So, overall, I guess, I would just say is this operating foundation is almost in place, and you really should expect that the future years are going to continue to have more revenue enhancement opportunities. But the reality is, I mean, we’re never really done with this pursuit of operational excellence. It’s something that’s wired into the DNA of our company, and I’m sure as this year goes on, we’re going to identify new things for future years as well.
Haendel St. Juste : Very helpful. Thank you.
Operator: Our next question is going to come from Rob Stevenson from Janney. Please go ahead.
Rob Stevenson: Good morning, guys. Alec, can you talk about how robust the market is for dispositions in quality of life areas like urban Seattle, San Francisco or markets with ongoing bad debt issues like LA, are things trading and where are they pricing versus a few years ago if they are?
Alexander Brackenridge: Yes. Thanks, Rob. It’s Alec. There’s almost no activity in the markets listed. I mean, we’re we test from time-to-time. Not saying we wouldn’t sell something, but right now, I don’t, I couldn’t tell you what market cap rates are because they just haven’t been frayed. So, it is really frozen there. So frankly, we’ve concentrated our efforts elsewhere.
Rob Stevenson: And I mean, is that just hold-on for a couple of years, hope that the cities get their act together, or is there something else just simply buy lower price capital that will allow that to sort of come back or are there you anticipating some sort of level of permanent impairment on some of those markets and submarkets?
Alexander Brackenridge: No, I think all of the things that you mentioned are likely to happen. There is a tremendous amount of capital on the sidelines. These cities are still great cities. The cities themselves are doing a lot, particularly in San Francisco and Seattle to improve the quality of life. I mean, they’re making some really serious headways. And as Mark, talked about, we expect them to recover as the jobs recover. But even absent that, we’re at 96% occupancy. It’s just investors sentiment’s really negative right now, and, we think that there are better opportunities elsewhere, and we’re frankly a buyer of what it sounds like people would transact right now.
Mark J. Parrell: And, Rob, just to add to that. I mean, these markets, Seattle and San Francisco, particularly though, you could think about downtown LA too. We may have powerful drivers. For us, it’s like we talked about New York when everyone was down on New York City, and we were positive on it still. That recovery has been vibrant. I think it’s the same pattern here. It’s not a matter of if, it’s a matter of when, and I think these markets will recover greatly on the rental side over the next few years. What we shied away from on this call is, excessive enthusiasm too early in the year when you’re not really into the leasing season yet, in markets that do have volatility associated with them. So, I don’t feel any sense of permanent impairment in these markets at all.
I think that you’re going to have great rental growth. You’re going to have a recovery that’s pretty strong in these markets. And you are likely, but not certain to follow a pattern like in New York, where again, the sales market has some deals in it in New York, and they’re trading really well. And so, I’m not sure why in a few years, San Francisco and Seattle wouldn’t trade very well as well, but it’s just going to take some time. And, again, our hesitancy here is really around the timeline for this, not the occurrence of it. And I think it’s a catalyst for our investors. I think having, a portion of the portfolio and unrecovered markets with rents lower than they were in ‘19 and incomes a lot higher is a huge potential piece of kindling wood to our earnings in future years.
Rob Stevenson: Okay, that’s helpful. And then lastly for me, Bob, what’s the $0.06 difference between day REIT and normalized FFO guidance? Is that one or two large items that you’re expecting or a bunch of small ones given what you know today?
Robert A. Garechana: Yes. There’s one larger contributor which I’ll talk about, which is, advocacy costs. So, we are forecasting higher levels of advocacy the cost in 2024, given that it’s an election year and some of the ballot sheet, ballot initiatives, sorry, that we are facing, which is not atypical as in other election years. And then the remaining pieces are typical forecast for pursuit costs and other items.
Rob Stevenson: Is that advocacy in California or is there other markets as well or is that entire spend out there?
Robert A. Garechana: It’s predominantly California.
Rob Stevenson: Okay. And is there anything, I guess, related to that that you’re especially worried about this cycle? I mean, I know that a lot of this stuff keeps being put on every other ballot or every ballot, but I mean is there anything that’s looking like this year or 2024 is the chance that it really passes, it would wind up being a negative for you guys?
Mark J. Parrell: Rob, it’s Mark. I mean, there’s negatives and there’s positives in the regulatory area. The ballot measure is by far the biggest point of focus in the industry. And just to remind everyone, this has been on the ballot twice before. The citizens of California rejected it by 20 percentage points each time. The industry is well organized. We’re going to make the same good arguments about supply being the solution, more rental voucher funding being the solution. And to be honest, the Governor Newsom and the legislature have done a lot of supply things with the accessory dwelling unit legislation, with some of the zoning reforms. And so to be honest, when I turn to the positive on the regulatory side, people would hear us.
They hear the industry’s point about supply, about zoning reform. Governor DeSantis, obviously, couldn’t be more different than Governor Newsom. He has done some great things in Florida as it relates to housing policy as well and zoning reform to allow more affordable housing to be built. Governor Hochul in New York was trying the same thing and got a lot of resistance, but we hope that is still in place. So California is, to answer your question, the focal point of us in the industry at large this year. But markets like New York and, Massachusetts and Colorado, there’s always dialogue going on in those markets, but we’re well organized to have that conversation. And I think policymakers, by and large, understand that supplies the answer, not rental regulation.
That’s what I think is the positive here. You hear about that a lot more in our conversations, and the reaction to rent control is, something that we talk through and, you get a lot of people calling the other direction after they’ve heard the arguments.
Rob Stevenson: Okay. That’s helpful. Thanks guys. Appreciate the time.
Mark J. Parrell: Thank you.
Operator: And our next question is going to come Anthony Powell. Please go ahead.
