Shankh Mitra: Michael, if you think about — different times give us opportunities for different types of product. You have seen us buy and sell every product that we own in last, call it, 7 years, 8 years under this — under the leadership of this team, right? So, because different times, you get opportunities to buy different products at a very favorable basis. This might be the first time we’re seeing across all our product type, across the three countries that we do business with, we’re seeing opportunities, right? This is a very, very disruptive time from not only from debt side but also from equity side. The people who we normally compete against, right, the core funds, the non-traded REITs and others, everybody is facing very significant flow — outflow, either because of the denominator effect that you see in pension fund world as well institutional world or some other reasons such as availability of — not availability of debt and other situations.
So, we’re seeing across all product types, we’re seeing very significant opportunities — and frankly speaking, an ability to achieve IRRs that we haven’t seen in some of the product types, frankly, forever.
Operator: We’ll move next to Jeff Dennerlein (sic) at Bank of America.
Josh Dennerlein: I appreciate all the color on the asset management platform. Just kind of curious how we should be thinking about kind of is this like the full investment year and then payoffs start happening in 2024? Is there anything kind of built into guidance as far as like a payoff — and how are we thinking about the J squared run rate for returns?
John Burkart: Yes. I’ll start and Tim may want to comment. I’m not definitely — for clarity, not commenting on Tim’s guidance. But, I think what we’re seeing and what we’re trying to show is the returns are already coming through. I mean, if you look at what’s going on from an aggressive asset management perspective, you see that in the agency move and what the team has done, which is tremendous amount of blocking and tackling. The additional work that we’re doing really relates to scaling those things. And partly why we included that in the deck is I came in and I had a view of things from my gut, you might say, so to speak. And I probed around and got confirmation, and then we started workflows and now that that’s proving out, and that’s what we wanted to show because that is critical.
We were right. There is tremendous opportunity here. And the more I got into it, the more opportunity I see. When you look at J squared, this exponential opportunity, it’s huge. My view is where I’m working right now is across the whole platform, as I mentioned, and Jerry will be able to focus in on individual items and execute highest of all levels, which will speed up our process. So bottom-line is we’re already delivering numbers. It will continue for many, many years and it ultimately relates to significant margin improvement across the board.
Tim McHugh: I’ll just add on cost. We look at this as an investment, right, on the human capital side and on the technology side. So, you know that we run our platform very efficiently, and we don’t take the costs lightly as far as any further investment. But we think there’s a lot of return here on investment. And so, there is a bit of a lag between dollars in and hires, in that return. But on a go-forward basis, I expect us to be very prudent about it and continue to show high return for dollars spent.
Operator: We’ll move to our next question from Mike Mueller at JPMorgan.
Mike Mueller: Hi. I’m curious what’s the range of margins that you think the SHO business could operate at full occupancy, and to use your term, when it’s fully professionalized?
