Douglas Emmett (DEI) 9 May 182018 Q1 Earnings call transcript

Company Profile

Participants

Stuart McElhinney	VP, IR
Jordan Kaplan	President and CEO
Kevin Crummy	CIO
Mona Gisler	CFO
Manny Korchman	Citi
John Guinee	Stifel
Alexander Goldfarb	Sandler O’Neill
Nick Yulico	UBS
Jed Reagan	Green Street Advisors
Laura Dickson	KeyBanc Capital Markets
Mitch Germain	JMP Securities
Rob Simone	Evercore ISI

Call transcript

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Operator

Welcome to Douglas Emmett’s Quarterly Earnings Call. Today’s call is being recorded. At this time, all participants are in a listen-only mode. After management’s prepared remarks, you will receive instructions for participating in the question-and-answer session. I will now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett.

Stuart McElhinney

you. Thank

webcast the Crummy, Jordan Gisler, for our This is on and our our replay today website call Kevin our XX CEO; CIO; being during call the us be days. Kaplan, are President CFO. and next Joining will from available live and Mona

earnings You our the Relations package can also section Investor at find of our website.

package. of non-GAAP today’s the earnings during financial call discussed reconciliations measures find can You in

are based During available of statements statements. call, These made will assumptions we to currently forward-looking the the make on by course this information of, beliefs forward-looking and us.

will by and control Our be actual trends, beyond ability risks, or and uncertainties results that our are affected known predict. unknown to factors

will that reasonable, expectations, Therefore, assumptions are incorrect. material. believe can guarantees our they actual we future of differences expected those our our to and from prove to differ results be not Although, be some may be and are future performance

more filings, consideration over website. question turn refer reach follow-up. some please detailed of one our question-and-answer potential When For be of yourself to call Investor limit now section others, and I please to the in portion, can the in Jordan. which the will risks, description Relations a SEC of we our one to found

Jordan Kaplan

foot Center have two-thirds including progress single pleased Warner Since almost Thank especially Studio Good leasing, buildings, of from that million XX,XXX impacting leasing including quarter quarter, including higher we in square resulted at We property. backfilling the for executing the tenant you than Center. morning, I’m foot had lease renewed everyone. decline at X.X square all-time expirations the occupancy an we January, feet us. in made joining Warner a this two end, our our high. usual downsize. an busy quarter good XXX,XXX Plaza of square leases leases, The downsize

is lease left have one feet that that submarket. over square We XXX,XXX only in

expirations across as through are XXXX up went entire the are the More we our lowest move lease of importantly, well-positioned XXXX. to since portfolio occupancy we end in public

in-place quarter up. years. discuss, other quarter FFO we healthy adding where in achieved Center. report our driven results NOI Warner our expected months with record have entry, growth. the high by strong X.X% in will rents during the in growth Center, roll Los financial confident property guidance in LA level very over increases Angeles property another Protected our Warner generated our leasing We grown rent jobs than setting of February. our As to in XX,XXX submarket by drivers issues first XX Stuart another their all-time Mona timing the same recent over this remain for we Same five average impacted in-place In every barriers ended submarkets remained last highest County, rent strong have year. the Demand year, quarter. in will to on by was cash rent

to breaking Kevin residential over leasing capital the Brentwood, new now rapidly in for achieved units and update. Moanalua, a for a at are We our the turn I’ll notable by milestone tower. new up ground we markets call

Kevin Crummy

good morning, Jordan, and Thanks, everyone.

ramp to opportunities and growth portfolio. our investments up continue We projects repositioning in with across major expansion internal

full are Our in two swing. projects multifamily development

residential units pro our with a tower As leased quarter of XXX-unit first continue Jordan we exceed of to we forma. XX-storey At new that mentioned, construction rents just with our Moanalua, the average commenced high-rise Brentwood. ended total in XXX

the our including that center this to a units, upgrade We year. the of around expect end existing and complete new fitness project, of

reposition begun higher also construction have We meaningfully office properties can we where four think to generate investment the rents.

within these complete projects to We year. expect a

additional pipeline the to continue in internal and opportunities. evaluate projects more investment several have We

a plenty dry of number and powder. potential pipeline our have of We in acquisitions

loan the properties now turn sheet and low loan will XXXX. Except with on our I next maturity that to Our is the our strong unencumbered over in years many leverage, four With near-term development, away remains Moanalua call balance for Stuart. limited term maturities.

