And so having these two included in our real estate-owned properties really improves our position with them in a downside scenario. We’re not expecting that, but it certainly helps. But when you have the lease rate being reset shortly. You throw all of that together, and we feel like it was a no-brain and we’re excited about that acquisition.
Austin Wurschmidt: That’s great. Thanks for the time.
Dave Sedgwick: You bet. Thank you.
Operator: We’ll take our next question from Michael Carroll with RBC Capital Markets.
Q – Michael Carroll: Yes, thanks. I guess, James, in your prepared remarks, you kind of discussed that pricing is starting to come down. So what’s driving that? Are buyers pushing and sellers willing to accept higher yields? Or are these stakeholders just being more conservative underwriting where EBITDARM is trending or where it could potentially stabilize?
James Callister: Yes, Mike, I think that it’s a combination of factors. I guess I’d say, I think that you see a number of — more than user institutional groups now that they’ve got positive cash flow in buildings, trying to take advantage of being there and exiting, putting those up for sale? And if they’ve got any kind of interest rate risk or maturity date risk, they’re just wanting to be a little more reasonable to get the deal done quicker. I think also they really want to attract the all-cash or quick buyer. So they’re willing to get a little more — you kind of — they take a little less on the proceeds side to get more certainty of execution and timing. And so I think that’s why they’ve come down a little bit. I think also just if you put a deal out there right now at a stabilized number and it’s not, you’re just not going to get the interest, you’re not going to get the buyer of a quality that you want to be able to close quickly.
And I think that’s feels like it’s finally started to really be taken into account and narrowing the bid-ask gap a little bit to kind of ensure that certainty of closing with a quality buyer.
Q – Michael Carroll: Okay. And then can you kind of provide some color on who are the sellers? And — maybe you could talk about it generally or even kind of discussing related to this Covenant Care deal, I guess, why do they want to sell? Was there a certain reason in this situation, why the seller wanted to get out?
James Callister: On the two Covenant Care deals, it’s a third-party family kind of owned, family office, third-party landlord. They were not particularly heavy investors in skilled nursing. This is just an asset they’ve held for a very long time, and they felt like it was the right time to get a price that they could sell at. So I can’t speak entirely for them, but I think that’s pretty consistent right now, whether it’s institutional or mom-and-pops or whoever that either fatigued for what it’s been like for a few years or really are facing down the barrel of having to try to refinance or figure out their maturity date risk, and so they’re putting out properties for sale. And you still see some institutionals and REIT selling non-core assets because the buyer pool is more a little more — you get that certainty that, hey, if I put it up now, I’m getting a cash buyer, and so they try to take advantage of that now the cash flow is positive for the most part.
Michael Carroll: Okay. And then with regard to the expected Eduro transition, can you quantify the type of rent disruption we should expect on that?
Dave Sedgwick: No, not at this point. We’re still working through a couple of different scenarios with them. But like I said, as we sit here today, we don’t think that it’s going to be anything material to us.
Michael Carroll: Okay. Great. Thank you.
Operator: [Operator Instructions] We will take our next question from Juan Sanabria with BMO Capital Markets.
