So, very pleased by, again, the tools that we have got and the ability to exercise the synergies. Tom spoke to some length this morning about many of the tools we are using right now from a revenue management standpoint, whether it’s tied to new customer, top of funnel demand and/or existing customer opportunities. So, those two are different toggles that we are deploying into that portfolio as we speak and not seeing anything that’s going sideways. In fact, more encouraged that things are actually even better than what we predicted when we underwrote the portfolio.
Caitlin Burrows: Great. And then maybe another quick one. I know you have talked a number of different ways about the lower expected deliveries in ‘24 and ‘25, which is encouraging. So, that would suggest, you have started to see development, started slow, I was just wondering if you could talk about the magnitude of that slowdown and/or when it started, like how new is that?
Joe Russell: Well, it’s been year-by-year transitionary. We hit a peak of deliveries back in the 2019 or so timeframe with plus or minus, say, $5 billion of assets that were again, added the market, which actually equates to about 5% of additional inventory. And as I have mentioned, this year, it’s down to about $3 billion or about 3%. We think that, that’s going to notch down by at least another 10% factor each successive year between 2024 and 2025. By the time we get to 2025, we may be in the low-2% range of deliveries from an inventory standpoint. And to your point, that’s a good thing and gives us a very different opportunity to leverage our opportunity as not only the largest developer in the sector, but the only public developer of assets.
And we are able to do many things even more efficiently because of the scale we have got with our own development team and the amount of capital that we can sensibly deploy into development and redevelopment opportunities.
Caitlin Burrows: Okay. Thanks.
Joe Russell: Thank you.
Operator: Our next question comes from Ki Bin Kim with Truist Securities. Please proceed with your question.
Ki Bin Kim: Thank you. So, you guys mentioned that you were testing out some additional promotion activity in October, call it, a follow-up Halloween special. I was just curious, do you plan on keeping that type of promotional activity past October into November, or would those come off?
Joe Russell: Yes. Ki Bin, sales are something that the company has been doing for years and years. You go back and look at pre-pandemic activities, the company started doing Memorial Day sales going back probably more than a decade ago and see good traction from that. And so around holidays, we oftentimes will run sales and get some traction and we offer discounts on select units in our markets that we operate in. And we have seen good traction on that this year. We did a more of a [ph] sale. We did a Labor Day sale. And this one, I don’t know if you want to call it a Halloween sale or I think we call it a fall sale on the website, but it will wrap up today. And we see good customer demand traffic. And others in the industry do, too, the big public REITs generally run these types of sales as well.
And so they are good traffic drivers, and they get the team in the field excited as well, and we see good conversion there. So, it’s a part of the business that’s been around for some time, and we will continue to use it as we have in the past. We didn’t use them in ‘21, ‘22 because we, frankly, were too full for it to make a lot of sense, but we are back to an occupancy environment where it makes good sense, and so we are utilizing it again.
Ki Bin Kim: Okay. And on the debt maturities, you have a U.S. note and a euro note coming due next year. Just any high-level thoughts you can share on refinancing plan?
Tom Boyle: Yes. We will plan to refinance those as we get into 2024. The $700 million U.S. note is a floating rate note and we will plan to refinance that as we get into the first part of the year.
Ki Bin Kim: And assuming the spreads will be pretty similar, or should I expect that to change?
Tom Boyle: It depends on ultimately what tenor we issue and the nature of the interest rates at the time. But it’s our floating rate note, as I have said. So, it’s at market from a benchmark rate standpoint. So, there won’t be a significant headwind associated with refinancing that particular note. It will be more spreads. And we will update you on financing costs as we get into the first quarter. And frankly, that’s. I mean if you look at our balance sheet overall, we obviously have a very long-dated set of financing tools, most notably the over $4 billion of preferred stock that we don’t need to refinance ever, but we can refinance at our election to the extent interest rates change. And we have a very well laddered maturity profile. So, you are highlighting some refinancing we have in ‘24, we have modest in ‘25, a little bit more in ‘26. But overall, a very small percentage of the capital structure is coming due in any given year.
Ki Bin Kim: Okay. Thank you.
Tom Boyle: Thanks Ki Bin.
Operator: [Operator Instructions] Our next question comes from Mike Mueller with JPMorgan. Please proceed with your question.
Mike Mueller: Yes. Hi. Just a real quick one here. Joe, when you are talking about cap rates trending 6% to 7%, is that – was that meant to be a day one cap rate if you are buying a stabilized asset, or is that more the yield that you are looking at if you are buying vacancy and assuming the lease-up risk?
Joe Russell: Yes. I mean again, that would be, in our view, a stabilized expectation would be. If you are dealing with a highly stabilized existing asset, that too, I think would be in that similar zone. There is always going to be a gap or some kind of a risk that you are going to inherit the time and again, we have been more comfortable doing that, knowing if we can buy an underperforming asset at a going in lower yield, we will be able to extract the kind of ultimate value and yield hurdle that we are speaking to. So, those are the stabilized yields that we are aiming at, Mike, as we are looking at investments in this arena right now.
