Operator: The next question comes from Adam Kramer with Morgan Stanley.
Adam Kramer: Just wanted to kind of talk about the — kind of the cash on the balance sheet. I know you did the debt offering in the quarter. I think cash is kind of sitting higher than it has historically as a result. You took up the kind of the acquisition guidance by a little bit. I think it only kind of implies maybe, I think, $100 million or so of acquisitions from here on the wholly owned side. So maybe just walk us through kind of what the opportunity set is like in terms of acquisitions now. And just in terms of the capital deployment, anything else that we’re maybe not thinking about that some of that cash can be used for?
Dallas Tanner: This is Dallas. Great question on the environment. I think we’re — and I’ll let Jon speak a little bit around how we’re thinking about cash as I finish. I think we want to stay in a position of strength. And the goal would be to make sure that we have as much flexibility between cash, our JV businesses, our pipeline with new construction, which continues to be an interesting area for us as we continue to evaluate better opportunities and then ultimately also being ready for some additional hopeful M&A over the next couple of years as smaller portfolios sort of get in a position where they have a decision tree moment and have to make a decision based on the capital markets, maybe in availability that’s out there.
And so look, while we don’t have anything pressing or current and we just digested 1,800 homes that we did last quarter, we certainly want to be ready if or when the opportunities come in front of us. We are still seeing opportunities out there with significant embedded loss to lease from some of the other smaller portfolios. We’re having sort of the inbounds that I’ve talked about at Nareit in June. And we still continue to see sort of what-if type of moments. I think people are still trying to get their heads around where those opportunities are if you’re a seller. As I mentioned earlier on the call, we do not see the MLS as a big source of opportunistic external growth for our business. We prefer to continue to stack a bunch of this newer product at pretty meaningful discounts to where kind of they’re selling in neighborhoods and being able to sort of insulate our balance sheet, so to speak, with newer product, less CapEx risk while we sell older assets at really updated marks.
So I think from an external growth perspective, just keeping our options open, making sure that we have plenty of cash available, Jon can talk more about what we’re doing with that cash, and then also just making sure that we’re keeping our eyes out on just any and all kind of balance sheet activity that could be available to us.
Jonathan Olsen: Yes, Adam. With respect to cash, I mean, the thing that feels really good at the moment is the fact that we can sell assets at a 4% cap, put the cash in the bank and earn 5.35%, right? So we don’t need to have an immediate sort of capital redeployment opportunity. We can basically park the cash, and it is still accretive, up until such a point that we find something that is interesting to go after on the acquisition side. So in this moment in time, being liquid, having a lot of capital just makes sense to us, right? So a portion of that cash on the balance sheet is, if not directly earmarked, it’s certainly, in our minds, circled to take care of one of our 2026 maturities, which is the $615 million 2018 for securitization.
But I think all things considered, right now, we want to maximize flexibility. We want to maximize optionality. And that means sort of having as much dry powder on hand, particularly if holding that cash is accretive. It just makes sense.
Operator: The next question comes from Keegan Carl with Wolfe Research.
Keegan Carl: Just wondering if you could provide any color on recent news that you’re entering property management, given the articles that came out.
Dallas Tanner: We appreciate the question. We have nothing to report. By nature, we don’t comment on speculation. We’ve said in the past that with the strength of our platform, we’re going to continue to look for opportunities, find ways to grow that can both be capital-light and accretive and also look for areas where we can actually leverage the platform to enhance our own operating margins. But as of today, we have nothing to report.
Operator: The next question comes from Buck Horne with Raymond James.
Buck Horne: Following up on that, I was just wondering if you could maybe comment on your thoughts on expanding joint venture relationships or any partnerships there. And also, your thoughts on working with homebuilders, if there’s any interest or you’re finding any availability with builders to do more build-for-rent communities.
Dallas Tanner: Buck, thanks for the question. On the second one around builders, yes, I mean, we are definitely — we have existing relationships already with some of the bigger builders in the country that I think everybody on this call is aware of. Those relationships have been excellent for us. I hope they’ve been equally as excellent for them. We are all looking to expand those pipelines and create additional, what we would call, deal flow through the channel of partnering with our homebuilder partners. And just by sort of a way of kind of reminding everyone, one of the things we love about that, just call it C of O, C of O-plus-type relationship is we get meaningful discounts. We can put sort of limited deposits out there.
And we manage that business in that pipeline, which today sits at roughly $1 billion or more, in a way that is very effective and efficient for us. As we look for other opportunities, I think one of the areas that we’ve been pretty vocal on, especially in light of where the capital markets are treating equity prices for REITs, is doing more in and around ventures with partners that are sophisticated and also have sort of the same ambition around the single-family space that we do. And so we don’t — while we don’t have anything sort of new to announce on that front, we are always having inbounds and active dialogues with potential partners. One of the areas of which that seems to be the most appealing is around our new construction business.
And that, to me, feels like a natural fit for us as we continue to build out our JV businesses over time that we could bring on strategic capital and still be a partner with them with our balance sheet capital, to Jon’s point, and put meaningful opportunities to work over time. And I think that business will continue to develop and evolve for us. And we’ll obviously keep everybody posted if or when there’s anything to talk about there as well.
Operator: The next question comes from Daniel Tricarico with Scotiabank.
Daniel Tricarico: Question on the JV acquisition guidance coming down, Dallas, can you talk to what you’re hearing from your partners and how their outlooks or expectations have changed over the last 90 days?
Dallas Tanner: I just think there’s been honest conversations around where the clearing price of capital is. And I think that has more to do with where the debt capital markets are or aren’t as they’ve shifted. It feels like it’s sort of a new conversation every 30 or 40 days in terms around where debt facilities are. I mean, if you look at the deal Jon and the team did in August in the bond market, we had basically a blended cost on that $800 million of around 5.5%. And I think that market is far different today, being 60 days later. And so as we think about where we would need to be as a partnership either with our own capital being partnered with theirs or if we were to just do things on-balance sheet, like where is sort of our strike price?
And it definitely feels like it’s in today’s world in the 6s. We’ve talked about that in the last earnings calls. We’re looking for accretive opportunities that are sort of in the 6s on a yield on cost for us today. And being outside of that, I think capital is willing and able. I think capital market is less so willing at times. And that’s what we’re trying to sort of navigate through right now.
