Douglas Emmett (DEI) 3 Aug 222022 Q2 Earnings call transcript

Company Profile

Participants

Stuart McElhinney	VP of IR
Jordan Kaplan	President and CEO
Kevin Crummy	CIO
Peter Seymour	CFO
Steve Sakwa	Evercore ISI
Michael Griffin	Citi
Alexander Goldfarb	Piper Sandler
Nick Yulico	Scotiabank
Jamie Feldman	Bank of America
Rich Anderson	SMBC
Dave Rogers	Baird
John Kim	BMO Capital Markets

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Douglas Emmett’s quarterly earnings call. Today’s call is being recorded. [Operator Instructions] I will now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett.

Stuart McElhinney

Thank you.

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

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

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

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

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

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

some Instructions] please Relations description turn will to found For refer SEC can [Operator detailed Investor the in over filings, Jordan. the a website. I more potential our risks, which be to now call of of section our

Jordan Kaplan

for Good morning, everyone. Thank joining us. you

As our local tenant pandemic office demand in saw subsided, markets. concerns strong we

negative. utilization we and including leasing that quarter, quarter, pre-pandemic over feedback second feet, feet million the from net square square income new during square property Despite on feet over second now our of our exceeds managers, X XX% the metric we deals. office and improved leased our Based slightly During has levels. XXX,XXX meaningfully parking estimate was of X million absorption

eviction moratoriums of non-paying balances. of our their With replace collection tenants finally commercial the pursuing to we still expiration in markets, are while able outstanding

slightly we address by turned square from recovered our square non-paying have about occupied that XXX,XXX such by and second tenants, negative. the we still quarter, feet during XXX,XXX to which We So net year-end. expect absorption metric feet tenants approximately

have impact recognizing not a tenants. Although impact our actually from results as they have revenue our nominal on been we financial positive these those will efforts occupancy,

a on XXXX the quarter It increasing new our Our portfolio Ocean at fully second We XXXX added Bishop. XXX rents units of and ongoing our to well. leased, at and leases through very growing residential acquisition strong portfolio are apartment remains the Avenue project conversion is pace. during performing

Our apartment X,XXX over now units. portfolio includes

While tenant impacts for to adapting macro I’ll inflation. over demand With the impacts, closely environment already recessionary we’re are turn in to the monitoring and we strong of Kevin. remained QX, the that, call

Kevin Crummy

Thanks, Jordan, and good everyone. morning,

XXXX During essentially Ocean is ocean XXX-unit acquired Avenue, property iconic the fully apartment quarter, second overlooking Santa an we Monica. The leased. in the property

units. higher the and they units our in are upgraded common and rents area individual the as achieving are roll, We significantly upgrading we

Landmark downtown at Our Bishop and continue Los development projects and Brentwood Honolulu to XXXX nicely. The Angeles progress and

than With any to more call the over refinance we to rates, years and have last locked XXXX recent year in rate. spike that, favorable turn significant our We program Stuart. our now fortunate are maturities. With extended that maturities billion very $X.X interest a before I’ll in two the

Stuart McElhinney

Kevin. leases. Thanks, had an XXX,XXX successful of including We X leases square XXX feet square feet, signing over extremely covering leasing quarter, Good new million morning, everyone.

lease rate described net to reasons slightly down nominal the Jordan, bringing our For was by XX.X%. absorption our negative,

of during on-site mentioned, spread also was amount our That of by as to Jordan in backlog scheduled new experiencing permitting As move of impacted been result occupancy pandemic X.X% is the we the quarter. number nearly during our we current widened delays during a lease-to-occupied QX. to the delays did the leasing and that have large inspection half

focus choppy occupancy this these been rent recovering past As point our in to spreads at paying primary on expect remains the cycle. as we’ve we quarters, saying several be

negative for X.X% were straight Our X.X% leasing spreads this for quarter and positive cash. line

Peter I’ll we very to turn leases discuss across submarkets. new continue over results. XX.X% residential our remains full strong rent at leased, that, portfolio to various on Our and our roll-ups With achieve to the multifamily call

Peter Seymour

Thanks, Stuart. Good morning, everyone.

our increased Residential X.X%. FFO Office $X.XX by by primarily by increased X% Same-property to to improved partly office NOI per X.X%. to cash Compared revenue, quarter Turning expenses, including income, increased increased both increases second $XX.X by and in revenues offset parking XX% the XXXX, utilities. share, higher of million. results. AFFO driven by to

G&A, to of revenues, only remains Our at benchmark very X.X% group. relative low our

Turning to guidance.

We be the to and range year FFO now $X.XX per are narrowing of share. guidance full our between $X.XX

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

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

Operator

Sakwa Evercore comes the of from [Operator line with Instructions] question ISI. first Steve The

may You proceed.

Steve Sakwa

the you was back the wondering take like? the to XX cadence next leasing the you can can as little you’ve half environment? space understand But to some second months? of certainly maybe over I on next the provide due bit looks improvement desire pipeline I a the a out and figure just want us lot to occupancy space. to know of could And if what of in got I both just Jordan, trying give sort coming XX more to sense color the year.

