Let’s say that, that lease had a 3-year lease term. That expiration is now reflected in our 2026 mark-to-market at the market rent and that resets the market mark-to-market to zero. So because of these constant changes within the pool across various years that are driven by a number of factors, you will see different impacts from a mark-to-market perspective.
John Kim : Got it. Okay. So this quarter, it just happened to be a 6% change per year. But going forward, that could change year-by-year.
Laura Clark : Yes. I mean this — if you look at this quarter, the mark-to-market change for ’24 and ’26 were actually closer to 1,200 basis points. And the factors that I just mentioned drove those changes.
Operator: Our next question comes from the line of Blaine Heck with Wells Fargo.
Blaine Heck : So you touched on this a little bit in prepared remarks, but you all continue to be active on the acquisition market with $400 million under contract. But you’re getting a little lower on forward equity at $450 million, you have capacity on the line, but the rate is much higher than it has been and your cost of equity has increased. So can you just talk a little bit more about how you’re thinking about the pace of additional acquisitions? And how much of that funding for future acquisitions could be driven by disposition proceeds?
Laura Clark : Hi, Blaine, thanks for joining us today. I’ll jump in here as well. As we’ve mentioned and it continues to be a significant focus is going to be on driving accretion and NAV growth through how we deploy capital. So when you think about capital deployment for Rexford, that includes our internal investments, so our repositioning and redevelopments that today are yielding very accretive yields at 6.4%. Our external investments, today, if you include the pipeline that you mentioned the $400 million, stabilized deals are 6.4%. So our investments today are accretive. They’re driving more accretion today than they did last year even at our higher cost of capital, and that’s driven by our higher initial and stabilized yields.
As we think about sources of capital going forward, we’re going to continue to assess debt and equity and dispositions and sources of capital in relation to the hurdle rates in which we’re solving to today as well as the embedded growth of those investments are going to contribute over the long-term for Rexford. In terms of dispositions, specifically, there will be another potential source of capital. We believe that there is a great opportunity to realize the value-creation efforts that we’ve executed on, and we can redeploy that in the higher-yielding assets and grow our overall net asset value. So today, we’re currently actively pursuing a number of dispositions in the market, and we’ll provide updates on those properties as they close.
Blaine Heck : Okay. Great. Just a follow-up on that. Can you talk about kind of the spread between the stabilized cap rates at which you think you can dispose of assets and the stabilized cap rates? Do you think you can use those funds to invest that?
Michael Frankel : Hi, Blaine, it’s Michael. No, I was just going to say that, suffice to say that the reason we’re disposing of such assets is because we believe they’d be highly accretive in our recycling capital. And so we’ll disclose those spreads when we close those disposition transactions. Otherwise, it’s kind of tough just to speculate.
Blaine Heck : Okay. Fair enough. And then lastly, I was hoping you could talk a little bit about the tenants that are creating the most demand across your portfolio today. And maybe you can touch on tenant size and industry?
