Welcome to the WashREIT Second Quarter Earnings Conference Call. As a reminder, today’s call is being recorded. At this time, I would like to turn the call over to Amy Hopkins, Vice President of Investor Relations. Amy, please go ahead.

Good morning, everyone, and thank you for joining us on our second quarter earnings call. On the call with me today are Paul McDermott, President and Chief Executive Officer; Steve Riffee, Executive Vice President and Chief Financial Officer; Grant Montgomery, Vice President and Head of Research; Drew Hammond, Vice President, Chief Accounting Officer and Treasurer; and Steven Freishtat, Vice President, Finance. Before we begin, I would like to remind everyone that this conference call contains forward-looking statements that involve known and unknown risks and uncertainties, which may cause actual results to differ materially, and we undertake no duty to update them as actual events unfold. We refer to certain of these risks in our SEC filings. Reconciliations of the GAAP and non-GAAP financial measures discussed on this call are available in our most recent earnings press release and financial supplement, which was distributed yesterday and can be found on the Investor Relations page of our website. And with that, I’d like to turn the call over to our President and Chief Executive Officer, Paul McDermott.

Thank you, Amy. Good morning, everyone, and thank you for joining our second quarter 2022 earnings call. These are obviously quite interesting times. The capital markets have been disrupted as a result of the Fed’s response to rising inflation, as well as other macro events, yet apartment market fundamentals remain historically strong. Interest rate movement has caused debt markets to pull back. And as a result, transactional markets have slowed down substantially. However, as an all-cash buyer, we continue to receive calls about acquisition opportunities as certainty of execution is now paramount. We have completed the deployment of the commercial asset sale proceeds and are working on additional opportunities to continue our growth and geographic diversification. Steve will cover where our portfolio is 1 year after launching major transformation steps and the anniversary of turning the corner from the worst of pandemic leasing conditions, as well as our second quarter results and growth outlook. But first, I would like to talk about the environment we now face in the near-term as we continue our geographic expansion. As interest rates have risen, deal competition has subsided as leverage buyers face negative terms and have moved to the sideline. Our underwriting has been conservative, and we plan for the potential of a lower gross economy. We underwrote the expectation for 2023 rent increases to trend down to high single-digits versus the unprecedented double-digit trade-outs we are continuing to experience thus far and to approximate to historical levels after 2023. Depending upon the market, submarket and vintage of assets, we believe cap rates have expanded 30 to 50 basis points, and we’ll continue to monitor price movement as the markets are still volatile. That said, we have capital to deploy and are being judicious with our underwriting and continue to insist on full…

Thank you, Paul, and good morning, everyone. I’d like to cover where we are at this point, having launched our most significant steps in our transformation 1 year ago and talk about our operating results, trends and outlook before covering our second quarter results and guidance. We are now in the third quarter of 2022, which represents the first quarter of performance that includes the full allocation of the net proceeds from exiting our commercial businesses. It will also be the first quarter where substantially all of our multifamily leases, that have had at least one post pandemic inflection lease rate increase. Our transformation was designed to provide tailwinds of growth as opposed to the headwinds facing the commercial office and retail sectors. We had historically strong rent trade-outs since we reached the pandemic rental inflection point beginning on average last July. By the end of this quarter, nearly all of our leases will have captured strong year-over-year rent trade-outs and substantially all pandemic lease consumptions will now burn off. The growth that we are capturing as we sign new leases remained in the double-digits for leases signed to date with July and August commencement dates, reaching yet a new same-store peak for effective new lease rate trade-outs of 13.9% for July. Our total loss to lease stood at 11% at quarter end and combined, this gives us true visibility into the growth that is ahead. Starting with the third quarter of 2022, we expect average double-digit same-store multifamily NOI growth for the next 5 quarters. All things considered, we have excellent visibility into very strong NOI and Core FFO growth for the second half of 2022 and all of 2023. On top of our historically strong same-store growth, we have strategically and geographically expanded and invested in Southeast communities,…

