Good morning. My name is Colin and I will be your conference operator today. At this time, I would like to welcome everyone to the BSR REIT’s Q1 2021 Financial Results Conference Call. Thank you. Mr. Bailey, you may begin your conference.

Well, thank you Colin and good morning everyone. Welcome to BSR REIT’s conference call to discuss our financial results for first quarter ended March 31, 2021. I am joined today by Susie Koehn, our Chief Financial Officer. Also with us are Dan Oberste, President and CIO, Chief Investment Officer and Blake Brazeal, our Co-President and Chief Operating Officer or COO, who will also be available to answer questions following our prepared remarks.

Sorry about that. I believe we went on mute for a second. Thank you, John. Same community revenue increased 2.5% in the first quarter to $14.8 million from $14.5 million last year. The improvement reflects an increase in average rental rate from $1,011 per apartment unit as of March 31, 2020 to $1,025 per apartment unit as of March 31 this year as well as increases in fees associated with test, late rental payments and the flexibility to rent on a month-to-month basis plus an increase in utility reimbursement revenue. Total portfolio revenue for Q1 2021 was $25.8 million compared to $27.5 million in Q1 last year, a decline of 6.4%. This reflected the more rapid take of dispositions compared to acquisitions over the prior 12 months. Property dispositions reduced revenue by $10.7 million compared to Q1 2020. This impact was partially offset by acquisitions and non-stabilized properties, which added $7.4 million and $1.2 million of revenue respectively as well as higher rental rates across the portfolio. To clarify, non-stabilized refers to properties that were undergoing lease-up or renovation during at least part of the comparative periods. NOI for the same community properties was $8 million, an increase of 2.2% from $7.8 million in Q1 last year. The increase reflects higher same community revenue partially offset by $0.2 million increase in the cost of utilities. Approximately, 80% of the increase in the cost of utilities is expected to be reimbursed to the REIT from residents in the second quarter of 2021. NOI for the total portfolio was $13.4 million, a decline of 9% compared to $14.7 million in Q1 2020. Property dispositions reduced NOI by $5.9 million, while property acquisitions and non-stabilized properties increased NOI by $3.3 million and $1 million respectively. FFO for Q1 2021 was $5.8 million or $0.12 per unit compared to $7 million or $0.15 per unit last year. The decrease reflects the lower NOI that I just discussed partially offset by a reduction in interest expense of $0.3 million related to the timing of acquisitions, dispositions and the equity offering we completed in February. AFFO was $5.3 million in Q1 of 2021 or $0.11 per unit compared to $6.6 million or $0.15 per unit last year. The decrease in AFFO reflects the lower FFO as well as a $0.4 million escrowed rent guarantee that was realized in Q1 of last year. This was partially offset by a $0.3 million decline in maintenance capital expenditures in the first quarter of this year. As John noted, we expect AFFO and NOI will significantly benefit in the second half of 2021 and throughout 2022 from property acquisitions using our acquisition capacity.

Alright. Thank you, Susie. This has been and it has an exciting time for BSR REIT. We are sitting on significant capacity or acquisition capacity and we are eager to deploy it productively in our primary markets. The market for multi-family properties in the U.S. Sunbelt remains highly liquid. Even during the pandemic, there has been no shortage of opportunities for us to evaluate. I am confident we will identify the purchase and purchase more high-quality properties this year and will upgrade our portfolio quality and drive growth in NOI and AFFO. As always, we will prioritize off-market or limited bidding situations and we will not compromise our solid liquidity position. We also expect to continue generating strong organic rent growth from our existing portfolio. The rent increases we generated in the past year were highly impressive and they underscore the strong fundamentals of our target markets. As I noted earlier, thus far, rent growth has exceeded our expectations for 2021. Now, we are starting to see the pandemic dissipate. The impact of COVID-19 will not go away overnight, but we are turning the quarter where life can begin returning to normal. Given the pent-up consumer demand that has been building over the past year, many economists believe the economic activity could begin to strengthen materially that should be highly positive for rental rates in our core markets. We are grateful to investors for patients as we reoriented our portfolio towards primary markets with some of the strongest economic fundamentals in the country and we look forward to delivering significantly improved financial performance in the quarters ahead. With our strong property pipeline and acquisition capacity, we fully expect to capitalize on opportunities in primary markets that will drive value for unitholders.

