Operator: And the next question comes from the line of Greg Williams with Cowen. Please go ahead.
Greg Williams: Great. Thanks for taking my question. Just echoing the congrats to Jeff and Brendan. Just wanted to revisit the M&A landscape question. I mean there seems to be two camps on where multiples are headed in the private assets. One is €“ some believe private capital is going to €“ that’s on the sideline is eventually going to dry up and private multiples could come down a bit. The other camp, the scarcity of assets, especially U.S. assets and the tower multiples should stay elevated. It sounds like you’re waiting for rates to come down so the multiples will stay higher. I’m just curious to hear your thoughts on those views. Second question is just on service margins. I mean your service revenue is coming down understandably from record levels. But how should we think about the type of service activity and the margins year-over-year? Thanks.
Jeff Stoops: Well, I mean rates versus multiples. If you look at any kind of traditional economic analysis, there should be a relationship between one and the other. We didn’t see a lot of that over the last couple of years. As rates have gone up, multiples really did not drop the way they should have had, at least using our math. That’s starting to change a little bit, and we will have to see. We will have to see whether the amount of private capital on the sidelines will long-term push returns down in the acquisition market across the board. We’re not prepared to invest with those returns. We’ve got higher goals, and we pick and choose. And so far, I think we’ve been pretty pleased with the capital we’ve invested versus the return that we’re seeking, but I think it remains to be seen.
Brendan Cavanagh: And then Greg, on your services margin question, our outlook assumes a slightly lower margin for services work this year, and that’s based on primarily just a slight shift mix €“ sorry, shift in the mix of whether it’s construction or site act type of work. So the construction stuff is usually a little bit lower margin, also a mix on the type of work and who we’re doing the work for has some impact. But from a big picture standpoint, it’s a fairly small drop from what we had last year, and we will see how it shakes out. If it ends up being the same, we will have slightly better results than we projected.
Greg Williams: Got it. Thank you.
Operator: And the next question comes from the line of Michael Rollins with Citi. Please go ahead.
Michael Rollins: For the first question, I’ll preface this by saying that I realize it hasn’t even been 2 hours since you’ve given the full year 2023 guidance. But a question that keeps coming up is if the second half of 2023 in the U.S. business decelerates, what does that mean for growth in 2024? And Jeff, I realized you made some comments both in the release and on today’s call about some of those prospects. But just wondering if you could put more color on how you’d like investors to feel about this multiyear transition and leasing opportunity, if you could put some guardrails around it. And then just secondly, if you can give us an update on what the build-to-suit opportunities might look like more broadly over the next few years. And is there a way to accelerate that program to get greater portfolio growth?
Jeff Stoops: Yes. I think the way we think about leasing, Michael, is there is a lot of work left to be done on our assets domestically and internationally to deploy 5G, multiple years’ worth of work. But ultimately, whether €“ how far that goes and at what pace will depend on how much and how fast carriers want to spend money. So we €“ it’s going to €“ we’re confident it’s going to occur. It’s just a question of when and at what pace. But the physical work that is yet to be done is tremendous. There is just a lot left to be done. Now I guess you could take the €“ because if you were a naysayer, you could take the position that, well, they are just never going to deploy all that spectrum that they spend all that money on, but that seems to be a bit forward.
So, those are the guardrails that we are looking at. And right now, and this could certainly change based on pickups in activity, that we are going to have a very strong 2023, where the first half is weighted more heavily than the back half. And in terms of build-to-suits, we are pushing that business line, both in the U.S. and internationally. We continued to be financially-driven in the investments that we make in that area. So, not every build-to-suit is necessarily, at least in our view, an appropriate return on capital. But we are going to seek out and try and take all the ones that we think do fit those goals.
Michael Rollins: And just a curiosity, where are year one returns for the build-to-suit program?
Jeff Stoops: We are looking for 9%, 10%, 11% cash-on-cash returns, and that’s not every opportunity that’s out there.
Brendan Cavanagh: Yes. And that’s a multiyear. Year one will obviously vary depending on the specific situation. And frankly, Mike, that is the analysis around new build opportunities is not that different than it is for M&A, where a lot of these opportunities are competitively bid like the M&A deals are. They are just competitively bid with typically with carriers handing out those opportunities. So, we do our best when we are able to find strategic opportunities to build, but the volume there is obviously less. On the build-to-suit opportunities, we are making a financial decision. So, we would certainly like to continue to boost our portfolio numbers, but it’s all about the financial returns, and so we will be selective there just like we are on the M&A market.
