Mike Daley: I also want to make sure; this is Mike, I also want to be sure and clarify what you just said about the 90% that’s of the renewals that we expect to happen in the first quarter. We’ve got 90% in, not that we have a 90% renewal rate.
Austin Wurschmidt: No, correct. That makes sense. Thanks for the clarification.
Operator: And we will take our next question from John Kim with BMO Capital Markets.
John Kim: Thank you. On the blended 2.1% growth that you had in the first quarter, which is on long-term leases, can you remind us what percentage of overall leases that is? And I just wanted to clarify the 2.2% guidance, that’s also on a long-term basis, correct?
Jim Sebra: Correct. That’s on the same 9 to 13 months basis. Historically, that 9 to 13 months kind of made up anywhere between 80% to 90% of our kind of leasing activity every month every quarter. That number is roughly about 65% today as we’re just kind of continuing to kind of help people from an exploration standpoint out of the shoulder seasons of the year and into the higher leasing velocity seasons — months, April through call it, August.
John Kim: I just want to say, how should we read that remaining 35%? Is that above or below of the 2.1%?
Jim Sebra: Yeah. I think it’s probably slightly below that 2.1%, but I think. again, I can follow back up with you offline with that exact answer, but it’s kind of just again, it’s not significantly below, it’s like right probably, I’ll guess 1.8% to 1.9%.
John Kim: Okay. My second question is on bad debt. How that trended in the fourth quarter versus 2.1% in the third quarter and where you see that going in 2024 and how you get there?
Jim Sebra: Can you say that again, John? I missed the first part of that question.
John Kim: The bad debt. Where it was in Q4 and what’s in your guidance for 2024?
Jim Sebra: Yeah, sure. So we ended the fourth quarter, about 2.1%. So that is bad debt as a percentage of revenue, and we expect that for the year that’ll kind of average out to be about 1.75% in terms of what’s in our guidance. We expect Q1 to be slightly underneath that 2.1% and then you kind of move down throughout the year into the fourth quarter. Yeah, and from a from a bad debt perspective, I think we’ve talked about it in the past. We continue to look at additional technology solutions. And as we mentioned, or as Mike mentioned in the call, we’ve already implemented a better ID screening that really kind of pinpoint identify the ID fraud since that is so prevalent in some of these days in some of our markets like Atlanta, and we’re excited about what that’s going to have for the portfolio for the year.
John Kim: That’s great. Thank you.
Operator: We’ll take our next question from Anthony Powell with Barclays.
Anthony Powell: Hi, good morning. Just a question on the customer profile as you build occupancy. Are you noticing any changes in your rent-to-income ratios? And also, where are you gaining share from? Class A or Class B?
Mike Daley: I can take the first part of that. I think in terms of our renter profile has not changed. We’re still at about 22% in terms of the rent-to-income, which is very comfortable in terms of the financial ability of our average resident to pay. Janice, do you have any thoughts in terms of migration from A to B or some of the competition at the top end?
Janice Richards: Yeah. I think our value-add are very well to the current market state when we have that opportunity to provide a product that is similar to, at a value rate of that Class A at a lower price point. And so we look to see that be a significant benefit for us this year.
Anthony Powell: Okay. So maybe on the competitive environment, I know last quarter there was talk about some of the merchant developers that being aggressive with concessions as the 10-year went to 5%. Has that changed at all as kind of rates have stabilized here? And how do you expect those developers to behave as you approach peak leasing season?
Janice Richards: Hello, this is Janice again. I think we’ve seen concessions continue in the first quarter from those merchant builders at relatively the same level. I think we’ll start to see that dwindle as demand picks up for the seasonal leasing pattern. And our use of concessions has decreased sequentially quarter to quarter, and we will continue to be very strategic in our targeted concessions to maintain that, that 95.2% occupancy, but look to maximize NOI at every point.
Anthony Powell: Okay. Thank you.
Operator: We will take our next question from John Pawlowski with Green Street.
John Pawlowski: Hey, thanks for your time. I’m curious if you can share what your market rent growth assumptions are for your average Sunbelt market versus Midwest market this year?
Jim Sebra: Yeah. So it’s a good question. Overall, in our guidance the market rent growth, the blended market rent growth we have is about 60 basis points. And across our top 10 markets, which include obviously Sunbelt markets as well as Midwest markets, that’s about, call it, 80 basis points. Other markets kind of are a little bit lower, roughly 40 and 50 basis points. If you were to look at some of the real kind of core Sunbelt markets like Atlanta, the market rent growth is actually about 10 basis points negative. If you look at some of our Midwest markets like Columbus, we’re about 1.2%, I’m sorry, 2.2% market rent growth.
John Pawlowski: All right, that’s great. A question on property taxes. So curious geography in the low to mid-single digit property tax growth rate that’s going to be embedded in the expense guide, which geographies you’re expecting to see really high or particularly low property tax pressure around that average?