Thank you. Okay. Your first question comes from Dean Wilkinson from CIBC. Dean, please go ahead.

Thank and good morning, everybody.

Good morning, Dean.

John, maybe just a higher level question for me, I mean, there has been a lot of consternation in the paper. I think you know where I am going with this on Biden putting the 1031 exchange program in his cross hairs. You are kind of through your disposition program. So, it probably would have been more meaningful if this would have happened say 1 year, 1.5 years ago. But as you look forward, would this change how you are looking at the asset dispositions? And maybe for Susie, when you look at the $500,000 limit that they had put on there, would you have been able to do a lot of this program even if that limit was in place?

Well, thanks for your question, Dean. This is John. And in terms of the 1031 what we would expect is that given this company has we successfully rotated about 85% of our properties that we went into the REIT with and of course, we are able to sell those properties at about a 10% premium and what we had put them into the and we did rotate them into the primary markets that you are referring. And in regard to the 1031 strategy, think about it this way, our properties that we purchased recently in recent years would have a much lower impact on anyone’s taxes if there were a reason to rotate. But from a standpoint of the overall 1031 that could impact the total volume in our markets, of course and we do believe that if it impacted the volumes to drive it lower that of course it would also impact the amount of the rent that we would have in terms of driving rents higher, especially in a market where you are seeing the renter migration coming in, it was such a strong renter migration that are in the growth of Houston, Austin and Dallas, Fort Worth. And last, I’d like to just add that in terms of our portfolio when we went public in May of 2018 our average age at that point in time was 29 years. Today, after doing all the rotations that we have announced that we would do, of course, we are going to be opportunistic still, especially while the 1031 is still available to the market, which has been available since is the early 1900s in the United States. But as long as it’s still available, we are going to be opportunistic on any other opportunities we may rotate and extract the value like we did if you saw the one up in Mountain Ranch that was tremendous opportunity for us to rotate that capital, leave that market, it become more efficient for our platform. And we do believe that our investors will benefit greatly from now adding scale into the markets where we are already existing.

Hey, Dean. About the $500,000, of course, the answer is it depends, right, because of how long you have held the property and how large our potential capital gains would be. But the good news here is that BSR is done with our program for the most part, so that’s not something we need to worry about in the future.

Yes. Well, I guess the base has been reset for a lot of those. So, conceptually, maybe Dan and Blake can chime in on this. And when you look at markets say up in Canada, where we don’t have this kind of exchange program, the transaction volume is arguably at a scarcity, where there is a premium to that. Could something like this actually cause a further compression in cap rates in that you now bid up for transactions that were otherwise maybe a little more available and you have less churn which supply and demand, maybe pricing does go up?

Hey, Dean, this is Dan talking. I would say, let’s not think of it as a compression of cap rates. Our view is that capital is always going to get its retirement. And if you think about what John was saying earlier that if indeed the 1031 is eliminated and if indeed, capital gains, tax rates in the United States are increased, that capital is going to get its return. Now, it might show up in a higher price and probably will show up in a higher price for our assets and appreciation of our assets and the other assets in our market, but I don’t think it’s reflected in the cap rate, because that capital is going to get its return. So, what that means to me is that the rents for apartment rents are going to increase at a rapid pace if you eliminate that 1031. And without getting into opinions here, that’s expanding on one of the problems in the United States, which is housing scarcity and affordability of rent costs. If you are a believer that capital is going to get its return and the cap rates as a result of elimination of 1031, the cap rates aren’t going to change, but what you are saying is your rent is going to go up at a rapid pace outpacing inflation, right. I mean, that bodes very well as a catalyst for just a small little REIT that’s managed to sell everything at owned and buy brand new a $1 billion of bricks and sticks in the last 2.5 years.

Yes. It’s an interesting dynamic. They look north and see what’s happened to our rental markets in the absence of them, but that’s way above my pay grade. I will hand the call back for others. Thanks, guys. Take care.