Jordan Kaplan

a we’ve occupancy obviously, leasing. people a or comes But think, keep and fact focus shrinking, space of out, that was for looking so with that that the Because started I spread leasing great end back tell leasing moving over. it you we taking lead to I’m so shrinking by down, the had on but there I sort tells I occupancy. more where driven you’re I number, was quarter. up always is Well, because just and last turns really know the as in going quarter more you, now loss slight can occupancy market the

is stat, revenue. XXX,XXX didn’t And we did leasing. it’s of it impact a feet The impacting just great really so news

telling we’re that happen. can’t we’re of that of obviously, July, definitely of lot watching had lot for I hearing saw. you are I’m but hearing things same I yet, in say what the bit a seeing we’ve experience the I’m mean, slowdown So potential happen. to we’re is a track, driven a economy. you a but And of on right, little all by I about carefully

have So really would it’s than goes quarter hard recession, make we the quarters, few amount look assuming to come last predictions actually at assuming starting I on been a don’t we’ve that going, doing, say, strong. of forward good, we’re everything to and the last go other along leasing the to back

have And we’re of so them strong, pay, in saying, people out out we and but to start in. getting okay, people want get sort people have them don’t if the with the putting confidence these to let’s space. of out it going And

Steve Sakwa

financial kind at our The mentioned pace the forma is kind sort and coming rents that around in leasing Landmark, just Can And Landmark. versus of Bishop of The as of up? of are evolution sort follow-up, where in a you of and of lease any you Bishop more the provide pro where commentary

Jordan Kaplan

So XXX Bishop, a units. are units, be XXX to little quite them both well. of when moving under going it’s Bishop, done, it’s

XXX about the done we’ve think I of units.

We’re some back. floors now gotten

some We’re floors. working on more

and You a for by And all tenants to of It out. It’s a done the the extremely floor successful Including poster we encourage our have areas. over. beautiful because it. still in income, child, and to they tenants, wait maintaining we’re working move I Hawaii, it convert reasonable we investors, to all for conversion project. anyone for finish. level check as out, when here, common definitely move both of to and have Office a to tenants of go out and is sort an shifts Hawaii through it still in paying Residential. those We’ve you’re

still we’ve there really we’re So and XXX L&LA, tenants I feat we that as in many leasing building a well. can’t and has bit which out and amount Los lag people We extremely had calling a of the for Angeles, in that it lag leased an opened lot, a said, in, have that of so move was a units April. we’ve done. the over terms of we’ve between engineering leasing of very amount gone down The little Landmark, moved people in And floors. successful. been -- there’s

project units one the done cetera, getting So cetera. just there’s so But project over elevator, XXX now XXX we’re many catching kind into time, units. of them only we’ve freight move can at et leasing. on because That people is think you up I et of

very all is original the about project of pro project, initial that forma Steve, and performance that has this abandoned successful. been of question, sort your so some pro rents forma the Did are So our above point. or? far later even I of The we’ve kind also at that think answer

Steve Sakwa

a was still I Yes. on maybe pull holding that? you just or to know sort sort mean, tracking I that of I if of you around were didn’t had back think $X foot,

Jordan Kaplan

That’s Yes. so on I an mean, we far so $X project. the incredible number, That’s which to good. result for that hold correct.

Steve Sakwa

me. for it’s thanks. Great That’s

Operator

Citi. with question Thank comes you, line the of Griffin Mr. The from next Michael Sakwa.

Michael Griffin

to to the the year? up of I terms, kind least terms how that Maybe signed at you’re last comment get were of sort and and on the you new this the rest both back lease trending on of leases to be seeing quarter, noticed quarter, on renewals. throughout leasing. for expecting lease Can relative

Jordan Kaplan

a It terms while, can don’t longer lot new that. yes, seeing I be of depends Frankly, I And around the I’d take deals, It out lease our bit. the a ones. some think have bounced larger on like term, little in longer. particularly

wonderful volume XXX,XXX I will the the with get would terms can into number, And over goal because would number thing are saw that. only if fantastic remarks, is that’s qualify have that up look to #X that quantify, say up #X a get the our so the coming volume there of and around heard being demand activity just a a us went end really at we Remember, which can So for And try the really what but get our lot you and that’s lease we’re recession you up to as there into volume I in into telling get to million primarily rate space. I feet, the very a is sure market that this utilization. over is way we’re though think, thing but the other is real XX%. I prepared what’s we read XX% not number. our looking I’m our mean, I and the feet, we there focused XX%, into And yes, that’s without back and I’m is X that that people people you number that hit gratifying out lot goal, which longer, now, read our feet we the million-plus it’s And is that get on. lease in to this that soundly new back that the the in. out time and on that

into getting too. good territory up there, So we’re really

and markets, All that reading a like thinking other although little been of of which a I’ve be about are very outlier. articles bit positive an signs, we might lot the looking

Michael Griffin

for just Maybe second recession. on my question, touching

I for think office could we’ve seen recession good say space. and a come the office some peers that of out your potentially be

of how of think from on seen we case, impact an historically I the that could to of necessarily environment the we’ve may kind the just kind thoughts get on central expect your curious be recessionary but what not the given horizon? portfolio

Jordan Kaplan

Well, you do are employers to the the a I for good don’t as The allows back if good our recession office something back I the level think or for and it’s them all way puts office. be driver necessarily you people space with could their in. in is into just the call markets comes to that be back only be unemployment seat office need, coming it the employees think heard, good recession space? would could of it inflation get

a think Beyond I imagine and that, can’t recessions feeling hitting tenants the are I my that’s revenue of activity impact then good. how recession, if are

real than running during because an has do an the Now a rise Inflation over I up. inflation position costs has costs that’s think interest the haul, short-term of than and that level in in be recession, under shape generally long you long-term place. estate. when arrived. only they leverage, could employers back take have us. to recession. the be and some us have a I impact bring of industry therefore, it real maybe the the a the going interest effect on thought would where getting of could I drivers be going rates positive pleased that, them. we’re office, better imagine the that’s would is very has to for not would a that buildings our up, time left would effect value and estate Rather people And be which inflation, It But want fixed in assets so unemployment

