Douglas Emmett (DEI) 2 Nov 182018 Q3 Earnings call transcript

Company Profile

Participants

Stuart McElhinney	Vice President of Investor Relations
Jordan Kaplan	President and Chief Executive Officer
Kevin Crummy	Chief Investment Officer
Mona Gisler	Chief Financial Officer
John Guinee	Stifel, Nicolaus & Company
Jamie Feldman	Bank of America Merrill Lynch
Nicholas Yulico	Scotiabank
Laura Dickson	KeyBanc Capital Markets
Emmanuel Korchman	Citigroup
Alexander Goldfarb	Sandler O'Neill + Partners, L.P.
Richard Anderson	Mizuho Securities
Steve Sakwa	Evercore ISI
David Rodgers	Robert W. Baird & Co.
Mitchell Germain	JMP Securities

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by. And 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. turn over like Mr. now would the to conference I for of Stuart President Relations Douglas McElhinney, Vice Investor Emmett. ahead go Please with your presentation.

Stuart McElhinney

Thank you.

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

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

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

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

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

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

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

Jordan Kaplan

grew another Good cash morning, we everyone. X%, XX%, quarter by for strong very report by Emmett. Thank us. Douglas to NOI to joining and you year, revenue for FFO pleased X.X%. Compared last I'm same-property by

we office the in robust point XX occupancy in Los from Angeles. quarter. of a Overall, economic basis to benefit Our year in first the half continue trends leasing our drove this increase success

still see County XX and jobs meaningful supply submarkets. did last months, new added XX,XXX the our in During not any LA we

and coming we demand a a healthy of range a with from wide industries. leasing pipeline As result, have

up strong. remain cash rent Our very straight-line roll and

very unique Our leasing commissions, kept CapEx TIs, our platform recurring and low. has operating G&A,

NOI our are our and better of for XX% same-property turnover we represent NOI for XX% Considering lease guidance costs our versus fact, our raising an benchmark XXXX only of fundamentals, In our expected FFO. cash group. average than

excited prospects. LAs very long-term Looking dynamic ahead, healthy our fundamentals driving roll-up. rent I am are growth about

acquisitions We are in markets. positioned more for successful our uniquely

delivery through Angeles units midway residential in are Los XXX and of new We Hawaii.

over is current swing a over now our future months, repositioning $XXX within I'll importance, program full repositioning in and existing complete call portfolio. projects next opportunities additional we our we Of Kevin. few pipeline. Our of development in the million to to the number have expect equal the and turn for

Kevin Crummy

morning, good Jordan, and everyone. Thanks,

development with to continue make are projects. good We XXX two our we building residential unit tower. progress multifamily XX-story, In a Brentwood,

the remain west We The residential of on for than in XXXX more scheduled four completion. tower first XX budget five freeway is on and years. or

pro creating park are office local properties and that our Honolulu, the these above the development, As we privately Brentwood, delivery residential leased through XXX than of of will benefit all owned in of also ended new are residential community. we as We as units. public units part average forma. of which at the XXX quarter new first the In our nearby halfway more with rents well

expect fitness new by the pool as year-end. We remaining complete and well the to center units as

increase a capital will As are targeting number quarters, us mentioned investments properties that allow believe we making rent. where we've recent in significantly our in we of existing to

repositioning first next projects expect quarter. complete to of these We the

within evaluate we attractive opportunities our to additional can investment continue We generate returns. where portfolio

in on of sheet the low with strong project X.X loan the our and loan term leverage is exception XXXX. Our balance our approximately next in away development our Moanalua, is maturity remains years

flexibility of call With turn over now to properties that the number We for also Stuart. financings. provide have will future that, unencumbered large a I

Stuart McElhinney

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

the Over roll by straight-line trend and portfolio X%. rent annualized our we cash XX.X% continued square That foot average up months, and up. have office XX.X% the we about rent achieved per roll increased in last XX QX as

rate increases in nice the ended Sherman quarter Westwood. at XX.X% Oaks/Encino lease Our with and

remaining the than totaled recent well was leased. expirations portfolio, next our averages. below of XX% Our our lease quarters again our fully over four quarter-end, portfolio historical At less residential

Moanalua year, the for rent total by appeal we reflecting Over of annualized units the rent past our from X.X%, the developed portfolio. the growth multifamily rest have at portfolio our and the continued newly of increased

we few we units over the continue discuss deliver XXX I'll expect Mona new the quarter, to During turn lease another to where now call to next our Moanalua months. over to development, the results. at units the

Mona Gisler

in morning, increased XX.X% to Thanks, $XX.X a year-ago, we We $X.XX by X%. Good XX.X% quarter $XXX.X share. revenues the million by We increased everyone. Compared increased or XXXX, to to third AFFO per FFO by Stuart. million.

office Our NOI With and multifamily of million revenue our same-property portfolios. from by our quarter by NOI, strong GAAP our respect to based declined about cash $X growth increased XXXX. to compared both non-cash second revenue X.X% the on

future revenue Excluding an to acquisitions, we at expect the non-cash of decline impact accelerated pace.