Thanks, Dean. Good to hear your voice.

Your next question comes from Kyle Stanley from Desjardins. Kyle, please go ahead.

Thanks. Good morning, everyone.

Good morning, Kyle.

So thanks for the new disclosure you provided this quarter. Just looking at kind of the AFFO guidance on transactions already announced or to be announced through the balance to the year. I am just wondering, can you talk a little bit about what assumptions go into this forecast whether it be margin or just a little more detail there would be helpful?

Sure, Kyle. So, the margin for that, the three tax acquisitions that we have already announced plus the additional $250 million, we simply do by year end is around 53%.

53%.

Yes.

Okay. Thank you for that. And then you mentioned expecting the portfolio to be stabilized by year end, I just wanted to confirm this includes the potential $250 million of acquisitions to be completed as well?

It does.

Okay. Thanks for that. And then just on the leasing spread disclosure you gave for April, that’s really helpful. And just curious if you can comment on maybe what the spreads were during the quarter? How that is compared to historical and thoughts on where that trends going forward? Yes, help there would be good.

Hey, Kyle. This is Blake. I will start out and give a little background, when you really look at our portfolio starting in February, all the metrics that I look at from leads to tours to occupancy to rental increases, I started seeing an uptick and it has continued during the first quarter and into April and into May. And when you look at the – this is kind of in the rental increases and the occupancy. And when you look at Q1 for the blended rate, we were at 2.8% for the total portfolio that is basically driven by every one of the main submarket to our end. Austin had a new 4.7%. Austin bounced back quicker than any submarket that we have looked at in Americas for lease rates and Dallas was up 2.1% and Houston was up 2.6% in that. Now contrast that to April and Austin is up 4.1% again in new, Dallas is up 5.7% in our portfolio in new and Houston is up 3.6%. So when you are looking at the blended rates in Texas, we were at 4% in April. That’s continuing into May. And when you look at Q1, we were at 2.8% for the entire portfolio. So, what I see is a really, really well positioned portfolio in the right areas with teams that are laser-focused on the top of all these assets as we had exited many of these non-core entities that were, frankly, when you have got an asset in Pascagoula or you have got an asset in Blytheville, Arkansas, you’ve got one in there. You have to service it. Well, we don’t have those anymore. Now we have got people that are on top of all these assets and the rental increases are showing that. They are continuing into May. And the occupancy rates on all of these submarkets are increasing. So – and also our lease-up properties, we get into that to our lease-up properties are performing ahead of our projections also.

And Kyle, this is Dan. And I just – Blake and I look at it from a look-back and look-forward, and I want to talk just a little bit about a look-forward. When we began the year, I think everyone in our sector was searching for a catalyst. And I think a lot of our competitors were forecasting kind of a flat growth and trying to push everyone out a year, 2 years from now and talk about all the great growth in the future. Now, let’s start – let’s talk about a catalyst. And I just want to speak to – there is a Vice President of Market Research named John Affleck for CoStar Group that him and his team came out with an article this week and some analysis. National apartment rents in their analysis, they said national apartment rents aren’t just recovering they are growing at a pace that would equate to the strongest apartment rent gains this century if they maintain it throughout the year. Now the quote from John Affleck, at this current rate of performance that we have seen so far year-to-date continues then rents should rise by 9% in 2021 nationally. And that’s easily the strongest gains this century. So, with anyone in our industry is looking for a catalyst, my thoughts or John Affleck’s thoughts from CoStar would be that catalyst occurred in the first quarter and things are looking up for BSR and things are looking up for our industry in ‘21, not in ‘22.

And I guess for the statement, we did 2.5% year-over-year in the first quarter. And you just heard the stats for the April and into May and you heard Q1’s also. So yes, I think we are looking for our income to grow more than we told you on the last call. As long as everything that we – our leads are up 33% year-over-year and have gone up each month of the quarter. And that’s a really important stat that we look at. And our visual of online hits and our – which is another thing I stress to you guys every quarter, but it’s a big thing we found is our self-guided tours continue to increase. And all of this is playing in together and Dan’s comment is well set, because at this point right now, we have got a lot of positives that we are looking at.