Stuart McElhinney

million Thanks, a Kevin. Good X.X for feet. morning, everyone. Last quarter, square XXX office we of signed total leases

mentioned at with to tenant up. single leases roll quarters. our that two for our leasing cash and in straight-line rent help leasing which boost for included strong roll renewing spreads our XX.X% Jordan two recent those As XX.X% up were the spreads excluding Even up rent roll properties, consistent leases, the

of much in quarter. side, Honolulu vacancy multifamily property the the mentioned rate as to we improved we our XX.X% On the lease backfill last temporary

units. our headwinds continued of expect Moanalua and income our restricted at from previously community a recapture We ongoing construction

four leased submarkets Angeles quarter. last in over results. discuss X% last headwinds quarters, discussed Honolulu, I’ll now to we X% per in Over call the grown we the unit to and Mona our by Los by over turn rent have the our reflecting

Mona Gisler

Thanks, everyone. Stuart. Good morning,

$X.XX to We X.X% are our we $XX Compared XXXX, per FFO increased We quarter of by to increased increased a the with first ago or $XX pleased XX.X% to QX AFFO results. share. year and X.X%; million. million revenues

with would the leasing renewal during XX.X%. been of for leasing by leasing have Our $XX.X quarter grown in to exceptionally trend commissions the contributed the line Had two prior high million. commissions volume years, AFFO

settlements. property by NOI tenant increased the cash of X.X%, same recovery revenues, reimbursements, including from tenant Our and impacts expected timing lease

mentioned, for same confident Jordan NOI year. for property we this cash in remain As guidance our

of quarter only first well below Our group. X.X% that revenues, benchmark G&A our for was of the

guidance. Finally, to turning

per guidance for We FFO the year are to between $X.XX raising share. and $X.XX

more information package. in to our please assumptions the the our refer For on earnings guidance, schedule underlying

take of we our financing. guidance your impact not operator, future over or turn the usual, will acquisitions, As I dispositions now assume so call the questions. the does can to

Operator

first the go our Please begin comes Citi. now ahead. of Instructions] Korchman And from [Operator Manny will question question-and-answer We session.

Manny Korchman

everyone. Hey

our with market more was versus you trend? the in earnings put I a sort presentation do the versus vacancy sort guys out to versus was with So, last of caught slide others here has you And just what market’s eye over controlling a was your that you’ve there your that occupancy much occupancy permanent and package there that more in spread your how a showing narrowed has occupancy. night, had wondering of time. and the

Jordan Kaplan

it’s don’t permanent a think Well, trend. hope permanent a I it’s I trend. not

it’s that we those what buildings vacancy up. leasing is the square of I feet added recently being think in most we’re millions of market. the that working driven the through had of buildings by And fact

So, you can to as if number at with patterns keep look volumes -- we buildings it round vacancy, like to us how takes while out, how up. fight it you you’re of those buying see correlation there. that you sort our and see a little And going a back see

Manny Korchman

just those. buildings and capital same us your process. several if of are took pool go I as could remind much hoping putting you into you where you was then, that store you you’re how out that and And reposition in campaign

Jordan Kaplan

Sure.

this I’m took about four or starting projects pool. of -- not year, -- So, TIs we -- took year The buildings the capital going talking that this I not, we out into think, those occurring bit although regularly think Go the a any buildings, it’s $XX over ahead, stuff good things, big -- of the Manny. type I over $XX a the maintenance for million. million, a bit

Manny Korchman

Sorry.

there. up broke You

I So, you million... think said $XX

Jordan Kaplan

over in bit those $XX buildings. a it’s that we’re million putting So,

Manny Korchman

and can long process that is that where take? And how

Jordan Kaplan

mean, in projects some a know now if will going on calls because barriers are aggravated. Well will construction going and around be I of into year lot this year. to we’re you’re tenants; next flow our some like Wilshire, and crazy. we’re finished middle buildings a see We down of you they it, those drive getting up and of from

all good were seeing they coming; pictures was the in Before they what now, a mode, of are aggravated.

