Ray Pacini: Yes.
Rob Stevenson: Okay. And Rancho Cordova government tenant, what’s the timetable for them to exercise that purchase option and is there a pricing mechanism in place already on that?
Aaron Halfacre: There is a pricing mechanism in place already. It’s a little, even though there’s a price and it’s referenced in the lease, it’s a very attractive price. But then the pricing mechanism is a reference price. They also have to go through this process where they’re seeking out, they have to do appraisals. And if the appraisals are within plus or minus 10% of that pricing mechanism that they can just go forward with it, other than that, they have to be able to submit new offers. We don’t have to accept them. The mechanism is lengthy. So you should think about that in terms of probably about at least 12 months, probably more like 18 month process for them to exercise the mechanism, the option process. So and they’ve talked to us about starting it, but they can’t start it until next year.
They would start it next year, they would go through their evaluation process, they would get it approved, they would get a requisition, then it would go through to the governor and then they would get on the — once a budget is approved, they would then be able to relinquish funds. So I think that liquidation, if it were to happen and it seems reasonable that it will happen, it would be in ‘25. So from a modeling standpoint, we would be still capturing that AFFO to the balance of this year and into, I mean, it’s a balance of ‘24 and into ‘25 for a bit. But it’s, it was a big component of our lease negotiation. It probably added an extra month into the lease negotiation because they insisted on having it, it wasn’t just a bully play one.
This property was strategic to them and they wanted to make sure that this mechanism we had agreed to and the process was there. And so that’s all embedded in.
Rob Stevenson: Okay, that’s helpful. And then how should we be thinking about the timing on a GIPR distribution and how quickly would you turn around and redistribute that to Modiv shareholders?
Aaron Halfacre: Yes, so can I have alluded to anything? Barring any private party sales that we do in a van, I don’t know if we’ll do any, but if we did, we’ll take those. We would distribute those concurrent when they redeemed. So it’d be sort of a simultaneous distribution and we’d be coordinated with GIPR. I don’t think — I don’t see it happening in the fourth quarter. I see it happening very early first quarter. And I think — as I think as early as January, I think January is reasonable. And so once we would line up the redemption date with them, the shares would hit our books for a nanosecond and then go right into the hands of our shareholders.
Rob Stevenson: Okay. And then Ray, a couple of numbers, questions for you. The 440,000 of preferred stock fair value adjustment, is that an ongoing adjustment in the fourth quarter and then for whatever part of first quarter until those shares are redeemed?
Ray Pacini: Yes, there will be an adjustment as of December 31st. If we continue to hold the shares for some reason at March 31st, there would be an adjustment as well, but most likely they’ll be redeemed before the end of the first quarter. So one more adjustment is coming at December 31st.
Rob Stevenson: Okay. And then how should I be thinking about cash interest expense? And I’m not sure if I’m looking at page 13 of the supplemental correctly. There it looks like you’re running around $5 million a quarter of interest expense before netting out all the GAAP treatment of derivatives and swaps. But if you’re just doing the math on the $2.82 at $4.52 get you to more like $3.2 million a quarter, how should I be thinking about before any of the derivative swap stuff, what interest expense is running you guys a quarter these days?