Okay. That’s great color and very helpful. Thanks and I will turn it back.

Your next question comes from Brad Sturges from Raymond James. Brad, please go ahead.

Hey, there. Just to follow-up on the AFFO guidance and disclosure that you provided, it seems like you have some degree of confidence that for that $250 million of acquisition, you could still be in that sort of 4% to 5% range for going in yields. Is that fair to say?

Yes, fair to say.

Okay. And what would you be assuming from a long-term debt cost or financing perspective on that $250 million of acquisitions?

Hey, this is Dan. We would assume something similar to what we are enjoying today on our current BMO led syndicate facility. That’s, you can call that LIBOR spreads at around $200 on short-term debt, $185 to $200. Long-term debt rates right now range, agency, life insurance and private bank range from anywhere to $275 to $340 loan-to-value dependent. Long-term, I am talking about 10-year fixed.

Okay. I guess, maybe take a different view on valuation. If you were to look at the replacement cost in your core markets right now, what would that kind of look like today on a price per door? And then what would your expectations be for replacement cost growth, let’s say, in the next 12 months?

On a replacement cost basis, are you speaking in reference to total insured value from an insurance standpoint or how much would it cost to replicate the portfolio?

Yes. And from like a construction cost perspective to replicate the portfolio?

Sure. Now, it’s no surprise, this is Dan again, I am sorry. It’s no surprise that construction costs are going up, labor is going up, materials are going up. That’s – I think that’s every news article we see right now. I think it wouldn’t be unreasonable to see replacement costs for our assets, have a two on the front end of the numbers, so, $195 to $230 a unit for new construction in these locations, probably $230 creeping up. I’m probably conservative on that $230 number. Not counting the dirt.

Okay. And how much would land be?

Well, land in Texas ranges anywhere between 15% and 20% of total asset value, but you talking about a fun. It is a fun discussion topic. I mean, what if the lumber projects gone, they were $200 this time last year, and now they are at $1,600. I mean, there is – I want to remind everyone, we owned about $1 billion in lumber, at about $300 million about in dirt. So god, we can – if we can only translate those lumber gains that would at 800% lumber price or construction increase for all the lumber we own. I’m not being serious, but could you imagine what would happen if we just deconstructed our apartments and sold the lumber.

Yes. I’ll jump in here since I live in Dallas and have been around Dallas for we don’t know for years. The assets that we are buying and I have stressed this every call, but I think it’s really important. When you just say Dallas, Houston or Austin, you can’t really look at it from that perspective. You have got to look at the submarket. In the areas where we are buying, one of the reasons that you are seeing is rent growth, you are seeing our income of our tenants going out is because we are in some really, really good areas. So when you ask that question about dirt, the dirt that we own currently and that dirt that you would have at the cost that you would have to pay to procure dirt in these areas is really, really high and because everybody choose America. And we are seeing in our portfolio just a real uptick in California in the New York are moving in and so you have got a real, real dirt, people want dirt and it used to be in Texas of north, especially in the Dallas area, for instance. You would say, well, there is a lot of land up there. Well, when you start looking at Frisco and some of the areas that we are in now, Frisco has 8 high schools. So that dirt is shrinking and we are right in the middle of all of this, the toll way and 121 in the Dallas area and 380 where we are, it’s a hottest area, really if you are looking from a real estate value standpoint in America.

Yes, that’s right. And this is Dan again. I mean, all jokes side, I am not advocating that the management team all get claw hammers and rip nails out of wood and so the lumber. I think, what I am really getting at here is the cost to construct competitors of ours in our locations is going up. And those competitors are going to get their returns in the form of higher rents. They are going to have to underwrite that new construction to higher rents. And fortunately, we are right in the middle of something three of the four highest growing MSAs in the country right now and they have been for the last decade. So, that spigot of net migrations and both internationally and domestically into Dallas, Houston and Austin is not going to stop. Those people are going to continue to move to those markets at a clip this high and Houston is 3% a year compound it. So with that supply continuing the developers have no – I mean, they will continue to build housing for those new residents and new employees. And with constructions costs increasing it’s just a math game. It’s a arithmetic. The rents that are going to be needed to service those new constructions are going to have to be higher, which only bodes well for just a little rate with 96% of its NOI generated out of three of the four fasted growing markets in the country right now.