Operator

from of Please comes go ahead. Stifel. question next Guinee John Our

John Guinee

walls. you really about move talked you tenant Therefore, had how ago, focus. didn’t you Years of a lot demising small a

a of multi-floor floors and givebacks the full smaller, have the you talk XX,XXX to you gut or happens about didn’t to much spend have foot et TI have dollars in big what square sub cetera. Can lot tenants? you rehabs You for to relation how

Jordan Kaplan

don’t forma a part full over floor we start building we buildings lot last the were since expensive and were these It’s big Big a a pro and end move I out reason you flow bought, a quickly, down of we’re care going redo want like seen generate long-term, sometimes mean, whole demand big we’re building, go, feel we all look leasing. That’s a trajectory more. I it A when they big, years, in we of corridor you’ve a I of they mean, big. times, because put needing those not. back tenants lot could up. them and time. we And a floor -- space just buildings few even to so full lot tenants, the TIs or buildings lot these split I yes, space, ways. But our say, start prepared as break to smaller a on a full for for rolling smaller in make the over of TIs basis. these, flow of for cash as if because gains front immediately you’ll large the before, suites, time, cash are space, foot the -- big times, usually of and in our number; the lot number small where plan vacancy leasing that you’ve how real at number. you’re floors we’re but per buildings tenants a tenants we and many go number; and waiting new TIs More And small at are keep the the is, they for higher more heard TIs. all renewals through

on mentioned Center. that call, we Warner our it’s saw at You happening

going only getting be We’re of to we able out. that either or start or a tenant without down shrinking that’s now make big likes a one we huge sort tenants once losing dramatically but are tenant, the feet. large whatever to the the are and a conversion a through may it XXX,XXX Nobody of recession from every gains year portion had in through over moving torpedoed with side

much about So, is we expensive it good direction even to our those feel very more guys. though that portfolio, in roll

John Guinee

not of reset? able The capital mentioned four Does you California of you is, or $XX question assets capital. trigger of million out tax-free trigger are service, tax a level in set to a that next

Jordan Kaplan

because in it’s could taxes from if whatever That’s then building, the resets care. a reset or trigger building, What nice come taxes, would tax whether go, Prop a they That’s worse, doesn’t reassess. reset a footage It increase or of reposition. they you the we remodel don’t and on how XX. oh, square not larger they

Operator

of Please Sandler Goldfarb question O’Neill. Alexander next go comes ahead. from Our

Alexander Goldfarb

So, two questions.

utilities memory the about having provide expenses bit could a but pressure First, or you up maybe maybe more my pressure. and bit with? more at a growing understand don’t a same when it payroll an the feel XXX? store just oil issue now year, just make was you you seem guys oil with your Hawaii I going then, on issues be But I NOI but it’s color to on XXX, why be to recall payroll was guidance and especially bad, what’s this that color? when side recall better what’s could the on I utilities, going you overall, similar comfortable And just and provide on, them don’t wasn’t is little given so on

Jordan Kaplan

now, with right knew energy. here. was comfortable guidance same our as NOI feel we we sit on So, store coming We what

you you oil So, say say over that’s you’re same a store, price. so in prior when when so at XXX, comparison change when was periods, about so talking

So, for the gains would we through got out getting store. still next in stayed many last across many year, portfolio. was same of and it I happened of role for for energy play amount but XX we we at huge a oil instance, we the did What impacting used if actually the programs X.X% years years years, for we’re it, our XXX in got reduction think no

use type during in because run saw bit after generated energy reactor oil a generators, a we of that’s run-up turned time oil, accident type. then Hawaii Hawaii, oil prices, for same -- in happen out Japan they of to rare to Now, that in energy particularly type Japan, the oil, and special it their of this

made up a in were not and trying it. -- because a So, a that very a buy the it’s ramped it all of lot, to prices market for it’s and they sudden, narrow Hawaii there’s buying a lot they were not same oil

we of actually good kind at stabilized, energy for stabilized pretty things number costs. then, Now, a

costs running energy again. Now, up are

wouldn’t I are good, some and ago, -- that’s business. less So, to of look seeing we’re our went making But still instead they probably a they talking matter did if be It change. up it’s energy rates it. fact modifications down say say and XXX, paying talking to they’re a equipment the stayed now it. raising the running it passing we and capital overall, are starting that costs, XX, down bringing we’re you’re would just their costs change The stayed through in but went of those in talking why about and Hawaii, -- modifications time at the moving at then wouldn’t to the about all are also cost that’s for than us. is you would oh be we it;

able rise, the we’re been usage this our faster by to we’ve because not why being Now, been we’ve impacted reduced usage, but rose our and that’s it lowering we year than by been have impacted year. it last

