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 the 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 McHalney, 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, and thank you for joining us. Leasing during the first quarter of 2025 was quite successful. We achieved positive absorption. across our total office portfolio. We signed over 300,000 square feet of new leases. New leasing to tenants over 10,000 square feet was well above our historical averages. Our Class A office portfolio has maintained stable in place and asking rental rates despite this higher vacancy market. And as we convert Studio Plaza to a multi-tenant office building, Our leasing there is well above expectations. In addition, looking ahead, I am encouraged by our below average office expirations in 2025 and 2026. Our multifamily portfolio enjoys very full occupancy and robust revenue growth. This reflects the appeal of our high-end residential communities and the affluence of our coastal submarkets. where the need for quality housing only seems to accelerate. We are working on four solid avenues for restoring and then exceeding our pre-pandemic FFO with good progress on all four fronts. Leasing up our existing office portfolio, redeveloping our 712 unit Barrington Plaza residential property, converting our Studio Plaza office building to multi-tenant use, and acquiring additional office and residential properties. Of course, higher interest rates remain a drag on income. As we roll through refinancing our existing debt portfolio, I suspect that our cost of debt will increase between 100 and 200 basis points from the 3% average we enjoyed before COVID. My hope is that the higher cost of debt is matched with rental income growth as the economy recovers and the market reflects the slowdown in new development. At present, our office leasing pipeline remains healthy and our multifamily demand continues to be strong, but we are keeping a weather eye towards the broader economic landscape. Recent volatility in national policies affecting the public markets could pose even greater challenges if they lead to a slowdown in office leasing, or worse, tip the economy into a recession. Whatever happens, our operating platform is built to weather storms. Our conservative financing strategy, diversified tenant base, and focus on the best supply-constrained markets gives us a strong foundation to manage through periods of turbulence. With that, I'll turn the call over to Kevin to discuss our investment activities.

Thanks, Jordan, and good morning, everyone. We are making good progress toward developing the new residential building at our recently acquired property in Westwood. We still expect that JV's total investment to be approximately $150 to $200 million over a three- to four-year period, including the cost of acquisition, construction of the new residential building, and upgrades to the existing tower. As Jordan indicated, our Barrington Plaza residential redevelopment, including installing new fire life safety equipment, is on track. In addition, the lease-up and repositioning of Studio Plaza into a multi-tenant office building has surpassed expectations. During the quarter, we closed a non-recourse interest-only $127.2 million loan secured by one of our residential properties, that will mature in April 2030. The interest rate is fixed at 4.99% per annum. We used part of the proceeds to pay off a $102.4 million loan. We also refinanced a $335 million secured office loan with a non-recourse interest-only loan and an effective fixed interest rate of 4.57% that will mature in March 2032. With that, I will turn the call over to Stuart.

Thanks, Kevin. Good morning, everyone. During the first quarter, we signed just under 800,000 square feet in our total portfolio, including over 300,000 square feet of new leases. We also had our best quarter in more than two years for new leases over 10,000 square feet. The overall value of new leases we signed in a quarter increased by 0.9%, with cash spreads down 12.6%, as larger tenants skew the averages and make it hard to beat the contractual 3% to 4% annual rent bumps in our existing leases. As we sign more leases over 10,000 square feet, we expect to see an increase in leasing costs and a widening of our lease-to-occupied spread. However, even with more large leases and a higher proportion of new leases last quarter, our average leasing costs of only $6.17 per square foot per year remains well below the average for office reach in our benchmark group. Our residential portfolio remained essentially fully leased at 99.1% with strong demand. With that, I'll turn the call over to Peter to discuss our results.

Thanks, Stuart. Good morning, everyone. Compared to the first quarter of 2024, revenue increased by 2.7%. FFO decreased to 40 cents per share, and AFFO decreased to $62.3 million. and same property cash NOI was essentially flat. Our results this quarter reflect the acquisition of 10900 Wilshire, as well as the January 1st consolidation of a previously unconsolidated joint venture which owns two Class A office properties totaling 400,000 square feet. At approximately 4.5% of revenue, our G&A remains low relative to our benchmark group. Turning to guidance, We expect our 2025 net income per common share diluted to be between 7 cents and 13 cents. And we continue to expect our FFO per fully diluted share to be between $1.42 and $1.48. For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges, or other possible capital markets activities. I will now turn the call over to the operator so we can take your questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. In consideration of other participants, please limit your queries to one question and one follow-up. Our first question comes from Steve Sakwa from Evercore ISI. Please go ahead.