And I want to add – because I am really passionate about this, Dan is too, when you look at our assets. If you look at the income growth that we’ve had and I just told you, we’re expecting that to increase. And based on what I’m seeing in our numbers. And I look out 2 months in advance. But when we put together our projections or Dan and me sitting side-by-side and we go through these things about 3x and into the year when we are putting them together, and Dan is using CoStar, he’s using tourist different publications to help us look at rent growth. And we really look at that closely. And to be frankly, right now, what’s happening is we are just flat beating those CoStar or other projections in these areas. And I don’t see it letting up. It sure is right now and are based on all of our leads. So, I think it’s really, really important and I think we have done a good job. And Dan has done fantastic job, his team of picking areas in the right growth pockets with the right schools which I have stressed to you guys for years, schools are in Florida and Texas. They are very important. So, just a little color for me, Dan, but I think it’s important to understand all these different elements that are in play.

That’s great color. I will turn it back. Thank you very much.

Thank you, Brad.

Your next question comes from Matt Logan from RBC. Matt, please go ahead.

Thank you and good morning.

Good morning.

When we think about your capital deployment, there is certainly a lot of supply coming online in your submarkets, can you talk a little bit about a) how that could impact the rent growth in the near-term and b) if that also provides some opportunity to acquire assets that are coming online this year?

Sure, Matt. This is Dan. When we think about new supply from an opportunity point of view, it’s always a tale of two cities. It’s not necessarily the supply that we are looking at it’s the demand net of supply or the absorption. And I mean, Austin, Dallas and Houston lead the country, I think they lead the country in absorption and they have from a quarterly and annual standpoint for as long as we have been public. So that demand net of supply that net absorption number, it definitely props up operating numbers right. It helps us deliver returns operationally that are in excess of peers that own properties in other markets. Now, from an acquisition standpoint, it makes acquiring in these markets a highly competitive endeavor, because just economically, when you are leasing up properties and half the times it takes to lease them up in another market, then your cap rates are driving down lower than you are seeing in other markets. So, it’s a mixed bag. It’s – I want to highlight here, BSR is an operating company. So we would prefer to own properties in markets like we own, where you have demand net of supply year-over-year that drives operating metrics. We happen to have been rotating in the last 2 years, but at our core, our platform is an operating platform. And so from that, I have heard someone say to me once the world is filled with difficult decisions. And if you got to make one, you make the one you can live with. And in this case, we can live with demand net of supply in all of our markets. I would rather have our teams going out and really conducting hand-to-hand combat to find the best assets and the best locations in these markets than the alternative, having supply net of demand and having a very easy acquisition market.

I absolutely agree, Dan.

Well, it certainly seems like you are outperforming your competitive set. We dive a little bit deeper into the submarkets, which is good to see. But when we look at the revenue growth outlook that you talked about last quarter at 1% to 2%, certainly with the trend being at the upper end of that range and trending higher into April, do you have any sense for where that top line figure might end up for 2021?

Yes. I would say that I believe we are 2.5% right now. So, if I was – this is a real tough one as I told you all last month, because it’s quarter – we look quarter to quarter, but it will be higher than the 2% that I told you last quarter. And you heard me go over and I can do it again offline or anything with any of you guys, you heard me go over the rent growth numbers in our areas. So, where will it end up at the end of the year, I hesitate to give you a number. I just know it’s going to be higher than the 2% to 2.5%, but then 2.5% there we are doing right now.

