AVB
#We did not, we did not.
We just ---+ we really just spoke to the shortfall so far this year, which is about 50 basis points less than we had anticipated, that is nationally.
And then if you look at our markets, I think it is probably roughly in line with that in terms of the overall shortfall so far this year.
Yes, Vince, let me just ---+ maybe just speak to that.
What happened in the first half year is what is really going to impact portfolio performance in the second half of the year.
So that is why we are not really all that focused ---+ we aren't not as focused in terms of ---+ what happened in the second half of the year in terms of job growth will really play more into our 2017 outlook than the back half of 2016.
You'll usually see about a two quarter lag impact in terms of what is happening in terms of the direction of job growth relative to the portfolio.
It is in the arts district.
Correct, yes, I am sorry.
Well, yes, there is a <UNK>t Hollywood that is under construction, there is Hollywood which is a development, right, which is three quarters of a mile down Santa Monica.
So Hollywood and the arts district, correct.
Well, Alex, I mean as you know, I mean we do underwrite based upon current rents in place.
So as long as rents are ---+ continue to rise at some level we would expect yields to continue to go up all other things being constant.
Which, for the most part they are.
We've generally been able to bring development in close to budget.
So yes, you would expect that left to moderate as rents might moderate.
Now the 30 basis points is a little misleading.
If you took out the impact of Willoughby, well Willoughby's rents went up pretty significantly, so did the taxes as <UNK> had mentioned.
So that actually muted the impact in terms of the yield impact.
If you neutralize for Willoughby the other deals on average have gone up by 70 basis points.
So almost a 10% lift in terms of ---+ about a 10% lift in terms of the projected yield.
So you have got to look at the actual basket and some different things that may be happening with individual assets.
Yes.
Alex, this is Kevin.
The $0.02 lift in expected core FFO per share coming from capital markets and transaction activity is as you would expect.
It's a mix of things going on there.
It is the impact of net acquisition and disposition activity both in terms of the amount and the timing, as well as some changes to JV income ---+I'm sorry, some changes to the debt assumptions that we have got.
We did pay off a piece of debt in the second quarter.
And we had some benefit from lower interest rate being woven into the mix here.
It is timing of other activity, primarily acquisition and disposition activity, both amount and the timing of it.
So, yes, we don't expect to be a significant user of our line of credit and we haven't been throughout the year.
And, <UNK>, this is Kevin.
Just to add to that.
While treasury rates have certainly gone down, if you sort of look at our cost of debt for 10-year unsecured debt, last year we averaged around 3.4% or 3.5%.
As you know, in our May offering we executed just under 3%.
If we were to raise ---+ do a 10-year unsecured bond offering today we'd probably be around 3% because while treasuries have fallen spreads have widened, essentially neutralizing the treasury change.
So, even over the last year there has only been maybe a 40 basis points or 50 basis point decrease in our overall cost of debt.
So, when you weave that through on a blended basis, 30% leverage for what <UNK> alluded to in the underwriting, it is a pretty modest potential impact.
I am not sure if I follow.
We underwrite yields on an unlevered basis.
And so, what we do is we ---+ in our yield matrix the component that <UNK> was alluding to that ties to our short-term cost of capital looks at our unlevered initial short-term cost of capital which ascribes 30% weighting to debt, 70% weighting to equity.
So you end up with having essentially undelivered or neutralized number there from a leverage point of view.
So we don't look at yields on a levered basis.
Well, it has been driven mostly by labor, not by materials for sure.
And that has been a mix I would imagine of both profitability and labor costs.
If you look at the different sort of wage indices out there, construction labor is towards the top if not at the very top in terms of year-over-year wage growth.
So it is an industry that has seen a lot of skilled labor leave over the last cycle or two.
It is a challenge to get good skilled labor at a lot of these sites.
And when you think about the production level not just of apartments but just housing and all real estate categories, the level of construction is still not that high and yet it is a real challenge for the industry right now.
And I think a lot of that just has to do with the shortage of skilled labor.
Well, we continue to ---+ whenever we look at new opportunities as well as existing opportunities, we continue to sort of re-underwrite them as we continue to best pursue cost of capital and make sure it is something we want to continue to do ---+ that is what we think is sort of the highest risk capital of any deal which is that entitlement and design ---+ that pursued cost capital, if you will.
So the kind of yields that you see on the schedule in the release, they are consistent with the kind of yields we see in the development [right] pipeline.
There is clearly ---+ I mean part of why we have been able to replenish our development right pipeline I think is connected to that.
We are seeing more deal flow.
I think there are ---+ if a developer has three or four deals they may be looking to lay off one of them in terms of land.
And it is probably a function somewhat of the kind of reception they are getting with some of their key lending partners.
But across the board you are definitely hearing from both banks, the suppliers of capital as well as the consumers of capital developers that construction financing is less plentiful.
Well, thank you, Augusta.
And thank you, everybody, for being on the call today and enjoy the rest of your summer and we will see you in the fall.