Thank you, Steve. Before I conclude, I want to take a moment to welcome our new Board member, Jenny Banner, who will serve on our Audit and Governance Committees. Jenny is a highly accomplished senior leader with 14 years of CEO experience and 20 years of public company board experience. Among her many accomplishments, she has been a public speaker and consultant globally on the Board’s role in digital transformation, which is an area of focus for us as we continue to improve and streamline our corporate and property level technology infrastructure. Her technology expertise and leadership will be a great asset for WashREIT. I’d also like to thank the entire Board for their ongoing support and commitment. To conclude, as we enter the third quarter, we have a line of sight on the best growth outlook we’ve had in recent history. It’s been a year since we embarked on the final phase of our multifamily transformation. With same-store NOI growth expected through the third quarter of 2023 expected to average in the double-digits and even higher growth from our non-same-store communities, our outlook is certainly much better than it was a year ago. Our internal transformation continues, and we are actively preparing to begin bringing our community operations in-house. Looking forward, we have several exciting announcements on the horizon, including our new resident-focused brand rollout later this year. While our plans to scale our company might take time as the capital markets disruption subsides, we are confident in our ability to execute on opportunities and grow profitably and to further expand geographically and look forward to delivering very strong growth from our existing communities through 2023 and beyond. And with that, I will now open the call up to answer-questions.

And the first question today is coming from Blaine Heck from Wells Fargo.

So clearly, acquisition expectations are delayed a little bit contributing to your guidance reduction. It sounds like that delay is related to the specific situation you have with that seller. But more generally, Paul, can you give us a sense of whether you expect opportunistic or somewhat distressed situations to emerge, given the disruption in the capital market? What is the overall decline that we’re seeing in transaction volume just more attributable to just price discovery on all deals given the meaningful movement we’ve seen in the cost of capital, but maybe fundamentals are holding up well enough that there isn’t going to be much distressed?

Well, great. Let’s -- Blaine start with the capital markets where you did. I mean -- and let’s start with looking at debt first. If we look at the agencies right now, their coverage ratio constraints and their underwriting on trailing 12 has really started taking them out on deals, I’d say, over 55% LTV. The debt funds who we talked about a couple of calls ago, who were normally very aggressive, well, their costs have increased. There’s -- and thus so is their stabilized debt yield requirements. So they were really -- I think they owned a lot of a higher LTV deals and where they were extremely competitive. And the now that -- those types of requirements on the debt yield have really hindered them from reaching out and doing those higher LTV deals. I still think you’re going to see deals and we are seeing deals because we’re known to be an all-cash buyer. And the deals that are going to get done in this market are going to be all-cash or lower leverage, 50% LTV, 55% or lower. I think the biggest thing that has changed probably in the last quarter is the premium that is being given to certainty of execution. And I think, look, we’ve tied up 5 deals, and we’ve closed 5 deals. I think we are known in the target markets that we’re in that we do offer certainty of execution. We’re not shying away from our underwriting. And as I said in my remarks, I believe our observations of the cap rates have expanded 30 to 50 basis points. I would say, Blaine, if I was talking about office product, that number is probably going to be higher, same with retail. But I do think there is -- because capital costs…

That’s very helpful color. And as you mentioned, you guys are halting development at Riverside at this point, and this is related to the first question, but on the other side of the deal, is there anything to read into that decision with respect to a potential monetization of that asset or even part of that asset? Or would you say it was driven more by kind of the other factors that you mentioned in prepared remarks?

I think it’s driven just because we are being prudent in our underwriting. And when we look at our requirements, our initial going in yields on that, we want to see more data points from that market. That market is certainly moving in a positive direction. But when we combine that with the increase in construction costs from when we first started the predevelopment work on that, I think construction costs, Blaine, have gone up probably 20% over the last 2-plus years. That’s the only reason. We’re still very committed to that asset. We like what we’re seeing in our current same-store pool from the Riverside asset itself. And we think that, that project will be a long-term winner for us. But just right now, we’re really focused on current income as we make this transition.

Last one for me, Steve. I wanted to ask about same-store results in the quarter and particularly on the change in rental and other revenue at 5.3%. In the context of average rent per home up 7% year-over-year, along with a 0.7% increase in occupancy. I guess I would have expected the total revenue number to be up more. Was there anything in other property or elsewhere that offset that rent and occupancy growth?