Yes. And Matt, this is Dan. I mean, moving out of BSR, if we are just looking at what the market experts are seeing in Dallas, Austin and Houston right now, annualized rent growth expectations in Austin are 5.7%; and Dallas, Fort Worth of 4.3%. And in Houston, they are 1.9%, but let’s break that down and Houston has 43 submarkets. And in the 2 submarkets we are in, in Houston and quarter-over-quarter sequential rent growth right now looks to be at about 11.2% in that Katy Cinco Ranch, that’s the Satori, Richmond and the Alleia product. And then quarter-over-quarter, 4.6% of Conroe, that’s just North Houston. So as we said all along, we like to be positioned in the right submarkets in a market. We understand that Houston’s is highly competitive and in that last few sentences that I have said, Houston is definitely running up, took a boost at 1.9% relative to Dallas’ 4.3% and Austin’s 5.7% for the year. But in our two submarkets, we are in the top quartile of those Houston’s 43 submarkets. That’s right where you want to be. And I think that’s just a product of having our team live where we owned. And having been in the Houston market for 21 years now, I think our team is pretty effective at picking the right locations in the right submarkets and the right side of the street to maximize forward-looking rent growth.

And Matt, just to give you a little better guide we are not more like we will be looking at just to refresh everybody, in Q1, Austin blended in our was 3.1 and in April, it was 4.0, which is in line with what Dan said. Dallas was blended 2.5% and in April, it was 4.4%. So Houston, which you heard me talk about 1.9%, which is what we were kind of looking at and if you look at our same-store Houston properties, just some color, they hit our expectations. We were expecting a flat year-over-year NOI curve on the ones that we have, but they beat those actually. So, when you look at Houston from a rent standpoint, blended was 2.8% in Q1, April, it was 3.3%. So, all of those, when you look in April and we are looking at 4.0%, 4.4% and 3.3%.

Great color. And maybe just turning to the margin, should we still be thinking about something in that 54% range?

Hey, Matt. It’s Susie. So yes, our same-store has been consistently performing at about 54% market. However, we have bought a lot and we are buying a lot. And like I said earlier, it looks like the margins on acquisitions for 2021 are looking more like 53%. So I am guessing in 2022, margins will be closer to 53% than the 54% given the volume of acquisitions that we plan to make this year.

Makes sense to me. And maybe one last one there before I turn it back. In terms of the cap rate compression, Susie, this quarter, could you give us a sense for how much of that was driven by mix shift into new or better quality assets and how much of that was driven by just cap rate compression in your markets?

Yes, sure. So, comparing NAV from March 31, 2020 until March 31, 2021, about 66%, so the lion’s share of the increases come from cap rate compression when we are comparing the same set of properties we had last year to this year.

Appreciate the commentary. I will turn it back. Thank you.

Your next question comes from Matt Kornack from National Bank. Matt, please go ahead.

Hey, guys. Just a quick follow-up on Matt’s comments there. I am wondering if in terms of the NOI that you are capping in those figures, if it reflects kind of the more positive bias you seem to be having post quarter end and what seems to be market moves as well?

Yes, it does. I mean, as Susie stated in her opening remarks, we are running ahead of our NOI projections. And assuming that, we don’t have an expense issue to this and we continue with the income that I have been talking about things like all for the hour. We are expecting continued uptick in our NOI.

Okay. And sorry, so for your fair value that is or isn’t captured in the NOI that you are using for your fair value assumptions?

Yes. So, we are including the increases we have currently been in NOI as well as the lower cap rate trades in our markets. However, that will continue to go up. That is the fair value will go up as we proceed throughout the year and NOI continues to increase.

Right, okay. No, that makes sense. And I mean, I got a slight sense that you are looking at where you are trading relative to the value of the assets on the book, but also relative to peers and I think you would see the current trading price as a pretty deep discount in a bargain?

We do, Matt. This is John. We have seen it as the deep discount, especially compared to the U.S. market, where most of REITs are trading at a large premium to their NAV. So it’s a tremendous opportunity as you look at relative actions between U.S. REITs located in the part that’s where we are compared to where we are located – compared to where our price is traded against our NAV on the TSX.

Yes no, it’s a fair point and I think we have recognized that as well, but the trends that you are seeing I think were even more encouraging than what we were expecting. So, the last one for me, just on homeownership, the markets you are in have seen some pretty target increases in terms of house prices as well. Is that starting to send people back towards the rental market? Is that an aspect of this increased demand?

