Matt Nicholls: Sure. Thank you, Brennan. So I’ll split it into 3 components, if you’ll bear with me. One is, we’ll discuss the first quarter guide, our fiscal first quarter guide. Second, I’ll give a very preliminary, recognizing how early we are for fiscal year 2024. And then thirdly, I will provide an update on Putnam, because obviously, Putnam, we expect to become an important part of our consolidated guide, if you will. But I want to do that separately because we don’t know exactly when it’s going to close, so it’s speculative at this point but I’ll give you that information. And then I’m going to go through the individual components of the expense issues that you focus on, from a modeling perspective. And so firstly, EFR, we expect our EFR to remain in a 39 basis point area, excluding performance fees.
Compensation and benefits, we expect — again, this is first quarter ’24 fiscal, we expect compensations and benefits to be at $750 million but please note that this includes $35 million of accelerated deferred comp charges. This also assumes $50 million of performance fees. IS&T, we guided to $125 million, flat to the quarter we just had. Occupancy, we expect that to increase to $65 million from high 50s. And the reason for this is that in New York City, we are transitioning to a more efficient and unified space. We have 9 offices currently in New York City and we are consolidating into 1 major office space in New York. And for a period of about a year, we’re going to have the equivalent of double rent on that office. So that means, for the first quarter, this implies 2 months of this, by the way, it’s about an $8 million increase; and that $8 million will increase to $12 million of increase, for your occupancy for about a year.
After the year is up, that will be — that will go away and it would normalize back down into the mid-50s again. G&A, we expect to be in the $140 million area and this includes slightly higher T&E and flat placement fees. In terms of our tax rate, we expect that to be 24% to 26% for the fiscal year ’24 in terms of full year ’24 overall expenses. I’ll first of all note that, as I mentioned in my prepared remarks, that between full year ’23 and full year ’22, we are about 1% lower, excluding performance fees and the various acquisitions that weren’t included in the previous year. Full year ’24, excluding Putnam, performance fees and the New York City real estate transition that I just walked through, we expect our expenses to be approximately flat, perhaps slightly down.
But I would model flat at this point. In terms of Putnam, again, as Jenny and I mentioned that in our prepared remarks, we expect Putnam to close in the calendar fourth quarter and in our fiscal first quarter. We’re hoping for December 1. And so the guide that I’m about to provide to you does assume December 1 but that could end up slipping into January 1, for example. But let’s hope for December 1. If we close on December 1, from a revenue perspective, we expect to add about $50 million to revenue. Around $42 million of that is expected to be in investment management fees and about $8 million of that is expected to be in services. And you can run rate that by 20 — by 12 to come up with the annual number for modeling purposes. We expect operating income addition, so the addition to operating income in the first quarter, in other words, for the 1 month, to be between $8 million and $10 million for Putnam.
In the second fiscal quarter, we expect to add an incremental $25 million operating income and in both the third and fourth quarters, for Putnam, we expect to add an incremental for both quarters, $25 million to $30 million in operating income, assuming, of course, that revenue remains approximately stable and markets remain stable to where they are. At current levels, we’re still guiding, as I mentioned when we announced the transaction to add a total operating income of around $150 million run rate by the time our fiscal year ends in 2024, in other words, by 9/30. This is 10 months, obviously, assuming we close December 1 versus the 12 months that we guided when we announced the transaction. So the change here is not necessarily the $150 million that we’ve talked about, although we would put that at a minimum at this point based on current markets but the change is when we expect to actually realize the operating income.
When we announced the transaction, I described a scenario where we would expect to achieve 25% on a run rate basis at the time of close. And as you can see from the guide of $8 million to $10 million for the first month coming in operating income, this is now indicative of achieving over 50%, let’s say, between 50% and 60% of targeted operating income on a run rate basis by the end of month one. So in the actual year, just to be as clear as we can be to help with the modeling. In terms of the actual year, we expect to realize between $85 million and $100 million of operating income and to have reached at least $150 million run rate by 9/30/24, all else remaining equal. And then, the final comment — sorry, Brennan. I want to make sure this is as complete as possible, so everybody gets the models right.
At the end, so what this means in terms of accretion, dilution, because we talked about that, too. At the current time, again, recognizing how volatile the markets are and so on. But the current time, all else remain equal, this would mean a transaction becomes accretive by the second quarter. So in our fourth quarter versus at the end of the first year that we talked about initially. So we’re pretty much becoming accretive in this transaction almost right after we close. It’s like a couple of months afterwards but let’s say just to be conservative at the end of the first 4 quarter after we close. So that would be the end of our second fiscal quarter.
Brennan Hawken: Got it. I got my money’s worth on that question. Thank you, Matt.
Matt Nicholls: That’s pretty thorough.
Brennan Hawken: Just one clarifying question. So — and you gave us the — I think you kind of gave us that $150 million incremental run rate by 9/30 which kind of is a guiding — sort of a north star. But I believe the walk was, it’s like $8 million to $10 million in the first quarter, assuming ending December…
