Jamie Feldman: Okay. And as you think about those factors is it — if you pause on it being your largest market? I mean over the long term is that a reason you’d want to shrink there or grow in other markets more?
Eric Bolton : Well ,I mean, we continue to look at all the markets we probably over the next number of years we’ll you’ll probably see us continue to cycle some capital out of the Atlanta. It’s going to be more driven by asset-specific decisions, property-specific decisions. I mean, we continue to like the Atlanta market long-term. A lot of great job growth drivers and demand drivers in that market. It’s like all the other markets they will go through periods of supply pressure from time to time. But the demand dynamics there are pretty healthy. And I think some of the things that Tim is alluding to that were unique to Atlanta really are attributable to some of the practices that were adopted during the COVID years and the court systems there got really sort of backlog if you will and it’s just taking longer for that market to sort of work back to normal. We see it happening. But we like the Atlanta market long term for sure.
Jamie Feldman: Okay. All right. Thank you.
Operator: Thank you. We will take our next question from Nick Yulico with Scotiabank. Your line is open.
Nick Yulico : Thanks. Good morning. I was hoping to get your loss to lease if you’re able to quantify that.
Tim Argo : Yes, Nick, this is Tim. So a couple of comments there. If you look at sort of where we are right now and what’s going to earn in or be baked in for next year with pricing today plus the pricing that we’re assuming for Q4 probably have one to 1.25 of baked in or earned in if you will that will flow into 2024. Think about loss lease and just in terms of kind of where rents are right now it’s probably about a negative one of lease given what we’ve seen with new lease rates right now that’s where I would peg it in year in October.
Nick Yulico : Okay. It’s very helpful. Just one other question. Going back to the acquisition and the 5.5% initial stable yield. Is that number impacted by concessions reducing that yield? I don’t know if there’s any way you can quantify like whether that would be a higher yield absent as there’s concessions.
Brad Hill : Hi. Nick, this is Brad. Yes I mean that’s inclusive of concessions. The property is in lease-up and it’s offering about a month to six weeks generally on new leases. And so that includes the impact of that. So that would be your net effective rent. So assuming that we get to stabilization we would see some strengthening there and the use of concessions would generally burn off on renewals. We’re not using — generally using concessions on these properties. We would also see some expansion in that yield at that point.
Nick Yulico : Okay. Great. Thanks.
Operator: Thank you. We will take our next question from John Kim with BMO. Your line is open.
John Kim: Thanks. Good morning. I was wondering if you could talk about the impact of rising interest rates on leasing demand and landlord behavior. I know you commented that the demand has been strong. You had an occupancy pickup in the third quarter. So when you when you discuss new lease growth rates of minus 4% in September and minus 5.3% in October it seems to coincide with the interest rate environment. I just wanted to get your comment on that.
Eric Bolton : I think what we think is at play here is that in this environment with a lot of these merchant-built properties currently in lease-up the lease-up environment and the financing environment that they are facing today is most assuredly not what they contemplated when they started construction two years ago. And as a consequence of that I believe that what is happening is that some of the merchant-built product is in a rush to get stabilized as quickly as possible preferably before we even get into the holiday season which is why I think there was a lot of noticeable shift that took place in August and September because it’s probably — they’re probably late in their time line in terms of what they forecast and what they underwrote.
And certainly they are going to face an exit or refinancing that is going to be different than what was contemplated. And while there may have been some early hope that we would start to see moderation in interest rates by this time. I think that hope is now gone. And we likely are in this rate environment we are in today for quite some time moving forward. So I just think that all that is combined to create we knew in a highly high supply environment that lease-up pressure exists but I think it’s just been a little bit more intense because of what’s going on with the interest rate environment. And therefore, it’s manifesting itself in more competitive pricing practices in an effort to attract new residents and leasing traffic. So I think that that’s what’s at play here.
I think that once we sort of work through this scenario that as we’ve been talking about the supply picture starts to get a lot better, meaningfully better. And we think that we just got to put our head down and operate through this for the next — in the next couple of quarters or so.
John Kim: Can you comment on your turnover rate which declined 40 basis points? And remains in historically low levels, and how you are able to maintain this turnover rate with all the new supply that’s coming online and if you’re contemplating offering concessions I don’t know.
Tim Argo: Hey, John. This is Tim. I mean, as far as the turnover I mean, we expected — we certainly didn’t really expect to turn over to scale up with all the factors that we see at play. I mean, between move-outs by house and move-outs for a job change those are far and away our two biggest reasons for move-outs. And as expected the move out by house is way down. So we don’t see that again given the interest rate environment, we don’t see that changing any time near term. Some of the other things that drove move out or turnover up last year are down. So I would expect as we get into 2024 that there’s not a lot of change in terms of turnover certainly no significant increase in turnover, so I think that serves us well on the renewal side, that certainly we wouldn’t need to look and do anything more than we’re doing now on that renewal.
Eric Bolton: Encouragingly, I’ll add in the third quarter the move-outs that we had that occurred due to rent increase were half of what they were in Q3 of last year. So what’s really at play here on the turnover is just people are buying houses.
John Kim: Great. Thank you, everyone, and Al congratulations on your retirement.
Al Campbell: Yeah. Thank you, John. I’m excited about the prospects for the future, but also excited about what the company is going to do over the next few quarters and years as well.
John Kim: We have the company in good hand. Thank you.
Al Campbell: Thank you.
Operator: Thank you. We’ll take our next question from Joshua Dennerlein with Bank of America.
Joshua Dennerlein: Yeah. Hey, guys. Just wanted to follow up on a comment you made. It sounds like you’re a bit surprised just by the competition from the new supply. I guess what is most surprising to you?
Eric Bolton: Well, we’re not surprised by the competition from new supply. What we’re surprised by is how aggressive some of the merchant developers have gotten in an effort to expedite their lease-up sooner than getting stabilized as quick as possible. And as I’ve commented on,k we think that that is related to what is clearly now an indication relating to interest rate trends. And we saw the behavior with lease-ups and concessions begin to shift a bit in August and September as the 10-year treasury really started moving up to 5% close to 5%. And I think it just triggered a urgency and developers that have lease-up projects on their books to get stabilized and get out of it or get it as soon as possible. So I think that that’s what’s a play here.