Michael Griffin

time. it That’s Appreciate me. the for

Operator

question next from The the with comes Thank Mr. Sandler. Goldfarb line Piper you, Griffin. of Alexander

Alexander Goldfarb

XXX,XXX guessing to math $XX years like just the the the must on space, space. the spread Jordan, next get you that the feet should assume you feet than back two to something same you get through square steps it is have the foot psyched remainder. and and two-part go the be that XXX,XXX or a a just Stuart, that back, times if feet? to do that’s then when simple years One, are income square X over the we math on pretty will Maybe that take out that? the I’m remaining square And pickup XXX,XXX what we get to it over been then, more need and

Jordan Kaplan

it of And end space decision making out, kind of you a it, paid the on deal recognizing you from won’t The than and said going we people. obligation have won’t them calculation so have be, collecting because the varies. that owe then for end, them negative we’re people wasn’t income that re-lease a us. to said space have they mitigate of the to default, getting mixture these start people. get each a about you’re lease we the X% who that than net more it position. paid lot from going any default, haven’t and you, that’s of end a of included, in a and we always we collected us what haven’t But then a just about and I’ve figure the process to in be back whole said, and wasn’t X% times, from payer Certainly, money including of up you have people the the Well, lot lot UDs. will we money and with happens, out money including more that. make once the some you owe pick, things And not collect quits but of to they to kind I’ve what you those

they out pretty to to spread be it a they they’re obviously would was complicated we a money number say you have them you that’s couple also pay. have take it So over and would and that it of resisted because years people out. process. hard prediction. hard get the a be make Certainly, to time so paying, just decided It next can And we believe

to play And clear while our just them, do so now need we’ll -- California We’ll years. under some happening for do mitigation. out it’s we’re try from and and a XX will been it like

Alexander Goldfarb

I made too Jordan, it But complicated. guess, maybe I

is square million? assume incremental Or Should Just simple? should by pickup simply, over million and years, earnings trying We so up earnings. NOI it an million like $XX added next going foot, to just year a feet, million. think Like, two $X we in of not add next that’s $X XXXX $X I’m of about XXX,XXX million? think $X that $X the

Jordan Kaplan

XXX,XXX But lease. been reality the which that’s I basis that some Well, points economy we I available another mix and we’ll calculated has have would you rest pick value, be have XXX-something in saying now maybe while, It now it. the up we’ve recovers, we will obviously money hundred just this I probably pickup and points for XXX is have think in we more or couple than feet space lot mentioned. basis that a that of the for But way. think just with as of of the fact a can

Alexander Goldfarb

current debt what haven’t floating on your debt, it’s moving then in due that some you Are you and guys about Or finally $XXX just XXXX. you I burn your to talk there’s had think thoughts million thinking off while. are the implementing near-term you about the about floating rate thoughts think I rate swaps Can in some had environment? for sheet, have a just rate swaps? because any And balance floating around

So are trying now what thinking you’re about it. see that rising, you and have rates just to it

Kevin Crummy

it’s Well, that. Alex, answer I’ll Kevin.

a years program which flexibility in is runway you need And X, and gives provides what for Our that strategy a market. to is of with borrow to us the X exactly which XX-month lot flexibility, for current swap reply.

lot well as spreads have gapped turmoil, importantly, aware, of and have a gone just you’re there’s rates As up out.

down. an time until to really not ideal we’re it’s anything. we’re advantage to ideal calm monitoring and of So right it’s do But not things time And now, anything sense. it it just the do when market, to take going makes an

Jordan Kaplan

let market. too because in There’s in we go to that to So turmoil it’s time a things now. the not much floating just right lock good

Operator

the next line The with comes Goldfarb. Nick Scotiabank. question Mr. of from you, Thank Yulico

Nicholas Yulico

question third First half you scheduled then in about, about release, number, lease or going take are clear, about the the occupancy under quarter, think that that in quarter. move is right of back that to X.X%. that, that occupancy current just the occupied -- to versus next is be gap the backlog talked of the is X% you of take to pickup just half I just half of X.X%, the And the talked to you want suggesting that? way we

Jordan Kaplan

that for to changes to the happening. do a though actually, have that is absorbing up, giving some even the you move with saying outs, you pacing X.X% will people, I lot pick think The you just in. that half in occupancy of we’ll what’s half have going simply And of and have more

at X.XX% you, this to X.X%, it do going at then that go, of number all do slowing this because heck? half in. not us of we’re quarter. of I again is which there. board. move it’s stay getting to a matter why we’re can in I about can we quarter. we these by just just that, them don’t But you and new here’s world what end good and of there’s of mean, movement being by you slower, numbers fact, slower. to we the relate leasing the lot that next of just it, much that is getting so X.X% and times, gap. final but just the lot feel you on people a X do what lot do But or are that gap, to tough quarter what’s section the and know people’s what pointed some it’s question leasing that’s when and what’s lot half down. for we just to were was can leasing, of with of think But leasing, a it for you it’s say, a out in number. and even quarter, lot, could look you next or were wasn’t Because mean, out. be when you could the very pace is to to leasing situations, I of the months pacing even TIs the a number give having we I’m we we get next said the And And in out get couple what? also -- As is the And in If now speeding in number Which that they’re of a you you’re cause tell to the but feel especially exactly wide will up as trying moving sign-off, can which the a take Number I which we that doing trying particularly ton up exacerbates inspections, you want we’re give half a things maybe these plans done and terms quarter very a -- that is, world said the out that we’re I in asked, you itself, actually sorry, XX is one, down gapping of drives this. a both obviously has that pace of now world during approved. but city slowed X, the driving a at work that Stuart’s

occupancy that’s to Now, happen. I X.XX% just because I what’s by know going can change not

