William McMorrow: Well, I think as Matt said, we’re seeing great leasing velocity at all of the assets here in the United States and in Dublin, and in the vintage platform. And I think a good example, we just finished a vintage — it’s a mixed-use project that we’re calling Anacapa Canyon in Camarillo and we just finished a 310-unit market rate. We just opened it for leasing here just a couple of weeks ago, and we opened 170 unit vintage asset in that same development. And it’s interesting because if you look at both of the buildings, you really — you can’t distinguish between what’s senior and affordable and really what’s market rate. But the vintage asset is essentially 100% leased right now in the first three months. And so the thing you see in the senior and affordable business is that within two or three months of opening, they generally get to almost 100% occupancy with a waiting list.
The only limiting factor is how fast you can move people in. The market rate deal there of almost 310 units in the first 1.5 months or 2. We’ve already leased about one-third of the units there. And we’re seeing — we don’t count these properties in stabilization until they get to 80%, but we’ve got a number of buildings now that are in lease-up that are in the high 60s and low 70s. And so you’re going to see them come into the stabilized platform here in the third and fourth quarter. I would also tell you that pretty much overall, the leasing rates that we’re achieving in these construction projects brand new, are ahead of our original business plan. We have a lot of embedded gains in these new developments. That doesn’t mean that I’m telling you that we’re planning on selling any, but we’ve really been able to do a very good job of building on time and on budget, very, very high-quality new properties.
And then the back side of it, too, is that the brand-new properties don’t require capital on an annual basis like some of the older properties. And the one other thing that I would tell you that we’ve done, I think, an exceptionally good job of this year has been our capital budgeting across all of our assets. And when you think about uses of cash with the construction activity basically finished at this point and with the capital budgeting that we’ve done. So we’re not allowing capital to be spent at any multifamily asset unless it’s producing at least a 15% return on cost. But when you kind of add up all of these factors that Matt went through between the dividend saving us $66 million a year. Our CapEx budget and our development, our commitment to development is the lowest it’s been in probably five years.
So you’re talking very, very meaningful amounts of money in the CapEx budget and the development costs. So you had this great shift. And I think as Matt pointed out, the last thing I would say is we’re very, very focused on being capital-light in all of these platforms with a real focus on growing our fee income 15% to 20%, 25% a year.
Matthew Windisch: And Bill, I would just add to that. We have best-in-class construction teams, both here in the U.S. as well as in Europe and with a great track record. And so we’re confident we can attract third-party capital, continue to build these really best-in-class properties but do it, as Bill said, in a more capital-light manner. So we’re really excited about continuing to grow this business, just capitalizing it in a bit of a different way than we have historically.
William McMorrow: In the past, we’ve either been 100% owners of these assets like Anacapa Canyon where we’ve generally been 50% owners. But we think there’s a real opportunity with the skill set that’s been developed over the last 10 years in both of these markets, the United States and in Ireland to transition that business into acting more as a construction manager, where we have an investment in the asset, a meaningful investment, but not nearly at the levels that we’ve had before, where we’re earning different fee streams than we have in the past.
Conor Peaks: Yes. And looking at the Investment Management business, maybe from a higher level, you’ve got the build-out team with the Pac-West deal, the right-sized dividend to reinvest and dry powder to put to use. And I think you’ve kind of partially answered this question. But how fast can this business grow? And if there’s any goals or milestones you’re targeting here?
William McMorrow: Well, I mean, look, I’ll let Matt answer that. I mean we’re in what I would call the perfect storm. The average size loan we’re doing is approaching $80 million, and they’re generally 55% loan to cost. So that requires a sponsor to have a lot of equity. And so the number of sponsors that can come up with that equity are the highest tier in the country, in the United States. They’re really some of the best developers, very well capitalized. And the backside of it is what we alluded to earlier, that you’ve got less competition in that market today. I would say, and Matt might answer it slightly differently. We don’t set goals in terms of deploying capital into a lending business. We look for the right opportunities with the right sponsor in an asset cloud, we’re doing almost exclusively — we are doing exclusively this year, multifamily and student housing pretty much.
And so it just depends on whether you’ve got the right opportunities to deploy capital. But I’ve learned from my banking days, when you start setting targets for loan volume, that’s not — you don’t get the best outcome.
Matthew Windisch: Yes, I would just add to that, that it’s obviously going to be opportunity-driven, and we see significant opportunities in the second half of the year continuing. We’ve grown the overall fees at a clip of 25% compounded over the past five years, and we’re confident we can keep that level or do better, assuming the opportunities exist, and we do think they exist.
William McMorrow: I would — Matt, I don’t mean to keep going on here, but the — I would also add that — obviously, I have a bias, but we have a best-in-class team. And in all of our platforms, reputationally, it takes a very, very long time to build credibility for the company and for your teams. And I think that the — because of our reputation, across these types of asset classes over three decades, we just — we have a very big opportunity right now to grow the Investment Management business in a very meaningful way.
