Jim Kammert: All right. Fair enough. And then a technical question, I’m sorry. You note that the fourth quarter sort of same-store progression in the first half of this year will be a little depressed by the vacancy associated with four properties what would have to happen at those properties from a leasing perspective from where they are today to get to 3% same-store NOI guide at the bottom end of your range. I mean, does anything have to happen? Or I’m just trying to understand the order of magnitude might in terms of incremental leasing for that portfolio to bench in your range?
Joel Marcus: Yes. So Marc?
Marc Binda: Yes. So we gave the leased/negotiating stats. I think it was about half of that 64% was leased and the other half was negotiation. And that stuff is expected to benefit the last half of the year. We do need to continue to make progress on that. But then we do have a significant amount of free rent that’s contractual that has already been leased. It will also contribute to the numbers in the back half of the year.
Jim Kammert: Fair enough. Thank you.
Operator: The next question comes from Tom Catherwood of BTIG. Please go ahead.
Tom Catherwood: Thanks and good afternoon, everyone. Peter, you commented in past quarters on tenant space planning trending towards more just-in-time leasing. Is that still a fair characterization across your portfolio? Or are you seeing some markets where tenants are getting ahead of their expirations to lock in space?
Peter Moglia: Yes. Decision-making has been slow. And I mean, I guess what I’ve talked about is that and tenants not wanting to invest in space. So the preference has been to go into available build space, things that are vacant or rolling or subleased rather than plan ahead and move in 12 months later into a development project. A lot of that has to do with a lot of the requirements over the past year and a half have been small, versus a larger requirement that you might not be easy to find and you need to put into a newer building. But that I don’t think anybody is waiting to the last minute. It’s really a function of the size of the company. If you’re under 15,000 square feet or even under 20,000 square feet, you probably have options. If you’re above that, you definitely need to plan ahead, because there’s a lot less inventory in those sizes.
Joel Marcus: Yes. I think the other way to think about that is the just-in-time inventory issue is really focused on, primarily biotech companies clinical stage that hit a milestone, and they need to move pretty rapidly the scale because of that milestone, which also yields funding, and that’s where you get probably the most kick on the just-in-time space.
Tom Catherwood: Appreciate that. And that actually kind of leads into the second question, which is, Peter, you had mentioned elevated concessions, and we hear about that kind of across the market, yet if we look at your second-generation leasing costs in 2023, they were a good bit lower than in 2022, especially if we do it on a kind of per year average basis. So can you speak maybe about how concessions are trending for new and renewal leases at existing properties as compared to leases at new developments and maybe where the economics are different on that side?
Peter Moglia: Yes. I mean, the increase in the large increase in tenant improvement concessions has really been almost exclusively in new development space where you would traditionally give somebody $200 a foot plus or minus, depending on the market. With their rental rate and then expect them to invest into the rest of the space that, as we’ve talked about, has gone to $300 a square foot. If you look at the operating portfolio, and you pointed out that the numbers prove this, that concession isn’t needed, because that is already built out. And one of the beautiful things about our business is how the tenants or how the TIs are recyclable. So we build something out first generation. It’s very rare that we have to put a material amount of money into it the next time around.
And given that it’s probably got a large investment from a tenant, the first-generation tenant. We don’t have to bump the rents much to make up for that additional investment, right, because we didn’t make it. So it becomes a very valuable thing to a tenant to be able to move into something that’s already built out. And so they aren’t seeking the type of concessions that they are for new space. Now, it ties to what I said before, if you’re in the — a smaller set of space needs 25,000 square feet or less, you might have some options to find. But once you get above that, it becomes tougher to find existing space. So you might end up going more towards new development where you would see the concessions of higher TIs, but you’re also paying higher rents.
Tom Catherwood: Appreciate the color. Thanks everyone.
Peter Moglia: Yeah. Thank you, Tom.
Operator: The next question comes from Jamie Feldman of Wells Fargo. Please go ahead.
Jamie Feldman: Great. Thanks for taking my question. So, if you look at your 2024 exploration schedule, the amount of expirations moving into redevelopment declined 13% in the supplemental from 41% when you initially gave guidance? Do you think that’s a number that’s going to continue to trend lower as the year moves on? Or is that more driven by dispositions? Maybe just talk about what changed and what may change going forward?
Joel Marcus: Yeah. Marc, do you want to comment on that?
Marc Binda: Yeah, sure. I think last quarter we — or at least as of Investor Day, we did have the 219 East 42nd Street asset in there as something that we thought that we would redevelop or develop turned out that we’ve decided to sell that asset. Aside from that, it’s been pretty consistent from the last quarter. I think a lot of those redevelopment assets are in great locations in places that we’d like to be. But certainly, as we go through our process to look at non-core assets. It’s always possible that we find things in there that could potentially be sold.
Jamie Feldman: Okay. Thanks for that. And then the $95 million to $125 million of investment gains that you plan to include in earnings, you said you took an impairment recently. I mean, what gives you conviction that you can hit those numbers? And do you think you’ll see more impairments netting that out?
