Shankh Mitra: Rich, let me try to start that. And John, you sort of finish anything that I haven’t added. So I think your conversation that you have is a reasonable for — if you think about a long-term tenant in the middle of the market, right? So there is a — you have to think about the customer you’re talking about. We — our rate increase is because we have sold majority of our mid-market product, our U.K. and U.S. portfolio is primarily focused on very high-end customer, very wealthy customer and the product remains incredibly affordable to them. And at that level, we haven’t seen any pushback. The second point you have to consider Rich, is you — we have never raised rates like you have seen in other asset classes, multifamily stores, others, 20%, 25%.
We have never raised that, right? So just sort of rates remains high single digits, whatever, like 8%, 9%, 10% is sort of what we have done. So it’s much more sustainable than you think. But put that aside, just understand, put all of those comments in the context of average length of stay, you’re talking about an average length of stay of 20 months. So we might be here talking about for the third year of increase of X percent. But just understand, the person who got the first year of increase, he or she is gone, right? She’s no longer in the community. So if you put all of those together, you will see that if you provide the very important point, if you provide the differentiated services at the highest level, your customer is willing to pay you.
Now we are, as I’ve said many, many times, we’re not focused on an individual number, call a RevPOR or rate, right? We’re focused on very much of a delta between RevPOR and ExpPOR and that’s what we are focused on. I’ve said that last year and the year before. And we shall see what the market gives us, right? I have no idea what the market will give us if there’s a pushback, we will adjust, but we haven’t seen any yet.
John Burkart: Yes. I fully agree. It’s the difference between RevPOR and Expense POR and it’s — I think you’re probably, Rich, thinking about multifamily where people are there for years and years and years, and it’s a very different situation here.
Operator: Our next question comes from James Kammert with Evercore ISI. Please go ahead.
James Kammert: Hi. Good morning. Thank you. I certainly appreciate the operating leverage embedded in the SHO portfolio. And I was just wondering if you could provide a little more color sort of regarding labor trends for the general staffing there and what conviction you have and the ability to really continue to sustain pretty attractive or capitated growth of those expenses? I mean are you getting longer tenures, so it’s lower turnover and lower recruitment costs or just a better labor talent pool. And again, I’m just thinking more beyond the Chef [ph] and the General Manager, what levers are contributing to nice profile in terms of growth on the expenses for labor?
Shankh Mitra: Jim, you are correct that we are seeing turnover is coming down significantly. We are seeing that overall availability of employees who wants to be part of our business and part of the communities is increasing significantly. And we are seeing that our operating partners are getting better using technology and other resources to attract talent and keeping them in the business, right? So that sort of — it’s — whenever you get hit by a crisis, people figure out ways to do things better, every crisis makes the business better if it survives, right? And that’s what we are seeing. And what conviction do we have that RevPOR minus ExpPOR journey can continue very significantly. For a specific line item, on a specific thing, on a specific quarter, we have no idea. I said this a million times. Our goal here is not to predict the future. Our goal is to see what market gives us and do better than market. We’ll see what market gives us.
John Burkart: Yes. And I would just add, in my comments, my focus is on productivity. So we want our employees to be paid well. We want happy employees and happy customers. We also want to increase productivity of the business so that we can manage to accomplish all of that. So that’s really, I think, the take home point.
Operator: Our next question comes from the line of Mike Mueller with JPMorgan. Please go ahead.
Mike Mueller: Yes. Curious, how are you thinking about, I guess, senior housing development today? And how do you see starts potentially trending over the next couple of years?
Shankh Mitra: Yes. Mike, I’m just going to be repetitive here. I was asked this question at the NIC conference about a week ago or 10 days ago, whenever that was. I’ll repeat what I said on the panel. I think if we’re a debt provider in senior housing today, you have a better lot going to Vegas. And if we are an equity provider and senior housing development today, you have a better life buying lottery. I hope that tells you what my view of senior housing development is. I don’t even understand why there is any start, any like more than 0 because the economics doesn’t make any sense given where construction cost is, where capital cost is and where the margin of the business is. It should not have any starts and it seems like it’s going there.
I think any stock that you are seeing, people are still playing with other people’s money, and that’s coming down — closing down pretty quickly. And I think you will continue to see it’s moving down. Mike, did I miss any other part of your question?
Mike Mueller: No, that was it. Thank you.
Shankh Mitra: Thank you.
Operator: Our next question comes from the line of Michael Carroll with RBC. Please go ahead.
Michael Carroll: Yes, thanks. Given the dislocation that we are seeing in the private market, is it harder for operators that are having liquidity issues to provide the same level of care versus your operators that presumably don’t have these issues? I mean are you seeing that in the marketplace at all right now? And if not, do you expect that this will become a bigger storyline over the next several quarters?
