So again the word huge sounds a little bit of an overreaction to me.
Operator: And the next question comes from the line of Craig Mailman with Citi. Please proceed with your question.
Craig Mailman: Hey guys. Maybe coming at this from another way, and Hamid, I know you don’t like the word acute, but maybe this seems a little bit more preemptive, because if you guys are seeing a lot of the metrics in line with your budget, retention was kind of in line with where you guys have been the last couple of quarters. It feels like this is an anticipation of maybe slower takedowns that you’re seeing. I mean, is there anything else on the expiration side of the equation that you guys have a couple bigger known move outs now that are going to skew numbers? I’m just trying to get a sense of how much of this is actually what you’re seeing real time versus just giving yourself a little bit of cushion so that you don’t have to kind of readjust later in the year.
And also, just a question on development. How much of this kind of occupancy decline is just developments coming out a little bit less leased than maybe you had thought? A couple of months ago, we noticed your development margins were pretty — were single-digit this quarter. I don’t remember the last time I’ve seen that. And is that a reflection of this? Or is there something else going on as well?
Tim Arndt: Okay. Let me start that, and then I’ll turn it over to Chris and then to Dan to talk about development margins specifically. We like to be early and thoughtful in outlooks that we share with you, and we’ve always prided ourselves in doing that. And in some cases in the past, as you know, you’ve been following us for a long time, we’ve taken pretty bold statements on the way up and on the way down and actually been proven pretty right about it. So for us to be late on this stuff is not something that we look forward to. So we always try to be on the lookout for trends that may be interesting to our investors and to you, who are looking at our company on a real-time basis. So I’m not smart enough to assign percentages of how much of this is preemptive and how much of it is.
But I can tell you there’s nothing going on in the portfolio. There’s not some news embedded deep in our customer behavior or some market that we’re not sharing with you. This is just looking at the tone of the marketplace and sharing with you what we see playing out in the next two to three quarters, nothing beyond that. And the outlook for the long term is very much the same as it was before. Dan, do you want to talk about the margins?
Dan Letter: Yeah. The margins this quarter, it’s actually an isolated event here. We had about 15, 17 projects stabilized. We had one project that just had a confluence of events take place, whether it be weather, some infrastructure, municipal requirements. And it just came in at a pretty negative margin, weighing down the overall average margin for the quarter. If you pull that out, our margin for the quarter would actually be more reasonable 15%, 16%.
Operator: And the next question comes from the line of Camille Bonnel with Bank of America. Please proceed with your question.
Camille Bonnel: Hi. Hamid, you mentioned how the company likes to be early on calling things, but I noticed that you only updated your outlook on operations and guidance. So can you help us understand how conservative guidance levels are? Or could we see more downward revisions, for example, if you start to pull back on the capital deployment front? Thank you.
Hamid Moghadam: Well, on capital deployment specifically, you may remember that I’m always saying the only reason we provide guidance is because you ask us. We actually don’t have a budget or a plan for deploying capital. We look at every investment opportunity one at a time. So all our elements of our guidance. And this doesn’t go for just this period. It goes for any period. I would take that one with a grain of salt. We are not afraid to deploy a lot more or a lot less capital if the market conditions warrant it. With respect to conservatism, I would say, we call it as close to the pin as we can get it with a very slight bit of conservative. Not a lot, just a bit. So that, in the majority of the cases, we are pretty confident of what we are saying, but we are not 100% confident.
There could be downside beyond that. But I would say we try to call it as we see it and be careful that we don’t — we don’t want to disappoint 50% of the time, which is really calling it right on the pin. We’d like to be a little more conservative than that. Now, we don’t always get it right. So let’s admit that.
Tim Arndt: And Camille, it’s Tim, I might build on your first — the first part of your question as well, which is that at prevailing cap rates and the cost of debt and everything else, there’s very little you could actually do in deployment in the year to affect earnings in year one or two. I find that deployment changes tend to have kind of a push effect on earnings. So you should probably have that in your thinking as you watch our guidance.
Operator: And the next question comes from the line of Nikita Bely with JPMorgan. Please proceed with your question.
Nikita Bely: Good morning, guys. The $150 million of other real estate investments. Curious, what exactly was that on the sales? And maybe also, if you could talk about the reduction in development starts. So any color on that, geographic focus or spec or something else?
Hamid Moghadam: That’s basically — the $150 million is some non-core assets. And we could not hear the second part of your question. Could you repeat that?
Nikita Bely: Reduction in development starts for this year. Any additional information you could provide on what drove that, whether it was geographic based or asset specific or built-to-suit pullback?
