Bill Crooker: I mean part of it is — and this goes down to our basic thesis here is when we buy properties, we make sure those properties fit the submarket really well. And fit the teeth of the demand in those submarkets. So by having those type of assets, we’re able to push rents because demand is really high. There is anticipated leasing in the back half of ’24, which we’re forecasting spreads for, but there’s a lot of time between now and when those leases are going to be forecasted, which is why our guide is 25% to 30%. But we have signed, as I said, almost 70% of our leases for 2024 at 30%. And one point that I don’t think we brought up yet is same time last year, we’re about 60%, 61%. So we’re ahead of where we were last year in terms of leasing.
Operator: Our next question comes from the line of Blaine Heck with Wells Fargo. Please proceed with your question.
Blaine Heck: Can you just talk about how you’re thinking about your overall cost of capital today and the spread between your cost of debt or more importantly, probably cost of equity and your required returns on investment? Has that gap expanded, and that’s what’s driving a little bit more of the acquisition expectation?
Matts Pinard: Blaine, this is Matts. I think we can start with the cost of debt. You look at our investment-grade balance sheet, we have a mix on there. We have a mix of term loans and private placement notes primarily. So the original tenors of those instruments are five years, seven years, 10 years. You take a look at the 10-year, it bounced around recently, particularly yesterday. If we were to originate that today in the 6% area, granted, that’s a little higher than what we have originated over the previous three years, a lot of that is related to the 10-year. If we think about capital allocation for this year, look, the funding plan for ’24, it really begins with the retained cash flow after dividends paid. As I mentioned in my prepared remarks, we did retain $90 million last year.
We expect to retain roughly the same this year. We do have asset dispositions in our guidance. We’re going to have those proceeds to deploy as well. And then what I do think is important is, we do have $63 million of unfunded equity that’s available to us on the forward ATM. That’s at a gross share price north of $38. So, you take that and then you take a look at the balance sheet, it’s under-levered compared to our — to a range of 5 to 5.5. So, we have a lot of what we need right now. And with the movement in 10 years, yes, it does have an impact on our cost of debt.
Blaine Heck: Okay. That’s helpful. And then just on the mid-single-digit rent growth you guys are projecting this year. That seems to be a bit above some of your peers and some brokers that are guiding to flat or low single-digit growth. I guess what’s giving you confidence in that higher number? Or what do you think is unique to your portfolio or markets that might push rent growth a little better this year?
Bill Crooker: And some of the things I said in the prepared remarks, I mean, just where — and some previous questions. But our buildings fit the submarkets we’re in really well. Generally, our buildings are on the smaller side as compared to where the vacancy is now, so the vacancy is generally big boxes, call it, 400,000 square feet and above. And so, when you look at where the demand is — it’s — it’s on the smaller boxes. We’re seeing — still seeing near-shoring demand. We’re anticipating some on-shoring demand in the coming years. And then the way our buildings fit the submarket, we feel really confident about their ability to lease and drive good strong rental growth. Last year, we went out and we forecasted really well in terms of where we came out.
I think we started the year at high single digits or mid- to high-, and we ended up at a little north of 8%. And this year, it’s — we’re starting the year at mid-single digits. So, it is a ground-up analysis that our team spends a lot of time reviewing and we have a lot of confidence in it.
Operator: Our next question comes from the line of Camille Bonnel with Bank of America. Please proceed with your question.
Camille Bonnel: Can you expand more on the 31% outstanding leasing you have less to address in 2024? How much of that is near-term weighted versus back half? And are there any big concentrations in any one market?
Bill Crooker: No big concentrations in any one market. No, I think I mentioned this on the last call, too, nothing over 400,000 square feet, which is just kind of our line of demarcation of big box, small box. More of it’s back-end weighted, which is why our range leasing spreads is 25% to 30%, and we’re coming in close to 30% for the amount we’ve leased to date. So that — because if it’s more of it’s back-end weighted, that’s why our range is where it is. But we’re really excited about where we are today. Like I said, earlier, it was 61% at this time last year, and now we’re close to 70%. So there’s really good activity on that.
Camille Bonnel: Right. And for my second question, the core operations ended in a very solid place. But as we look to the bottom line and adjust for noncash-related items to get you to your cash available for distribution, this came in about 5% lower than the sell side was expecting. So I was wondering how should we think about CAD growth this year? And would this be similar to the 4% FFO in your guidance?