Nicholas Yulico

helpful. occupancy think which where guys about is at you’re full Yes. No, the trying year points higher get that’s XXX to your components I’m just right roughly guides, than now. to how the basis you of midpoint

square think the some of expirations the releasing deal then in I benefit, about about still we just that that’s and have expirations expirations guess, there’s the year, the you some insight So those for? up for half right spoken of any your of still to So a of of pick think as that the benefits the now? visibility on back occupancy any year. of with well. rest Has which as I X% of those as footage into

Jordan Kaplan

within expirations half we the my But a so year. Well, in calculation all to that has on. than those the X gave second look little first the it. points be we’re going going still recollection, we range we bit that of year X when have numbers -- and we to in it’s And of the guidance have think to lighter we do half that a at provide or we’re we guidance,

I range. we say, don’t the change right only right to said But mean, through halfway So we’re year. now, you’re that

the year how see rest plays the out. we’ll So of

Nicholas Yulico

growth your guidance, you’re possible, at the if through suggesting the question. the of kind the That of occupancy now you’re the you still the if I back. range middle guess like because year. the change of lower be of you got space point I feel you sure back range assumes occupancy wasn’t likely Or didn’t the the which extra some is because end half to of more was of

Jordan Kaplan

I that be mean, hit range range but I like that center, is. meeting dead we’ll there. sat in, still main will the not, it we bell or I in changes. standard. small think mean, was what had it curve thought somewhere anything know really That’s valid I in a know. the the I I don’t we Probably

Operator

with comes Bank Jamie America. Feldman Yulico. of from you, next Thank question the line of Mr. The

James Feldman

new the kind certain tenants square of the it you buildings, there more What certain Can same? about what pipeline, is curious of is then the you are like. And think Are about submarkets? just they? looking demand of feet more the incremental talk leases. I’m as XXX,XXX

Jordan Kaplan

Yes.

think tenants driving of about market our the it. that I great diversity is thing are the

still that I seeing demand. think in our we’re

We’re to to demand industry bag. was so noteworthy that up point it is several industries, nothing down, of We kind getting rate good one driving some more the board kind and go across a than mixed of anything the usual. submarkets in lease go so of had

wouldn’t new, was a point I was So to demand noteworthy like board. that felt pointing anything It’s submarket across or wise that we worth or industry-wise out. trend healthy new a a still the

I think true the same is the pipeline. for

of haven’t pipeline that seen a would be the the get. typical change kind demand that noteworthy we We in diverse to anything

James Feldman

would at didn’t who winning all? you the from space or other have buildings, you’re tenants other say new landlords? more Or deals And

Jordan Kaplan

It’s always of mix that. a

tenants moving the have We from other markets. in buildings

it’s had factors. We mean, leases, group. various like have we of over combination always those so new a XXX it’s all business creation, I a so

James Feldman

All right.

trend in or So perceivable it like sounds no trend? change real

Jordan Kaplan

Yes, it’s normal. I think

James Feldman

in And on then to just total terms And be shifting bigger know think do talk I having want success sounds with then, gears yield that NOI your stabilized picture. yield expected stream? the about big to it the mean XXXX I of Can great apartments that? you how I upgraded like units. or guess, you’re you’d on you Ocean.

Jordan Kaplan

like. how I that projects big mean, find or amount of Well, the we of we

way we’re doing is now office. markets think them. apartment it most with XX% I I in, XX% find fine XX%, it’s XX%. high-quality hard, I where it’s it and right projects, mean, the large, would aren’t by be calculate, institutional much a building mean, the or very not me. or if But least getting at at we in of was focused now, the it’s So building a really to in of we’re problem

apartments. focused We’re on primarily building

XX%, the to So up back again, that market number. transactions go it will start if go office a up. or bit around and coming if things goes will XX% perspective, then maybe little catch the office up, that will office market from But

terms In having your we at was, remodeled -- question still the of success and are on XXXX? units

James Feldman

yield having or success. on targeted yield that project that I know or you’re What’s the investment? . expected

Jordan Kaplan

XX that be cap I think it’s well X, mean, a done on such maybe hair -- on X pretty IRR line. like would the or around I of sort an a high-quality have project. rates call of doesn’t leverage. I the leverage lot down a mean apartment project, in number, years, Job all-cash general You center would under because think I And it it

I think -- good leverage that on the we number got in made and because project, partner we’ve a loan have it. a

I the in that Xth. think be it will asking? you’re what somewhere Is

James Feldman

kind I even I What mean, just assuming, yield. well, the are you the mean, use of model.

Jordan Kaplan

You am mean, what the right? I assuming flow, cash in

James Feldman

Correct.

cash Your yield. earnings your flow,

Jordan Kaplan

just IRRs. the I Well, gave

you the So rate mean what’s, in was what cap like, going or?

James Feldman

can if Sure, that. give you

Jordan Kaplan

we’re a in, going think I higher a three around little than a three.

James Feldman

prefer you you to decision? that have How guess mean, think So about I you do Or prefer to do incremental if work, you here? you I -- apartments every dollar do like for put office?

