Mark Langer: So I’ll take it in reverse order, Floris. Sunrise, we can’t say much other than we’re working our plan. We feel good about our plan. Things are moving forward, and we hope we’ll be able to say more pretty soon. Bruckner as you mentioned is an asset that as we spend a lot of time and energy on, we have the two boxes that haven’t — that are still unoccupied, one leased to Target and one vacant. We’ve announced some deals on the other vacant box and I think that’s moving forward. And we’re constantly in discussions with Target on that property. And then last but not least who’s to say that Jim did not crib that line from me. I’ll leave it at that.
Floris vanDijkum: That is true actually. You guys — you did overlap your time at Federal.
Mark Langer: That’s right.
Floris vanDijkum: Maybe a follow-up question, if I may. The expense recovery ratio at 83% or just under 84%, as your physical occupancy goes higher, presumably that number is going to rise. I know you talked a little bit about your peak occupancy in shop space at 91%, and how you might hit that by the end of this year, which obviously would be very encouraging. It’s another 200 plus basis points of upside. But if you can talk a little bit about what that means also for your recovery ratio, what was the peak recovery ratio for your expenses in the past?
Mark Langer: Yes. Let me peel that back in the different phases you asked for. So as you said, the recovery ratio, if you look at the last quarter, it was about 80%, it was 83% or almost 84% this quarter. And you’re right, as we look forward, I think most importantly and look at what we think physical occupancy is going to grow, we expect physical occupancy this year for us to grow 100 to 150 basis points. So as that physical occupancy gets that will get us to about 94.5%. I think exactly to your point what we see in our models is that the recovery ratio goes from that 83% in excess to 85%. And to your point, if you look way back when our occupancy overall was at those elevated levers, our recovery ratios got to the 88% almost to 90% level. So we are excited. Now that would mean the full S&O stabilization, so when you go out to 25% and beyond. But for this year, we see physical occupancy growing as I said about 100 to 150 basis points.
Floris vanDijkum: Thanks, Mark. That’s it for me.
Mark Langer: Yes.
Jeffrey Olson: Thank you, Floris.
Operator: And our next question comes from the line of Ronald Kamdem with Morgan Stanley. Please proceed with your question.
Ronald Kamdem: Hey, just two quick ones for me. The first is starting on the record, the target for record occupancy, maybe can you just dig a little bit deeper into that? What’s sort of driving the leasing sort of this time around? And is part of that the fact that maybe you’re also disposing or maybe some of the lower quality less leasable assets? Just trying to get a handle of how you’re getting there? Thanks.
Mark Langer: Look, I’ll let Jeff take it from here. But I think the driver going forward is the fact that we re-tenanted so many of our boxes over the last couple of years, spaces that were leased to Toys “R” Us and to Kmart to much, much better tenants, including grocers like ShopRite, including discounters like TJX and Marshalls. So now we’re seeing follow on leasing from as a result of having those stronger anchors come to play and it’s mostly happening within the shop space. Jeff?
Jeffrey Olson: Yes, good morning, Ron. Yes, first of all, the dispositions are not a factor. Everything we’ve sold has been 100% leased. One of the assets was dark and paying, but everything else was fully operating and 100% leased. So that’s not a component. But as Jeff said, the main component in our mind is just the byproduct of the anchor leasing. I’ll use Puerto Rico as an example. In Puerto Rico where we had vacant anchors on either side of our mall, we’ve been basically month-to-month with a lot of tenants on a temp basis. And now that those boxes are committed and being built out and in some cases already operating, we have the ability to go to those tenants and convert them to permanent leases or say we need you to get out because we have somebody else for the space.
So a big part of our push on the shop occupancy is that temp to perm movement in places like that. The rest of it is coming from market conditions and more people calling us for vacant space. And when you have three phone calls instead of one and you have more choices, you can be more selective in who you choose. You can find the right tenant for the center and you could push rents. If you look at our asset, our Morris Plains asset, Briarcliff Commons, I mean that’s a very good example where we opened Uncle Giuseppe’s a few years ago and there’s a lot more phone calls coming in to have a grocery anchor. And now we’re saying, well, do we really want this use? Maybe we want to wait for that use. It might take a month or two longer, but we’re getting really good demand.
Mark Langer: And Ron I’ll just add one data point to summarize what Jeff just said in terms of that follow-on benefit from anchors now bleeding to shops. Just from two years ago, our shop occupancy is up about 500 basis points. So I think that kind of demonstrates that follow-on effect.
Ronald Kamdem: Great. And then my second question was, you guys have had a lot of success sort of capital recycling, getting sort of selling out of lower cap rates, buying higher cap rates. And if you can just talk a little bit about I think you touched on dispositions already, but just on the acquisition side, going forward, how is that sort of pipeline trending, what are cap rates looking like?
Mark Langer: Look, we’re on the hunt every day. Cap rates have been relatively volatile just because interest rates have been pretty volatile, which by the way we love, we’d like to see more volatility because that can allow us to tie things up and then lock in when the rates are appropriate. So we’re actively searching for new property today and we believe we have a cost of capital that will allow us to transact.
Ronald Kamdem: Great. That’s it for me. Thanks so much.
Mark Langer: Great, thank you.
Operator: [Operator Instructions]. Our next question comes from the line of Paulina Rojas with Green Street. Please proceed with your question.
Paulina Rojas: Hello, good morning.
Mark Langer: Good morning.
Paulina Rojas: You have been active on the financing side. So taking advantage of what you have learned in that process, where would you say the spread is for financing of the different shopping center formats, neighborhood, community or larger power centers?
