Smedes Rose: [indiscernible] picking over. Yes, sorry go ahead.
Scott Stubbs: As you say me, it doesn’t really impact your bad debt either because you’ve already accrued the bad debt reserve. So there’s no impact there, but it does impact occupancy.
Smedes Rose: And then I just — you mentioned higher property taxes in the quarter. And I just — as you — the larger expense lines just looking into next year is there — so we’re broad sense of how we might be thinking about wages and benefits for pace of growth slowing at all? Is it maybe what are you thinking about for kind of the pace of tax property tax increases? Any sort of thoughts there you could share?
Scott Stubbs: Yes. So we actually thought it had decreased some in the 6-month numbers. I think we were looking pretty good. We won some appeals. We were a little bit surprised on how our actuals came in for Florida and Georgia and Illinois versus the estimates we’ve made using property tax consultants. We hope that the worst of the property tax reassessments are behind us, but every year is a new year with the local municipalities.
Smedes Rose: And on wages and benefits, how is that pacing?
Scott Stubbs: Wages and benefits, we’ve actually had it slow some. We don’t see the wage pressure that we saw the last couple of years. We saw higher slightly earlier in the year as we had more hours compared to prior years when it was difficult to hire. Today, it’s much easier to hire. Our applicant flow is significantly better and we’re not seeing the wage pressure we’ve seen over the last couple of years.
Operator: Next question comes from Ronald Kamdem with Morgan Stanley.
Ronald Kamdem: Just two quick ones for me. Just going back to the same-store revenue number of close to 1% in 4Q, is the messaging — I think this got asked earlier, but is the messaging that essentially, unless you sort of see things take a turn to the downside wouldn’t expect that number to get sort of worse going into next year? Or is it sort of still wait and see? I’m just trying to figure out if 4Q is sort of a good run rate looking forward from here without asking for guidance.
Scott Stubbs: Yes. So we think it’s a good run rate, the estimate we’ve given for the quarter. Obviously, October is done. It’s too early to tell for next year.
Ronald Kamdem: Great. And then doubling back on the sort of the expense line items. Obviously, you took the same-store up for EXR. I see sort of LSI at 4.5% as well. Maybe can you talk about just doubling down on whether it’s marketing expenses or insurance. Is there anything either one timing in nature this year that we should be mindful of? Or are these sort of decent run rates.
Scott Stubbs: So why storage, the big increase year-over-year came from more personnel and the payroll line item. Our managers, on average, make more, and we have more hours allocated to us, and that’s how we get the premium rates that we get. So we are operating them more like we operate our stores. The other thing that’s different from their historical same-store numbers is we have allocated call center and a technology charge to the stores that they historically had in their G&A. So we went back to their historical numbers and added those in, too.
Operator: Our next question comes from Caitlin Burrows with Goldman Sachs.
Caitlin Burrows: I was wondering maybe — I don’t think anybody’s asked about supply yet. So we’ve seen it fall off in other sectors, new starts. So I was wondering if you could comment on what you’re seeing now? Have you noticed any projects either getting — taking longer, getting pushed out or any new ones getting started, just kind of what you’re seeing on the new supply side.
Joseph Margolis: Sure, great question. So we continue to see moderation in new supply. The peak was maybe 2018 and every year since then, it’s moderated. We expect deliveries in 2023 to be kind of similar to 2022. But after that, likely to be more moderation. The headwinds to new supply in terms of interest rates and debt capital, equity capital, availability, construction costs, entitlement period, underwriting forward revenue growth are pretty significant and drop our rates for projects that you can see on yard and all those other reports are really high and a lot of projects we see in these reports end up not getting built.
Caitlin Burrows: And just to that last point, would you say that the dropout rate is more significant today than it has been in like the past? Because of maybe those factors you mentioned?
Joseph Margolis: Many of us were at a conference in New York a couple of weeks ago where one of the leading brokers in the industry said, he thinks the dropout rate is 70% to 90%. I don’t have the statistics for that, but that’s an observation from someone who’s very, very close to the industry.
Caitlin Burrows: Got it. And then maybe just a quick 1 on the transaction side. You mentioned that EXR has pulled out recently, especially to focus on merger, which makes sense. I guess, could you comment more broadly on the transaction market? Kind of our properties trading have cap rates stabilized? Has the bid-ask spread close? Or is it still pretty quiet in storage also?
Joseph Margolis: Yes, I would characterize it as quiet. There are very few transactions that we see end up making many transactions. People bring our portfolios and they don’t end up transacting. That’s an indication of a bid-ask spread. And the transactions we do see that happen. There’s it seems to be some story either on the buyer side, why it was a special buy for them or on the seller side. But I don’t think there’s enough of a market where I could tell you what market cap rates are. It’s just very quiet and very circumstantial.
Operator: Our next question comes from Samir Khanal with Evercore.
Samir Khanal: Joe, when I look at some of your top markets, the Texas markets, Florida, they’re holding up quite well this year and from a revenue growth perspective? And I guess how are you thinking about those Sunbelt markets into next year, the markets which got a boost in the last few years? I mean, do they give back in ’24? How are you thinking about that?