Jordan Kaplan

available, But or make of good the two decision in aren’t to would forced equal I never was had very haven’t be one willing to it we always go I towards equally do the so pretty if the quality, position. that capital done been higher having both. the If We’ve I’ve a to job of other. quality high-quality one. projects, projects choose

So if I was office, the had and amount the apartment do fixed same it product. or of an would money in whether a market, I only higher-quality

Operator

comes you, question Feldman. The of SMBC. with next Rich Thank from the Mr. Anderson line

Richard Anderson

nearly of of number. to than the feet the compares got estimate I expiring on X less, How broader does course. from logically, standpoint well it your industry, using utilization if But a good XX% role And kind space But you’ve not you’re material it question, of to in interest more right, there of process guess. year. a would more the obviously, leasing, national utilization, we’d plus utilization and future million So next square rather the space? see that expiring or indicator it’s seeing? optics can sorry. in a space I’m play And you ability Is lease something vacating just coincident good or is dumb a and your in of leasing use that

Jordan Kaplan

the a dumb be And although it better People saying you’re utilization building as think always want that from activity, useful that’s than expect going used have much predictor what a and used with level and a it’s around same will with things No, stat think as forward. happening. of should show but more I more and to the part to to of not people building probably in a it’s is demand it’s we is, question. thing. activity for I marketing, I say not activity

had low, was low when we very demand. So utilization

Now, utilization is higher.

have Now, We leasing you a quarter. a things. did few lot of last only

are that’s go, what You what of things all for around And suspect you good, I okay, Here’s to analytics thing. kind say my can link another other future? the go, right? now I

The would more be, and in. space space in, coming be I’m back up, and now need well, maybe running more or more getting are go, going other my because and therefore, needing just space and means reevaluating, is thing keeps little saying people which need let just I I utilization back a they’re to space I

and you lot It’s just So a The utilization hearing a another tenants around positive sign, sign? too we’re wow, What’s discussion being to go, negative about side sign. recession. going negative is scare recession. a much

because that go, and with guard a take you on up. sailing just isn’t a maybe to I little be maybe arrow more need it therefore, So straight clear

headed. predict just where is stats of utilization one that we’re helps those So us

Richard Anderson

can that or reason XXX,XXX for And there one some get the or back out to stingy and in the that feet, amount term? it that’s particularly or otherwise, you is square the is politically second everything that’s is get you can’t another, there short question

Jordan Kaplan

want can the a We back, we be way space multiply that to how just it want make to space, don’t to get to So mind clear. deal the get back. to we you’re so saying

it’s say you there use. a we when no guy -- is there’s when that, So go making having

We’re the just going around and we to out out actually or go click settle and them get have space. to what legal can, of

And fall is But point that may left amount we we people this We’re at left, better be have a of space that what we have that think off call we’ll think the that’s in we kind less. way. this of little that bucket. of

Richard Anderson

it more space it terms that get different that’s to about would leasing of kind quality? anything how normally process a is in bit mean, else in relative beaten I non-paying that’s little everything that’s see And up. you particularly space located? expiring, of maybe rent, what than is well the there competitive Is

Jordan Kaplan

the think of resistance space don’t think It’s stuff special worst portfolio. there’s pains. in a thing the are the rest has tenants any been our leasing, so the same as I space it’s -- about that just like I we’ve are just that space

Operator

Anderson. Rogers Mr. with question The the you, Dave line from of Baird. Thank next comes

Dave Rodgers

that just know see much from the square start is owe Do work? over? in in question second the this that that money, I ask uncollected top tenants could, maybe that year. And of that is So renegotiating Yes. aggressively how a I those maybe evicted going curious leases How I’m balance you’re of that Are but addiction still topic, quarter? talking with layer tenants going of to does of you the guys if not start in the it’s of questions How fourth I that balance. XXX,XXX about those favorite we that rent kind wanted to I the being kind to separately, feet guess of aren’t then is please. X about about to early? the coming now kind the eviction on you them?

Jordan Kaplan

number been to numbers the in that’s anyway, been is saying we’ve in but the they’re they’re that decreasing sell us. that outstanding So

and be haven’t space up you money if we right? Although go, their to us some owe calculate number and you up to now. well, you’re hard is to So the hit to going now, in now,

there, victory also owe course, else mitigate, get you can right? we obliged that Now get are we also the once of lease. But we someone from in the obviously whole from feel you to get money space, Now figure go a out there, them and go, out. send at we’re then money, We what and get owe owe something you else that going us, kind of you we can it. you and to then get

I expand or hard whatever. said these to do million. last it out that number pull I’ve money or many it was $XXX as But looked times, is, it’s think I to So at, time say guys

attached it. number most are to it’s obligations to our So is to from people Because and coming process number. very legal collect small complicated is these of a smaller not the coming to particular all of be All numbers that and a numbers. mitigate, might down, feet XXX,XXX in down because big there

very timing in. particularly I think would that it be coming to predict for hard money

past. those say will have I they Although in bad most not they and I in of will end think many put paying of them cases, many, the habit It in money up paying. the just a

them. just money the battle out And of get a to so it’s

Dave Rodgers

the is in, are balance that, that tenants the time still a owed side another of part didn’t On paying, that you and that other how about not have evicting while. talk but that of the of was you that comes you’re pay they for They catch percentage Can remaining in? they up. to them, so flip some

Jordan Kaplan

Well, about probably it’s people are decline. don’t the paying plus could between that current And causing some are to probably split slowly paying of causing the increase still I tenants. in the you the the this current, talking we’re Yes. know as were something, balance warrant. are the that groups ones and I of paying amount, two that tell group balance