Well, first of all, I think what you’re seeing is that we’ve really been building it. I think you’ll see that kind of growth in the third and the fourth quarter continues. So for us, I think we hit our inflection point a year ago in terms of post pandemic, maybe a little slower than some other markets that started in July. We have some concessions and all that started to continue to burn off through June that we’re amortizing. We did have a little bit of timing noise in the quarter on both an expense item, a couple of expense items and also that would have affected revenue. We had probably what we think will be our peak bad debt quarter, which affected revenue a little bit in the second quarter. It’s just literally -- we’ve got projections going out for the year, but I think the second quarter was our peak as we looked at just the aging of receivables, the whole clock on getting repossession of units back flips at the beginning of the third quarter, and we were -- it was just a little bit extended there. So that may have affected the second quarter a little bit. And then on the expense side, which is not what you were asking about, but we had just a comparative year-over-year. We had a real estate tax reassessment credit in the second quarter of last year. And so it looks like expenses went up more other than that. And a couple of the assets that we bought in Atlanta is just we were -- we have a little bit of timing differences. We were forecasting exactly when we would incur a few costs, and we hit a couple a month or 2 earlier than we thought we would,…

And the next question is coming from Mike Lewis from Truist Securities.

I wanted to follow-up and ask a little more specifically about cap rates. And on the cap rate on your second quarter acquisitions versus what you expect for the fourth quarter ones, you mentioned cap rates moving 30 to 50 basis points. So it’s unfortunate that you got delayed on an acquisition case. But are you benefiting here? In other words, it becomes a drag this year, but you think you’ll -- maybe cap rates are a little higher than you thought on the acquisition side, maybe that becomes a little bit more of a tailwind next year? Or am I kind of overstating that movement in acquisition cap rates?

Well, let me make a couple of points on your question, Michael. It’s never unfortunate to walk away a deal -- walk away from a deal that doesn’t meet your underwriting criteria because somehow some way we think that, that’s going to come back and rear its head. And this particular deal that we had tied up would have met and exceeded our acquisition goals this year, but I’m proud of my team for having the discipline when we didn’t get the capital improvements adjustments that we needed. Clearly, the market was moving while we tied it up. And we also think that there could be some credit challenges potentially moving forward. So I think this is the time you need to maintain your discipline. But to your point, I think we will probably see, as I said on Blaine’s question, number one, I think we’re going to see a lot more deals in the second half. And just the bid-ask, I would expect that a lot of brokers that are taking on listings right now and even some of the owners, I think they’re becoming more realistic on the bid-ask. I think some of the sellers, particularly in the Southeastern markets, were a little bit in denial that the market had moved and we were watching deals get retraded all around us, Michael. These are deals that were probably in the mid to upper 3 deals that we’re now going at 4.25% to 4.35% and seeing even in some of the submarkets, those deals getting priced to upper 4s. I think our investors in our portfolio will be a beneficiary longer term and coming in at a better basis.

And then second, I wanted to ask you the portfolio now Atlanta is only about 8% of total NOI in 2Q. How aggressively do you go about getting some belts up as a percentage of the portfolio from here? I know you have, like you said, more acquisitions in the back half of the year. Do you think there’s a -- does this involve the next stage of either D.C. area dispositions in Sunbelt acquisitions or is it more of a gradual shift in the portfolio over time? And kind of where do you want to end up on that mix?

Michael, it’s Steve. I’ll start, and Paul, I’ll just hand it over to you to kind of round it out. Some of those acquisitions and all came in late in the quarter, our models show us at 20% in the fourth quarter in terms of Atlanta NOI as part of it. The other thing I would say is, obviously, they’re growing really well. And we would have talked and then I’ll get to kind of what we’ll do transactionally. We talked what we were targeting for when we rolled out the transformation to try to get approximately a 4 cap rate a little better. We’re -- as of today, for the assets that we’ve acquired, our 12-month yield forecast looking-forward from June 30 to now is a 4.6%. So obviously, we’re getting growth and good returns on what we’ve acquired so far, so that’s growing there. We have 3 objectives, I think and I may have mentioned this in the prepared remarks. One, we wanted to get out of the headwinds and get the tailwinds behind us and to generate profitable growth. Well, we’re at that 1-year point, where we’ve repositioned the company, and we’ve got really significant growth ahead of us, as I laid out in the remarks. And I think if you model it, it falls all the way down to the bottom line. And hopefully, we’ll be able to give guidance for next year fairly soon in terms of all the way down. Now secondly, the goal was to geographically expand. And I think we want to continue to do that. 20% is not where we’re stopping, and we want to make it more and more a part of the asset base of the company. And it really diversifies our business risk that also, we believe, with…

No, I think that covered it, Steve.

And then just one last quick one for me. You have almost no debt maturing in the next several years. So of course, I’m going to ask about the one piece you do have, which is the 2.3% term loan next year. Should we just assume you’ll roll that into another term loan? And how much do you think rate has moved on that?