our will third would cost rule the XXXX, that was well but REITs it only quarter of external X.X% cost, of revenues, been leasing our in are XXXX. by FFO, metrics leasing to of this but reduced of benchmark internal expense in Has accounting about change have place Most below the cash not certain $X.XX. in for starting G&A not aware require you that group. Our

Regardless leasing we benefits. internal peers. of provides costs have change, significant continue Our this accounting will to a leasing lower our platform and

guidance. Finally, turning to

$X.XX range guidance per are X% NOI share. between for and between we mentioned, growth and Jordan cash As FFO and our $X.XX to X% to for same-property increasing

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

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

Operator

ahead. be today Stifel. Guinee the questioner go now And you. And Thank with we will begin John will Please Instructions] session. [Operator first question-and-answer our

John Guinee

little what cost Brentwood you to value sort assuming Hawaii yield as the Great. Thank full more of think might give you. for market a land? development have guidance you in Can what the units XXX the is Very, on and on you very strong fair budget and a quarter. out then

Jordan Kaplan

Yes.

Moanalua, $XXX about total between cost million million. million for $XXX Brentwood, and the $XXX and So

John Guinee

for you What do think… zero the land. That

Jordan Kaplan

zero for the Yes, that land.

remember very brought was property we the support what these with projects So they the them more decade investment a we than bought been and just on – and built property. and have ago themselves good

you build today, have make we've that seven a everybody, because of on land. include sit which way to estimates, we'll but we does correct, rate sort we above said excess not of what to we the But it that, for sites. is which off some to, as land So, alluding you're cap is those just parse trying never can this and of that certainly is cost course

project will metrics. them these still those rate And usual. told be would very, above been as But successful finish so that maybe cap out have a make that to an And very cap expect we've very that It projects to turned you, if I added we rate that's to would it for. land successful. than say well easier a in, you seven it's and statement change that –

John Guinee

you lease or cash $X. inevitably is and a two XX% cost last maintain a spread three your Can of that around to releasing that spread about foot year, GAAP years, on the shade per and going over question, slow? under you've or per Second averaged XX% square

Jordan Kaplan

driven occupancy be They're that mean, York, room. should moving market is that Well, in, to angle it compared just just fundamentals – because growing for and I line of and the seems it's you cost the of just be to and don't pretty other this years strong. at on our so cetera, supply than of and high. it's of the continuing seems here be lack that up the et going angle for what's of rents still higher the of it like and that amount that seems impressive part. other New terms But of the submarkets if see most just the relative I tenants of numbers up running look reason. had in have of to line it cash it we're lot it by in San are we've mean amount roll tenants and I whether still a have any they're markets Francisco,

John Guinee

right. Thank Great, you. all

Jordan Kaplan

Thanks.

Operator

Please the today will questioner ahead. next Lynch. Jamie And go be Merrill Feldman Bank of America with

Jamie Feldman

thank you. Great,

some So some you lease are basis? Can in the had or percent just talk spaces of go backfill the dark did that the changes you moves some that, of the of the meaningful of percent lease your on some had that lower and prospects submarkets. some and then did about, some

Jordan Kaplan

those of backfill in They're very of to are we a think very we full Sure. strongest Monica, and those our really move tenants out. of markets about least Thankfully good Center couple core spaces both referring we're Jamie, prospects had quickly. those our City to and I feeling some still highly few markets. Santa a

Jamie Feldman

large how leases? the And are

Jordan Kaplan

force Full XX,XXX feet. typically us about for

have force in average We in City, larger another move Monica. Center ground the Santa tenant full than out two

Jamie Feldman

to how compared those do Okay. rents And market?

Jordan Kaplan

see I up on roll think good in spaces. a we're to nice position those

Jamie Feldman

and generally, effective outlook can Okay, then the on maybe just and do just you net if in that? rent thoughts growth across of markets kind

Jordan Kaplan

a has working as been there we’re west growth be net outperforming the will Well, very it Woodland slower, in But some, done up in with that that would a we're with Hawaii needs hope know, the what but Hawaii you but we very a other and the in across of market It's really getting still to say effective to were there We're would and one in happy been and redeveloping growth we're there. us impactful markets. be little Sherman into markets not looking going – XXX% obviously make Woodland in make Oaks. area the through real growing slowest, strong the rent process I in trying to we buildings the side strong Hills have happily Hills happen, end yet.

Jamie Feldman

Westwood? and Including Brentwood

Jordan Kaplan

Definitely.

Jamie Feldman

Thank all Okay, right. you.

