Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of David [Tote] – Citigroup.
David [Tote] – Citigroup
A couple of questions, there’s one particular statistic I find interesting with regard to your residential customers, home purchasing move outs dropped as would be expected but move outs related to rent levels increased. Can you talk a little bit more about your sense of why that popped up?
Edward J. Pettinella
I would suggest that there’s two kind of indicators we’re looking at that kind of lead us to believe that the resident is feeling the pinch a little bit and that is we’re continuing to have bad debt level, it’s actually four quarters in a row now where we’re over 1% where we use to be about maybe 75 basis points so that I think tells us a little bit that they’re feeling the pinch. And, we certainly noticed that increase it’s been a fairly consistent reason for move out. It’s been between 7.5 to 8.5 so the fact that it got up to 10, I think people are feeling the pinch of gas prices being up, groceries being higher, we’ve said before that even though our occupancy levels are holding up very well that our residents are price sensitive so it’s been tough to be too aggressive in rent increase so I think it’s not unusual that they are feeling that a little bit.
David [Tote] – Citigroup
Then just sort of along those lines, can you talk a little bit about your sort of employment assumptions that are underpinning your guidance at this point?
David P. Gardner
We go pretty much by the employment levels in those markets. I don’t know if I have the sheet with me, the last we updated it we continue to be about 1.2% below the national average. There’s not one of our markets that are actually at the national average, just at the average. So it seems to be going okay. As I’ve said to folks recently, when we’ve talked to people in the field we’re not seeing companies that are losing 500 to 1,000 people or more in our particular bedroom community so, so far so good. The good news, at least in northern Jersey, we’re not feeling much of an impact of the Wall Street debacle. I think generally the type of clientele we have are not directly impacted by that. I think unemployment, my sense is that unemployment is holding steady right now in Philadelphia, in Baltimore, not materially changing so we feel the unemployment level is okay. The other thing I would tie back to is your first question, I think bad debt is creeping up slightly, people are feeling the pinch but if you look at our turnover rate, it’s holding steady at 11% or annualized at just over 40% which is the lowest in the industry so it may portend – the leading indicators may portend a little more difficulty in the quarters ahead but it’s not translating in to some of the other more solid indicators we look at like turnover. So, while we’re watching it closely and the more data we get on the unemployment we certainly will pass along but it doesn’t seem to be a major impact to us.
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