So we are committed to taking care of those redemptions in the next quarter. And we think the U.S. may take another quarter to adjust and we will take care of those in the second quarter. Here is what’s important and people don’t get about the structure of our funds. First of all, our leverage is in the low 20% range on these funds. So there’s oodles of liquidity in these firms to basically be able to handle any redemption requests — any reasonable redemption request. And secondly, we started with the Q and we started with some cash on hand. So, again, there are lots of sources for addressing those redemption requests. I think you should assume that redemptions that have been effective as of the end of this quarter will, by and large, be taken care of by the middle of the year and sooner in Europe.
So you can model that math beyond that. Now I will tell you one other thing, which is kind of interesting. Prologis could be a buyer up in these fronts, and in fact, even in the global financial crisis, where the old AMB was in a tighter spot with respect to leverage, we actually stepped up and bought on very attractive terms with adjusted values, a couple of hundred million dollars of real estate and we actually offered it to our outside investors first and then we stepped in and bought it. And you know what, the next quarter, all the redemptions went away, because people realized that the people who know the most about this portfolio are buyers at these prices. So it’s really about getting the values, right? And we started writing down these portfolios a quarter or two ago and our appraisal process is independent.
We have nothing to do about it and that’s very, very different than some of the redemption situations that we have all been reading about.
Operator: Thanks. Our next question comes from Camille Bonnel with Bank of America. Please state your question.
Camille Bonnel: Hi. Good morning. On your development guidance, can you give us some color on how much conservatism is built into your development starts? And also you are expecting another year of strong stabilization, what assumptions are you making in terms of timing of these projects and is any of the increase in guidance driven by projects from last year taking longer to complete due to longer construction time lines?
Dan Letter: This is Dan. Let me start with this year’s development start guidance. We are coming off our largest year of starts ever, and just given the macro headlines, we decided to take a little bit more balanced approach where we slowed our starts at the end of last year. We don’t expect to start up in earnest until the last half of this year. We think the build-to-suit business will pick up at the same time. So call it conservatism, I call it discipline and just feel really good about our approach, given the volumes over the last year or two. And then stabilization next year, stabilization this year, Tim mentioned it earlier, we think we can outperform. What we have in the books right now, demand continues to be strong.
We talked about the development starts plummeting in the marketplace in the fourth quarter. We think they are going to be slower in the first half of the year and we think that bodes well for absorption in the last half of this year into next year. So we feel very good about our guidance.
