Steve Sakwa : So you’d say you’re kind of flattish on rollover on an annual basis.
Dave Dupuy : Correct, yeah.
Steve Sakwa : Okay. And then just remind me, within the leases, do you — I assume you have contractual rent steps in those leases. Is that average kind of 1%-2% a year within the leases on average?
Dave Dupuy : I would say they’re on average 1.5% to 2%. I mean, we have, as you might expect because we’re buying existing buildings with existing leases, so we see everything, everything from CPI-based to fixed to fixed with a cap. But I would say, in general, you could assume that the portfolio is 1.5% to 2% in terms of rent bumps per year.
Steve Sakwa : Okay. And just to come back to the financing for a minute. I realize you’re trying to keep low leverage. And so just trying to understand, marginal borrowing cost today for you on the line, it sounds like it’s SOFR plus some spread, and the bank debt market might be something similar. So I’m guessing that your all-in borrowing cost is at least — on the debt side, at least 6% today. Is that fair and maybe moving a little bit higher?
Dave Dupuy : I mean, look, we’re actually very excited of where we were able to fix the debt that we just — that term loan cost is right at 5.1%. So we’re very excited at that outcome. And I would say — I would — I think we’re about 6% on incremental borrowings under the revolver. I think that’s probably right. I would have to go back and look at the spread, but I think that’s right.
Steve Sakwa : Yeah. I guess I’m just going back to the — there was a previous question on kind of the mix of debt and equity. And if your stock is trading around a six cap and marginal borrowing costs are six, the earnings accretion is about the same whether you use debt or equity. So I’m just wondering, would you lean even heavier into equity just to keep the balance sheet even in more pristine shape versus using leverage when the day one borrowing costs are about the same. I realize, over time, there might be dividend growth and higher shareholder return. But at least from an earnings accretion standpoint, it seems like it’s about a push between equity and debt.
Dave Dupuy : Yeah. No, I think that’s a fair point. And I think it’s always been a priority for us to have that mix. Our debt — our net debt to book capital has always been in that 30% to 40% range. And I think what I would tell you is, you tend to add debt incrementally. We just did that. I think it’s safe to say we’re going to be looking to access the ATM over time to continue to delever. And yeah, I think from our perspective, we believe that, that mix will continue going forward.
Steve Sakwa : Okay. And then just last question. Anything regionally — I mean, you guys are spread out in a lot of different MSAs, larger, smaller across the country. Is there anything that you’re seeing regionally or in an MSA that looks good or bad or is better or worse than maybe you would have expected? Just anything to call out from a regional, either operational leasing perspective or acquisition opportunity perspective?