Next year, it a go be down. it’d can plus. Therefore,

across wage. Now, pretty move of wage, there’s of in country California Angeles about the in is in predictable. there’s of there’s terms a terms minimum in move minimum the minimum even payroll, of county about move payroll stronger -- a a Los We and wage, kind stronger

up When moves point, and to and all those since our spot ourselves, a almost in the . that’s us we of are lot move above the impacting So, directly the certain we’re up, for move people fastest. on payroll to up minimum wage of wage do our minimum employ, a right people hottest services

see we have our for paid being you us us a of our don’t Those which people by it are by control netted revenue through vendor vendor So, number. or relationships. in

it. visibility, move. those seeing what know we costs so going there we and to is numbers do nothing And because are we visibility those can legislation it’s you’re -- But, have being statutory; don’t us, we know about the through pass good we how have mean, doesn’t is great that to it’s

we lot a year. So in of that’s our confidence going impact numbers to it’s how this have why

Alexander Goldfarb

Okay.

on is do same improve? the think that will utilities, So, you that

Jordan Kaplan

utilities, a over they’re I you know going that to feel better utilities. year. go our change saying could speculating reduce what ways feel could where any there A good think don’t be a and I then feel I again, go than down have are we remain but have we going improvement. to next utilities good for find could for feel have price year could that flat, are be net happen going a what? that. people and good where But you’re this lot an every if Oil to the utilization, down prices year oil do, to I just -- or with

Mona Gisler

in six in Hawaii, years. in PEC hike announced Alex, And the the first electricity

to us. but increase So that’s that’s we had that’s to, something visibility an going impacting be

Alexander Goldfarb

you second the then And Okay. Burbank, Warner Time there. question is, on re-leased

to So, that’s be obviously and seems fully now. buy for assets. hot leased dispositions a to market There people

You guys only have one asset in Burbank.

is is So, in? now asset you a there a to that grow that consideration or it’s that you can fully re-let, market think selling

Jordan Kaplan

Well, I a building made of of time. period it’s that money good think and we’ve it’s a a with long a building very over lot

and or it make sell So, in good to can when we look capacity is to the earning strong over at something, we want building that whether have haul. think, more -- flattened we out long its capacity earning its is

that’s a a real I not comfortable what we is to still have in and great feel with the very invested there. up. pleased and we’re to real properties there have good inclination trade key tenant Our property

Operator

next Our go Yulico of UBS. from Please Nick ahead. question comes

Nick Yulico

Thanks.

the could also then, So, time talk the to the a there. are going leasing leasing mark brokers just Center is and you’ve the driving of I there? know, get there? on at to you back to And think was And all the types just specifically? presence up tech how whether -- migrate some tenants spent of terms Warner more branding trying in of Center, I market up tech with, Warner about that

Jordan Kaplan

Nick. Hey,

there. Warner moved there of we We moved kind Brothers go chunk do space So, out a Warner seen have Center, nearby the kind of the , the Music not have several -- out a a few Warner companies took ago. out of years in Warner more folks there tenants in actually actually market big some Center of out mature moved to, go in tech to seen We’ve on Center, Facebook out market. there but entertainment or tech Center, the recently. the Warner Warner valley out,

as kind the went have as to of portfolio. our tenants as tech tenants Center see core we standard So, in out of Activision there well. migration we that out our well of seen group Warner

seeing your don’t up. break submarkets. out We And are roll the question we So, that. roll up between on second was then,

the clear growth I saying think, we’ve been in the that pretty occupancy rent in what Center given it’s their Warner been hasn’t side. been on there west

than expect be west you’d on the what So, we’re to side. more roll the muted there up getting

