Douglas Emmett, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's quarterly earnings call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After management's prepared remarks, you will receive instructions for participating in the question and answer session. I will now turn the conference over to Stuart McElhenney, Vice President of Investor Relations for Douglas Emmett. Please go ahead.

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO, Kevin Crummey, our CIO, and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our earnings package at the investor relations section of our website. You can find reconciliations of non-GAAP financial measures discussed during today's call in the earnings package. During the course of this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the investor relations section of our website. When we reach the question and answer portion, in consideration of others, please limit yourself to one question and one follow-up. I will now turn the call over to Jordan.

Good morning, everyone. I hope you are staying safe and healthy. I know we are all focused on the current situation. Before addressing that, I want to briefly report on our first quarter results. We had another excellent quarter. We grew our FFO by 8.5%, our AFFO by 16.4%, and our same property cash anointing by 7.7%. The straight line value of our office leases signed during the quarter was 23% greater than the prior leases for the same space. And we made good progress on our two multifamily development projects. Of course, that was the first quarter. As is true everywhere, our tenants are now struggling with the impacts of the pandemic on their business. In addition, the cities in which we operate have passed unusually punitive ordinances prohibiting evictions and allowing rent deferral for residential, retail, and office tenants regardless of financial distress. By eliminating any fees or interest and providing long payback periods, tenants essentially have the option of a free loan. Given the current uncertainties, in our earnings package, we provided you with our April rent collections data in lieu of guidance. To date, those collections represent 87% of aggregate rent bills, with residential at 95%, office at 90%, and our small retail component at 22%. We don't know whether April will prove to be a good predictor of the next few months or the remainder of the year. While we also do not know how long the pandemic will last, over numerous cycles during the last 30 years, we have designed our operating platform, capital structure, and investment strategy to weather downturns. We entered this downturn with strong cash flow and a very healthy balance sheet. At the end of Q1, we have $175 million of cash on hand, an undrawn $400 million line of credit, no debt maturities before 2023, no financial covenants that could force us to issue equity at the wrong time, and 41% of our office portfolio is unencumbered. In the end, we own many of the highest quality properties in the strongest, most desirable submarkets of Los Angeles. Our diverse tenant base represents our nation's most competitive industries and limits our vulnerability to any single tenant or industry. Our markets have no meaningful new supply, so we face no overhang from new construction as we recover from this crisis. Now, I will turn the call over to Kevin. Thanks, Jordan, and good morning, everyone. On the operational front, our buildings remain open, safe, and available for our tenants. We're focused on providing excellent service while instituting stringent cleaning protocols, safe distancing, face coverings in common areas, and reduced elevator density. As you might expect, we're seeing low attendance at our office properties, which will likely continue at least until the lifting of the stay-at-home orders. During this time, we expect some savings from variable expenses to help offset expected declines in parking revenue. As Jordan mentioned, the cities where we primarily operate, Los Angeles, Beverly Hills, and Santa Monica, have all enacted enforcement moratoriums to cover our residential, retail, and office tenants. The ordinances have some carve-outs for large tenants and generally prohibit landlords not only from evicting tenants, but also from imposing any late fees or interest. Under the ordinances, tenants are required to pay back the deferred rent within 3 to 12 months after the end of the emergency. On the capital front, construction is continuing on our two large multifamily development projects, although it may take a little longer under current conditions. In Honolulu, where we are developing 500 apartment units for our office conversion project, We have already pre-leased a number of units and expect to deliver them over the next few months. For our Brentwood apartment tower, we currently expect delivery of the first units to be pushed into 2022. For the moment, we have suspended work on new office repositioning projects, and acquisitions in our market seem to be on hold as buyers and sellers evaluate the new conditions. With that said, we are well-positioned to take advantage of any opportunities that emerge. I will now turn the call over to Stuart.