Douglas Emmett, Inc.

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. I will now turn the conference over to Stuart McElhenney, Vice President of Investor Relations for Douglas Emmett.

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO of 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. Our office leasing activity during the third quarter continued at a strong pace. We executed 225 office leases covering close to 1 million square feet. Third quarter activity had a much higher percentage of new leases as compared to second quarter. It also included quite a few new tenants over 10,000 square feet. All very good news. As we indicated last quarter, one large tenant in Woodland Hills renewed but downsized, which was the primary cause of our negative absorption. Nationally, office faces three challenges. Many commentators have simply focused on the narrative that work from home has permanently weakened office demand. That is wholly inconsistent with our experience and long-term expectations. Once vaccinations became ubiquitous and offices reopened, we saw meaningful jumps in leasing volume, absorption, and building utilization. It was not until the Fed raised rates to control inflation that we saw the slowdown in large tenant leasing that impacted our absorption. Even with that slowdown, our office utilization has returned to very high levels, which was likely aided by our market's short average commute times and low reliance on public transportation. We feel that the remaining two challenges have had a more meaningful national impact. One of those challenges is that many gateway markets are suffering from new construction overhang as a result of recent overbuilding. Fortunately, that has not been a problem in our markets, where strong supply constraints have limited new construction. In fact, over the past 15 years, our markets have only added 3% to total office inventory. The third challenge, which has been most impactful for us, is that tenants, in particular large tenants, have become cautious about new investments. This is understandable and likely an intended reaction to the Fed raising the cost of capital to slow the economy. Our results in recent quarters have been significantly impacted by this last factor, though the Fed's intervention is clearly cyclical. This is our fourth experience managing Douglas Emmett through a recession, which typically comes with a mix of pain and opportunity. We feel well prepared for both, and are confident in the long-term health and resilience of our markets. With that, I will turn the call over to Kevin.