Yeah, thanks. Good morning out there. Jordan, I was just wondering if you could provide a little bit more color detail on kind of the leasing and the larger tenants that you mentioned, the over 10,000 feet. I suspect that maybe your smaller tenants are maybe less impacted by sort of all the tariff uncertainty, but I'm just curious, like the pace of leasing that maybe you saw throughout the quarter and you know, did you see any real change between January, February, March on the smalls and the larger tenants?

Hey, Steve, it's Stuart. So, you know, pleased to see the new leasing increase this quarter. We had good demand kind of across all the industries. The over 10,000 guys also, you know, really strong last quarter, which was great to see. Diverse industries in that set as well. So, you know, we saw legal, we saw real estate, fitness, all those guys coming in. So, But I'd say the core portfolio is still performing really nicely. And, you know, the last three quarters in a row that we've seen improvement over 10,000 square feet.

You know, they got us kind of up to the positive territory, which made a big difference. Remember we were saying to you we need to get positive absorption and we need these guys to come back, and they're getting us there.

Okay, thanks. And then obviously your apartment portfolio did far better than we had thought. I know you added two assets into the same store pool this quarter, but could you just maybe speak to kind of the pricing trends that you're seeing in multifamily and how much of the NOI growth was driven by rent growth versus, say, occupancy gain? And I guess what are your expectations for rent growth moving forward on the multifamily assets?

yeah so one thing to be super clear on is we have not changed our asking rents from the time before the fire to now which is being frankly closely monitored by the state and you can check and we haven't changed our asking rents so so We are, although we have people that are moving, and of course they might have been at a lower rent, and now it's the asking rent before the fire and now. So that's obviously making a difference, and we're very full. When I say very full, I will say that probably in my career, I've had a few times that people call and want to get a unit here and there, but in general, nothing like now. I get a call a week early. or almost every couple of days from people saying, I need to get into your LMLA building. I need to get into Shores. I need to get into Champaign. You got, can you find me a unit, you know, et cetera. And I'm like, I'm pretty on the list. I mean, so it's very full. Did that answer your question, Steve?

Well, I was just curious, like, Well, I guess you're saying that with the restrictions, you can't actually push rent. So maybe this is just a function of below-market leases moving up to market rent at this point. But I guess the SOEs stay in place through the end of this year.

Well, you can move rents 10%. We're probably being a little more cautious, but we're big, and we want to be clear of where we stand. And so, as I said, I mean, we literally have not changed our asking rents from before to after now you probably were facing before. No fire, no, nothing. You're looking at a pretty big rollup. The market has been, was very strong and strengthening before the fire. So I'm not sure that you can attribute the fire to a lot of this. You can probably just, and maybe there's even more coming. I don't know that answer. But I know this, we probably were moving our asking rents in a pretty good way up into the fire. We stopped at that point, but we're getting those rents and we're very full.

And Steve, I'll add the two buildings that came into the same store were 1132 Bishop in Hawaii and Landmark LA in Brentwood, both of which are performing really well. So having those in there helps.

Got it. Thanks. That's it for me.

Thank you. The next question comes from Nick Ulico from Scotia Bank. Please go ahead.

Thanks. Hi, everyone. So in terms of the debt refinancing that got done in the quarter, the $335 million secured office loan, looks like there was an extension on that. Can you just talk a little bit more about the rate that you got? It seemed pretty good for an office loan and how we should think about you know, being able to get sort of a similar rate for other debt, office debt that you're dealing with, you know, maturing over the next year?

Well, I'm glad you like the rate. I got to tell you something. Those loans are very hard to get. Very hard. I mean, and going out and refining the office portfolio has been Really a rough run. We're getting it done. And thankfully, we have great relationships. And that's probably helping us a lot. And I'm glad you like the rate. I thought it was pretty good. I wasn't getting knocked over by it. But in general, I tried to say in my prepared remarks that looking at what's going on, because we're working on debt. We start with stuff that's two years away. And we're working on a lot of stuff right now. It's one of the big agenda items around here. I'm kind of starting to see a little bit of light at the end, and I tried to give you guys that information and said, you know, we ran for a long time at about a 3% average in terms of our debt, and I think now we're going to be, you know, 100 to 200 basis points up on that. And I think we're kind of coming out in that range. I mean, we'll see. We have more to do, but we're coming out in that range. All right.

That's helpful. Thanks. And then second question is just on, you know, the absorption comment, which I know that that applied to the total portfolio. If we look at, you know, the in-service portfolio, actually sequentially, you know, the lease rate was down a bit. Occupancy was down a bit. So, you know, is the message here that, you know, new leasing volume still needs to pick up a little bit more in order to show absorption in the in-service pool, and I also wasn't sure if there was any, like, early termination of space issue you were dealing with in the quarter that may have affected those numbers. Thanks.