Kevin Crummy

way Yes. not it, We’ve collection can pursuing pursuing entire the right. aggressively pandemic. James, aggressively the is you now start been characterize we

X we doing out now. pay that a them in, still past them folks prefer the according starting paying for out so allows. back owe them So extend us lease hanging balance, with. moratorium with and some They bills time, most sign But the are are years what we’ve new of what they’re own their paying made that. some of they let them pay and due to we’ve and lease or us been rent, and They’re to over to current that

start balances. been haven’t until aggressively waiting pursuing now We those to

Dave Rodgers

Yes.

for evictions number those I now guidance, about the I clarify pursue the and I you was lease Sorry mischaracterization, for could thinking me, year. the where Last your both your on the of the think for just occupied end occupancy wanted to aggressively. more

correct? don’t after numbers taken no in whether already mean, lease change. those Is is I they’re these or regardless not number, so there not? that leave you’ve the of Before they evictions, or them occupancy, change out of

Jordan Kaplan

any didn’t least stats occupied it wasn’t that. available giving us you’ve we third We lease were the didn’t is when no driven for spread the for could was that created and There and none been by been they left someone rent, a The the between in But difference in. none between lease got but and many paid income, anything in accounting it’s by Maybe by the signed take and what leased the it now occupied. move no and people is of stats and you they actually occupied, don’t is the of stats just at leased by to the utilization, because that of That’s that’s into out. occupied moved us. I be we’ve pandemic fact utilizing But it’s hasn’t else impacted occupied. XXX,XXX some of do the and them feet there’s person are revenue. called leased about these number Occupant haven’t impacted they we them space calculation accrue know. have, that space leased, account, didn’t are for that but

Operator

of the Thank Mr. Kim The Rogers. comes BMO Markets. line next with you, from Capital John question

John Kim

a had leasing questions couple on I of activity.

and square square million would wondering if vacate feet XXX,XXX I X that last was the and have captured XXX,XXX said quarter, or there you This down square according great. over termination in so it the of quarter, lease another square couple during second or remaining did then rate? unknown the your to then feet. feet improved went some during thought other offsets feet quarter, was just I expiring that was months, leasing the that so You your XXX,XXX number

Stuart McElhinney

it’s Stuart. Yes, John,

we not the that had it quarter most folks their that expirations we quarter the had So back wait of nearly day does quarter this if you and capture last till course, before of one nobody lease expiring, population renew. just in waits, because, go look of at what to

and renewing number tenants that the X.X supplemental left year months years the all we’re of that in we’re we’re advance, So to putting in is way, X what’s expiration, along advance telling expiring address. you their that

of it, addressed renewed it we’ve if we the if it, So out comes expirations.

had you that have laid tie can’t expiring do back can’t you in the and add you look it out, way. it and it did you leasing out, So the go and you quarter do and way to math the what at you the that then

Jordan Kaplan

tenants And in as renew expiration. sound, as it’s of long after kind fact, many

negotiating So you’re the deal. holdover, deal, lease still theoretically you a on expired, the they’re make

the -- new us holdover go, our another with and happens a Some months for you deal them. later, back, refund give just not they portion, exact But on with tenants. that as now okay, That’s small date. have put they’re focused us

John Kim

in have square not additional not leases XXX,XXX commenced signed that’s schedule? you your this So feet exploration of

Jordan Kaplan

it a approach little less expirations the it’s isn’t in those in the get you the a while, when every but deals. then because know somewhere year, the by X%, of a usually we the time before, might exploration, but of year year, quarter. XX%, to if deals. And this to of don’t year, you done X%, than its around But think up terms the you’re I it making you you It’s I’m usually, I’m because shrinking we’ve doing next year just get not, XX%. necessarily in is ton especially starts that year watched kind next the year, for as the

Peter Seymour

it’s John, Peter. But

were asking it? not signed about commenced, leases You where, the are go the Those was leases $XXX,XXX. about What ahead. the question

Jordan Kaplan

Yes.

Peter Seymour

Yes.

those So yet. into are essentially feet. leased they’re occupied schedule, part lease, just of leases moved considered The So now, square be between right? be if from there XXX,XXX not we’ve leased. that They it’s leases. recently, but exploration expiring commenced, the done are and new haven’t X leases it That’s in releases. the will a an will They X-year occupancy is signed gap, years right? Those gap

John Kim

I’ll on up Okay. seasonality. second follow offline. my question But was

there leases seasonality Is X million signed leasing? resolvable of this any last this Or in the second and in $XXX,XXX quarter. you see typically feet year? be square at So quarter can

Jordan Kaplan

Yes, there’s seasonality.

tend some are be Some just slow, slower. to

John Kim

What the fourth quarter? about

Jordan Kaplan

end the Yes. I of of last mean, lot leases day fourth a there’s quarter. that the

So of a at day. that end times, our quarter one quarters on leases the of the toughest is of the right ended year first lot because

of the it’s not, later next But that, people but that beyond all in lot a day, have say has of shifting talking I validity frank. made XXXX been are COVID’s is that I if has that, pandemic, tick that that’s a mean, mean, looks to I prior. the than in about let’s with sure they to COVID whether leasing of for all recognizable the people’s the reasons only it seasonality seasonality and ticks more or would up had economy the I do slow the up, signing reordered was the I’m seasonality, you’re views from during pandemic seasonality quarter. the pace you more if accordance So say, relaxing. be know there’s with it not had seasonality know. think some think you on the the to like move and in