Well, look, I think that’s part of the optionality we have because that is debt that we can repay without penalty. And so we have the option of rolling that back into the bank market into another term loan. But I also want to keep open the possibility that we could pay it off if we got a hold of a portfolio and had to assume another kind of debt instead. And so we’re going to have both of those options. I think we could definitely extend it if we needed to. But I think it also might be the way that we can structure a potential portfolio transaction where we need to pay off some of our debt.

And the next question is coming from Michael Gorman from BTIG.

Paul, sorry if I missed it, but did you mention the deal that you walked away from because of the discipline on your underwriting. Did that ultimately trade with another buyer? Did they pull it off the market? Is that something that you think will come back as you talk about the next 30 days as sellers reset expectations? What’s the status there?

To our knowledge, and as of this call, that deal was pulled, and we would expect -- it’s not a fund that is monetizing, but we probably would expect to see that deal potentially in the fall. And I think we’ve done our homework, and I think we’ve underwritten the asset appropriately and calculated the risk, and we stand behind our number that we would acquire that asset at.

And then maybe as you talk about your underwriting and then what you’re seeing in the market. And obviously, WashREIT is being disciplined here. Have you gotten more conservative with your underwriting in terms of rent growth over the past 30 to 60 days as you’ve looked at the macro environment? Do you have a sense? Obviously, the capital markets have been having an impact on cap rates. But have you had a sense that buyers are shifting their underwriting expectations for rent growth in the apartment market as well?

Michael, let me answer that in 2 pieces. We -- I would say that our team from the get-go has always been disciplined in the underwriting, and we’ve really never thought that these growth rates we are seeing now were sustainable. And last year, when we were losing deals, we took the market rent growth the first year, we pared that down to high single-digits in year 2. And then we returned to normal historical rates, which were mid to low single-digits in the beginning of the third year. I think we are still comfortable with those, although we’re hedging a little bit. And we’re also digging deeper now into historicals on accounts receivable, bad debt. In addition, I mean, I think we have a great physical team, but we’re counting on that a more moderate increase. Other buyers that we’ve seen come in, especially, Michael, because they -- right now, the people that are active in the market or are getting deals done, like I said earlier, either all-cash buyers or they are in the mid-level LTVs. I think they’ve tightened their underwriting approach, and there’s a particular focus on -- particular focus on the credit envelope around that NOI.

That’s really good color. And then maybe one more on the underwriting. As you’re doing this transition to the in-house property management, you’re doing the technology rollout, all of those things. How does that factor into how you consider the expense side of your underwriting when you’re looking at these assets, your ability to maybe drive better NOI through the efficiency side as your underwriting assets? Is that something that you’re not kind of putting through the models yet just because you’re still early in the transition? Or how does that factor into how you’re looking at assets?

We certainly factor, Michael, this is Steve. We factored it into our modeling of onboarding all of this. I don’t know that we’ll get the full benefit of it until we actually have everything in-house and is running. But as we look at our property management expenses, about 70% of that is what we pay third parties. And then the balance of it is split between our own internal management overseeing it, doing our overnight pricing and asset management and all of the properties today and then our own technology charges on top of that. We believe that when you cut out the third-party services and all in that, we have a very scalable base of technology and corporate structure ourselves that there’s a net savings and all of that. Plus, in terms of efficiency and staffing, when you own it yourself, you can operate it consistently across all your properties according to your own model. So there are things like centralization of certain functions, et cetera, that are factored into our long-term cost structure. We’re factoring it into it. I think it’s going to take until about midyear of next year before all of the properties we currently own are internally on the same system. But thereafter, we believe, we’ll start to realize some of those savings too.

And maybe one last one for you. You talked about some of the potentially interesting or innovative transactions in the NAV-to-NAV side for private portfolios. Just of the $125 million of acquisition guidance targeted for kind of fourth quarter of this year. Are any of those private portfolios kind of targeted in that number? Or are those more traditional one-off deals that you’re seeing in your pipeline that you’re underwriting right now?

Those are traditional deals that we have site on in our pipeline. And as Paul said, our pipeline is probably going to expand after Labor Day on top of that, plus maybe some other deals that we passed one might be visible again at that point in time. But we’re actually working on assets that could possibly do more than that. That’s what we’re guiding to right now. That is not the portfolio, NAV-to-NAV type structure, which we -- those are hard to work out, but there may be ways to do that, that creates value and scale and get our geographic expansion kind of accelerated. So we’re doing those things kind of in addition to our normal in the market, working with brokers and owners to acquire assets.