Operator

And our questioner be Nicky Yulico next ahead. today go Scotiabank. with Please will

Nicholas Yulico

thanks. Okay,

the increase? kind same-store this we get trend question year, expenses, preview also NOI how next growth you're And of maybe on thinking drag expenses for then year? guidance how First a what your is, might about it's been drove

Mona Gisler

Nick. Hi,

same-store three So cash we're the NOI, I quarters mean in.

sense. year whole, been Like about through about QX for payroll that and continued the good areas to and far talk we an to year as X% single go, any two provided we at so guidance. And guidance year rate we've look at looking we as said quarter, expenses and X% the this ahead we’re the look we've X% the don't for have then to make range that but feeling comfortable far the felt want looking to full-year that in earlier, increase to X% as at a utilities. major expense the So and run that our

last moves get ahead in wage to some Los made we increases side, year try payroll mandated the minimum On Angeles. of the to

So addressed comparable think we low and kind year, forward we've you – a unemployment. and market year comparison that that this going a of should last that with it's between good a obviously better see and

market mandated increases, those So point. we'll have in terms we think at addressed see to but that just the this pressures what we've of are, that

We're happens something side, we'll in got and to On into that factors it's the happy being on something with for utilization we that to some put continue said, and we're ways And one. try that that with look to we've rates past eye place. on. talked to what But sustainability as you an forward our and our keeping the that's as the pretty minimize lower great and been drive our going to and sustainability regards our going see utility summer/fall. improve We've But have as weird that's about keep and to in well. mine to and good waiting that. are a we on expense warm so put up is to the forward quarter-over-quarter continue going going coat that utilities. measures a put I it's utilization to really

So one. see to we’re and that going to on have wait

Nicholas Yulico

good. Okay. Yes, it sounds

Jordan Kaplan

in those question back the Nick keep guys fundamental. and last in the going getting By we it just by mean you just same-store way I quarter-after-quarter roll-up expected stronger-and-stronger the in that numbers, your driven answered which fundamentals stronger see than roll-up, it's sustaining. – but

Nicholas Yulico

Prop of thoughts acquisitions or Right? decision you're And mentioned couple your opportunity. does decision does years that are a on affect that even on for like Jordan, any positive potential your role on you acquisition what how your make and How affect Prop making there? the you you the XX, latest portfolio making sound on split thinking and XX

Jordan Kaplan

make you very cut for never it I much strong thing popular. any people, Well, in pulling anyway split doesn't week as and And changes, a spilt it the people, changes of mean is a in business XX, modifying doing at polling it general, it. terms all to Prop complicated this any relatively poles to for of do even role been role, it. XX that It's young Prop low old being poles probability people, rest including law at there's and very matter. and It appetite I

tax saying – State We've We similar under we in other impact we're think around XX of the in worth growth property in I think have property it's very taxes property its as of about and XX Prop California. – that terms had of property states actually had have in for on actually, revenue terms taxes. many and very or somewhere general XX I

because and balanced a have we're in this over convex income a actually very state that's number. in certain not We're on high state added tax tax very low with X amount income personal budget it's a a So that we excess front. also with state with a like

there be I'm pretty any changes that. So optimistic that won't to

that Now, for would at specific number. question whatever asked would the bought happened if of the the Regardless of with time go it to some or is be whatever building most of you you you Prop at me approximation valued buying XX that it very buy a what you happens about buildings.

the So a rate. to of because XX when buying they're about the building pay get whole going the in only tax way value current it thing that is But wouldn't resets buildings Prop the transfer. there's anyone

only year. it X% a up property, at the hold you If moves

that's that's be by it forma puts the pro buildings, included because purchase. impacted they're they're taxes property stop everybody, it So when full it about everybody what buying going buying wouldn't to after

where full it. we're seen So impact selling to the analysis just never a it taxes, of cleaned value but was property wouldn't anything at impact I've buildings where they someone building all. going thought

Nicholas Yulico

that market within property ahead you've you more there some I buy taxes taxes guess are that if have sense, for point that portfolio it your low already Does assets risks was the my and make that? property because are up. going while of owned some a in your

Jordan Kaplan

I the more bullish on market think buy because it makes to market. the in I'm sense

can very number, that mixed you basis a goes can portfolio you're because only on down down, is that they you our when remember, – can have then have existing tax because X higher go market you you could think in the We raise tax file then a when property Prop it it again down, number. but still it by higher quickly property capped

deals, terms we think actually numbers even hope for understands reasons but of because no that was those impact that, you buying split sold if familiar value. their would any values, said, price fundamentals be more make there role, it you that quite doesn't buying of have have if anybody seller recently around would that are guys XX, lower, the to for So make because you No are move guaranteed a bit. or with. a are But on building. Prop – I in it our and going on were of We you to bullish But general even impact in building buildings? for all if

Nicholas Yulico

All right. you. Thank

Operator

And the will with Markets. ahead. next Mailman Craig questioner Please KeyBanc be today Capital go

Laura Dickson

everyone. This Dickson with Hey Laura is Craig. here

Jordan Kaplan

Hi Laura.