Operator

Mr. Kim. you, the line of [Indiscernible]. comes The Thank question next from

Unidentified Analyst

past robust country. quarter multifamily know across Obviously, your was this I exception. growth the no So rent markets for were

had you any that drag market about average time. up up, I an And roll much across sort was units detail from your apartments? how just of your of a that there from that controlled of the rate you rent number have? was during further had portfolio rent rent curious X% You roll came over if sort any

Stuart McElhinney

when number We is to The signed, subject lease rent That’s you rate market a which we that when can vacant, side. the we’re it’s sign leases, on control new it on new leases Yes. that’s no back rent control component on so there’s giving not get that. to deal. new

So the you rent giving by the we’re stat control. unblemished

Unidentified Analyst

XXX operating that Very and the an there revenue-enhancing entire have acquisition. frontage we’ll for was XXXX Then Ocean With are at upgrades across of know looking other on or sites? any any opportunities block Wilshire. Ocean that now in frontage that synergies Ocean property, you’re contiguous between Avenue, mind entire these and forward. XXXX my Ave. that, Stuart. it, question Got you keep other helpful, definitely block of I just with going on

Jordan Kaplan

Yes.

one Wilshire. I acquisition XXX it’s the -- that of that bought by, three all was a Wilshire have And for Welk. building for XXXX things, one And good we they, good The XXX were agreement for controlled and garage question by built common made when that Ocean, So yes, Wilshire the actually the well, which garage. XXX Lawrence a somewhat not is XXXX because XXX actually and Wilshire, special fantastic XXXX. things buildings of and us Wilshire, parking is XXX negotiated that

And situation. these Valley. opened had parking. let say separate a up on other me lot And that for way. This a floors just these There’s lot there, that way, totally by it things also the of so of they going has buildings own

We another garage. have partner

a making So in management, big it’s difference. parking, in we And redoing buildings. are the

front. they’re think consistent to going all more have I to a look

very going be I even views, there with because we’re the and have But now. beautiful think done, way to I line, I it nice them. of pretty really will less L.A. a well-located. we’re think the for. they’re be a they’re that’s look what properties undisputed, to And think all class premium shooting in disputers lineup down the will be It’s there Top when out nice. incredibly to properties incredible going that

Operator

Next is line from Citigroup. question Griffin a of with the Michael follow-up

Michael Bilerman

want But to not acquisition buybacks you’re suspect members you’ve raising to where I done, I taking you’re as Jordan, of purchases trading and look reluctant of Bilerman Michael having personal you sort alone valuation, know price capacity, know It’s that you’ve stock about obviously, And how other are of as with and the frustrated management. Griff. for firm wanted but office sort of alongside at are, today. where and off of to other just office back development. the valuation And leverage I here are. CEOs come and by thinking sort not in sort shares world, been do stock I you’re

to think the same always going been assets to preferred venture going a because sell and also you’ve stock You’ve Where the you’re joint in new deal arm where reluctant arm I partners at both trade? on basis.

Jordan Kaplan

you just right. exactly said is Everything

Michael Bilerman

Ray boardroom. you you don’t is different Sugar it’s new have It’s here at so right? question The just but X in point, your answer members is know. I and if year, totally mind like the is Shirley that okay. Board views, shift, you So I have don’t added But to fine, it’s know the this no, also new it. last and have views Doreen question no,

Board is view be in X% and shares Tan the low today? Given implied the at where the sure So cap, would almost and that and Dan’s imagined the a yield. double-digit I’m stock trading your never a AFFO you’ve XXs,

me shareholder within this you understand sort value? that how where drive And to can the take other organization? importance help there is, are So of steps it’s taking

Jordan Kaplan

of take And does, it’s to And company. a long the But And Zen. I on about some be had stock. what question. will what’s the about opportunity, line, of you’ve not one the had that’s that with opportunity great back share that a we’ve by the very what options. threat know all conversation the and So the the willing I an for never we don’t that heard to center opportunity does And down maybe that’s that’s stock. the your buy conversation I opportunity. bought be in a we buying kind you’re to present but I’m going say stock, sense, my way, it Board. opinions our a conversation about mixed price for saying But that should done. And

finish a which kind Are of some the there is office we negative office to very global can type still office like have option is XXXX, of that it absorbs portfolio you position? us buy buildings just that up because we want, this So right get did especially opportunity our it buildings very extremely other whatever positive enhancement an to of kind around I maybe we office, that building on our The XX’s. we’re and pick since platform a is now. synergy, that condition, well, of allows there wanted

debt. are something, from at I’ve as course, upturn and in And and when people they’re it’s the than building, has that that And maybe going Residential I the of interest wanted. rates that is and flush may comment of it one, essential cheap number is So it’s we’re residential we’re leans -- some to more look we that out lot past, that building. negative opportunity. deals that that heavily a projects is, an still had on very then right, maybe because then But good my on usual to about come said think people

it. set we’re of of inflation bias I’m in there’s right and with And those there, walk very an obviously, And and that The at negative company advantage run. office of can and sheet, out well kind looking the about or have a do taking always what sort on between is think certainly. with opportunities. has opportunity risks line properly associated hoping you we to there whatever all we’re or things, balance recession to the we’re a So that’s strong very now,

lot flow Even of beyond everything year. a produces lot cash the company of dividend. every on, that’s flow have now of going in its a the middle We cash

in often, our boardroom. around don’t that like subject your but you like weaken we’re through. talking company so don’t opportunities to because this, time And want also you been a opportunities during take biggest to want this come That’s the that and

