Gregg Adzema: Sure. Upal, it’s Greg. The vast majority of our property tax savings this quarter were in Texas and the vast majority of what we own in Texas is in Austin. So, the savings were primarily in Austin. It hasn’t been approved, but it will be overwhelmingly approved by voters here in a couple of weeks. Once that happens, it kind of resets the bar. And so as we do with any accrual we caught up three quarters to the first nine months of the year, this quarter. So, you saw kind of nine months of an accrual adjustment pushed into three-month reporting period. In the fourth quarter, it will just be a one-month reporting period. So, we’ll still enjoy some savings, but it won’t be quite as large as it was this quarter. And then we reset the bar in Texas going forward.
So, it’s a favorable kind of outcome that has legs moving forward for us. We haven’t seen anything large like that in any of our other markets, statewide or market-wide adjustment to kind of the property millage rate or property tax policy in general. But you take a step back and we all realize what’s happening to office values here. So, we should be successful just in general, on appeals of property tax assessments going forward. So, there are certainly some headwinds on the expense side for office owners, just general inflation as well as people returning to the office. But on the property tax side, I don’t think we’re going to have those same headwinds.
Upal Rana: Okay, great. Thank you. So, for my next question, I mean, you kind of highlighted all your strong balance sheet and your strong liquidity. Are you still going to focus on liquidity? Or do you think that maybe you can start putting some of that to work maybe in buybacks or some other places?
Gregg Adzema: Yes, it’s Greg again. As Colin talked about just a few minutes ago, we value our liquidity at the moment. We’ve always maintained liquidity. And these are the periods of the cycle where it has tremendous value. And so we’re going to be patient and disciplined before we deploy it. There will be opportunities to deploy it, but we’re going to be very thoughtful and treat it as a competitive advantage because it is one. And so we’ll look at each opportunity as they arrive. Things are starting to kind of come over the threshold. The pace is increasing slightly, and we’re optimistic going forward that we’ll have a chance to do something with that liquidity.
Upal Rana: Great. Thank you. That was helpful.
Operator: Our next question will come from Camille Bonnel with Bank of America. Please go ahead.
Camille Bonnel: So, a few follow-up questions on the balance sheet. First, more generally in today’s market, where do you see the most attractive places to raise capital?
Gregg Adzema: Camille, it depends on what type of capital we’re talking about. But at the moment, equity capital is obviously priced at levels that us and other office streets would find not useful. So, I don’t think you’re talking about raising equity at the moment. On the debt side, what has emerged is, if you have the right assets, you can obtain mortgages on those assets. The LTVs are lower. The spreads are higher than they have historically been. But there’s debt available for the right office buildings. And that’s probably the most cost-effective debt available at the moment. Unsecured debt, whether it’s a product placement execution or an investment-grade bond execution would typically be more expensive. And you’ve seen — there hasn’t been much liquidity, but you’ve seen some liquidity on both of those fronts.
So you can generally kind of see the pricing on that. In terms of kind of alternate sources of liquidity might be a joint venture or something like that, I think that also has become more difficult than it has been historically, and there’s limited liquidity out there. The typical joint venture partners are — I think, have taken a step back from the office market at the moment and they’re trying to figure out where pricing will actually occur and when liquidity returns. I don’t think they’re going to be at the forefront of it. I think they’re going to be watching what happens.
Camille Bonnel: That’s helpful. And can you put some numbers around where you think spreads are today, if you try to raise secured or unsecured debt?
Gregg Adzema: Yes. I mean, it changes. It’s fluid. But I would say that — and you can see the REIT office, REIT unsecured bonds trade, they trade every day. Not a lot of them, but they do trade. So you can see the spreads out there. And I think that the higher investment-grade office unsecured bonds are trading in the kind of the high 200s to low 300s over the 10-year spread. And then in terms of secured debt, I think you’re probably 50 to 75 basis points tighter than that.
Camille Bonnel: I appreciate the color. And finally, what gives you comfort to underwrite redevelopment projects like Hayden Ferry or potentially Domain 4, when there is such high cost barriers and unknowns around where rents will ultimately pencil out that?
Colin Connolly: Camille, it’s Colin. I think we’ve got a lot of confidence in Hayden Ferry and a lot of history in Hayden Ferry. And we’ve also seen some very recent successes with our redevelopment projects, certainly here in Atlanta to Promenades executed similar redevelopments and solid demand and the rate that customers were willing to pay for a premier lifestyle type office properties. And then looking out specifically to Tempe, we just executed a repositioning of our Tempe Gateway project, which is effectively across the street from Hayden Ferry. And again, we’re able to see the types of rents that we were able to achieve and are achieving a Tempe Gateway, and that gives us direct visibility into how we’re underwriting the repositioning of Hayden Ferry.