Laura Dickson

afternoon. Good

on detail complete us you was you mentioned expect remaining the projects assets if in big associated spend currently? could give to several how the of wondering which some So you I then repositioning just is and of XQ. that pool your assets

Jordan Kaplan

amount in cases to than and more $X projects. So been $XX a million even million we've on in very anywhere $XX at the million working We’ve are been the the a we on, in look of spending terms that some spending impact you we a buildings can to repositioning from the rate. small size it that’s little feel rental when And have relative of building.

enormous. So the returns on these are things

the all that's news. So good very

news Now it's to the is very building. bad the disruptive

process that that and told that much take million. You out buildings the and up right already now, the we time so many put we're in rolling to you then total start We've that in. of good so will buildings quarter of think as of beginning months, we through wholly-owned them purchased you a quarter, we're capital next more process at end about to don't do and we have JVs want on in only in we and as too $XXX combination that wholly-owned it of can a that rolling process. few now strong and that, a ones to chunk out over And JV next wall this the rolls And forward. both we pipeline very

also At for work it. just say doing chance we're And up so ground to completion projects. you looking give we question, other the to want roll at because at same for what on sites And doing preparatory me looking work time, the we're asked in. the development. We're the also a those

we various ground at development have So up stages now.

completed units. being haven't in We first XXX Hawaii for those

think ground of fronts, starting thing out of be the we're market. advantage entitlements to take rolling. the ground, coming best, we other We’re able because the we most I to both to have out through in about exciting the which our position program we now in have that it's to clearly what work this Brentwood. coming of opportunity really have where is have But sites we in up the keep And

of strong in front but away but per And anything those to all to the I rest. say for on appealing would opportunities. do most of the rolls repositioning think great out carry feel I'm On side, earnings, real especially up the I and of we They're will a That's mean, work about front extremely opportunities they're construction, slower. on – the awhile. take source not trying in ground not markets that come the terms buildings and from the of revenue public good those a of that. we acquisition necessarily basis and time, because growth share our the long-term, over the we

about programs. excited I'm those So

Laura Dickson

just remind ground the up you Can multifamily? that development? primarily Is

Jordan Kaplan

It’s all multifamily.

Laura Dickson

yes. multifamily, All

Appreciate color. Century of on Santa in backfill City then to kind the leases? outs downtime question Okay. for And move are expecting Jamie’s and just Monica, what regarding follow-up to those you

Kevin Crummy

spaces, not I know and we They've strong will there. historically backfills, us. Santa any timeline a City. the mean quickly. And about we're at look so out Laura, of say, think good about performers for And of to we're Monica been prospects There's activity in very IT’S I feeling those Century I – I do but kind tenants have lot giving that

Laura Dickson

Okay, great. Thank you.

Jordan Kaplan

Thanks.

Operator

be And next will go with Please questioner today the Manny ahead. Korchman Citi.

Emmanuel Korchman

been to you Thanks, just that confidence spaces tenants, beat is? assumed timeframe I get everyone. timeframe there dead and given in that that Stuart, try there a done a confidence Do to tour out. in the have want you wouldn't lock in just activity? more advance that but reason anyway. large have they not knew horse, Was you do tell what us and you moving were the don't couldn't yourself they're have they or I'll Those

Stuart McElhinney

I'm question. not I sure answered the

Jordan Kaplan

confident that. know answer to wants He you your are in how

very those a pipeline spaces. in of interest good have We

doesn't take Now time.

You back tendency level rent. those got but paces, predict, to get the a about confident. tougher being with leases of solid extremely confidents paying is done good asking and you're to they're before little answer space build That's if

Emmanuel Korchman

like a there your X,XXX it’s X,XXX. size meeting Is Bilerman square and average it's feet Michael tenant way, speaking is

the XX Is you was assume little piece. space, So said any more you I us XX,XXX coming of two it's So where a much tendency? color X,XXX are relative big so doing tenant leases more there with larger a bit because smaller do like that tenant that have like that bit you I way can little our I a that negotiating really larger of those time a with that's questions the space from. and because guess leases one you're other guess a all give a the to from window

Jordan Kaplan

slower smaller to Well, and then are larger definitely leases ones. done get

I'm how signed to I we're have a rent. interests especially to the need for mean business predict in. be, case, not but completely They'll we you will paying single interest sometimes of like in will the sure be still that And be I this think we in the they multiple space lot quickly choose a up. that, leases. in not do we spaces, because that doing of break lease tenant on

Emmanuel Korchman

behind I those markup? the larger guess be to there of significant these but to only spaces decline X,XXX why a the leases lot Is in CapEx tenant needs about leave. which lease, foot on it? decided did talking story occupancy, Well, in the talk we larger, wouldn't we're put so a is leases, to What think rare the is going right? why be to because what's typically the very it which your about X,XXX and cause call with square asking about We're you

Jordan Kaplan

tenants I don’t like I mostly think that’s are – XX,XXX think rare…

Emmanuel Korchman

tenant… about talking per XX,XXX Are you

Jordan Kaplan

Yes.

