That will all get you to close to 9% and then we backed off an assumption on occupancy loss, which we couldn’t point to right now, but just feels prudent in the environment, so we have taken our guidance down there a bit.
Operator: Thank you. Our next question comes from Vince Tibone with Green Street. Please state your question.
Vince Tibone: Hi. Good morning. How should we think about the organic same-store NOI growth for the legacy Duke portfolio in 2023, given them that’s outside of guidance? Is it lower than guidance for the legacy PLD portfolio in the same ballpark, just given the thought that you do any color you could share would be helpful?
Hamid Moghadam: Well, it will be lower for one reason anyway, which is that they started at a higher level of occupancy. So putting even rent aside on a same-store basis there’s less opportunity. They generally had longer term leases because they generally have bigger spaces. So that affects the mix, but Tim?
Tim Arndt: Well, I think, an important thing to remember here and we have seen some people not have this entirely correct modeling is just understanding that on a GAAP basis there will be very little same-store. There’s potential for some, but because we mark the leases up to market now at the close on a net effective basis there will be very little same-store growth, that’s contemplated in our guidance. On a cash basis, I expect it would look quite similar to Prologis.
Vince Tibone: That’s really helpful.
Hamid Moghadam: Thanks.
Operator: Thank you. Our next question comes from…
Hamid Moghadam: By the way, if I can continue that. One thing that you didn’t ask, but it’s important in this context, and Dan can elaborate, is that the rental performance of the Duke portfolio on the few spaces that have come up for releasing or were in progress during the time we were doing the transaction are trending significantly higher than what we had underwritten. Dan, can you quantify that?
Dan Letter: Yeah. I actually go as far as saying we expect to outperform the operating portfolio to 11% to 13%, call it, now 8% of that is going to come from market rent growth, so really 3% to 5% of that comes from just operating that portfolio in the Prologis platform.
Operator: Next question comes from Tom Catherwood with BTIG. Please state your question.
Tom Catherwood: Thanks. Tim, you mentioned in your prepared remarks that the outlook for 2023 assumes a recession and if we look back to previous recessionary cycles, usually we get declines in consumption, which drives lower demand for industrial space. But we have also never started a cycle with kind of persistently low vacancy like we have right now or tailwinds from e-commerce and supply gain reconfiguration. So kind of within that backdrop of assuming a recession, how do you think it could be different this time and kind of what do you have baked into your numbers for that for 2023?
Hamid Moghadam: So given that Tim was in kindergarten when cycle started, Tim and I are a little bit different than our recession outlook, but I don’t think it matters. I think Tim would tell you that if there’s a recession, there’s a very mild recession and my bet would be that we wouldn’t have a recession, but it would be close to zero GDP growth for a while. So call it recession or no recession, but the same outcome. I think what’s different about other cycles and I say that with a lot of dislike for the phrase that’s different this time is that, there were really two situations where we had negative absorption in the U.S., which is where we have data. One was on the hill of dotcom and there you had a high vacancy rate. On top of it, you had a very low utilization rate because there was a lot of capital for these dotcom, particularly e-commerce retailers and they were taking space way ahead of demand, so there was a lot of shadow space too.
