Alexander Brackenridge: So, and, Jamie, this is Alec. I would just add, though. When you’re in a market, though, that’s got so much supply, and these are historic amounts, where concession levels start to get more than two months or, really excessive, I think everyone gets impacted, whether you’re a B property or an A property. I can’t see how you’re immune, from some of that pressure.
Jamie Feldman: Okay. That’s very helpful. And then as we think about the investment market, I mean, clearly, the debt markets are coming back, pretty quickly. We’ve now seen some real estate M&A. So, I assume competition is going to get harder for the types of assets you’d like acquire in ‘24 and beyond. How do you think about the importance of just transitioning the portfolio, as soon as you can versus, really hitting that right number? Do you think maybe your underwriting assumptions have to loosen up a little bit just so you can achieve some of your strategic goals, over the next couple of years if the market gets more competitive.
Mark J. Parrell: We’d love to move more quickly in completing our, repositioning. I don’t feel any need to do that by selling assets cheap. I think you’ll continue to see us, sell assets that are a little bit less desirable from our point of view. It’s more about the difference, Jamie, between the sale and the buy, if we can sell things well, we can pay up a little bit on the buy side. And, again, we’re creating that diversification we value. So, it’s a little bit about if we’re doing trading like that, it’s going to depend on both the sale price and the buy price. To the extent we try and expand the company through debt activities, then the interest rate that Bob’s borrowing at is going to become more relevant. So, I think right now would be somewhere in the name of where the 5% for 10 year money.
So, I hope that’s helpful, but we’d like to move faster. We point out that since 2019, when we started this, we’ve moved billions of dollars of capital into those markets, but the transaction markets have been closed for half of the last four and a half years because of COVID and because of the Fed. So, we’re hopeful that in a wide open year, I mean, we did, I think, $1.7 billion back in ‘22. We’re capable of doing $2 billion plus a year for sure. If the opportunities present themselves and we push the gas hard, it’s got to make some sense. De minimis dilution is one thing. Wholesale dilution would require some sort of justification that, we could get on this call and you all would feel was compelling.
Jamie Feldman: Okay. So, it sounds like it’s more about the dilution than it is the absolute cap rate or the absolute IRR?
Mark J. Parrell: We would accept some dilution to complete our strategic repositioning. The IRR matters. I mean, these deals got to make sense. We like owning newer assets because we’ll have less capital. At the end of the day, the portfolios we’ll own in Atlanta, Dallas, Denver, and Austin. We’ll be the youngest portfolios of our REIT competitors. We think that’s beneficial to our shareholders on the IRR CapEx side, not just on the NOI side. So, yes, we want to push the gas on this. We want to move this along. The IRR matters. The cap rate matters, dilution matters, but, getting it done matters a lot.
Jamie Feldman: Okay. All right. Thank you.
Operator: And our next question is going to come from Brad Heffern from RBC. Please go ahead.
Brad Heffern: Yes. Hi, everybody. In the prepared comments, you mentioned some increased price sensitivity in New York late in the year. Can you add some color on that and talk about what gives you confidence to rank that market relatively high for 2024?
Michael L. Manelis: Yes. Hi, Brad. This is Michael. So, I think in the prepared remarks, I was saying we saw just that the overall market level, there was what I would describe as just like rent fatigue where you started to see, certain types of units, one bedrooms, all of a sudden hit a price point at, like, $4,000. And it just kind of the activity level slowed. The renewal conversations became a little bit, more challenging. So, I would say we still expect pretty good growth out of New York in 2024. We’re just saying we’re tempering those expectations a little bit. The fundamentals there would all suggest that you have pretty good pricing power all year long because you have almost little to no competitive supply in Manhattan.
You’ve got good demand drivers, in those markets, but I just think we’re realistic that we’ve had two really good years of rent growth of rate growth that we’re just kind of saying, okay. Let’s just take a pause on that, and let’s wait till the spring leasing season shows us, exactly what the market’s willing to absorb.
Brad Heffern: Okay. Got it. Thanks for that. And as a follow on to your earlier comments about wage growth on the West Coast versus where rent has gone. I guess, how much of that opens up an opportunity for future rent growth versus how much of that just reflects that those markets have become unaffordable before the downturn, and they’ve been, semi-permanently reprised?
Mark J. Parrell: I guess we’ll see. I our sense, again, from all our comments on San Francisco and Seattle is that they still are appealing places for our demographic to live that people will want to live in the center of those cities and the whole market and that, I don’t know about some sort of wholesale repricing. And you saw New York recovered smartly on the rent side, and there’s some deals going on in the investment sales market that would support New York trading at a lower cap rate as it historically has than the national average. So, I think the story is yet to be told on the West Coast markets because there’s just no one selling, in the urban centers. But, I don’t think, there’s an answer to that, but I think the appeal of those centers is true and obvious and will come, and we’ve kind of given you our view of that.
Brad Heffern: Okay. Thank you.
Operator: And our next question is going to come from Alexander Goldfarb from Piper Sandler. Please go ahead.
Alexander Goldfarb: Yes. Hi, good morning. So, two questions here. First, on the renewals, in addition to jobs, I guess renewals also seem to be a wild card. I realize there’s a frictional cost to moving, especially in urban assets, but can you just walk through your views on renewal activity for this year. And it seems that you guys think it will hold up much better than new rents. And I’m sort of curious, I would think those same existing residents would see the new rates that, newcomers are getting in would want a rent reduction, not a rent increase?
Michael L. Manelis: Yes, Alex. This is Michael. So, yes, I think it’s a great question. And what I could tell you right now is that the quotes for the next 90 days have already been issued. We do expect to continue to renew about 55% to 60% of our residents, and achieve approximately anywhere between a 4% and 4.5% growth off of about 6% quotes that are out in the marketplace. You got to remember in the last couple of years, I mean, we put a lot of effort into this renewal process. We’ve centralized our renewal negotiations. That’s really helped us navigate, the negotiation conversations with residents. We’re leveraging all new processes in both the quote generation as well as the negotiations. We’re layering in data science to help enhance some of these results.
