Floris Van Dijkum: Hey, good morning, guys. I had a question for you on the capital markets and how that’s impacting your business. And obviously, you’re testing the market with some asset sales. Should we presume that you’re testing the market in sales below $100 million? Or because of the difficulty in getting debt on some of these larger transactions? Or does the Sunstone news make you more positive on some of the bigger potential dispositions? And then the follow-up, I guess, is on the fact that the debt markets are more accommodating for smaller transactions, are you seeing more competition for the types of asset that you’ve been buying like the Chico and the resort type assets?
Mark Brugger: Floris, it’s — let me try to parse through those several questions. So I would say, in our portfolio, everything is for sale, and there certainly seems to be an arbitrage between private market values and public market implied values. So I’d like to convince to that arbitrage. With that said, it’s not a great sellers market right now. So we’re trying to be prudent about making sure that we’re doing what’s in the best interest of our shareholders on release prices. So we’re actively involved in testing the market. I think it’s below $100 million, we’ve seen greater volume in the number of lenders and the number of potential bidders. So you’re more likely to get a number of bidders on those on those more small to midsized deals than you are on the $200 million product deals that are out in the marketplace.
So we remain — we think the best arbitrage is still probably in the under $100 million dispositions. The flip side, as you pointed out, is that for acquisition opportunities, there is more competition for those kind of opportunities. That’s why we continue to spend our efforts on off-market transactions. And as I mentioned, our proprietary database that we’ve spent over 10 years now on focused on these kind of unique opportunities like Chico and Lake Austin. They continue to be where we are spending our time on the extra growth front.
Floris Van Dijkum: Great. And maybe my follow-up question is you have a mortgage on the Courtyard in New York that’s coming due next year, $74 million, pretty low interest potentially, I mean, you could look to sell — that could be one of your dispositions as well potentially. So you don’t have to deal with that. But would you otherwise just simply pay down the mortgage and increase your unsecured borrowing base?
Mark Brugger: Well, I don’t think it makes it more likely that we sell the asset debt’s fungible among the assets if we sold another asset, we can certainly use it. But I would say we have — we ended the quarter with $102 million of cash plus the undrawn revolver, so we could satisfy that mortgage with cash on hand. So we have all the — kind of all the optionality that we need. It’s one of the reasons we keep the fortress balance sheet and the financial flexibility to handle those kind of events when they come without putting any pressure on the company.
Floris Van Dijkum: Thanks. That’s it for me.
Mark Brugger: Thanks, Floris.
Operator: Thank you. And our next question coming from the line of Anthony Powell with Barclays. Your line is open.
Anthony Powell: Hi, good morning. Just a question on business transient. I think you talked about some sluggishness there in the third quarter. Were there any particular markets or, I guess, categories that drove that decline? And what revenue management strategies to implement to counteract that?
Mark Brugger: Yeah. So just to — good morning, Anthony. It’s Mark. Just to clarify, we didn’t see BT softness. We just said it substantially remained substantially below 2019 levels. Really, what we’re seeing, and you’ve seen these comments from the big brand companies as well as the small business travelers still remains relatively robust, and they’re at levels north of what they did pre-pandemic. But the biggest special corporate, the sensors, PwCs, they’re traveling at much, much lower volumes than they did pre-pandemic. And that trend continued in the second quarter and the third quarter. The comps were, obviously, easier to last year. But they remain at those lower levels, and we’re seeing it gradually get better post Labor Day, but it remains depressed levels overall.
Anthony Powell: Got it. Thanks. And maybe one on cash flow for next year. I mean, you talked about some more developments, redevelopments in 2024. Do you expect the CapEx budget to remain where it is? And also on the dividend, do you have any NOL and whatnot that keep your dividend at current level, or maybe the dividend go up next year as income continues to increase?
Jeff Donnelly: Hi, Anthony, it’s Jeff. Right now, I mean, as Mark said earlier, we’re still pulling together our budgets. I think our CapEx will generally remain as what it was originally contemplated to be this year, which I think is about $100 million. It’s a pretty consistent number for us. It might flex a little bit simply because there’s timing issues between when projects are started and completed or carryover from the prior year, but it will be about $100 million. And as for the dividend, right now, we paid $0.12 share per year. I’ll defer to Mark on that where the Board had that, but I think that’s the plan going forward in 2024. Yeah. And we have sufficient net operating losses that we can continue to use to offset the need to pay a dividend, I believe, through much of 2024, if not at all of 2024. So I think we have the ability to keep it at that level.
Mark Brugger: Yeah. I’ll just add on, on the dividend policy. It’s something we’ll review with the Board every quarter. But right now, it looks like the highest and best use of our capital is in other places, while we value the dividend and know it’s an important component of long-term returns for lodging REITs. Right now, given one of the stock price is trading, we just think that there are higher and better uses generally for that capital, but it will be something that we talk about every Board meeting we’ll evaluate quarter-to-quarter.
Anthony Powell: Okay. Thank you.
Operator: Thank you. Our next question coming from the line of Dany Asad from Bank of America. Your line is open.
Dany Asad: Hi, good morning guys. We’ve heard airlines commenting during this earnings season that there’s been — they’re seeing strength on peak holidays, but outside of those windows, there’s been a little bit of more weakness in between. Are you seeing any similar behavior in your booking patterns and maybe why or why not we could be different than what we’re seeing on the airline side?
Mark Brugger: Dany, I think it’s a little bit of — we’re starting to establish the new normal patterns this year on that. So certainly, there’s some Florida fatigue, I would say, and some of that stuff that we had exceptional shoulder seasons. They’re remaining better than they were pre-pandemic, but they’re coming down into, I think, more sustainable levels that we can build on going forward. So I wouldn’t say that’s different. We are implementing strategies around that reality. So that may mean that some of our resorts like I’ll take a Henderson Beach Resort, which we have invested and has terrific meeting space. Last year, we basically locked it up and barely used it. As we move into 2024, we’re going to be much more aggressive in booking and high-end group during the midweek to make sure that we’re maximizing profits for the hotels.
