William Monroe: There is a lot of movement from quarter-to-quarter, however we would expect there’s some seasonality in the first quarter, but as we look at the changes to the compensation plan, those amortization schedules are over 36 months for kind of the long-term incentive awards. So those will remain, the cash salary will remain. So we typically see some movement in the second quarter versus the first quarter, but I would not expect it to be a material amount. The other thing we would highlight as we look at kind of compensation throughout the year is beginning in the third quarter, we will start accruing for 50% of executive bonuses to be paid in cash as part of the new executive compensation plan approved in January.
We waited for that to be enacted to align with the start of a new performance period, which always goes from July 1st to June 30th. So similar to the impact of executive cash salaries this quarter, we would expect that 50% cash bonus to have an incremental impact AFFO of about $0.01 per quarter, right? Kind of $260,000, similar to what we announced here in the first quarter.
Rob Stevenson: Okay, so we shouldn’t be expecting the G&A to revert back to sort of the $3.6 million, $3.7 million a quarter that you had in the second — through fourth quarters of last year, it’s going to wind up running higher than that because of the way these comp programs work with GAAP.
William Monroe: That’s right. It is — while executive compensation will be lower — compensation is not the same as GAAP expense, and so there is a significant amount of kind of non-cash compensation and amortization that we will continue to have going forward.
Rob Stevenson: All right. That’s helpful. And then Dave, One last one for me. When you’re talking about the development assets that are closing in ‘25, ‘26, ‘27, Why is it as far out as ‘27? Did some new development get added to the pipeline or was there some sort of significant delay? Seems awfully far out into the future. I respect that even a high-rise Manhattan development could be completed by ‘27 at this point. So just curious what’s taking that one in the — and I don’t know when — if the ‘26 one is a back half of ’26, but for you know sort of more suburban assets it seems like an awfully long cycle there.
Dave Dupuy: Yeah, no, that’s a fair question, Rob. Couple things going on. First of all, there’s a net of one new deal that we added to the group this year was actually one deal that we were going to do in Florida that we decided not to move forward with. Again, and this gives you a snapshot into the world of these projects, just a significant amount of issues with the site. And push back on some, there were some endangered species, both plant and animal on the site, that resulted in a lot of expense and problems. So one of the Florida projects fell out of the group and we added two new projects. Both of those are in Texas that are now part of the new group. So because we just signed the deals, it typically takes at least a couple of years.
And the reality is, ever since COVID, the projects — getting these projects totally through from beginning to end, there’s just been a six to even 12-month add, as it relates to getting these projects constructed. Believe me, both our partner as well as us want to get these online as quickly as possible. And so that’s what you’re seeing. You’re seeing the addition of 2027 sort of recognizes that we just have these two new facilities that we literally just signed up a net one new for that pipeline.
Rob Stevenson: Okay, that’s helpful. Thank you guys. Appreciate the time this morning.
Dave Dupuy: Thanks, Rob.
Operator: [Operator Instructions] The next question comes from Jim Kammert with Evercore. Please go ahead.
Jim Kammert: Good morning, folks. It sounds like the whole Genesis situation resolved pretty well here. Can you just provide some qualitative comments regarding sort of the new tenants on the five assets that they were assigned or assumed leases? And were there any material increments or diminution to the leases? I presume they’re pretty much assumed as they were, but any color there would be helpful.
Dave Dupuy: Yeah, it certainly was a long bankruptcy process, but we’re proud of the outcome and the team’s hard work to get all seven of those remaining properties assigned to buyers or assumed by the new Genesis Care. As you look at those new buyers, that were assigned, it was five separate buyers. They include a large oncology provider, a large hospital system, and some local oncology practices. And so, you know, receive adequate assurance as part of the bankruptcy process from Genesis Care on these assignments and look forward to working with these new tenants and feel good about those new tenants in those facilities. The two remaining properties that Genesis Care assumed after exiting from bankruptcy. Again, Genesis Care is in a much different leverage position than they were entering bankruptcy. And so again, receive adequate assurance around the new Genesis Care and look forward to working with them as well.
William Monroe: And Jim, we’re actively working on lease extensions with these new tenants. And what I would say is, look, these leases had uncapped CPIs. And there’s going to be a handful of leases that will probably for additional term — will probably lower to make them more market because during COVID, those [lease rates] (ph) went up to way out of market. But the good news is we’ve got good operators in those businesses and we feel like that they’re in a good place right now.
Jim Kammert: That’s very helpful. And then I think David, you’d mentioned that potentially you’d look at some asset sales and partial funding obviously for the accretive new investments and just plain devil’s advocate looking where the stock and consensus implied cap rates around [8, 9] (ph) on the equity. I mean, presumably you could sell a number of your assets well inside of that. Just what’s the philosophy there of asset sales versus equity just to try to think through your process, please?
