding acquisitions? Because it seems like given Keith’s acquisition market commentary that acquisitions at best would be back half end loaded and may not come at all if the rest doesn’t come.
Keith Oden: Yes. So our guidance assumes that we basically match dispositions and acquisitions. So we would look to be kind of net 0 on the year. And the answer on the acquisitions really dispositions kind of gets back to when we find value and we believe that there’s a real opportunity on acquisitions, then we would those clearly would be assets that we wanted to — newer assets that we want to add to the portfolio and we’re always willing to improve the portfolio by selling a corresponding number of dollar amount of assets that to fund that. So our working assumption and what’s reflected in the guidance is, is that we’re willing to be pretty aggressive when we see value in acquisitions but not before then.
Rob Stevenson: Okay, that’s helpful. And then, just a point of clarity. The mid-5 to low 6s that you guys talked about on development yields on a stabilized basis. Was that for the 2 Charlotte ones that you might start this year? Or was that to stabilize yields on the 4 properties in the current development pipeline?
Ric Campo: Actually, the numbers are the same. The current development pipeline, we have some in the sort of the low to mid-6s and some in the sort of low 5s. The new developments in Charlotte, we’re still working on what the model looks like but we wouldn’t start them if they were in that zone.
Rob Stevenson: Okay. And are you seeing any real relief on materials or labor on the development side, given the sort of pull back in other areas of development? Or is it still competitively priced versus the last couple of years?
Ric Campo: Not yet. We haven’t seen a big — any big drops in cost. What’s happened is the costs haven’t been going up as much. I mean if you go back a couple of years, we were having like 1% to 1.5% inflation every single month. And so today, that’s a little — you don’t have that part of the equation but there hasn’t been a material shift in pricing. And that’s 1 of the challenges you have every merchant builder and Camden has is that if costs aren’t coming down but rents are flat and it’s a very competitive market, you just — it’s really hard to justify new construction. That’s why the starts are projected to fall to low 200,000s in 2025. It’s just that a math doesn’t really work well when rents are flat and construction costs haven’t fallen.
Operator: The next question will come from Wes Golladay with Baird.
Wes Golladay: Question on the development delivery forecast. Do you think this year is going to be more at risk to delays versus prior years? And are you seeing any of the developers going bust yet?
Ric Campo: We haven’t seen anybody going bust yet. And I think that banks are definitely, we hear a lot of anecdotal information about banks working very well with their borrowers today. The banks are much more — they’re well capitalized and the — it’s pretty common knowledge that in the next couple of years, the economic drop — backdrop of operating fundamentals and lower interest rates are all going to help — it’s going to help get some of these deals through that system. So in terms of that perspective, I don’t think that you’re going to have any — there’s not going to be any major bankruptcies for major defaults with merchant builders they might be stressed to sell but that doesn’t mean there — I think there’s still equity in their deals, most of them anyway.
In terms of delays, it’s still hard to get a project to be delivered when you expect it to because so many people left the labor for us. We don’t have excess labor supply. And so there’s still a fair amount of risk in deliveries and when the delivery is going to come. And so that could actually be beneficial to the backdrop of our supply and demand equation. If starts do plummet or I think they will but let’s start when you actually start seeing more and more of that, if we delay some of the ’24 supply into ’25 and some of the ’25 into ’26, that could be a lot smoother softer landing for those markets given the demand side.
Operator: The next question will come from Anthony Paolone with JPMorgan.
Anthony Paolone: Yes, thanks. So it sounds like the stress is in the system just isn’t there to create a lot of opportunities right now. So wondering what it might take for you to use some capacity to buy back stock?
Keith Oden: Yes. We’ve — it’s something that we look at constantly in terms of the opportunity set for allocation of capital. And in the past, we haven’t been bashful about buying back stock when it made sense to do so. It’s always a little bit of a challenge because of the rules and the trappings around buying stock in size and doing it in the windows that are available. But yes, it’s something we’ve talked about. We’ve discussed and that we would pursue when the — when we think the opportunity makes sense.
