David O’Reilly: Look, I would tell you that the governor statements and the media focus that has been on the is consistent with what our understanding was going into the acquisition. There’s no new information that’s come up over the past several months that changes our view. We had done our work. We had a great idea of how much water there was and how much water there wasn’t. I would tell you that given the continuation of the drought across the country, that this is an issue that continues to gain traction and momentum but one that we’ve been focused on since I’ve been at Howard Hughes because it’s been an issue in Nevada in the Las Vegas Valley. And we’ve seen what those efforts — the results of what great collaboration across developer city, state, local authorities and a focus on conservation can drive.
And we’re highly confident that we can see that same kind of outcome in Phoenix West Valley because we seen already great collaboration from the Mayor of Buckeye, from Governor Ducey from the Mayor in terms of driving great outcomes that are allowing those that want to live in Phoenix West Valley the opportunity to forward that affordable home that they can’t find in many other cities in this country.
Operator: The next question is from John Kim with BMO Capital Markets.
John Kim: On guidance, I was wondering if you could provide guidance on interest expense given your debt is largely fixed or swapped for most of this year.
David O’Reilly: So I think the guidance that we provided in terms of NOI, MPC EBT, condo profitability and G&A is about all we’re going to provide, which is what we’ve historically done. I think our interest calculation for the forward years are pretty straightforward. They’re on a line item by line item detailed basis within our supplemental. And I think most of our investors and analysts have an opportunity to get to a number that’s very close pretty easily.
John Kim: Okay. You do have a $650 million of swaps that expire this September. What’s your strategy as far as what you do upon exploration? And is this the only swap you have expiring this year?
Carlos Olea: Yes. John, this is Carlos. That is the largest swap that we have expiring this year, the only swap actually. And we’re already looking at alternatives right now for how we’re going to cover the risk for those cash flows when that swap expires.
John Kim: You mentioned also your capitalized interest policy in answer to another question. What are you expecting as far as capitalized interest in ’23?
David O’Reilly: Capitalized interest in ’23 will be largely dependent on how many new developments we start beyond what’s been announced today. I mean, those that have been announced today have assigned individual construction loans where we do capitalize interest into those buildings. Those are shown in the total cost of our expected spend in those buildings. So when we announce a new development project, we tell you what the total project cost is. And within that total project cost includes the capitalized interest that we expect to put into that asset over the development period. That’s a number that can change if new projects are added and continue to grow. But I think that the total capitalized interest for the development pipeline, strategic development segment is pretty straightforward.
John Kim: Okay. Moving to operating assets. David, I was curious on your comments on retaining office within your MPCs. And you have been outperforming the local markets, but reflective of market conditions, leases coming down, what’s going to be the catalyst for occupancy to pick up? And if you could provide any color on what leasing activity was in the fourth quarter versus the full year.
