Alexander Goldfarb: And then I guess to that point, Dave, what do you estimate your free cash flow is for 2024? So I’m just trying to, I mean, I understand defensively husbanding cash, especially given the intensive nature of hotels. But what do you figure your free cash flow is after debt service, after normal, not the big R&M, but normal CapEx? What do you anticipate the free cash flow to be?
Dave Folsom: Yes, if you strip out the nonrecurring CapEx, I think I’d have to ask Tony to kind of weigh in on a potential number there.
Tony Domalski : I have to go back and double check. My guess off the top of my head is probably $5 million to $6 million a year. But it could be wrong. I have to go back and check.
Dave Folsom: A lot of it is going to depend on how these debt numbers flesh out with respect to interest expense and principal amortization. I think on some of these debt refinancings, we’re going to get some interest-only periods up front where we’re not going to have to spend a lot of cash on up front principal amortization.
Alexander Goldfarb: Okay. So that $5 million to $6 million is, that’s inclusive of amort pay down or that’s before?
Tony Domalski : That’s inclusive. But to your point, it’s non-inclusive of nonrecurring CapEx, so one-time PIP expenditures, which will have some coming in the future here.
Alexander Goldfarb: Okay. And then just the final question, just going back to the OpEx and appreciate your time. It sounded like you guys are saying that in 2024, insurance, labor costs, full, basically restoration of the full amenities and F&B, et cetera, it sounds like OpEx should be back to a normalized level. I don’t know if that’s 3%, 4% growth, but whatever. But is that the way we take that? And if it is back to a normalized level, sort of what is the new growth rate that we should expect in OpEx?
Dave Folsom: Well, I mean, operating expenses have been so volatile because of the insurance picture and the tax, the real estate tax picture, those have been the big drivers. And then as Scott mentioned in his remarks, just getting the hotels back into sync with their amenity levels and service levels that are demanded by their asset chain scale designation, that’s created an abundance of operating expenses. But the theme for us is we’re going to start normalizing all of those where they should be normalized this year, and whether it’s 4% or 5% or 3%, I’m not quite sure what the operating expense growth is, we could get back to you on that number, but normalized back to pre-pandemic levels with margins is what we want to see.
We’ve had a lot of rate growth as you well know, but we’ve also had a lot of operating expense growth, specifically with respect to staffing and the cost of that staffing. And then the big outlier has been insurance and real estate taxes. And we’re in the middle of our renewal right now. And I would say for the first time in a couple of years or three years. I’m somewhat less nervous about the insurance renewal, as I think there’s a lot of excess capacity in the market. And I think we’re going to see at least some nominal growth in cost, but not the 50%, 70%, 100% premium increase that the industry saw in prior periods.
Operator: Our next question comes from Brandon Boyd, Private Investor.
Unidentified Analyst: Thank you for taking my question. Would you speak to the payment of the deferred preferred stock dividends and what you foresee in that area?
Scott Kucinski: Sure. Good morning. This is Scott speaking. We’ve stated on previous calls and anytime we’ve spoken, the deferred preferred dividend, it’s certainly something that we’re striving to get repaid. We’ve made one catch up payment in the calendar of the year 2023. I think what we stated previously is that our goal, absent additional capital raising executions will be to repay that through ongoing operations. As kind of Dave’s comments to Alex’s previously alluded to right now, our main focus on the uses of our capital and our capital allocation for the company is going to be on how these debt refinancings unfold over the next year or two and how the debt markets behave. So that’s a critical piece to the puzzle. We need to see how the debt markets, how they reopen and how they are underwriting behaves, either getting less restrictive or interest rates coming down to help that underwriting process and also the capital needs of our assets.
