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 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.

Thank you. I will now turn the call over to Jordan. Good morning, everyone. Thank you for joining us. We had another strong leasing quarter with total leasing exceeding 1 million square feet and new leases of very healthy 365,000 square feet. Despite this accomplishment, I feel like we've been on a treadmill for the past several quarters, considering our efforts have only produced a modest increase in net absorption and occupancy. Of course, this is partly due to our program of replacing non-paying tenants with new paying tenants. As I mentioned last quarter, the expiration of commercial eviction moratoriums has finally allowed us to recapture space from non-paying tenants while still pursuing their outstanding balance. During the third quarter, we recovered about 50,000 square feet from non-paying tenants. We expect to address a similar amount of space in the fourth quarter. With respect to occupancy, our leased to occupied spread improved slightly, but remains more than twice our historical average. While we expected occupancy growth from a reduction in that spread, it has not happened yet. One reason is that an unusual number of tenants are expanding our portfolio or simply relocating, which increases occupancy lead times. While we are concerned about a future economic slowdown, we firmly believe in the long-term health of our markets. Our demand comes from numerous industries without any risk of material new supply. Having successfully managed through several prior cycles, Our strategy and platform are designed to withstand downturns while staying positioned to act opportunistically. Now, I'll turn the call over to Kevin. Thanks, Jordan, and good morning, everyone. Higher interest rates have begun to affect us, even though only 13% of our debt is currently subject to a floating interest rate. To provide us flexibility during challenging debt markets like these, We typically borrow for seven years and swap for five so that we can delay refinancing for up to two years without any penalty. With current loan spreads historically wide, we do not think this is the best time to refinance. We have no debt maturities until the very end of 2024. We do have additional swaps expiring in 2023. As a result, we expect our interest expense to increase next year. Turning to development, our residential projects continue to lease up at a very good pace. At Bishop Place in Honolulu, our office to residential conversion project, we have now delivered and leased about two-thirds of the eventual 493 units, and we will continue to convert more floors to residential as office leases expire. At the Landmark LA in Brentwood, we have now leased over 50% of our 376 new units. rents at both projects remain above our proforma levels. While sale transactions have remained very slow in our markets, higher operating expenses and a challenging refinancing market may encourage sellers to bring their properties to market. With that, I'll turn the call over to Stuart.