Michael Lewis: Great. And I’ll try to squeeze in one more, if I can. It seems like there is more investor demand and liquidity in the market for multifamily than for some of the other property types for all the advantages that you spoke about. But there is still this bid-ask spread that’s kind of limiting transaction. So I’m wondering what are your target returns for acquisitions today or how are you looking at potential deals given what’s happened in the cost of capital? And I know you’re still looking, but maybe there is a pause here as that betas kind of shakes out. So how are you kind of thinking about that and what might be attractive?
Steve Riffee: Well, in terms of Michael, our observations on what we’re seeing in the marketplace right now, first and foremost, there is not a lot of product in the market on a relative basis, like if you look at the year-over-year numbers of what is in there. A lot of the brokers that we interact with as well as the owners have a large BOV pipeline. And we expect groups that are in the Odyssey funds, they are waiting on appraisals from Altus. And I think as you know, appraisals tend to lag the markets anywhere from six months to nine months. We think those appraisals are going to hit. We think second quarter will have a lot of mark-to-market activity. And we believe that we are going to start €“ we will have a more robust second half of the year, as we have said before.
These are funds that are still dealing with the denominator effect and have to go through their own processes on mark-to-market. But really, the sellers that we are seeing right now, they are only selling either, there is a liquidity requirement, i.e., a Q or they are funding other parts of their operations. As you alluded to, I don’t think there is any question that there is enough capital, but we would also say and in talking to folks that are thinking of taking product to the market, the ask is really coming towards the bid. I think the gap is going to be closing, and we will be closing as we progress through the year. In terms of kind of what we look for right now, I mean look, a lot of the institutional capital remains on the sidelines.
A lot of that private capital is the most active, and they are trying to take advantage of some €“ the in-place leverage, the low leverage that they can utilize. I mean I think for us, it’s going to be about €“ it’s going to be maintaining our continued discipline in our underwriting. In reference to the top line, we are and always have been, I think more realistic about rent growth and about our trade-out. And as Steve Freishtat alluded to, we are being disciplined in how we look at expenses, labor, insurance, property taxes, utilities. And I also think we are €“ you have to have discipline around that residual cap rate. We think right now risk is being priced appropriately, our particular focus right now. And we are very sensitive to replacement costs.
But in terms of what we are seeing out there, Michael, our cap rates can vary depending on the amount of risk we want to take on. But we are seeing cores kind of in the 4% to 5%, core pluses, 4.25% to 5.25% in value add in that 5.25% to 5.5%, and we have seen that go as high as the 6%. So, unlevered IRRs are in the 7% range, levered IRRs are in that 10% to 14% range depending on what risk bucket you want to play in. But I think as Steve alluded to also, we are going to be looking at longer term value creation for our shareholders, and we will price our assets appropriately. It’s not just about NOI going in cap rates. It’s about longer term growth and value creation for our shareholders.
Michael Lewis: And that’s great detail. Thanks a lot for answering my question.