The next question is coming from Bill Crow from Raymond James.

A couple of quickies and then a more theoretical or strategic question. First of all, on the bad debt, I think you all are probably talking about it more than anybody else in the multifamily side. I’m just curious whether it is an issue that’s kind of a Walmart versus Target sort of issue, a submarket issue or why you’re having -- seem to be having a little bit more challenge on the bad debt front than your peers?

Well, first of all, I think it’s timing because I think we had a pretty light bad debt in the first quarter and they had a heavier when you look at it. I think it’s just literally where we are in terms of the program. In terms of just a couple of the macro things that I think that you’re implying, which is a fair good question, Bill, it’s not a question about income or people’s ability to pay. And I’ll let Grant add a little color in a second to that, too. But right now, we’re back to pre-pandemic rent levels and incomes are much higher. And it’s really more about the ability to get possession of space versus the ability of renters to pay. In fact, in the units where we’ve had some age delinquency until we hit this -- the opportunity to start repossessing, we’re getting 14%, 15%, 17% trade-outs in some cases in the same properties. So there’s a deep market with the ability to pay behind it. But Grant, maybe you could comment, if you don’t mind, just on sort of the macros and incomes and all, if you will.

Sure, happy to. Yes. So in our portfolio, our average rents have increased approximately $350 since March 2020, with the onset of the pandemic. Meanwhile, in the Washington metro, monthly incomes across the region have grown about $570. And we mentioned in the call within our portfolio, our actual residents incomes are up 12% year-over-year in the Washington region in really just over the last 6 months comparing to end of 2021 with the beginning of 2022, incomes are over 14% for our residents in our Atlanta properties. So as Steve said, it’s really not a wherewithal issue at all in terms of incomes versus rents.

Second question, I think you said retention was 68%. I think it was somewhere in that range of 60s. I’m curious how many of those people are leaving to buy houses and whether you think you’ve seen any benefit over the last month or 2 from the shoot-up in mortgage rates?

Yes, we certainly have both in our Washington market and in our Atlanta market. And our Washington market, the reason for move out to home purchase has declined about 20% compared to the prior year. Where in Atlanta, it’s been even more dramatic, and it’s about a 50% change. It’s actually under 9% move-out and that had been more in the high-teens as recently as the beginning of the beginning of the year.

And then I guess bigger picture, Paul, one of the things that I’ve admired of you since we first met was your aggressiveness and you really -- you’re focused on driving shareholder value. And I’m just curious, as you continue to trade, what, 100 basis points wide of the multifamily REIT group on a cap rate basis. But also as you continue to build out your company and add a lot of employees, does it change the way you might think about selling the comp, if you were to get a bid, how you might react to that?

Bill, I think in our first discussion way back when I said, first and foremost, we’re going to do the right thing for the shareholders. I think right now, we’re trading down along 52-week lows in that region. 90 days ago, we were at a much different number and had broader options. But I think what we’re doing right now is creating value for our shareholders. I think everything we’re doing with project reimagine, bringing the operations back in-house, diversifying our portfolio, recycling out of lower-growth assets into higher-growth assets. Our thesis and our execution has always lent itself to creating value for our shareholders. I know the cap rates that we’re trading at right now. Do I think that we can do better? I think when you start seeing our next quarter’s performance, maybe the next 5 quarters performance, I think our stock will improve. And we’re not a group that picks up our jacks and goes home when we hit a speed bump. I still think there’s a lot of value to create here. But of course, we’re always going to do what’s in the best interest of our shareholders, and we’re going to be consistent about that, Bill.

The next question is coming from Alan Peterson from Green Street.

I was just hoping to get some more color around the lower growth D.C. assets. And in terms of the initial marketing or when you guys are having those marketing discussions, can you share what pricing is looking like for those types of assets? And amongst the 3 submarket locations, Maryland, D.C. and Virginia, where we could potentially see some of those dispositions come out of?

