Tom O’Hern: You’re right about that. I mean we announced the deals, the day we sign them, they go into occupancy. But in some cases, if you look at something like a Pinstripes or a Lifetime Fitness, it’s going to take close to a year to get it built out, and it doesn’t start hitting NOI until the build-out. So a lot of the stuff that we’re talking about today, like Arte Museum, we’re going to get the benefit of that in ’24 and ’25 as it relates to NOI growth, but not in ’23. So that big pipeline does bode well for the NOI growth as we look forward into ’24 and ’25.
Operator: Our next question comes from the line of Linda Tsai with Jefferies.
Linda Tsai: Sorry if I missed it, but did you outline bad debt expectations for ’23?
Scott Kingsmore: Yes. We spoke about that just briefly, Linda. We do not expect those to be significant at all. As a result, we just did not disclose the guidance. It wasn’t trying to be opaque or anything, but we just do not expect that to be significant. It’s a very, very small line item when you’re looking at a company that generates nearly $800 million of NOI.
Linda Tsai: And then what’s demand like right now from digitally native retailers? That’s something that you’ve talked a lot about in the past. Is that still kind of going on at the same level of velocity as you’ve seen in prior quarters?
Doug Healey: Linda, it’s Doug. I would say that the digitally native, the ones the retailers that are currently online that are starting to open bricks-and-mortar stores, that slowed compared to the last 2, 3, 4 years. But then you think about the brands that were born online that turned into bricks-and-mortar retailers, think about Warby Parker and think about Vuori and Allbirds. They were all born online, but now they’re just basically traditional retailer. They have as much business in their bricks and mortar than they do online. So the new ones are slowing, but the ones that are emerging are really picking up.
Linda Tsai: Just one last one. Are the luxury retailers turning their store opening plans back to Asia given the reopening? Or what are you seeing as it relates to domestic demand from the luxury retailers?
Tom O’Hern: Where that’s most relevant for us, Linda, is at Scottsdale Fashion Square. We had such great success to the luxury wing and the food and beverage that we added a couple of years ago that we’re converting the Nordstrom wing to luxury brands. And the demand has been very, very strong. So not a big sample size to speak to your question, but where we are looking to put in luxury brands, we’re having pretty strong demand. I don’t see it pulling back at all. Do you, Doug?
Doug Healey: No, not at all. It’s only going to get better.
Operator: Our next question comes from the line of Todd Thomas with KeyBanc Capital Markets.
Todd Thomas : Just a question about the same-store NOI growth forecast of 2% to 3%. As occupancy is expected to increase, which you indicated, and it appears rent growth is holding steady here, obviously, a lot of other factors, including the expenses and recovery income that you discussed, but can you just provide a little bit more detail around that build up to the 2% to 3%? And sort of, I guess, my question is, what’s kind of holding it back a little bit? You talked about the $62 million of incremental rent or I suppose, $55 million of NOI that is expected to come online. That’s pretty significant growth off your current base. So I’m just curious if you could talk about that a little bit and a little bit more detail around the 2% to 3%.
Scott Kingsmore: Sure, Todd. This is Scott. The biggest factor, I think we touched on it earlier, is downtime. As you take large space off the market, most of which is committed, some of which is not, you’ve got downtime, which impacts you. And as we took a step back as we were doing all of our detailed work, looking at our business plan for 2023, we realized that coincidentally or not, some of our better space and some of our higher rent-generating space in our New York assets were, in fact, spaces that where we’re taking offline. So that downtime certainly cuts against growth. You touched on the other component, obviously.
Tom O’Hern: It temporarily cuts against growth. It ultimately — so we talked about the $55 million of incremental pipeline. That doesn’t all hit in ’23. Significant percentage of that hits in ’24 and maybe some of it even in ’25. So as Scott is saying, as we take space offline, it’s a temporary hit to NOI to be picked up as we put the new tenants back in.