Michael Rollins: Thanks.
Operator: And next, we will go to Brett Feldman with Goldman Sachs. Please go ahead.
Brett Feldman: Thanks. And I will just echo everyone else’s congrats both, Jeff and Brendan. Two questions. One, the SG&A looked a little higher than we thought. I wasn’t sure if that’s a step-up related to some of the assets you acquired in the quarter, if maybe there is any inflationary pressures that are flowing through the P&L that we need to be thoughtful about as we model out next year or this year. And then you pointed out that the dividend payout is still a very low percentage of your AFFO. I am just wondering where are you in terms of the payout relative to your taxable income? And do you anticipate that the payout is going to be able to remain at a relatively low portion of your AFFO, or could something on the tax component of that change quickly over the next few years? Thanks.
Brendan Cavanagh: Yes. Just so on the €“ I will do the dividend one first. We have pretty significant NOL still. I believe the number is somewhere around $585 million of NOLs as of the end of the year. So, that gives us a decent runway, and we should be able to keep our percentage of AFFO at a manageable level. And although it will grow certainly each year, if we continue to grow our dividend at the same pace we have been, I still think we have got many, many years left based on how we model it out. On the SG&A side, going forward, we did include certain bigger increases in our outlook that are largely around inflationary-type costs. Most of our SG&A is people-related costs. And on average, we are giving bigger increases to people this year than we have in past years. Just cost of living is increasing, and also to be competitive in the marketplaces that we are in. So, it’s mostly that, there is nothing in particular, I think to call out on it otherwise.
Jeff Stoops: Yes. But I would echo you ought not assume that that’s going to be the same pace of increase over a multiyear period, Brett. Thanks.
Brett Feldman: Thank you.
Operator: And the next question comes from the line of Nick Del Deo with SVB MoffettNathanson. Please go ahead.
Nick Del Deo: Hey. Thanks for taking my questions and Jeff and Brendan, again, I also want to echo the other’s comments and congratulate both of you on the upcoming changes. I guess first, you noted in your prepared remarks that revenue placed under contract in Q4 wasn’t quite as strong as in Q3 and your backlogs have ticked down a bit. Are these changes of the magnitude you consider kind of typical in the course of business and to be expected? And can you share anything about what you have seen year-to-date in €˜23 along those lines?
Jeff Stoops: I mean they are clearly part of the cycle of wireless deployments over the last 20 years, Nick. We actually €“ we are looking at charts €“ internal charts today about the pace of activities on a quarterly basis, and this period of time really was some €“ one of the longest that we have seen going back to before the 3G to 4G upgrades. So, it’s not unusual. And deep down, there is two things that our customers really care about. Are they losing ground because there is some kind of great competitive pressure coming from somewhere, and what’s their free cash flow, and what did they promise the investment community. And what I think is going on now is simply a balance of that. But I would steer people to the comments we made earlier about this being a temporal thing because the physical amount of work yet to be done to bring 5G, at least to our assets, there is still a lot left.
Nick Del Deo: Okay. And then I also wanted to drill down a little bit into the agreement you reached with TIM. I think you said there would be about $10 million in churn from that in 2023. Does that take care of all of your expected Oi churn from TIM. Are there any benefits to SBA aside from the term extension? And just think about Oi more generally. I think in the past, you said you expected about $20 million to $30 million in total churn. With this deal done, should we assume, call it, $10 million to $20 million from the other acquirers, or are you now able to tighten that up some?
Brendan Cavanagh: Yes. First, yes. This would account for all of the Oi consolidation-related churn with TIM. There should not be any more based on the agreement that we struck. The total remaining would be €“ in the ballpark, I would say that it’s a little bit higher because of the GTS acquisition if you recall. So, I would call it 23% to 33% is €“ I am sorry, that’s a total $23 million to $33 million, minus the $10 million. So, yes, I mean I think we are €“ we will see where things go with the other carriers down there as we have conversations. So, those are to be seen, but for TIM, this would be it. Nick?
Nick Del Deo: Yes, sorry. And then aside from the term extension, nothing else to consider from our side of the deal?
Brendan Cavanagh: Yes. I mean there are some other things. There are some other business commitments that are part of the agreement as well, and there is a variety of smaller things. But the main gist of this is some accelerated discount to their leases, long-term commitments across the entire portfolio, including non-Oi related agreements and some future business commitments.
Nick Del Deo: Okay. Thank you.
