Richard Anderson : So I want to talk about the supply side of the house. As some people may not remember, the senior housing business was not in a great spot prior to the pandemic because of oversupply. And I know that you trended down. It’s trending down substantially as shown in Page 11 of your deck. But the rule of thumb for supply is, in my mind, is if you’re anywhere over 2% of existing stock, it’s on the table as a possible problem. So tell me why even though it’s down substantially over the past five years, that, that comp year of five years ago was not a great fundamental period for the business. So tell me why this is a good thing beyond just the optics of it being down. And also what you think the window is for you to sort of see this ramp in demand that we’re all seeing and expecting.
And when you think supply starts to sort of muddle in the story again because it certainly will, particularly with development costs coming down now. So if you could comment more color on that, that would be great.
Debra A. Cafaro : Good. I mean, it all starts with the demand side, as you know, with the record 80-plus population growth in 2023. In terms of supply, I would analogize where we are to a little bit after the financial crisis because during those years, construction and development starts, obviously, were paused for a period of time because of the great financial crisis. And this is similar really to what we’re seeing from kind of the pre-COVID period that you referenced but then also kind of during COVID and then continuing now because costs are still quite high, particularly capital costs. I mean, construction loans are extremely expensive now. And so the costs remain, for the time being, very high. And there’s — would tend to be because starts are really low in our markets, Justin can give you the specifics.
But we believe we have a good multiyear window here where we know kind of the demand profile and can capture that while, at the same time, deliveries should remain muted, very muted because they’ll be seeing the effects, again, much like we did after the financial crisis, where deliveries were low. And I think at that point, occupancies got up in and around the 92% level. And that’s really where we want to be able to see if we can get back to that kind of 92% level in this nice window that we have and kind of that’s the game plan.
Justin Hutchens : Yes. I mean, I think you summed it up perfectly. I would just point out again that the 80-plus population, what’s different from that period is growing at record levels and will continue to for the next several years. So that’s obviously very supportive on the demand side. Supply, most are supplemental, we have starts. In our top markets, it’s like — it’s in the basis points. It’s like 10 basis points, exceptionally low. And that supports the window that Debbie is describing over the next few years. And this is a sector that has tremendous demand fundamentals. So the capital we’ll see through those and will bring supply eventually. But we do have a window that’s formed that’s really exciting and supportive of the recovery that we’ve been talking about.
Operator: Your next question will come from the line of Mike Mueller with JPMorgan.
Michael Mueller : I’m curious for SHOP. Should the RevPOR growth moderate a lot in ’24 and ’25, just given the pace of how your expense growth has been moderating?
