Ken Bernstein: So I think that was within my $0.01 to $0.03 for our core. We have the luxury given our size that we could go space by space. And AJ and I talk sitting right next to each other, and we have a former point of view as to which — whether tenants going to stick around. So we have that luxury giving our portfolio and being able to go space-by-space and he’s talking to all of our tenants, along with his team every day. So we have that. And then what I would say is we have not seen any meaningful change of tenants that are maybe potentially not going to stay. If anything, I would say it’s more biased towards tenants wanting to stay in their space, if I had to look at that. In terms of — on the credit side, another thing I watch very closely is on reserves.
Do we see slowdown in payments? Do we see the leasing or at least admin teams getting questions or calls around wanting to work through payment plans? We have not seen that tick up. Not to say it’s not coming because we’re not oblivious to what’s happening, but we have not yet seen a pickup as some of the capital markets would suggest we potentially should not, but we have not seen that. So our reserves are appropriate in that $0.30 to $0.34 number, and we’re conservative in those, but have not seen a follow-up.
AJ Levine: And let me add a little color above and beyond our portfolio. Given the rise in interest rates, the likelihood is that tenant retention and/or tenant failure rate could be as likely to come from tenants’ balance sheet as opposed to their business. And since we see tenants’ business models, meaning their sales more often than we get to examine, especially the private companies, their balance sheet, that is something we will watch. If I were to get where this stress could occur, it would be for our local retailers who got a lot of help during COVID. So we did not see the failure rate then. The local segment, especially in our suburban portfolio adjacent to supermarket anchors, et cetera, those rents have grown nicely.
So that’s a segment we’ll watch. So far, as John said, we haven’t seen any slowdown, but common sense tells us that they may be more interest rate sensitive in terms of their business, so that’s something we’ll watch. And then in general, as John said, it feels like next year may be more boring than volatile on that side, but we’ll see.
Paulina Rojas Schmidt: Thank you. And then the second question regarding new openings in the portfolio. Are you seeing trends from a category perspective?
Ken Bernstein: So, AJ, why don’t you take that in terms of what trends are we seeing in terms of new tenants on where demand is coming from?
AJ Levine: Yeah. Look, obviously, the earlier days of COVID, the recovery was first led by the essential retailers, but then quickly behind that, we saw this huge influx of luxury into most of our high-growth markets. And then, of course, the aspirational and what we call our advanced cotemporary brand, sort of clustering around them. And I think for most of our high-growth streets, that’s what we continue to see. We’re seeing continued entry of luxury tenants. We’re continuing to see continuation of the clustering of those tenants that want to be near luxury. On the suburban side, a lot of the new store openings or the growth that we’re seeing is being led by our discounters, right? So the TJ is the raw Burlington’s of the world. They have been leading the way in terms of net new store growth as well as, of course, the dollar stores and those sorts of high-volume openers.
Ken Bernstein: And let me just remind everyone, especially generalists who haven’t thought about this. Some of the trends, some of the reason you’re seeing this pent-up demand. A few years ago, there was this notion that online sales were going to be the best channel for growth. And now we understand in an omnichannel world, the stores are there most profitable. You’re still seeing that pivot, whether it’s luxury, whether it’s advanced contemporary, or whether it’s discount. Then secondly, you are seeing retailers recognizing that now is still a good time to sign leases even with all of this uncertainty. So it wouldn’t surprise me that we’ll continue to see an economic slowdown, economic uncertainty, consumer spending will be choppy, some tenant results will be choppy, and I still think you’re going to see good leasing results.
Paulina Rojas Schmidt: Thank you.
Ken Bernstein: Sure.
Operator: And I’m not showing any further questions at this time. I’d like to turn the call back to Ken for any closing remarks.
Ken Bernstein: Great. Thank you all for your time. We look forward to speaking with you next quarter. Happy Halloween.
Operator: Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect, and have a wonderful day.