Michael Bilerman

the opportunity assets to to either the the your of deals institutional changed long-standing last existing of outright by you’ve Like all? that And as partners over does appetite your sell done or partners, has at some number obviously, months. have XX a evidenced

assets return? and lot you just that, I liked that of haven’t reap way? reinvest or We’ll to why continue activities those in the and to create liquidate a future so value acquisitions proceeds a NAV either and reinvest can where couple but and to do in earn know And not you that use development a redevelopment of capital higher stock

Jordan Kaplan

an thing mean, I an and an there’s it Well, long think one kind to I’d contradicts guess buy again, [indiscernible]. apartment things. it’s will the my to with then opportunity I that a and think buildings to I opportunity finally buy, of buildings, be there’s opportunity It’s partners. office conversation I say to is this sell if

buy your only probably e your two stock are the assets, can back reason down, values is on down. way you’re sell which So is which stock, say, highlighting asset you them, there’s to would if you of and ways

your back buy at least stock. debt structure. So assets you That and doesn’t sell can

buy. ways money a right is buy time opportunity way they do because back I If to want be a borrow in And and do where can just really now, think sell. inclined are to the the very good mean, to time think stock, seller two buy. only it’s it. a buying I there’s other to The think not to it’s you situation good I I I don’t a

Michael Bilerman

the partners then my to with X, who take probably in think still But XXs. of your any okay, because interest up valued and And you I $XX, equity. you you’d units private at have we’ll come in the take say, have they’re money negative

Someone I can having XX%. it’s care buy will And Like the maybe just of of these at the the I know stock just changed around or of some out have is, whether in how things screen don’t mindset just discount. members as I at the I’ll say, time? Board this, you take how as where half the get new buying about items? well, I some much by all taxes, know didn’t

Jordan Kaplan

having say the this. changed around can’t I mindset Well, has members new Board

the opportunities, private Different say, that put opportunity. and different sure protect primary mindset is usually and its end, when happened this than But do there’s the presents and type are opportunity. right. company is we’ve company at recessions risk, to one that those real XXXX, Number the changed I’m this opportunity created two what’s make supplement look this a saying got at. think that I other in two, you way when of means it from was, the own a one, we looking in X the things. off, things And were one don’t simple number it and the

Michael Bilerman

I that. appreciate the conversation, Jordan, on

just and lease just clear. occupancy were follow-up rates, on perfectly one Just so

and how takes XX.X% is numbers area. How understand that lease that want back XXX over occupancy XXX So that I in as basis move have delta, retention half half, million these on potentially you about the year? XX.X% X.X go square the leased, half occupancy the a just happens occupied, we with about or it third understand just back of rate it And XXX,XXX aspect back of fourth the the And only in which about different should to really in of like basis point question mentioned then you to XXXX points? X what think the obviously, today, tandem is half? where whole about in the role the that quarter. feet, sounded then call

Jordan Kaplan

So I’m what I mean, numbers say. sure that on is insurmountable for our fourth quarter. gain hope third I numbers they’re beyond are not the to have fronts. both don’t end obviously, those and you we up. and the our not where I guidance -- think can think we for

Michael Bilerman

office for you Residential. the Did Page see don’t have on also of rate? occupancy, that guidance You XX%, Because an XX%. lease office, see XX, I give I

Jordan Kaplan

don’t lease. guidance give We on

Kevin Crummy

Yes.

giving been on other haven’t guidance We quarter. than we obviously, reported, lease every

Jordan Kaplan

retention? you about asked And Michael,

Michael Bilerman

Right.

with right. I’m So going that’s it, what

Jordan Kaplan

Yes.

we’ve So retained. been in historically, case reason high, to mid has to be forward. the No continue That’s think retention our that going what that the XX%. typically wouldn’t

Michael Bilerman

feet and the X.X the to the in trying million signed not Right. effectively half, But expirations then understand I’m there’s also given expect you of new back just feet leasing square occupied. what for those to -- but at square of happen Viking? XXX,XXX what’s

those spread, equation. that the expect if too same at guidance? to how sort to occupancy of just just I’m and the leased which whether the spread moved rates staying the narrows Or we move, is portion the but relatively pieces with bottom Just of up? end lease end two occupancy year of the understand trying flat,

Jordan Kaplan

out the to have work. now all we I to Well, have we’ve -- do laid but we think the Yes. components,

see of plays year have the how out. We to the rest

for move we we a we’ve retention moving leasing And new So done, QX, be done. be those the know just ins we see there’s and unknowns how remainder of components there’s out of in that doing scheduled. leasing got to continue got in the We’ve the the year. out. But folks a retention so lot laid to lot the of plays got to there’s

Stuart McElhinney

I go an sure factors gap I’m not as and earlier call, answer that But between along in also said to all with leased. shrinking those the occupancy

Michael Bilerman

months, that’s part people ahead, Hopefully activity, and answers you’re coming knocked your when the told of right. by you you, Sugar in yes. going leasing the you’re ‘XX and you’re getting questions. All be and to you X next expirations to because ‘XX the didn’t all out for of get Right, to Ray them

Operator

now back will I session. the the question-and-answer conference to remarks. additional the pass concludes That management closing for or team

Jordan Kaplan

next look you Well, to with we you again for and all thank joining speaking forward us, quarter.

Operator

Earnings concludes the That Emmett Conference Douglas participation. for QX XXXX Call. your you Thank

You may now disconnect your lines.

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