Emmanuel Korchman

time. have We a like for all role that tenants market… not that It's uncommon the

Jordan Kaplan

X,XXX, predict Yes, up had interest some way, dealing where therefore and and you always, with I it's lot prediction you're space. of give what's that flow of a they're the those have you're kind have have not we so to want around going guidance chunky can that don't of don't case, you marking get an we correct. But are if you leasing, when on little there deal give is, we don’t X,XXX, but we by other not I a them they – can we you're it. end. got and moving lot for guys I got you then have a built a like good tenants rare make think Is to out. only timing a the really that more and good either what from pop think asking a I tenants We've much if putting those guys I pipeline but notice a say of don't those that business as of we much That's guys them. just guidance, don't

Stuart McElhinney

above it's nature XX%, we today once little while without sitting And confident why markets operating XX%. XX% is ones level we the Monica fall, of than I we at consider has Michael more with tell now. we're, full. we're we're it. a for basically that you very backfill portfolio have what these in for a These that going long spaces. that time mean But chose through to what are in we you'll And with while Santa been and that's have, us take tenants our look, having a – small

Jordan Kaplan

If you’re going to market it. have a this space, is great to have

Emmanuel Korchman

I Yes, five only your feet. X% look, than leases XX,XXX mean or I know, out it's X,XXX of square only greater

Okay.

bit right? where why, So more just I that's question or you of acquisition not if a XX% an That's we're a focused a on overall south of so sort little it, and the the that. true, you butter quick investment bread have the little want and anyway, bit for leases other know Kevin, from perspective? market of don't to talk pipeline about But

Kevin Crummy

mean of pipeline reverted frankly a the slower. in everything is We're back era still to and little acquisition I underwriting pretty out come market. We're that a the are yet. the out and EOP where the it's on that we there's offered it's – in about that couple normalized of things business. So environment buildings haven't we're over fewer are being excited

not of said, the fit growth Jordan they're definitely our and the just portfolio maintain on But chase the strategy redevelopment that launch to because part acquisitions after for assets going going properties the forward. As we're development doing we're our discipline and and of a lot market. are but

Emmanuel Korchman

Okay. Great. Thank you.

Operator

Please Sandler O'Neill. with ahead. are Alex next Goldfarb Our go will be today

Alexander Goldfarb

next a the calls model option with traditional questions, fixed the swap than doing traditional competitive I that the a as with five-year that in XX-year of or side out banks, versus sharp just is backup something traditional rate far think you Good floater I in is with curious five-year mortgage seven-year August next the interest Two Hey. financing? of on – a the a first, XXXX. some economics seven get going refine floater you there. have million Have still your just But straight missed from change this. in $XXX your of your fixed Unless seven-year swap. of rates, morning or up more get

Jordan Kaplan

call That's What do actually I type Well, personal. me. we've way that of know XX the how someone our like always to we focused a that love on you great. the feel to be we our financing. thing. taken or well say that it's I region years to liked – and

financing, we first of on or I optionality being making for that that pay you of the the alone But interest have recognized when the of optionality general of real rates a do able think people long-term lack kind of never So all undervalue we've just direction bet fixed big – been estate loan. off in to the you optionality interest rate, is of or a rates. on have

or sideways structure So and I've fixed and line because optionality the we loans I and going rarely think can maintain the wondering the the the down saying, So lenders that down borrower get you we the whatever. wasn't It's Hey, I is or from longest go where having that's stuff. or this? we somewhere seen big I'm reason rate, loans not interest did lockouts still to go rates swapping up way the long-term why do do are not through because

maintenance rates up, appeal floaters trying fixed than So street, go if is up, off. way rates tell to et low yield when a big and a we're that plus a still rate allow to important. that's I we do can't right? not go me swap push point why years. Cetera, seven that Even low If do to rates very swap down, charged when go they're pay So where To down loan is go them it to does why has you. and longer you get ones two rate banks, in, they is the if and charged you I Rates the it I it the do they're point. And swap value. though those a

even not that's an handed So trade. right

the leaned the in direction of we've that's swaps the seven-year So deals. why and, always

Alexander Goldfarb

Okay.

of it change to do correct? rate the are reasons like that doesn't relevant your for is the way So is sort it matter what the not these part, is on that as a economics, and this the you would happen view economics

Jordan Kaplan

if But Well, we're part the I correct we're relative. curve. in take aren't economics the real swapping to got to at are the I going many in. they our go just rates are look that of that fits out I think various rates do on we what those swap like caught try financing mean up, where that market's were the rates and general, down, all going like. we operation I'm wouldn't large cause. that are the direction start and laid company they fits figured what steep years, went it's at you what it's as already buildings like Because say positions to the not, always people Because and better I of terms. interest structure that we to mean, with out with looks over with not financing. I not the what for XX curve to and last the

Alexander Goldfarb

South and to down office to then Okay. some the there. question. the executives of deal some are set, second there question opportunity chatter back LAX, of LA There's of, to sort the attracting sort along And the of is, that cross they want been want above that LAX don't down about markets pipeline going the Bilerman’s beach

the something So may think your share. high and the don't that Brentwood, because you would submarkets one qualities it if look a think to opportunities executives proximity is do you share down there on with that that's Monica, take end then those Santa cetera guys at office two, curious fit year or you that valid, et that

Jordan Kaplan

the And Well, a There their when cities stop. from are That’s executive you finish South community. in Bay. are beach and USC, very of a they first the the UCLA large right. kids lot is

those the and diversity Bay of down there. very there's labor South you'd markets are to lot good a be. But pool So within where want

constraints. so corporate owner. it's if very lot of asking not XXXth to make be when We Segundo, And That's that so, towards area in that sense, of don’t entitlements And we you're of large you lot an although dominated by a want Manhattan El there's would up lot a Rosecrans The and then ownership be is has probably Torrance? supply it’s no. a answer one Beach. to want get near and could Street in

be tracking with market quite we're but into So that it's it's but that not that where we yet. something track, ready to we an market it's definitely potentially, we're would [indiscernible] would and opportunity go someday a something there that

along, came evaluate. something opportunity it'd right be definitely we'd the Although,

Alexander Goldfarb

Okay. Thank you.