Nick Yulico

secondly on market acquisition LA. in just And then, the

there think is I Kevin, cited now? that’s Park to happened? do right of Business in think, trade Santa purchase size guys you Monica some What And LA actually much at looking available opportunities. you that about

Kevin Crummy

would million our $XX typical market. say, look, I $XXX outsized Business are The was transactions range. more Santa Park an to the So, of Monica type transaction million call, in for

And that this. that typically take lot as think And product some was things maybe but that to traditional of are owners competitive. strong transaction some that the And pricing strong would that should we’ve thing you had I range. in are it we’re large so, pricing, more very slowdown more as that’s pipeline The that the assets, wow, pretty a funny brings say in of on actually investment was very looking seeing advantage market at assets. a would activity, their

in things. our And so, busy pipeline the activity is is generating acquisitions and team more things the underwriting

Operator

comes go Street question Jed from Please ahead. next Green Reagan of Advisors. Our

Jed Reagan

you’re these or core And any last especially in seeing in kind just Hey, good question. seen pace of LA? LA guys. changes cap recently, just Maybe mean, growth to net the West morning, of I days? pricing curious your effective rates markets also have a you the follow-up rent west year-over-year in

Kevin Crummy

piece. on cap rate touch I’ll the Well,

secret people is a dropped a I supply New rate to constraints basis. cap of transaction mean, new here dramatically that volume last as no lot -- say City it’s Our there typically of to opposed price recognize market York where on doesn’t year. pretty

there of that product lot Six on wondering was new Avenue. a were recognized the everybody that So, was how going to Westside. We impact

the so, the up. has moved market by Jordan, and more pricing And a of to rate it’s you the pound about the rental growth. pound by want do talk

Jordan Kaplan

talking what’s back about looking actually because better if the same And effective, it we morning, of looking growth We Ken this not feel but number that rents, But, been thought effective, net fast, would making going like, ways, years. this year-to-year through grown little So, net with have you exact funny, effective. like quarter-to-quarter, the were never net almost I it’s going put has you’re a on back was I on subject. were effective, look a effective, spectacular, would to you if a prediction. have

going, like So, we were is think are trying where to the cetera. where things in market et about occupancy

We’re things going. about very where optimistic are

markets we a in role, out going mention it controlled gone a have our -- executive but -- the moving frictional some especially that the when XXXX, around And gives the in which the through company. optimism which good when good the been a But have looking where not very looking which has it chunk that, portfolio can look we’re in looking mentioned And at also look of at as moving a but we have have in out them period made from going we’re feel summary. of in -- this, wow, of through might make frictional for a end our might period opportunity been of loss into to a at time. or vacancy, done right, time retaining we of remarks call to been we’ve lot, seven a time Westside the good during kind prepared are rent, that We’ve tenants comes of we of only least we’ve of comes occupancy quarters a our which gains. them forward, lot in lot. saying, for job very you still We’ve kind for next, we moment a forward, been

Jed Reagan

guess rent sort And say the that just say Okay. kind you That’s in it of growth to I then, decelerated is generally, of fair -- helpful. recently? market, would

Jordan Kaplan

fair. it’s think I

rates face don’t were probably think this face rates decelerated a bit little -- we think I no. that’s why are conversation. I having net and decelerated,

of actually that think effectives the nets the face. or kind are catching I

on some face very move in there market, rents big very was market up rates, when drained net face and effective. So, high owners the we in a especially has this a between add spread maybe market, pushing of but effective when that but or been were

have owner a no Now, we’re post very big incentives rate. rate face in large the and we to effective versus market

the And back only emailing are and that upward and are two each right, so, look like getting we’re collapsing was that trend we we trend numbers see and if right. -- forth therefore, face but we and to information fortunately toward collapsing And rate. discussing Stuart not I other, think on are the really and and

Jed Reagan

And that’s concessions are… because

Jordan Kaplan

It’s a off former stuff like concessions, a TIs, it’s concessions time that of lot It’s was burning it’s from spread. that.

