Kris Douglas : Yes, I mentioned a little bit in my prepared remarks about the improvement that we did see in the fourth quarter compared to the third quarter, and a good portion of that related to some successful property tax appeals. Excluding those property tax appeals, where we see our operating expenses right at around 6%, which is still trending down from what we were seeing earlier in the year. The good news, we’re also seeing some signs that as we move into ’23, we could see some continued improvement. A lot of that comes from the utility side. That’s one of our largest expenses. Kind of over 20% of our operating expenses are related to utilities. And those were — utility expenses just on the rate side, we’re up double digit in ’22 over ’21.
As you look at the forecast moving into ’23, you see that moderating. We’ve even seen some forecasts that show it declining. I’m not ready to latch onto that, but if you can just start to see that come down a bit from what we saw in ’22, that gives a lot of line of sight to feel much better about where overall operating expenses to trend throughout ’23.
Operator: We now have Jonathan Hughes of Raymond James.
Jonathan Hughes : I just wanted to go back a little bit in time. I guess can we talk about how much of the decline between the kind of FAD figure we had talked about last summer of like $1.45 this year and the $1.24 annualized run rate FAD? How much of that decline is not from the higher interest rate backdrop? I’m just trying to understand where some of this the operational upside that was embedded in those projections has gone and maybe it’s just simply delayed rather than no longer achievable?
Todd Meredith : Jonathan, I think, number one, the projections you’re referring to, clearly, were in a very different environment. I think everybody is dealing with the interest rates and to different degrees. I don’t think there’s any change in the operational picture whatsoever. There’s been no material delay or decline in the opportunity. In fact, I think we’re seeing very strong signs, as Rob walked through some specific examples. I talked about what we’re seeing come through on same store. So we’re really not seeing anything that is operationally negative. I think this environment for a lot of folks has two big impacts. You’ve got your operating fundamental business. How is it doing? How is demand? What are the trends? And then what everybody is dealing with is a dramatic C-level change in interest rates.
Unless you just were prescient, perfectly prescient, maybe lucky, the interest rate side is what it is. We’re all managing through it the ways we can. And I think we’re in very good shape there, but certainly see a large impact but see a rebound as things moderate coming from that side as well. So again, that’s kind of what informs our swap position fixing those rates. So I think operationally, we’re very optimistic and bullish about where we’re headed. So I think, Kris, unless you have something to add, I think the majority of that would be the interest rate environment is the impact there.
Kris Douglas : Yes. And we do still enter the space set to be able to achieve on the operational upside. And we’re — that’s kind of what we’re pointing to now, is being able to have achieved the funding of the dividend, special cash dividend as well as the synergies. Those were kind of two of what I would say are the three main pieces that we knew we need to execute on, third main kind of operational upside. And that’s what Rob was hitting on that we’re — we’ve kind of set that foundation, and we’re seeing good indications to be able to start achieving that as we move through ’23 and into ’24.
