Douglas Emmett, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmet'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 McElhaney, Vice President of Investor Relations for Douglas Emmett.

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 and thank you for joining us. Since we last spoke, we took two very positive strategic steps toward enhancing the long-term health of the company and ensuring meaningful growth. First, we have formally begun the process of reconstructing our Barrington Plaza apartment community to install modern fire life safety systems and otherwise bring the asset up to date. Tenants have been notified that they are required to vacate the property and approximately half have already done so. This is having a current impact on our earnings, but we have waited three years to begin this process, and I am very happy that it has started. Second, in July, we closed a new 10-year, $350 million non-recourse interest-only loan secured by two recently completed residential projects. The loan is floating at 137 over SOFR, which we feel is a very good rate. Both properties were built using our free cash flow, so they were completely unencumbered. In a difficult loan environment, we are pleased to have this additional source of cash to take advantage of future opportunities. While new leasing from larger tenants has been slow, tenants over 10,000 square feet did account for nearly half our renewals in the second quarter. Overall, we signed 210 office leases covering nearly 1 million square feet. We are seeing tenants renew further ahead of their expirations and for longer lease terms. This returns us to a more typical lease expiration pattern, reversing the short-term mentality we saw during the pandemic. I am also pleased that we have been successfully maintaining rental rates and controlling leasing costs. The overall value of leases we signed during the second quarter was higher than the prior lease value for the same space. At the same time, Our focus on smaller tenants and simplifying the office leasing process has kept our leasing costs below our long-term pre-pandemic average and well below other office REITs. While Barrington Plaza reconstruction and the new loan are very positive for the long-term, we are reducing our 2023 guidance to reflect their short-term impacts. We have significant cash on hand, strong cash flow after dividends, no corporate level debt, and almost half our office properties remain unencumbered. I am very happy to report that over the past two quarters, we repurchased 9.1 million shares and an average price of just over $12 per share. I am confident that our buildings and markets will perform extremely well over the long term, which is supported by our substantial leasing activity during this downturn and the long-term supply-demand metrics of our markets. With that, I will turn the call over to Kevin.