Operator

Our next question Craig KeyBanc Mailman comes Capital of Markets. from

Laura Dickson

Dickson with everyone. Craig. This Laura Hey, here is

ahead perused on So, year, you equity last issuing opportunities. any of thoughts delever. opportunities your here what some to Wondering acquisition are

Jordan Kaplan

of We’re came in big that issuers. is painful issued a or and we together the to enjoyed. circumstances year, history is took opportunity equity delever -- we The -- and special a company substantially general, our set very an it this is not all last the that that mean, trade cooperation I and recapture. not equity have took dilution we’re just said,

It We an well-positioned it have forward. that expensive opportunity from stuff. we done for have to stuff done debt could of a nothing. volume; was that of we do for lot a -- payoffs and going cheaply lot of be We the want come more

equity. general, And opportunity. took that that it’s In circumstances cause so, unique very to would would it be generally we -- issue pretty

general set our liquidity of a in capacity. cash platform. have we also lot flow of then, have relationships of robust a lot And and a in and have we sovereign We very

grade issuance we XX% in take, only through need we assets buy ourselves without can having XX%, large deals, to, very diluted of controlling So, the up of that equity. if and deal,

on well the list. that’s very -- it’s So,

Laura Dickson

competition multifamily rental LA, you’re portfolio, new Has And high your occupancy. supply or do moderate given you quarters? from -- pretty coming the running separately, rate moderated it’ll in at in expect then in growth and

Jordan Kaplan

that So, when or over years for rental X%, wild we’ve growth I X%, stunned numbers, running -- that the years we’ve five few been rate -- I moderate. mean, X%, six in years. for those it’s in it’s when year, talking how every even if don’t surprised every been okay, And five residential have But leases roll I office, -- roll been moving. is will you’re really I’ve last have about the it’s which been expected at felt. where

has moderated I back a but ago, a moderated about okay, then it four thought think to it going bit, I that maybe it and normal a whatever back quarters went to up. four, bit we’re case go and three,

So, predict. it’s hard to

Laura Dickson

regarding one quick one remind expected yields are us developments. multifamily just Can on what two? those you And the

Jordan Kaplan

times, -- for rate. seven cap above a we’re building be we’ll We’ve them said few a

Operator

next Germain comes from Our go JMP question Please of Securities. Mitch ahead.

Mitch Germain

market Maybe bidding that private you one now? of in against the for pockets Kevin. seeing maybe foreign you’re equity or Are capital, new any

Kevin Crummy

been bidding would just attracted that’s we’re I LA, say to That given against? more there’s that capital here. fundamentals the

in the starting are York now And some out tires and we so, New the Japanese and -- was kicking that it’s capital here. tires to seeing kick

that’s Google long-term lease the had group Japanese Playa And Vista bought year. last new. -- actually in So that they down something

worth guy can any assets we platform, But, is I anymore about So, worry on one follow-on competitive competitive high our out net more where for on focus come there’s else. don’t there. we market don’t competitor anybody -- source it’s we leverage capital can think to that the of foreign guy, that. market. a out than It’s I a think And top. REIT a that or the we the

Mitch Germain

me on those potential just expecting are could assets now, you projects? And right repositioning then, just four the you return kind undergoing what of if remind are that

Jordan Kaplan

buck, to for money. differentiates absurd, $XX because XXs which million, I repositioning think high, return put end something if to between million, colossal the about, a million that move the $X.XX are in you in now, mean, which building, And to -- and you are on you you [ph] extremely absolute we’re $XX or $XX XXX,XXX plus differentiates a in foot IRRs. Returns lot, rent -- creates if is even almost right that for markets, $X.XX you’re move a a low in only rents have $X.XX, it’s a are you’re that that market if up opportunity. can of differentiates buildings, between it’s you

everyone rate. And you’re it across on buildings in If markets. a rental flattens recession, rental is when on and bidding rate, out operating then everyone bidding is rents across

So, what to when in put you in money they’re in that’s revenue good doing per just see put gain foot people to people When a increase it lot they’re really repositioning to money in it rental don’t the see building doing. you a into They square rate. really we’re occupancy. repositioning gain a recession, market, and doing in the

Operator

Our from ISI. next question comes Rob Simone Evercore of Please go ahead.

