Operator: And I show our next question comes from the line of Michael Griffin from Citi. Please go ahead.
Nick Joseph: It’s actually Nick Joseph here with Michael. Owen and Doug, you guys have touched on the opportunities expected this year and with some institutional owners, maybe change in strategy or lowering exposure. I guess on the other side, are you seeing more competition for some of these potential deals? Are you seeing people actually looking either distressed opportunities or other opportunistic opportunities looking to actually add exposure to office? And then how are you thinking about actually underwriting the deals, just given the current environment?
Owen Thomas: Yes. So Nick. Good morning, so there have been more office transactions in the fourth quarter. In my remarks, I gave some stats, and it was kind of interesting to me the percentage of the commercial real estate transactions that are going on from office increased materially in the fourth quarter to the third. So what’s happening? I think there are more distressed players that are out there, buying assets at very low per square foot prices. Some of these assets are challenged physically, most of them are not very well leased. And I think those buyers are family offices, for example, they’re smaller deals that don’t need leverage. Because again, getting a secured mortgage for an office building is virtually impossible.
And I think these buyers are just saying, look at this per square foot price, we think the market will ultimately recover, and we’re in at a good basis. So I think that’s the kind of market that’s out there. Those aren’t the kind of deals that we want to do. I mean we’re looking for premier workplaces. We’re looking for assets. They may not be fully leased. Maybe there are some challenges with it or an asset that we can make a premier workplace, and they’re going to be larger and they’re going to probably require funding from the financing market in some way. And I think there’s much less competition for anything like that. And I think, hence, that’s BXP’s opportunity.
Operator: Thank you. And I show our next question comes from the line of Ronald Kamdem from Morgan Stanley.
Ronald Kamdem: Hopefully, you can hear me. Just one, 2-parter, one on the same-store NOI guidance of down 2%. Just hoping a little bit more color. You talked about WeWork being a 45 basis point headwind. Just could you talk through maybe what some of the larger expirations that you’re expecting in the first half the impact will be and what you’re assuming at the top and bottom end of the guidance range? And the second part, if I could sneak it in, is just on the life science market, as you sit here today versus 3 to 6 months ago, can you just characterize what the leasing activity is like for the larger versus the sort of mid and smaller tenants? Thanks.
Michael LaBelle: So I’ll start with that on the same-store question, which is really related to kind of the trends in our occupancy that we expect. So we gave the range of that. And our anticipation is the first half of the year has some of these larger expirations, there’s one in New York City. There’s one in Carney Center and then there’s one in San Francisco, and Doug kind of described how big they were. And then the leasing that we have signed that are going into vacant space is more spread across. So my expectation is that you’re going to see occupancy decline a little bit in the first couple of quarters, and then it’s going to build back up through the year. And that’s what’s built kind of into our guidance ranges. And then obviously, our boundaries are kind of the upper and lower boundaries of what that year-end occupancy range that we provided is that Doug talked about.
So that’s kind of how we build that range. And I think that pretty much answers your question, Nick.
Douglas Linde: Yes. And let me add on Rod deal go first on life science activity in the San Francisco — South San Francisco, North Peninsula market and then Bryan can talk about life science activity in our Waltham portfolio, which is where obviously where our availability is. Rod, do you want to start?
Rodney Diehl: I would just say that relative to 6 months ago, at least in the Bay Area, I would say the life science demand is about what it had been, which is that it’s not with the larger users. There have been some smaller tenants. That’s how we were able to land the 3 deals at our 651 Gateway project. Those are single-floor tenants roughly 22,000 each. So in that section of the demand, we’re still seeing a little bit of activity, but not so much on the larger groups. So relative to 6 months ago, I think it’s probably about the same.
Bryan Koop: Boston, this is Bryan Koop. It really reflects the same thing. The second half of last year was far different than the first, and activity picked up on life science tours. But let’s say, from summer beginning, smaller users out there still questioning, is it time to make a commitment or not? A lot of questions about their funding, etcetera. And then fourth quarter, we did see a couple of, let’s say, the life science titans come out and emerge. And they were all caught let’s say, potential clients that are in the market already in Cambridge that were, let’s say, looking, sourcing the Waltham market for what could be available. In general, we just had a summary with Doug and Owen yesterday about last year’s performance.
And we were quite surprised. We have 360 tours last year. So you’re averaging 7 a week, which was surprising, given how dismal the attitude about office was. Two comments. One is that the clients are spending far more time with us and aggressively looking for what their strategy is going forward. And we have also seen verification of possible spoke plays, where you have a large headquarters in the CBD district and then looking for a spoke location further closer to the suburbs to people’s homes. And we’ve had 2 great executions of that and there’s been a lot of interest in that.
Operator: Thank you. And I show our next question comes from the line of Caitlin Burrows from Goldman Sachs. Please go ahead.
Caitlin Burrows: Hi, everyone. Maybe just a question. Google announced last night meaningful office optimization charges, 1.2 billion in the quarter. So given your 2.8% exposure to the tenant, will this impact any of your properties? And I guess, more broadly, I think you mentioned that tenant defaults are included in your guidance. So what’s your watch list like or outlook for early exits by tenants this year?
Douglas Linde: With regards to your first question about Google, the answer is absolutely not. We have — Google is in only one asset of ours, which is in our Cambridge portfolio and they’re in there for a long, long time, and they’re actively using their space and talking to us about increasing parking needs and things like that. So we have no sense that there’s any change in their portfolio composition at least with us at BXP. I would say most of our defaults have been in the life science and they’ve been in the sort of start-up tech world, and we have 1 in Waltham, that’s probably going to occur and we have 2 or 3 that occurred in the latter parts of 2023 on the West Coast, 1 CBD and 2 in the suburban market, and they’re all sort of in this 20,000 to 25,000 square feet of piece, and they’re just part of the — what’s going on in the economy with regards to capital formation, where VCs want to put their money, where they don’t want to put their money, whether technologies are successfully getting companies to the point where they can raise additional capital again and we have some exposure to that, but it’s not significant.
