Operator: Our next question is from Tom Catherwood from BTIG.
Thomas Catherwood : Sticking back with the studios, Victor approved — I appreciate your commentary on the pickup in [preproduction] activity. Can you provide some more color, though, on how far in advance the production planning process has to start to lock in studio space? And is that driving any early discussions with users beyond just the preproduction activity you mentioned?
Victor Coleman : Tom, a great question. There is no science here on that. I can certainly tell you what we’re seeing. And remember, well SAG-AFTRA are on strike, they can’t even entertain signing facilities until that strike is done. Albeit that the writers are done, the writers can sign office space and they can start working on scripts, but you can’t sign sound stages and the likes of that, nor would they. So that’s where we sit. Let me now — I can have Jeff jump in. But sort of if the strike were to end today, as we’ve sort of commented, it would be 2 weeks to ratify it, and then it would be another 6 to 8 weeks of activity around what shows are going first, second, third and how they’re looking at that. And so then they would come and look at opportunities at ours and everybody else’s stages that have availability.
And from that moment on, there would be a timeline for [mill] space and outlining [editing] and the likes of that on the preproduction side. That’s why we’re anticipating a full up and running 3 quarters next year approximately, and we could get better economics in the first quarter of next year if things happen quicker. But with the holidays, even though they’ve been on holiday for 6 months, in my opinion, they probably won’t get going until January 1.
Thomas Catherwood : Got it. Really helpful. And then second question, maybe, Mark, following up on the levers that you mentioned in response to Blaine’s covenant question, what is your appetite to potentially monetize the retained bonds on the Hollywood media portfolio to fund either incremental investments or delevering?
Mark Lammas : I mean I think it’s an interesting potential source of liquidity and opportunity to create liquidity, improve the metrics. It’s something worth exploring. And I guess I’ll leave it at that. We’ll just have to see how other things unfold.
Operator: The next question is from Dylan Burzinski from Green Street.
Dylan Burzinski : I guess just going back to occupancy and the expectations over the next, call it, 18 months to 2025, are you able to share what sort of level of new leasing activity is embedded in those expectations?
Mark Lammas : Not at this time. I mean, we haven’t — I mean, historically, we’ve been asked this question. We’ve tried to give people ideas of kind of what — where we might end up at certain points and so forth. I haven’t — I think it’s probably caused the wrong type of understanding of our leasing, our leasing activity, the progress we make. I don’t imagine that when it’s time to reguide, we’re going to adopt some kind of — we might consider a metric. I don’t know that it will be as granular as new versus renewal. Maybe it’s worth considering something that our peers do in terms of ranges of occupancy or something like that. But it’s — I don’t think it’s going to quite be as pinpointed as your request for new leases.
Dylan Burzinski : That’s fair. And then I guess just one more. Are you able to comment on sort of expectations for net effective rents? And obviously, it’s going to differ by market. But if you can just go broad strokes across your footprint, that would be helpful.
Mark Lammas : Well, I mean, I’m sure you’re keeping an eye on how net effectives have trended. I mean they’ve held that well. I think we’re down — if you go trailing 12, pre-pandemic, so Q1 trailing 12 at that point, we’re essentially in line on a trailing 12 basis with the latest activity, I think we’re down like 4%. They’ve held up almost every quarter, we’re at, sometimes above, sometimes slightly below, but the net effect was held up. Again, we don’t provide some sort of net effect, I don’t think anyone provides a net effective target on a forecasting basis.
Arthur Suazo : Chiefly because the composition changes quarter-to-quarter.
Operator: Our last question on the call comes from Nick Yulico from Scotiabank.
Unidentified analyst: This is [Dan Garik] on for Nick. Just one question on leverage. How are you thinking about balancing selling assets with an expectation for improved occupancy and leasing? You’re pretty well set up on the maturity ladder over the next few years. And back-of-the-envelope math, if you had the $100 million of lost EBITDA from the studios business, you’d be close to that 7x net debt longer-term targets. So any thoughts there would be great.
Mark Lammas : I mean your lead is off, and the question is precisely what we’re doing. I’d say we’re constantly balancing that. We’re looking at assets that have — and its tenant composition, maybe the remaining term on the lease, how we view the prospects for the backfill, if that’s a relatively early lease expiration. And Drew and his team are looking at every element of every potential asset sale and taking into account exactly that, namely, how — what our expectations would be, what it looks like when it — if it does expire, what the downtime looks like, what the cost of retaining is, it’s just a constant balancing act. And I think thus far, his team has done an amazing job of like striking the balance just right every time.
Victor Coleman : Great. I think that’s it. Appreciate everybody’s participation in this quarter. We look forward to seeing you report next quarter. Thanks very much, operator.
Operator: Thank you. This conference has now concluded. You may now disconnect.
