Adam Kramer: Great. Thanks so much for the time.
Operator: And our next question is going to come from Haendel St. Juste. Please go ahead.
Haendel St. Juste : Hi, good, I guess, good morning out there to you guys. Mark, I guess the, first question for you, following up on Rich’s question earlier about your potential interest in stepping in and participating in other parts of the capital stack, seems a bit of a departure from how you responded to this the Mez Investments in the past. So I guess, first, is that fair and why the change of heart? I’m assuming perhaps it’s reflective of the opportunities. But second, I’m assuming or is it fair to assume that you’d be solely focused on the Sunbelt. And then third, what level of return or premium to acquisition cap rates would you seek there? Thanks.
Mark J. Parrell: Okay. I’m going to start with some of that and then Alec may answer parts of it as well, Haendel, but on the Mez Investment side, I think the part that Alec emphasized was the path to ownership. So, what we’ve been more hesitant to participate in is to just create a book where we are consistently making mezzanine loans or preferred equity investments in deals where it’s improbable that we would end up being the owner. When we’re working with the lender and the owner and we get in the capital structure and there’s a good chance we’re going to end up with the deal. That, to us, is very different. That is stuff we did do back in ‘08 or ‘09 through 2010. So, that is a familiar thing for me and Alec and a lot of folks on the team to do. So, that’s how I would distinguish the two of those. I don’t know if there was anything else in that question you wanted to answer, Alec. No?
Alexander Brackenridge: No. I think we’re good. I mean, we will be opportunistic, though. It’s free of our company, and we’ll keep looking for, chances to buy great real estate.
Mark J. Parrell: I guess I will, you asked about acquiring assets in one form or another in our established coastal markets, we’re certainly open to that. We’ve got some development deals. We’re likely to start in some of those established markets that are in areas really hard to build. But the primary focus is to get into these expansion markets and add capital there.
Haendel St. Juste : Got you. That’s helpful. But a follow-up, what level of return potentially would you or premium, to acquisitions would you seek were you to get involved in, some of these Mez or path to ownership type opportunities?
Alexander Brackenridge: Hi, Haendel. It’s Alec. It’s really impossible to peg that without knowing the specifics of the deal and the circumstances around it. But, obviously, we’re very focused on getting compensated for any risk would take beyond a typical transaction.
Haendel St. Juste : Okay. Fair enough. One more on the expense side. I was hoping for a bit more detail on the key components, appreciate the overall, high level thoughts you provided there earlier, but maybe some specifics on the key components like, what you’re embedding in your guide for specifically taxes, insurance, R&M, and also for the ongoing tech initiatives. I think last year, you outlined $10 million or so of savings via that. I’m just curious what level perhaps we could see from tech savings this year? Thanks.
Robert A. Garechana: Yes. Hi, Haendel, it’s Bob. I’ll start with some detail on the expenses and then maybe pass it to Michael on the initiatives. I will caveat on the initiative side. Most of our initiatives, as Michael mentioned, are more revenue focused this year than expense focused, but he can touch on, initiatives if I don’t cover something. So, on specifics related to some of the categories, we are expecting, as I kind of mentioned, utilities and real estate tax to grow higher than what they did in 2023. That implies or means that at the midpoint, we’d have real estate taxes around, call it a 3%, and utilities more around a 6% growth rate relative to what were, lower growth rates in ‘23. On the other side of the equation on the big categories, you have R&M, which experienced a lot of inflationary pressure in 2023.
We expect that to normalize. So we expect, R&M to grow something more like 4%. That is where we are realizing some of the opportunities and, work that we’ve done on the initiative front to reduce our dependency on contract labor and places where there’s wage pressure. So, that’s helping us get to that 4%, anticipated growth. And payroll, we think, we’re not anticipating as much, challenges on the medical benefit side, and we’re just yielding some of the, payroll optimization we did was back end loaded in ‘23, so we’ll realize more of that benefit in 2024. Does that help you on the color side? Is there any categories I missed?
Haendel St. Juste : No. That’s helpful. But in relation to I believe it was $10 million that you outlined last year from tech driven efficiencies, first, is that accurate? And second, do you have a comparable figure expectation for this year?
Michael L. Manelis: Yes. Hi, Haendel. It’s Michael. So, let me just start by saying, that really the entire company has been focused around these innovation initiatives for the last several years, and we now have created this foundation that really is going to deliver long-term value creation of the portfolio for many years to come. With the materials that we put in that November investor presentation highlights this technology evolution of this platform, really has been focused on creating the mobility and efficiency in the operating model while the seamless experience to our customer improves. All in, we’ve identified about $60 million in NOI improvements with about $35 million of that already achieved over the past several years.
The early stages of this was clearly more expense focused, and that shows up in our numbers when you look at the low expense growth. And that’s mostly in the payroll and some of the R&M accounts over the last couple of years. Going forward, we’ve identified and we expect about another $25 million. In 2023, we delivered about $10 million in NOI improvement, and about two-thirds of that was on the expense categories, primarily in the payroll accounts, and a couple of million dollars of that was in the revenue front. Specific to 2024, we’ve layered in another $10 million included in guidance with about $7.5 million in other income accounts. And this is realized growth as the annualized number from all of these initiatives is greater because some of these are back half loaded, meaning I only get about half of the benefit this year.
