In this quarter, the impact was about 200 basis points for our mark-to-market as we moved 7 properties into repositioning and redevelopment. Acquisitions can also — are also a part of that move in and out of the pool for mark-to-market and can certainly have an impact.
Operator: Our next question comes from the line of John Kim with BMO.
John Kim : Thank you. On the net absorption, your stats are positive, but it does start I think from some of your space that you put into redevelopment. I was wondering if you could comment on overall net absorption in the market or demand that you’re seeing in your portfolio or in the market overall over the last few weeks, just given the rising interest rate environment and uncertainty in the financial markets?
Michael Frankel : Hi. Thanks so much for joining us today. And this is Michael, and I’m pleased to answer the call. I think with regard to the last few weeks, we really haven’t seen much change relative to what we’re reporting for the quarter. So really no trend line there that’s incrementally different.
Laura Clark : And then I’ll add to that just around that absorption and the overall market. We’ve usually taken a pretty deep dive and analyzed every building in the market that’s contributed to negative net absorption throughout the year, we’ve been communicating those metrics. And it’s been really consistent. Only about 20% of the buildings that contributed to negative absorption in the overall market is what we would deem to be kind of higher quality, higher functional type buildings. So said another way, 80% of the product that’s hitting the market in terms of the negative net absorption throughout the year doesn’t directly compete with Rexford. And so this, like I mentioned, this trend has really helped throughout each quarter of the year and certainly speaks to the metrics that, and to the results of our portfolio and that differentiation is certainly driving our results.
John Kim : Okay. I noticed the lease term that you signed this quarter — first of all, are your leasing stats signed or commenced? That’s Part A. But on the lease…
Laura Clark : It’s signed.
John Kim : Okay. The lease terms were 3.4 years and on renewals, 2.1, which seems low compared to where it has been historically. Just wanted to get some commentary on that.
Laura Clark : Yes, John, I can take that. Our weighted average lease term this year was a little bit shorter. It was driven by several shorter-term deals that were 12 months or less in term. And those were signed in advance of repositionings and redevelopments, giving us the ability to capture revenue while we’re positioning those for construction starts.
John Kim : So would you characterize that aberration or going forward or at least term is going to be shorter nature?
Laura Clark : Yes, I think it was really driven by — there were about 3 to 4 deals that had a larger impact on the weighted average lease during this quarter.
John Kim : Okay. And just one final one on the mark-to-market disclosure on Page 15. The 7% reduction from 63% to 56%, which you clarified. Going forward, the out years, the projections that you have are down 6% from last quarter. And I’m wondering why it’s not the full 7%, including the market rental change?
Laura Clark : I think it’s important as you think about the — first of all, the calculation there and can certainly have various rounding impacts. But I think it’s important to look the disclosure are a few comments there on the disclosure that we provide by year from a mark-to-market perspective. Because you’ll see that the change in mark-to-market has varied across years. And so that’s really driven by the pool of leases that’s included in any given year that’s constantly changing. That’s driven by the leasing activity that we’re doing, the acquisitions, the properties we’re moving to repositioning redevelopment. So just by way of example, if you have a lease that expired in the third quarter of ’23, and we executed a new lease, I’d say we executed a new lease at 100% leasing spread we captured that mark-to-market, and that NOI is now reflected in our cash flow.
