Alan Peterson: Understood. Maybe just shifting over to the acquisition. Paul, I know that you mentioned that you guys are looking at a 6% yield. Is that 6% yield on a year one basis? And I know that you talked about some of the renovation upside. And it sounds like there’s some potential densification or even expansion over the next, call it, 24 months at that property. How are you guys thinking about it from call it, a year 3 and beyond yield standpoint in terms of the underwriting there?
Steven Freishtat: Yes, Alan, this is Steve again, and I’ll kind of start with that and then transfer to Paul to kind of talk about the upside in the out years. But the — the 6% is in an internal yield based on what we expect over the first 12 months. So Yes, it’s year one, and we think that this becomes accretive within those 12 months. So from a cap rate perspective, we’re pretty excited about that. We’re obviously very excited about the real estate and the opportunities here. And I’ll turn it over to Paul to talk about renovations and where we see the upside.
Paul McDermott: Thanks, Steve. Yes, Alan, and I’m going to draft a little bit off of Grant’s comments on RealPage and what he saw — when we look at this, and I think we’ve set the bar appropriately high for our acquisitions criteria, I mean this is the only one we’ve seen in probably plus to 18 months where we thought it had the potential that we think it has aside from the spread between Class A’s, we look at the demographics of the North Root Hills market. How much capital has gone in there, the amount of jobs around our property that are continuing to go, we think we’re going to be dealing with a higher credit profile here in that, the income band the demographics we are targeting has increased 17% over the last 5 years.
But when I look at the property itself, and we think this was a great real estate deal. The property itself, we’re looking at 10 units per acre right now. And if you look at the deliveries over the last 5 years, all the properties in that submarket have averaged 75 units per acre. So we really do believe that there are densification opportunities here and that this can be kind of looked at as a covered land play. But I think for us right now and just we’ve been banging on this market for a while, when we looked at buying this at 216 a door, we think replacement costs depending on land prices, entitlements, et cetera, it’s probably somewhere between 310 and 340 a door. So we looked at this as a 33% discount to replacement costs. So we think that actually sets us up for a nice land basis if we did want to do some type of densification moving forward.
But I can tell you, just because there’s been a lot of discussions about cap rates, et cetera, we were not the highest — the feedback we’ve gotten we were not the highest bidder on this asset. I think what the distinguishing feature for us was being all cash, offering our sellers certainty of execution. And it was our observation to move now and create the value while we could. So that’s why we move forward with Elme Druid Hills.
Alan Peterson: I appreciate those comments. Maybe, Steve, just on the 6% yield comments and the accretion there, you guys drew down the line, and I’m assuming the lines and, call it, the mid-6% range in terms of a funding source. Is there a longer-term funding plan that gets you to that kind of accretion mark for Druid Hills?
