John Dunn: Got it. And then on private markets, it sounds like we’re getting closer, but it’s going to be newer products on the block. Can you give us maybe a flavor of like how the conversations are going, the demand and eventually, where might you envision it being as part of the AUM base? Like how much of a contribution.
Joe Harvey: Well, we don’t really try to make projections on how much AUM it can represent. We focus on investment performance and providing strategies that are compelling and unique. That’s where we spend our time. Clearly, the real estate sector is one of the biggest asset classes in the world. So, the potential if we deliver on performance and deliver on distribution, it could be meaningful to the company. We have two different investment strategies. One is a core strategy that would be executed through the nontraded REIT vehicle. And as I mentioned, we are mobilized, we’re ready to go. And we’re just waiting for prices to decline to the point that were notwithstanding all the uncertainty in the world that we can say, look, these are going to be great investments over the next five to 10 years.
So, I think we’re much closer to that. And I would expect that as we get into early next year, it’s going to be time to put money to work. The other strategy is an opportunistic and higher return strategy that is focused on properties that might have an overleveraged situation or a vacancy situation. And there, too, we’re waiting for the dynamics of debt maturities and changing cost of capital to present the opportunities. And so, as I mentioned, we continue to raise capital, but it’s probably going to take a little bit longer for some opportunities to emerge there just due to the nature of the dynamics of how properties are financed and the process that owners and lenders need to go through to ultimately make sale decisions.
John Dunn: Right. And maybe just like commentary on how you’re finding the reception since you’re kind of breaking into the channels?
Joe Harvey: The environment fundraising-wise is more difficult just for all the factors that we mentioned. The reception of our approach to investing in private real estate and also including some investing and listed alongside of it has been received very well. It’s a unique approach by bringing both of our teams together to have an information advantage and an idea advantage and in some cases, putting both types of investments in a vehicle is very compelling. So, as it relates to nontraded REIT, our strategy is different than the ones that are out there. And that as we’ve been talking to gatekeepers over the past 1.5 years, what they’re going to see is that we’ve been right on that strategy. And so, as we demonstrate what we can do on the investment side, I think they’ll receive us very well.
On the opportunistic vehicle side, it’s a multi-property sector strategy, which three years ago maybe wasn’t as popular. But now with the breadth of opportunities in the private market that are emerging, investors are warming up to that to that approach including some listed opportunities in that vehicle.
John Dunn: Got it. And maybe a couple on expenses. You guys gave the fourth quarter comp ratio. Any early thoughts on the philosophy for next year, retention versus keeping in check.
Joe Harvey: Right. So, John, we typically give the 2024 guidance in the fourth quarter. So not prepared to signal where that is. But I think when — as I said in my remarks, the market declines in the end of the third quarter sets us up for a larger decline in full year revenue than what we had forecasted, so we needed to make an adjustment. And we did that keeping in mind like we always do, retaining our employees and returning shareholder value. So, we think where we have it set now is going to be where it needs to be, all things being equal, but all things are not always equal. So — but for 2024, we’ll give you that guidance on the next call.