Operator

the Mizuho next Rich will ahead. be today questioner go Anderson with And Securities. Please

Richard Anderson

morning. Good Thanks.

Where company. So sort has sort With come whether the leverage down initiative I of that the the at – type had in perhaps activity, you meant in to debt-to-EBITDA to wasn't you comfortable metric a of sort meant know developments as couple if that leverage buying mind, years? some your are to past or by were over of looking over use mind, a years. signal assets. up of Jordan, it few of be you redevelopment the thesis, the you next sudden deleveraging it bringing as not,

Jordan Kaplan

X.X. Debt-to-EBITDA now is

wouldn't the at and put properties want our As the everywhere it that. past, we’re risk, I at flared out of then we company at the like bunch don’t we properties any risk we in to looked put stuff more financing and look I've said at that financing.

lot flow. have cash of a excess We

it the lower to been in And roll this mean up. apartments our combination was flow herculean those growing in a flow markets keep flow mentioned to we're improve, all and things coming here our but think anything tightening cash know growing. we're running and you just cash up can't we've turnover. coming our repositionings of core we more year telling maybe They're that our the I those now. as a I'm – been not flows then it and I seeing for And you fruition all pace. been position has the of a at all fortunate and just more on has that's and continue things, programs as that we've as cash had in, flow, early was our but as used cash dividend, cost see of saying the every numbers, cash As beyond even we out. years our I'm and building call, role lot real

on we say appropriately then the or that do cash we're doing the have and doing revenue. When you we there's you construction like move you lot that it, that leveraged the costs because feel building's when building built and construction those it can repositioning a So something done supports flow. they're would and whatever, to a you little bit there's projects. then do when revenue that with short-term Certainly all

of an that's kind at it. So looking up and when down you're

I So our leverage levels. wouldn't at say that we're changing looking really

to others enough together maybe working that with. bring as system be those together large partners the large be some said some thing, would is we’ve the past, we've to JV enough of in we And on, the and if anything deals. trying Kevin same that actually I those Now, that meaningful in been working would or to stuff was find put to our you which switch third is that

So we be we the piece a of be that whole wouldn't would deal. deal,

Richard Anderson

talked this – you then the your wondering were second good in factor? how growing Would Okay, Mona, you it from impacted like a relatively wage implications profile. if X% issue NOI way small impact say you X.X%. is chunk there's on growth decline And if same-store? enough. about that to how running it I'm numbers your growth same-store now that its year, my is, quantify question the could and same-store more X% minimum to has the of on past you is Or the are a X or you large if

Mona Gisler

absolutely far through if for say years, XXXX you so that prior are was was factor. this a would and comparing I a so end Well, it year to compared year factor,

impact forward, But that an for going that I want going expectations given was something – knew are guidance don't that was year, really We this speak forward. what going that so in. haven't to to we the

Richard Anderson

trying I'm the to type I of Well, related many folks I know wage how get magnitude and just a do mean, sense minimum of employ? factor. fact. the of you people

Jordan Kaplan

say what’s ask the is same-store of Well, its would driver rental I a rates. big if more rollout, importantly, you

what's impactful lower rental topline or expenses, as than So less of a moving. even expenses, – the all expenses rates the driving percentage it's things

Now that expense with – that the section. said, on are and in in This it also was when an side executive because summary same-store. same pay and lot are the are – you properties story, changes a I has think of Mona by her have the had properties been impacted year do it were what by in the those rates you impacted and people

there's and even a So there. and the lot of apartments especially at them

last aggressive just some so in California, there's year, but some And LA. kind the Not we near wage end of took been minimum wage only that moves minimum California. actually made of in the on, in year, we move,

to it on get we make took of successful an of has in did at year, year, big moves keep a We near we stuff. it to so training But there. programs, also And of and right. end terms that we things program. actually the Allow us that ahead lot decided our been retention. we some all out did last rolled good And equity of the pushing very

So three call we be we'll four of to quarter bought quarters. tough ourselves compared That comparison quarters it another, or third even would XXXX.

move about. move quarter really responses very that some and trying the have And you've there's will is comparative lighten and forward had make its still in three in Still terms to move we and expense all to on with of of big beyond of a roll kind together, unemployment, other there's up once big just mover you that pain talked going that The up expenses very low was big so our for is outside. is that made. on that good same-store some we're that been we because of going pressure that, rents. of wages, controlling wear into other that the things that metrics comparison we've at the forward point pressure now But then the quarters

Richard Anderson

very Okay. All right, good enough. Thanks much.

Kevin Crummy

All right.