Well, this is Dan. The problem that we actually have in our markets is supply. There is not a lot of net supply of single-family homes in our market. And if you are a home developer, you are in a tough spot. Your prices for labor and materials have skyrocketed this year and you are in there markets that don’t have enough supply to meet the demand of just simple homeownership. So, I mean you are really in a tough spot for single-family home development in our three markets. Austin, I think we spoke about it in the last quarterly call, where we talked about how the inventory in Austin is about 9 days right now. That’s just an unheard of lack of supply of single family homes. But number two, I want to highlight that the – our average resident makes about $60,000 a year. And Austin is a good example, but so is Dallas and Houston, the average single-family home there costs about $400,000 to $450,000. Now, in the U.S., it’s exceedingly difficult to make $60,000 to $120,000 a year depending on whether you are calling it median or household income and afford a $400,000 to $450,000 home. So, you have two things competing. Number one, it is just precipitously more affordable to rent one of our apartments right now than it is to pay a mortgage and taxes and insurance not to even speak of the down payment you have to pay to buy that $400,000 to $450,000 house. And number two, if the house was available, there is no houses in our markets that are available right now. And if they want to build them, it’s going to cost more to build them than it did last year and really than it did last month.

Yes. And just to highlight that, I can give you an example, a real life example, Cielo and Austin. When you look at the first quarter, 62 leases that I have highlighted, the median income on those leases for the individuals, it is in the $90,000 range. Now, that tells you exactly the time resident we are getting, but also what’s happening in these markets. So I think that kind of pounds on to Dan’s point that the home prices in these areas and that asset that you are talking about right there is in the Lake Travis School district and also which I expect to look it up and it is similar to the assets we have in this portfolio. You are talking about people that want to be there, but they can’t afford a house as the guys that they are even at that income level.

That’s right. This is John, Matt. And that’s exactly, you do have to track the competition about how much houses cost in the – but it’s really about the affordability factor. And the wonderful thing that we have been talking about in our markets is that we are viewing our rents or maintaining about 20% of the median income of our cohort. And when you think about affordability, many of our cohorts, half of them are Millennials and they have debt on their own balance sheet, makes extremely difficult to come up with the cash that Dan was talking about to afford these higher cost homes in all the markets. So, it’s – we don’t see the competition as being single-family housing at this point in nature, especially with the demand in higher cost. And right now, we are sitting in a very good spot to where we are located for all the right reasons.

And then John and Blake are right on, this is Dan, so we come back to the themes of today. We talked about catalysts, the catalysts of multifamily are not unlike, I don’t know the catalysts of the candy bar industry, it’s just – it’s supply and demand. And if you drive in nationally, right and look at the catalyst for multifamily as a sector of real estate, the top line growth is right now at a potential to outpace any annual number we have seen in 21 years, this century and if you zoom in and you look at the epicenter of that growth, it’s sitting in – I mean, the majority of it is sitting in three or four markets. It’s sitting in Austin, it’s sitting in Dallas and it’s sitting in packets of Houston, right. Phoenix is another fantastic market for growth. That’s that fourth one that we are talking about. But it’s a simple formula, supply and demand. And now, with the commodity prices increasing to what they are and the housing supply available in our markets, it’s just, in our mind, the sky is the limit, exponentially growing that catalyst for BSR.

And as Dan said this couple of times in this call, but I think it needs to be brought up again. Just look the migration, right, into Austin, Dallas, it is – blow you away, how many people are looking into those cities daily?

Yes. Blake is right on. You take Dallas and just – we can just use the census numbers. So based on the recent census figures that came out for Dallas, Dallas in their last decade grew by the population of Wyoming and Vermont in the aggregate, the states of Wyoming and Vermont, one of these markets. It’s about 1.7 million people, if I am doing my math right.

No, that’s impressive. Guys, I appreciate the color as you sound very positive. I think there is a lot of upside to the name and hopefully between now and this time next year we will be able to see you in person.

We look forward to it, Matt and everyone on the call.

There are no further questions at this time. I will turn it back to John.

Well, thank you, Colin. That concludes our call this morning and thank you for your interest in BSR REIT. We look forward to speaking with you again after we report our second quarter 2021 results during the summer. So, God bless, everyone.

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.