Paul Seavey: I guess what I will say regarding that is first quarter, kind of just a moment ago walk through the assumptions for the first quarter. And then for the second, third and fourth quarters, we — our assumption is closer to flat on a combined basis for the seasonal and transient. That is somewhat different than our past experience. I think that we’ve talked a lot about the lack of visibility that we have into the transient business as a result of the significant amount of revenue that’s earned and booked in a very short booking window. And with respect to the seasonal, the first quarter is the lion’s share of the seasonal rent. So the remainder of the year, again, the second, third and fourth quarters are closer to flat than we’ve had historically.
Jamie Feldman : Okay. And that’s — it sounds like that’s more just lack of visibility and no reason to reach. You’d rather kind of bump as the year progresses rather than cut. Is that the right way to think about that?
Paul Seavey: I don’t know that it’s so much trying to manage expectations as it is acknowledging kind of what we’ve seen in terms of the volatility in the business over the last couple of years.
Operator: And our next question comes from the line of Eric Wolfe from Citi.
Eric Wolfe : I think you mentioned in your prepared remarks that you expect around $100 million of free cash flow this year. I was just curious if you could tell us how much you expect to spend in nonrevenue-producing CapEx to get to that number. And then as far as the revenue producing CapEx this year, if you can give us a sense for that expected spend in the incremental return.
Paul Seavey: I’ll do the first part, Eric. So to come to the $100 million, we have an assumption of $85 million of spend in recurring CapEx.
Marguerite Nader: And maybe, Patrick, you could touch on the rest.
Patrick Waite : Yes. I mean let me just walk through our total CapEx spend, but Paul just touched on the recurring piece. And recurring for us really is about 1/3 of our total spend falls into 2 buckets: asset preservation and improvements in renovations. The next bucket for us is property upgrades and development. That’s a little bit more than half the spend. And I’d just point out that, that includes hurricane CapEx, and we would note that in our disclosures. But important to keep in mind. And then the balance would be revenue producing, expansion and development property upgrades and repositioning. And the last bucket is site development, and that is about 10% of our total spend. And that’s going to be with respect to improvements to site new homes in our MH communities.
The developments, I’ll touch on that from a view of the current year and what we think we see coming up in, I guess, the last year and the current year 2024. We delivered just shy of 1,000 sites for the full year. That was in line with expectations. Just a reminder, our yields on those projects from a stabilized basis tend to be in the high single digits to low double-digit yields. That mix was about 1/3 MH and 2/3 RV as we look forward to 2024. We believe we’re in a position to deliver in the neighborhood of 1,000 sites again. But that will be more evenly balanced between MH and RV at least, that’s the visibility we have at this point.
Eric Wolfe : Got it. That’s very helpful. Thanks for the detail. So I guess my follow-up there is just, if you think about just an average year, is there any way to sort of quantify how much that spend is sort of contributing to same-store versus maybe the spend that’s not contributing being capitalized. Just trying to understand how it impacts earnings in a typical year.
Paul Seavey: Yes. I think, Eric, in terms of the growth, if you want to think about it that way inside the core portfolio, there’s an incremental contribution that we’ve seen in the, call it, 30 to 40 basis points year-to-year. And then overall, in terms of core NOI, it’s a few percentage points in terms of the portion of NOI that is generated by those expansions. Appreciate though that I’m talking about expansions that aren’t fully stabilized. I mean Patrick was giving stabilized yields, and it takes several years for those projects to reach a stabilized level.
Operator: And our next question comes from the line of Michael Goldsmith from UBS.
Michael Goldsmith : What are the factors that keep the property management and G&A expense essentially flat in 2024 when accounting for the accelerated vesting of stock-based compensation in 2023?
Paul Seavey: Yes. It’s primarily, as I mentioned in my remarks, primarily administrative and payroll expenses, Michael, just managing those closely year-over-year.
Michael Goldsmith : Got it. So it seems like despite wage growth in line with CPI or you’re still able to offset that through other angles? Or is it just reduced payroll within property management and G&A.
Paul Seavey: I think that we’ve been efficient with respect to our staffing. And I think that it’s just reflected in the projection for next year.
Marguerite Nader: And driven by those administrative fees that Paul mentioned.
Michael Goldsmith : Got it. And then there may be more anecdotes of municipalities becoming more accepting of adding MH communities as a component of affordable housing. Have you seen any change in the tone from the municipalities around MH? And then this is also an election year. Does a change in administration have any impact on the potential supply demand — the supply and the potential demand for your properties?
Marguerite Nader: Yes. I’ll take the second question first. And with respect to the election cycle, we have looked over the years at whether or not we see any change in the environment as a result of either a change at the federal level or at each individual state. And we really haven’t seen much, and I don’t anticipate seeing much in this coming year. As it relates to municipalities, we continue to work with municipalities on conversions of vacant land to MH and RV. We haven’t seen an uptick in activity where we’ve seen resistance. We’re continuing to see resistance and where we were able to be successful, we continue to develop the land. So we’re not seeing what we would see as a wide spread acceptance of the development permits, but that may change in the coming years.