Operator

ahead. go be Sakwa with today next And Steve the will questioner Evercore ISI. Please

Steve Sakwa

wondering property and with rental little basis points us lost leased. Jordan, if market just to kind on wondering tie office activity I any wondering been updates I and about guys find the if you to that could Honolulu it of the leasing about have tie you leasing percent that bit that I'm there actively and could provide a was Thanks. talk just guess I'm if XXX environment your conversion Good in Hey, of trying I could you Honolulu. morning. on a And sort in you multifamily. know the

Jordan Kaplan

So the population XX, it's it's because of population, housing. it so the mostly to in workforce hard leasing state states, it's expensive flat. environment of by very hard there, employees workforce permanent so the very is employees is while to all flat, been in, the lowest driven has costs high for office so everybody's workforce in, very all the looking that there. and of housing, It's then to constant flat There's larger reason XXX%, unemployment Honolulu live. draw draw housing It's costs

have and anybody built, on know horrific the workforce wise, at shortage bet for built Moanalua. there of island, that basically – housing size they workforce knows we a of So horrific everybody that. price have housing. We we the a We we

units, we've forma, head of the stuff. good all the forma, the leasing pro of tremendous You had above seen guys the success rest pro those have

MHA like And really being snapped that. would minute just something XX project, from downtown drive up. they're So or I like say is a

longer-term tenant want of said, tenants of all Matter a around has occupancy that So more right, we we thought could XX% downtown to downtown tenants something grow. move to downtown. margin and But had impact and we swirling base. over allow isn't consolidate our fact, and maybe and that to in into that enough and We to really since saying on draw we kind the the market program population side. took to on supply steady a do push very that it's are these

we're say after out very we units it, we and that's ready workforce we're work one or hard we market the would look these to buildings to supply occupancy that XX%. we getting to had doing one, have shift not the can a similarly it priced experience but why boom, at at said, getting building pulling we're of looked both MHA, building the of on we to over at supplied costs evaluating working the there. get, With roadblocks literally take out and And

that's small is. that So how market

with impactful even that And will other so through the them tremendously with tremendously into successful, it be to of we're doing are combined that tenants if really and be that market. move kind at trying trying would impactful. looking It we’re we're to process go

through a to want we the we're through. on are not that way because of still and there. Kevin's our But because working get have that we roadblocks on working there's some something we're and that get So yet it's to lot people there expensive people

Steve Sakwa

that Okay. quarter. of seeing were And Warner gears around It's of leased question, good a one just figure to percent XX%. maybe rent with that growth kind to then on side, you still the switching of you but kind comments thought said this in maybe you your Center. I flat for

I rent still having in trying I'm So marketplace. if will, you growth with, sort XX% you that reconcile vacancy guess the of to

Jordan Kaplan

growth rent but now the depends And XX%. I in the so been on arguments XX%, strengthening and occupancy that it's market. wish the it in it in it's depended Well, in market, portfolio, market I the the almost on our think occupancy has

So that's what's in market. driving rent growth the

underperforming the super wrong good you at only can Wherever at Now what's supposed why under XX%. we you're be perform. saying, go, with to are It's we're Okay, you the you market guys? market?

the a done I this that number in share we've space least there. when still Therefore, to whole where sentence, give reason XXX% for some you it's guys tenant, of come the you large at more larger in for buildings. of that the that. own is of where smaller market, of XXX% ourselves, tenants, at there's market, the So still buildings. right? look on buildings We could So reason The smaller a there's but have disproportionate the you

So it’s XX% XX% that's arrow. market up about our with the heading occupancy an against actually

that, reason but So I described, we the are holding of of market space. have because are more up. of getting for just the benefit smaller the Then of rates the vacant the we're yes, more tenants. the moving Yes, we remainder

and of confidence, focusing smaller coming tenants over when and that as for through and think, I were I do like large tenants the we're with process. said, done. that a beat the us we will shock. well I that lot more and we've years, to think will the set more our all rolled that subject market, format on have out and serve Now fact, think up I will less But to in we the I market catch working still

how of XXX,XXX great the that Most the how say it a we've one They know, few landlords number foot announcement is. people You a did put number just we're big feet. lease. over it tenants XXX, quotes of and of reduced XXX,XXX probably

set out rolling So a it long-term we're are risky with a those of for gives us the It's backfilling building assets. on less and happy with and out. assets We're smaller comfortable floors stable tenants. a that of we're process more set

Steve Sakwa

Okay. that If you I into Or marketplace? growing of quickly on could in of just do the see of sort kind do something pipeline maybe and com tenants smaller follow-up, beyond? you the XXXX think that's

Jordan Kaplan

seen We see see up. it and feet with we the – over XXX,XXX one center. maybe that more us, think We tenants it we it bought six growing way, it’s today sit with all space you've growing we tenants And and we when backfilled we small had by I and slightly here it or just I mix mean when over. one bought

going leasing out up little the small So some But rate. with There us doing that's a strong, you we'll there. it’s back we've numbers where strong us lot of – what's a doing up up stable a Warner giving call numbers And a long-term pipeline. to our of that robust been leasing they on was on leasing as we're of where it. was when We'll very guys Center, fast there. leasing hey, were it the less saying, were we and there because going said, as couple occupancy lot the quarters get very more but out website. a roll a a and moving doing if still space lot in are is we're build allowing aren't And

