And so what we’re doing is, we’re also realizing that folks want to collaborate and kind of get out of their own office. It’s not even just a potential of growing 110% occupancy, if you will. It’s just giving them a diversity of spaces. So I don’t think, I could give you an idea of what percent could be transformed over time. I think this is just now going to be embedded in the offerings that we provide. Yes, we’ve been fairly opportunistic, when vacancies presented itself to do this, and it’s been successful, but we really see this rolling up as kind of our flexible option that you get by having a kind of long-term relationship with Highwoods, and not necessarily have to engage at the more typical kind of co-working environments.
Blaine Heck: Great. Thanks, Brian. That’s helpful. For my second question, can you just talk a little bit more about your capital needs this year? I know, Brendan you mentioned no ATM issuance was included in guidance, but should we expect you to issue any additional debt this year? And how should we expect leverage to trend as we progress throughout 2023?
Brian Leary: Yeah, Blaine, it’s a good question. So we do have a lot of flexibility within the capital stack. So, as I mentioned in the prepared remarks no scheduled debt maturities until really the end of 2025. So, we have no need to be in the capital markets. However, we do have a lot of freely pre-payable debt that is outstanding. So the two options there are, one, I mean, we would like to have some of the non-core disposition proceeds come in the door. As Ted mentioned, that’s highly dependent on the investment sales market in terms of how much proceeds we get in the door there but that would be used to help pay down some of that debt. And then, I think we also have options with respect to longer-term financing to reduce the floating rate exposure that we have.
And on that we would be opportunistic. But I do think, it’s probably reasonable to assume that at some point It — I would say, it’s more likely than not that we’ll do some form of financing to term out some of the floating rate exposure that we have during this year. It’s just we’ll be opportunistic as to when and what form that takes.
Blaine Heck: Great. Thank you.
Operator: Next question is from the line of Georgi Dinkov with Mizuho. Please go ahead.
Georgi Dinkov: Hi. Thank you for taking my questions. So could you please walk us through the occupancy trajectory through the year? And what gets you to the low versus the high-end of the guidance?
Brendan Maiorana: Hey George, this is Brendan. I’ll start with that and maybe Ted and Brian will add in some color. So yes, I mean, as we talked about we obviously have the headwind from Tivity the 263,000 square feet. That’s in the first quarter so that’s 100 basis points. So we ended the year at 91%. And then you expect that number to go down in Q1 with Tivity and the backfill customer doesn’t commence — is not scheduled to commence until the beginning of 2024. And then, we have some other expirations that are — some move outs that will occur as well. We had a government user that was in soft term that gave us back a sizable amount of square footage. So that also is impacting us. And then, we have some leases that are queued up to commence into occupancy later in the year.
So with all of that, that’s where we think when we mix all that stuff together, we think we’ll end 2023 about 100 basis points lower than where we ended 2022. But keep in mind we’ll also have then as we start 2024 we will have the backfill customer for Tivity that will be in a sizable amount of that space. They do leg into that space over time but they’ll take the majority of their space at the beginning of 2024.