I think right now, I mean, we are -- I’ll start with D.C. I think the trade-outs we’re seeing are strong in D.C. The challenge that you’re seeing in D.C. right now, there’s a couple of them. First is that we had caps on our ability to increase rents and over the last 24 months, basically. And now that those have come off, a lot of the buyers that we talk to and a lot of the brokers, investors want to see a little bit more seasoning and particularly flush out the ARR numbers. But we’re definitely -- we definitely know the market is there. I think people are -- D.C. does perform well when other markets don’t. And so I still feel like there’s a lot there. The biggest challenge in D.C. right now is we still have TOPA. So for buyers that want to use leverage, they’re in a little bit of a jam on a, let’s say, a forward rate lock deal where TOPA might take 6 months, you can’t get a spread lock. So I think that’s hindered the deal pace. But overall, I think D.C., like we said before in our prepared comments, D.C. is back to and is better than prepandemic. So I just think it’s a matter of time since I think more prudent investors are being sensitive to credit standards applied by operators. If I turn to Virginia, I’d say Virginia is -- Northern Virginia is the most active in our region. The macro economy is outperforming and deals are getting more attention. I think there’s probably 2x or 3x as many deals, apartment deals in Northern Virginia right now as there are on the market in D.C. There aren’t really any accounts receivable or bad debt issues. And Northern Virginia is seeing excellent trade-outs as we’ve also said. Maryland is still seeing activity, not to the level of Northern Virginia. I think, again, another market, particularly in Montgomery County, when you look up the I-270 corridor, rent caps are coming off and job and wage growth are keeping investors’ interest, particularly in the Life Sciences Corridor up on 270. So we feel good about what we have here right now, we think the market is coming back to us. And in terms of are we -- what we would sell, we look at opportunities where we can allocate from, let’s call it, a moderate growth to a higher growth. Those will be the assets that we choose, and we’re not really expecting a lot of dilution in this recycling.

Steve, you mentioned the capital markets discipline. And back in 4Q ‘21 and 1Q ‘22, you guys brought some market some ATM issuances. Is ATM issuances still part of the go-forward funding plan for acquisitions today? And can we anticipate any ATM issuances over, call it, the next 2 quarters at these pricing levels?

Well, first of all, I wouldn’t indicate advance of issuing equity and create an overhang on the stock. But -- and ATM is a part of the playbook, but it’s not a part we’re using today at these stock prices. So I don’t think it makes sense to us to issue equity at these prices. Now I think potentially exchanging units on an NAV-to-NAV basis in a structured transaction, you’re getting a different relative value for those. So those are the kind -- but we were at $26 just 3 days after this call a quarter ago, and we’re not there today. So not at these levels, but we’ll be prepared to use that if it makes sense and if the equity markets come back.

Maybe just one last one for me on the transition. I appreciate the comments on the human capital side. Are you guys running into any difficulty either at the corporate level or at the on-site level in terms of hiring? And what positions are you running into the most difficulty with?

Steve and I will ham and egg this one. First off, yes, it’s a very competitive labor market, not just attracting but retention. And so we’re all eyes on that in terms of our human capital model and our Head of HR has been very proactive, especially on the retention side. But in addition, I would say that we’re trying to build up our corporate infrastructure to prepare for the onboarding later this year, and as Steve said, into mid next year. I think it’s really been at the property level. I think we have a good start on that, obviously, with our third-party managers, and we expect a lot of seamless transition there as we onboard those employees that come along with the properties. I think at the corporate level, it would probably be very job specific. Steve, I don’t know if you want to add.

I think you hit it. I mean, we have a really weekly status by position of what positions we want to onboard when and we’re building the infrastructure and the leadership and the regional leadership and all out. We’ve been -- I think you would say, Paul, we’ve been recruiting our own third-party management staff now for a couple of quarters and are communicating with them. And we’re part of our program of really assimilating multiple cultures into our mission and vision for the renters that we target. And so we’re bringing together 3 cultures into 1. And so there’s been a lot of work done on that to try to make sure that this is a place that our employees are going to want to work and be proud of. So we’re looking at everything from what the incentive programs are to, how we will reward people, how we will make them feel they have access or included in what we’re trying to do. And so a lot of that is we have a lot of the people that are in the communities already target specifically to come aboard. We’re going to have to add to it because it’s a -- it will be a challenging job market. But I think we’ve got pretty good visibility and have been working on it for a couple of quarters, Paul.

Yes, the only other thing I’d add, Alan, is just obviously, workplace flexibility is high on a number of people’s agendas and we’re trying to incorporate that into our human capital structure moving forward.

There are no more questions in queue. I would now like to hand the call back to Paul McDermott for closing remarks.

Thank you. Again, I’d like to thank everyone for your time and interest today. We will continue to update you as we progress our multifamily transformation, and we look forward to speaking with many of you over the next several weeks. Thank you, everyone.

Thank you, ladies and gentlemen. This does conclude today’s conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.