Chandni Luthra: That’s very helpful. Thank you. And for my follow-up, could you guys talk about what sort of conversations are you having with your JV partners? As you think about accelerating purchasing homes later in the summer, you gave some thoughts around bringing down the loan to value, but could you give us an update on where price to FFO multiples are at the moment for homes that you did acquire in the fourth quarter? And where that could potentially go, where it becomes feasible for you again?
Gary Berman: Well, so what we need to do in order to get to the next fund raise, we essentially need to get to roughly the mid-point. So, if we can buy roughly 3,000 homes and the breakdown of that would be 80% JV-2, 20% Homebuilder Direct, we will be at a point where that existing venture single-family rental ventures will be fully committed. And that allows us to then go and raise a follow-on fund. We started to have those conversations with our JV partners. I could tell you; they are very confident, I think in the overall strategy and in our performance and they feel bullish about the future for single-family rental. And so, we’re going to start fundraising imminently and hoping that if we can again hit the mid-point, will be in a position to launch, let’s say JV-3, later this year or at the end of the year or maybe early into 2024, but the hope would be, at the end of the year.
And that’s really our goal. We think it’s very much viable. All of our existing major investors have indicated that they would like to re-up and they’d like to put more money to work. And I think they’ve gotten around, I mean, obviously, there’s a lot of dislocation in the equity capital markets, but there is a couple of things happening. One is in the debt capital markets, that dislocation is going away. I would say, it’s probably halfway back now, so that’s an improvement we talked about green shoots. And we had our representatives at the securitization or ABS conference in Vegas, last couple of days and very positive response from buyers of CMBS, so it feels like that’s opening back up, which is helpful. But then also the JV partners are starting to say, look we’re somewhat agnostic to debt.
So, the way they think about it is, if you can buy homes at a 5.5% cap rate and then get NOI growth of 4% in perpetuity, that’s a 9.5% return and they’re happy with that. They’ll take that all day long. We obviously we do better than that because we get the impact of the fees. And from that point forward, it’s only a decision of how much more incremental leverage you want to put on to make — to improve the returns a little bit more. So that’s a big difference right now, I would say between private capital markets and public capital markets, which are in a state of angst I would say about what the cost of capital is, private capital markets are looking through that.
Chandni Luthra: Thank you so much.
Operator: Our next question comes the line of Nick Joseph from Citi. Your line is open.
Nick Joseph: Thank you. Appreciate all the comments on the buildup to the same-store guidance for this year. Just wondering why 6% to 7% is still the right renewal cap, just given the broad macro environment today?
Gary Berman: Well, there’s always an arc into thinking about how to set a renewal cap. The key thing for us is always try to set rents below — slightly below market, so that we benefit our residents and they don’t have anxiety, that whether they have to move out or whether they can afford the homes, that’s incredibly important to us. And we’ve shown over time that actually leads to great results, not just for our residents, but also our shareholders and investors as well. So, it’s a bit of an arc, Nick, but I would say, that if we kind of think about where we’re seeing wage growth, we’re seeing that moderate probably from about 8%, I would say with our frontline workers narrowed down to maybe 5% or 6%. And as a result, we think that kind of 6% to 7%, especially given the loss to lease in the portfolio makes sense.
