Anthony Paolone: Yes, thank you. I was wondering if you could comment on dispositions. And in terms of anything you might have in the market right now or expectations for this year and whether or not you think that could be additive or dilutive to where you put guidance at this point?
Douglas Linde: Yes, we have assets that we would like to dispose of non-core assets. But as I mentioned in my remarks, the capital markets are very liquid just generally, but also, I’d say, for office assets. And therefore, we didn’t put out a guidance on what we thought dispositions were for this year because we don’t — the market is not cooperating at the moment. Hopefully, that will change, but we can’t forecast that right now.
Owen Thomas: And Tony, if something — if we were to be in a position to sell something, unlikely that we’re going to put anything on the market in the beginning of 2023, which means any transactions that are likely to be weighted towards the far back end of the year.
Operator: Thank you. And I show our next question comes from the line of Ronald Kamdem from Morgan Stanley. Please go ahead.
Ronald Kamdem: Hey, just looking at the 1Q guidance of $167 million, when I compare that to the 4Q number of $186 million, any sort of — that’s a $0.19 delta, any sort of high level, how much of that is sort of the G&A seasonality versus this sort of onetime charge you talked about versus interest cost would be helpful? And if I could sneak another one in, just on the View Boston opening up in April, just sort of curious sort of how the marketing, how the interest and an update there would be helpful. Thanks.
Owen Thomas: So while Mike looks at his numbers, I’ll let Bryan Koop just describe sort of where we are with our plans from a marketing perspective on the Observatory in Boston. And we haven’t officially announced the date yet. So…
Bryan Koop: Yes. The great news is, given what we worked during the last two years in construction, we’re actually ahead of schedule and turned out beautiful. We’re doing marketing tours with people that would like to look at events in the future. I’d say we’re oversubscribed on that, and we’re determining how we want to execute that because as each of these observatory locations are fairly highly bespoke and different. And we have a good deal of space that we can do the events. Pre-marketing is going really well. The City of Boston is gearing up for tourism and we’ve seen a big response from that sector in call-ins to our team. And in general, we’re just focused on hiring people and getting staffed up for F&B and the overall staff, but we feel really great about it. We feel awesome about how it’s turned out. It’s just spectacular.
Michael LaBelle: So Ronald, on the first quarter, you’re right, it’s obviously down because it’s seasonal. We have a hotel that is seasonal that because it’s located in Massachusetts it has very few people that come to it during the winter. So it actually loses money in the first quarter and that it has profit to the other three quarters of the year. And then our G&A expense is front-loaded because of vesting and payroll tax issues. And then obviously, we borrowed more money in the fourth quarter. So we expect our interest expense to be higher in the first quarter than it was in the fourth quarter. The portfolio itself is actually — we expect it to be up slightly. And then going out for the following quarters because if we started $1.67, right and our guidance is much higher than that for the full year.
Obviously we see pretty significant increases in the following quarters. And as I mentioned, we expect our occupancy to start to move up in the second quarter. Bryan just talked about View Boston, we expect that to open up in the second quarter. So there are several things that are occurring in the second and third quarters that are going to push the FFO up later in the year.
Operator: Thank you. And I show our next question comes from the line of Dylan Burzinski from Green Street. Please go ahead.
Dylan Burzinski: Hey guys. Thanks for taking the question. Just curious, I think the story thus far has been that office landlords have been able to hold base rents and they’re giving up more on the concession side of things. But just curious, Doug, given your comments about not expecting positive absorption in 2023, is this the year that we start to see landlords sort of deal up on the face rent side of things?
Douglas Linde: I guess, I don’t think landlords, at least this landlord is never going to give up on anything. And we — look, we have situations in our portfolio where we have very little space in a particular building. And we’re very comfortable and able to handle both relatively modest concession packages and strong face rates. We have other pieces of our portfolio where we have vacancy or availability where we are trying to be aggressive about increasing our occupancy. And so in those cases, we are thinking about all the arrows in the quiver and figuring out what the right approach is for a particular client that we’re trying to serve. Some of those clients would prefer to have free rent. Some of those clients would prefer to have more CapEx in terms of transaction costs.
We might even agree to do turnkey builds in certain cases, and some of them may be looking for a lower “annual run rate” and sort of use the concessions in a different way. So I think it’s very hard to sort of try and articulate a particular component of an economic deal that is being done with a client of ours and sort of say, we’re going to gear towards one thing or another because we try and meet the needs of those clients. In general, transaction costs are higher. Why? Because there is more available space and it’s still very expensive for a company to move or relocate or grow, and the landlord is contributing capital for that, and it’s coming in the form of either additional free rent or additional TI, it’s generally not in the form of the “face rent” on the deal.
And I don’t think that’s going to change much as we approach 2023.
Operator: Thank you. And I show our next question comes from the line of Peter Abramowitz from Jefferies. Please go ahead.
Peter Abramowitz: Hi, yes. Thank you. Just do you have any comments or commentary you can give around the restructuring announcement from Salesforce from about a month ago. I think they said they’re both looking to divest their own real estate holdings, but also reducing their footprint, where they lease space. Any conversations you’ve had with them and any impacts to your portfolio?
Douglas Linde: Yes. So I’ll just make a comment, and then I’ll turn it over to Bob. So we have one building, which has a long-term lease with Salesforce.com, which is Salesforce Tower, which is to some degree, their preeminent building and is the preeminent building in San Francisco. And Bob, why don’t you comment on any conversations we’ve had with Salesforce regarding their utilization of space?
Robert Pester: Yes. They’ve got multiple buildings on the market. They’ve got 53 miner across the street that they own with 400,000 feet. They had several 100,000 square feet per lease in 350 Mission; they got space available, the space that was occupied by Slack. All the indications we’ve had so far is, they’ve indicated no interest in subleasing any of the space in the tower. But if they do, we’ve got 9-plus years existing weighted average lease term on their lease in that building. So we’re really not too concerned about it. We do get calls constantly about major tenants. We just had one this past week for 100,000 feet, that would like to be in the tower, but we don’t have any space available.
Operator: Thank you. And I show our next question comes from the line of Anthony Powell from Barclays. Please go ahead.
Anthony Powell: Hi, good morning. Just a question on acquisitions, what you target in terms of space changed in the past few months given the environment, would you be less willing to do deals like 360 Park Avenue, given the leasing there and more targeted sort stabilize or financial tenants. Maybe just comment on what you’re looking for would be great.
Owen Thomas: So as I mentioned at the outset, we have the capital in the balance sheet to make additional acquisitions but we are in — the market is repricing. And so, yes we are going to be very focused on valuation for any acquisitions that we would look at in the coming year.
Michael LaBelle: Yes, I would also say I would add to that. We are, as I mentioned in my remarks, our focus is going to be on premier workplaces, life science and residential development.
Douglas Linde: Yes. And I would just add the following, which is if we’re looking at an existing asset, they’re obviously, if we can’t make it a premier workplace, we’re not going to spend time on it. If we think we could, then it’s going to be a question of what our views are on how long it will take us to lease up the space. And I would say that we’re constructive about our markets, but we are realistic as I think all of our comments this morning were about the overall absorption of space in the marketplace. And so, I’m not sure our underwriting is necessarily going to match with the seller’s expectations for what they think their buildings are. We will look at stuff. We will be thoughtful about it. We will make offers. But whether there’s inability ability for there to be a meeting of the minds, I would say we’re skeptical that will happen in 2023.
Operator: Thank you. And I show our last question comes from Nick Yulico from Scotiabank. Please go ahead.
