John Kim: Thank you. Your ’24 MH rate growth, now that the Social Security cost of living adjustment came in at 3.2% and multifamily rents have really just stalled out here in the third quarter, how confident are you that you’re able to achieve and push that 5.4% on the remaining leases? And can you remind us, is that 5.4% on the base rate change only, or does that include any pass-through of expenses?
Paul Seavey: Excuse me, John, the 5.4% is on the base rate. It does include the residents that moved in and assumed in-place leases, understanding that they would go to market upon renewal in January. So, it does include the impact of the 13% mark-to-market that we’ve talked about for those residents. But I think Patrick has some more color.
Patrick Waite: Yeah. So, John, as we worked our way through our budget process, and that includes a review literally property by property in the respective sub-markets and a review of the competitive set, not only other manufactured home communities, but other competitive housing in those direct sub-markets. As Marguerite touched on, we compare very favorably just with respect to the all-in cost and the value that a resident moving to one of our communities gets in our locations. So, as we worked our way through, while it’s a fair point on the CPI, our spread historically has been in the 150 basis points to 200 basis points. We’re kind of in that range with the mark-to-market that Paul just referenced. And we did have that 150 basis points to 200 basis point historical spread to CPI with respect to our rate increases, kind of front in mind as we were working through where we were going to set increases, particularly for our in-place long-term residents.
So, we feel pretty confident that it’s a good value proposition and that those rents will come through.
John Kim: Any sense of timing or the quantum of the renewal rate increases in marinas?
Patrick Waite: The marinas are basically rattleable over the course of the year, so they’ll come through over the quarter by quarter.
Paul Seavey: And those annual renewals, John, are included in the 7% that we quoted for the RV, marina annual rent.
John Kim: Okay, got it. Thank you.
Marguerite Nader: Thanks, John.
Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Eric Wolfe with Citi. Your line is open.
Eric Wolfe: Hey, thanks. It looks like you’re guiding to a sequential increase in FFO in 4Q as well as an increase in your annual RV growth. I think it’s 8.8% from 8%. What’s driving both of those?
Paul Seavey: Yeah, I think, Eric, when you think about the fourth quarter of ’23, you kind of have to remember all that happened in the fourth quarter of ’22. So, with respect to the RV, I’ll take that first. The impact of Hurricane Ian in Q4 of ’22, really what we’re seeing in ’23 is the benefit of the occupancy that we gained following the loss in the fourth quarter of last year. That’s primarily what it is. There is also some contribution that’s coming from rate increases that are effective in the fourth quarter. And then, in terms of the FFO change, when I look at the non-core contribution, there’s about $5 million year-over-year that’s coming from the non-core properties this year that we didn’t have. We had six properties that were online — sorry, offline following the hurricane last year that did not generate any NOI, and we did not have any business interruption contribution from most of those locations.
And then, we had some contributions from acquisitions in ’22 and ’23, as well as some one-time adjustments. So, there were a number of things that were happening in the fourth quarter of last year that make favorable comp this year.