Steve Sakwa

me. it That’s for thanks. Okay,

Jordan Kaplan

right. All

Operator

with Rodgers And the next ahead. questioner today will Baird. be Dave Please go

David Rodgers

Good there. out Yes. morning

Jordan Kaplan

morning. Good

David Rodgers

the whether regions seeing City of color Santa leases that any issues? and to before add Monica addressed Jordan or even around you, commentary the you move bad credit maybe growth, i.e. changes in you price, broad can with those in outs just for that. maybe you've Are of just start some terms Century can’t accommodate

Jordan Kaplan

will amount and this. question the answer directly the can of I color I Well, no, but say say

Tick and markets stripped we living those and seeing just And growth, this ever effective of default, up about LA we're West said strong, we we're many years, strong. are I flow I up We of in and I've three Oaks. feel that talking very Encino strong. strong the West net all but even and have the broader the especially concessions, I've LA I Rental all tick everything Thinner transactions it. pipeline, steps Westside all last mean that through not here, market. in rental best leasing Sherman seeing you're because all And in take it's deal or so we're – a growth, if one like seen. see it. not not signs, mean

David Rodgers

deliver then time, the question, I’ll you And a helpful. immediately redevelopment color leases is of redevelopment deliveries, degree follow-up is pipeline a and some the kind try and maybe to number That’s how for vacancy? that start have there but start is XXXX over on higher there a in sense just Kevin, occupancy? recapturing as sense vacancy appreciate XXXX. of makes out this that'll that of back if component a what make Or you higher sense? to your of at Do look of versus can kind to you for grab where

Kevin Crummy

very highly is are Westside, all very, The we're leased. the redeveloping projects which that on

doing so it's portfolio lease and XX going through type XX-year there's I weighted to and of of recent our legacy term. it's the a over are portfolio the time. be not of the so we're some in churn so the a mean, of average – of And and a building, leases more buildings leases, role over gradual combination some purchase

of be either should we So months? call on side these XX the it of mark-to-market most and

Jordan Kaplan

pretty building chart with of our confident the we shows in curve. consistent the Yes, out I'm kind that That perform will a going roll have that – buildings supplemental.

that roll barely going out show that's a the of And It curve exactly we exactly for whatever now, average we suspect years, will a of there's – themselves back sort exhibit then ever of is reliable. So years. amount what's XX you extremely to that. moves three I and seven, terms going you what rollout our that buildings the in show years

of drop XX%. to So as just XX% to year larger and it go XX% little that tend you way XX%. the mean and size around the the tend sort every tend then like approach goes or be be it in the year, way that's I tenants like the a seems following longer. of to you of rolls. to because tenants year It you’re But

We curve. have towards tenants so that many just itself drives that

David Rodgers

to Great, degree, some so was I disruption the you a guys guess when and hasn't guess really about talk created earlier, it vacancy sizable answer, – monetizeable Jordan. number the that in you it that say immediately I you right? have mentioned redevelopment

Jordan Kaplan

you they because turn building the to get It's tenants to because have we're to back garage. don't been just garage them. means it's show disruptive, it's and not they their contract right when I It make We They lot we the just lobby that a for of left how to used aggravates going and created just they're be just blocked. have it, which it later. want I the mean, people vacancy. talk but in and in I better got economics. angry the turn it's now mean a them it into and into – worse, the of for can't space to with to doing that's the go can't good like And of disruptive. lot the hasn't don't pull They around go they're get construction

David Rodgers

thanks Yes, for the clarity. That's helpful.

Operator

Mitch Securities. be Please today with JMP questioner next ahead. our will And Germain go

Mitchell Germain

much about the that lot capital is product thoughts not was think maybe to? a lot whatnot there's there's more I do for families market. Kevin, curious active the you I What sale it around hold that. in attribute Is inventory. a said not of and your you as that that

Kevin Crummy

that think it's down. slowed I Well,

them. As XX said sold that had portfolio X.X eight that year over one which very a and before, seller and buildings a very, Blackstone period, of we we large bought they had I

churn not pace in an like so the marketplace. our long-term given be that’s unsustainable that owners And would we're amazing –

then are fit so there it everything the is a we down properties not necessarily and on And that for market, but slowed do. has are what

the so because that have that single might we And and have a looked come past of in you properties you tenant might about weren't at have its or again. long-term that lease plate larger we buildings back floor the excited

it pass we that. so on it And for

that any pace certainly there the won't that be it. – right slowed has out doesn't down, the that it just aggressively it's product when we mean pursue comes And So but mean trade. that doesn't won't

Mitchell Germain

of Q&A you. Thank End

Operator

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

Jordan Kaplan

I'd just quarter. we like us thank forward to next everyone joining speaking you and for with look again to

Operator

attending for disconnect today's you your now and you Thank presentation may lines.

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