Rob Simone

Hey, guys. question. for taking the Thanks

has already. had I been questions the of answered One

little bit increase developments your wondered you’re could as on to construction you if cost it guys relates that comment just I seeing. So,

pretty I ago, project the the guys believe. hearing development massive in budget took year-over-year, increases we quarters resi obviously cover. I sector up know obviously And much you your We’re every for two

according things wanted to of we should expectations kind recent I to there? trending what expect your or are if So, most just see

Jordan Kaplan

level, in quite generally a took that from that upward budgeting, and they’re time think, while relief stop we when I the to a we’re people supply the I terms was because And than that a come on in We on. but of of we’re in But out a confidence to on. of our we terms lot the that project. project in think coming Hawaii went impacts some get think buying, of definitely expected shenanigans of started. high through on change track getting more cost. I going lot the started, new cost not you’ll or to there returns it sure the markets, that, supply opinions of even and you’ll sort increasing of if really that cost terms don’t it’s took with I’m a construction actually and got gets have In happening construction enough what’s on definitely big of increases here, direction. when where you make we in of have coming And to all work. an are lot caused meaningful obviously, cost labor mean, the us

build, kind costs, whether to costs. a has your in of because do very construction kind market issue. construction can way usually than you So, when are of the are rents rents gating moving and we’re aren’t It supply the constrained with where more

Operator

Our next follow-up ahead. a Please Advisors. question Green Reagan Jed Street from of is go

Jed Reagan

Hey, guys.

question assets couple Just same out leaving you or follow-ups were One the at that occupancy quick guidance assets of guidance in the store those of would pool. the is, year, on all? pool this a store so same taken mean, if change I

Jordan Kaplan

answer is the stronger kind as a in, because number markets if as had we’re we I in rent a because that everything differentiations But, know. said, we than short rent lot of of the are -- doing be I lot lot would of of a suspect differentiation sit don’t today quickly. work could I Well, say there’s where I just rents moving

So, they’ve positive pretty been contributors.

Jed Reagan

Westwood if is this mostly And like and Brentwood Okay. I’m…

Jordan Kaplan

Yes. Westside lot a of stuff. It’s

Jed Reagan

to that with? I behind missed before sorry but of big that, how do this is mean pipeline identified, earlier, might you’ve be Okay. already you similar looking I’m And something assets if I the

Jordan Kaplan

portfolio, we’re of high opportunity where build that things types existing or a but a are change around three, fronts building such number additional kind on lot XX more two, Where rates of we very benefits that feel some do in the areas. the returns All if putting reposition we’re lobbies, we’re that capital number plus we the I or amenities in rental now because those high office, estimates our to owners that geographically for ground have doing on then, all growing we where and of what focus number are have get there’s area lot sites of opportunity or can large that in. the beyond think -- those the the near anywhere community is And reposition building. we’re in support way very to a and other adjustments, three penetration of development close, that areas our buildings and that, own; change have and maybe make of we on we or the parks fantastic grounds redevelopment the a get residential. the residential just can locations, already we of benefits, three which where one, the

We’re not at do real once. to everything quick

look from happened tenants to happened more where we’re this you go where back our located area buildings, -- neighboring because going have this comments getting rebuilt are go building. rents are the have what we where We’ve are service and expect. fast comes the we repositioning. we and this large we’re of we on tenants we Whatever So, wrong, how we in have year but we food there. what in can information the here, wanting We’ll there that rents trucks that the out if will to that be opportunity are we because launch field up building, in gather to that down park, right, in see way data change to Kind the happened rents area. have with we

Jed Reagan

that. appreciate on basis. Is a the year? year-over-year elevated obviously one, run-rate office. detailed Okay, just topic growth sort think to X% on was up rest little a of especially the multi-family expense And because on side X% the of Is earlier that to came for which about kind of expense for the X%, great. that last I apartment growth, X, X% then

Mona Gisler

timing I see expect that multifamily forward. that impacted some were issues to wouldn’t There going

scheduled balance So, some QX heavier and something impacted definitely were the of utility repairs than for services payroll and But the typical. we there year. the is anticipate that the other

Operator

over This closing remarks. our I any question-and-answer like to would the session. Kaplan for back Jordan conference turn concludes to

Jordan Kaplan

joining quarter. Well, a to in with thank for us speaking forward again everybody you we look and you

Operator

now today’s conference presentation. concluded. attending Thank for you has The

now You disconnect. may

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