Jamie Feldman: Okay. All right. Thank you.
Jason Fox: Yeah. You’re welcome.
Operator: And our next question comes from the line of John Kim with BMO Capital Markets. Please proceed with your question.
John Kim: Thank you. Toni, in your prepared remarks, you mentioned the improved rent recapture with the exit of office. So does that mean that comprehensive income will more closely align with contractual rent increases? I think in the past you said there’s 100-basis-point leakage and I was wondering if that leakage improves.
Toni Sanzone: Yeah. I think that’s our expectation going forward. The 100 basis points is really over an extended period of time and I think maybe even with some line of sight to what’s coming in 2024, we do see that marginally improving. It certainly could go either way in any one quarter, just given the amount of leases we have rolling at any one time. But I think we do marginally expect some improvement from the 100-basis-point drag that we’ve seen against our contractual.
John Kim: Okay. And then can we clarify what the $2 billion of proceeds you expect are coming to you, because some of this might be timing related, but in the past you’ve said $465 million from U-Haul, you have the Office Sale Program at $643 million and then with NLOP and the equity forward, $735. I just wanted to make sure that was in that $2 billion and Lineage was not, and if there’s anything that I’m missing in that number.
Toni Sanzone: Yeah. I think U-Haul’s about $470 now and the Office Sale Program, we’re looking at a total of $800. I think what you classified there is what we see kind of in the current state closing before the end of the year. So we’ve got $800 there, the $470 from U-Haul, as well as kind of our normal course dispositions next year, which we said would be in the range of $100 million to $300 million, as well as some additional operating properties that could make up another $100 million. So those were the components there in addition to the equity that we settled, as well as the NLOP distribution that we just received.
Jason Fox: Yeah. And it does not include anything with Lineage.
John Kim: Okay. Thanks a lot.
Jason Fox: You are welcome.
Operator: And the next question comes from the line of Brad Heffern with RBC Capital Markets. Please proceed with your question.
Brad Heffern: Yeah. Thanks. Jason, you mentioned a number of large portfolio deals in the early stages. Does that represent a shift in the type of deal flow that you’ve been seeing? Is there any additional color you can give on what the composition of those portfolios is?
Jason Fox: Yeah. I don’t think it’s any different shift. These are sale-leasebacks. They’re generally with sponsored-back companies as they consider the best way to capitalize either their current portfolio companies or as they look at making new acquisitions and in some cases add-on acquisitions. So sale leasebacks of industrial companies and kind of varying degrees of size. But I don’t think it’s any different than we’ve seen. Maybe the difference is that there’s a little bit more of these in Europe right now that we’re seeing and Europe’s been pretty slow over the last 12 months to 18 months. There was kind of more adjusting that needed to happen to steeper rate increases there than there had been in the U.S. So maybe that’s kind of the new difference here.
Brad Heffern: Okay. Got it. And then, Toni, how are you guys treating the Vegas construction loan in the 2024 guidance?
Toni Sanzone: In the 2024 guidance, we’re just assuming we fund the total commitment there and it continues to earn based on its current rate at 6%.
Brad Heffern: Okay. Thank you.
Jason Fox: Yeah. And I think, Brad, importantly, and maybe this is what you’re highlighting, at some point in time, that loan would get repaid, and as Toni mentioned, that’s a 6% coupon. So that could be some more cheap capital that we get access to and can reinvest in higher yielding net lease. I think when we did that loan a couple of years ago 6%, was a fairly interesting rate relative to where we were investing in net lease, and obviously, that’s changed. That’s going to be some pretty cheap capital I’ll have access to over the next maybe year or two, if not sooner.
Brad Heffern: Great. Thanks.
Operator: And the next question comes from the line of Jim Kammert with Evercore. Please proceed with your question.
Jim Kammert: Thank you. Good morning. Toni, if I could, you were very helpful in talking about how the third quarter recovery is obviously a very small subset portfolio, but what historically has been really W. P. Carey’s typical 90% recovery, 95%? I’m just curious if you had any trend data there on the releasing.
Toni Sanzone: Yeah. Brooks, do you want to jump in on that? I know you have…
Brooks Gordon: Sure.
Toni Sanzone: … more of the details.
Brooks Gordon: Yeah. As you noted, any given quarter and especially one with not a lot of activity, can move around a little bit. But we really like to think about it on a trailing eight-quarter basis. And on that basis, for the last several years, we’ve been recovering about 100% of expiring rent in our leasing table, and importantly, the TIs and leasing commissions component of that, so the capital intensity is very, very low, around $2.50-ish per square foot expiring. So that’s kind of the world we’ve been in. We do expect post-office exit that our leasing outcomes in the long run will improve as well.
