Steve Sakwa: Okay. So the sovereign wealth funds haven’t lost to earn interest, it just sounds like you’re pulling back just given where yields are that you guys are less likely to go forward?
Scott Brinker: Yes. I mean it was a mutual decision. But yes, we’re happy to control 100% of that project.
Steve Sakwa: Okay. And then I guess, secondly, just on the UPREIT, I guess, conversion. I mean, have you felt like you lost deals or that has been a competitive disadvantage to help Pete not having the UPREIT structure and hence, your desire to put it in here?
Peter Scott: Yes. I mean we did one on the Medical City campus about 18 months ago, we’ve got 7 or 8 legacy down reach structures in the portfolio today, which are pretty cumbersome and expensive to manage. So yes, I would expect that we would be able to use that structure going forward.
Steve Sakwa: Great. Thank you.
Operator: The next question comes from Vikram Malhotra with Mizuho. Please go ahead.
Vikram Malhotra: Morning. Thanks for taking the question. Just two. First — maybe. Can you just go back to the guidance and I’m sorry if I missed this, but just maybe walk us through Life Sciences, in particular, how much conservatism are you baking in? You typically started, I think, at around 4%, 4% or 5%, and then you’ve exceeded that the last, I want to say, three or four years. I know you have fewer expirations, but can you just walk us through what are you baking in, in terms of occupancy and the bumps that there, but occupancy and rent spreads?
Scott Brinker: Juan — excuse me, not Juan, Vikram, sorry. I got so used to Juan asking questions that I had to adjust. But it’s a good question, Vikram. And as you noted, we’ve guided 4% to 5% the previous five years, five years in a row. So we had a lot of consistency on that. One of the contributors, though over the last five years was the fact that we still had pretty significant net leasing activity every single year, allowing us to increase our occupancy. The good news is we’re at 99% occupancy across the portfolio right now. But the bad news is there’s really not a lot of room to go higher than that at this point in time, just given how many tenants we have in the portfolio and the weighted average lease term. So when you look at our guidance for this year, it’s primarily focused on the rent escalator, which, on average, is around low 3%.
We do have some modest lease maturities, and we do have some modest mark-to-market benefit embedded within our guidance. Not all of that though was within the same-store pool. Some of that is within our large redevelopment campuses, Point Grand and Oyster Point to just name the two biggest one. So that’s really the reason for the 3% to 4.5%. It’s not a deceleration within our portfolio. And the other thing I would just add to it, you asked about bad debt. And I think you’ve asked this before, we do include a little bit of bad debt within our same-store guidance at the beginning of the year. And to the extent that we don’t utilize the bad debt cushion or we don’t need all of it, that certainly would be a benefit throughout the course of the year.
A little early in the year to comment on that at this point in time, although we’ve been very pleased to see the capital markets improve significantly for our life science tenants. So that’s really the gist of our 3% to 4.5% guidance range in that segment.
