Specifically, on your question about concessions, I would say it does vary as we look across our markets. So the Washington market because of the stability of demand there has remained less concessionary with concessions being used on a much more targeted basis. In Atlanta, the market has been more concessionary over the back half of 2023 and thus far year-to-date in 2024. But concessions have been very helpful in driving occupancy to our targeted range. For the portfolio overall, on a year-to-date basis, we’re giving concessions on approximately 50% of new leases and the average level of concessions when you look across all of our new leases is about a week and a half. As we think about 2024, we expect Washington continue to remain less concessionary and we expect concessions to remain in Atlanta throughout the year.
In total, we’re expecting about 30% of new leases to receive concessions in 2024 and the average concession level though will drop to approximately half a week if you look across all new leasing.
Anthony Paolone: Okay. And then just last one here. If I just step back and start to think the next – think about the next couple of years, you’ve got some debt maturing at lower rates and it sounds like occupancy at Watergates slipping a bit here. Like do you think you have enough sort of errors in your quiver so to speak to drive growth and offset that? Like do we think of 2024 as being trough-ish earnings or kind of any thoughts there?
Steven Freishtat: Yes, so I mean, Tony, as far as maturities go, we’ve got our term loan maturing in January 2025, but we’ve got two extension options on that, so can push that out to one year extension option, so we can push that out to 2027. We have a balance on our revolver. We’re keeping an eye on the debt markets. Pricing has been a bit challenged as the tenure has kind of bounced around. But if we see an opportunity where pricing does become attractive to term out debt, we would certainly – could look to take advantage of that. As far as growth, I’ll let Paul talk about Watergate in a minute, but we certainly – in addition to Watergate, we have other assets that we could recycle out of in the D.C. area that maybe are higher CapEx lower growth and take those proceeds and further diversify the portfolio into new markets.
Right now, obviously our stock price and the cost of capital, tough to make new deals pencil out. But we’re focused on operating in the business and lowering our implied cap rate with our operational upside, with our renovation pipeline, smart home tech and managed Wi-fi. So we’re looking at growing the NOI through all of our initiatives and in earning a lower implied cap rate. And when things do make sense and we do see opportunities make sense with our cost of capital, we’ll certainly look to take advantage.
Paul McDermott: Yes, Tony, it’s Paul. We’re assuming that about 60% of our 2024 expirations vacate and that translates to just over 4.5% this year and that’s roughly that’s almost 14,000 square feet, we’re taking 60% of that. We still feel good about the traffic that we’ve been seeing at the Watergate and we’re gradually seeing some more people migrate into the district to buy office assets. I would say right now, that’s something that we’re keeping our eye on interest rates and as lenders gradually come back into the market. We don’t really see that the market is offering a tremendous amount of liquidity this year in office product, but we feel good about our opportunities post 2024 to monetize that asset and recycle it.
Anthony Paolone: Okay. Thanks for the time.
Operator: Thank you. Our next question is coming from Jamie Feldman with Wells Fargo. Your line is live.
Jamie Feldman: Great, thank you. Thanks for taking the question. Can you talk more about your outlook for new and renewal rate growth in the two different markets?
Tiffany Butcher: Absolutely, Jamie. The Washington Metro market is showing stable trends and healthy demand and it’s going to be our primary growth driver for the year. Given the trends that we’re seeing today, healthy and stable demand, strong renewals combined with favorable market rent growth outlook, we expect our Washington Metro portfolio to perform very well this year and to support our growth for the portfolio overall. Atlanta is going to be our more challenged market as new supply and evictions are having a temporary impact on performance, as I mentioned earlier and we don’t expect to see a significant change in that on the first half of the year. However, the second half of the year could look a little better as supply will peak in approximately 70% of our Atlanta submarkets as I mentioned by mid-year.
And as the year progresses, jurisdictions will work through the eviction backlogs and we’ve implemented initiatives that we expect to improve our credit performance. So as a result, we would expect more favorable tailwinds overtime related to that improvement, but the timing is still uncertain and we’re not relying on that tailwind to meet our guidance this year. Specifically, though, talking about the difference in blended lease rate growth across those two different market. For the portfolio as a whole, we anticipate effective blended lease rate averaging between 1% to 2%. For the D.C. market, we’re expecting that to obviously be higher with effective blends averaging in the kind of 2.5% to 3.5% range. And for Atlanta, we expect effective blends to average in the negative loaded mid-single digits through 2024.
Jamie Feldman: And then to be more granular, I mean, how does new versus renewal compare in the markets? I know you said 6% for March and April, how does that – maybe if you can answer the 6%, what is that in D.C. versus Atlanta? And then what are your expectations for the year on new versus renewal in each of the markets on a percentage basis?