No, there wasn't anything like that. And I think you're kind of right. I mean, we have our, you know, in-service portfolio, which shows the occupancy of the in-service portfolio, but then at the same time, We're saying, hey, but the great news is we have positive absorption because we're taking credit for the stuff that's not in the in-service portfolio, which is true. But I will tell you, these are tiny moves, getting to positive and negative on these things. And I'm not going to tell you going forward what's going to happen. I have concerns about the economy. You heard that in my prepared remarks. But at this moment, we're feeling pretty good and we're doing a lot of leasing. And, you know, across in-service, out of service and all the rest. So we're feeling pretty good about what's going on. All right, thanks, Jordan.

Thank you. The next question comes from Connor Michel from Piper Sandler. Please go ahead.

Hey, thanks for taking my question. I guess first, Jordan, you mentioned some of the macro uncertainty and tariff turmoil. Have you guys seen any tenant fallouts or leasing deals kind of fall out from import or export related businesses?

So far, so good. And I really tried to say that right in the prepared remarks by saying, look, we already know this effect in the stock market. Stock market is jumping around like a cat. But, you know, have we seen it roll to our tenants and impact our tenants? Not yet. And then even worse, which is obviously a fear, is does this roll into some version of stagflation or just recession? And, you know, like I said, we're watching for it, but haven't seen it.

Okay. I appreciate the color of that. And then... On the acquisition of Westwood and then the related developments, did you guys mention any timing on the start of that development?

We are already working on plans. We're going. So I hope that the timing is that we get the building built in the next three to four years. Completed. Three, hopefully. We're going. It's buy-ride entitlements and in our business plan of buying it, it was to build it.

Okay, great, thank you.

Thank you. Your next question comes from Rich Anderson from SMBC NICO. Please go ahead.

No, Wedbush. But anyway, so in terms of your common round absorption, you know, it sounds like leasing velocity exceeded your expectations. But would you say that the cash releasing spread underperformed your expectations, the down 12 percent, which so together net to sort of in line performance on a dollar basis? Is that the right way to think about it or do I have that wrong?

Hey, Rich. No, I don't think that we're disappointed with the spreads or surprised by the spreads. The spreads are going to jump around. It's, you know, obviously it's dependent on the mix of leases that get done. We did some larger leases, and you had some longer leases rolling off. So longer leases have higher bumps. And, you know, we focused on the straight line spreads, which are still positive, which is great. But I think in this market, you should expect the spreads to be in the territory they've been in. and they'll be a little volatile quarter to quarter.

But all in meeting your expectations, you would say, or exceeding your expectations when you take into account the pace of leasing, the velocity?

You know, the comment about exceeding expectations, just as an aside, related to Studio Plaza and the leasing there. Okay. And we've said this in a variety of ways over the last few quarters. And I had it in my section. I am surprised we haven't seen much of a change in rents considering the vacancy in the market. And now I understand the reason for it. And I understand that, you know, where the vacancy is and how it's operating and tenants need to be where they want to be and all of that. But I know there hasn't been a lot written about this. I've talked about it, but I'm impressed that we are holding rates so well that we've stayed flat on the straight line, meaning like leases we did in a pretty good market, you know, 2019, 2018. We're still holding that rate now. And, you know, it certainly isn't the same market. I think it's a testament to the fact that there's no new construction. It's a testament to the fact of the quality of buildings that we have. And I see that in New York, the higher quality buildings are also holding rate and doing better. And we're experiencing that there. I mean, I can't speak for the B and C product that's in the market. I think they're suffering. But people want to be in the buildings. And they're well run and managed and kept clean and nice and with good amenities and all the good stuff. And it's making... More of a difference than I ever really thought that it would in terms of holding rate and being a place that people want to end up at.

Okay. All right. Sounds good. And, Jordan, you made a comment in your remarks, interest costs up 100 to 200 basis points, and you hope that NOI follows along at some point. Your guides for same-store cash NOIs call it, you know, 1.5%, 2% negative NOIs. So that's not happening now. But is this interest expense view like a sort of flash in the pan? That's what's going to happen this year and into next year, and then you commence the catch-up on the NOLI line as long as we don't fall into some sort of major recession? Is that sort of your three-, four-year outlook when you look at those two competing measures?

One thing is leasing out the portfolio. That's just straight, perfect increases in NOI. Another thing is as the economy recovers, which we have seen in the past, you've got to be around for a long time, because there's no new development and as companies recover, things tighten up and you see an acceleration in rental rates. And it's that acceleration in response to whether it be inflation and where interest rates are, it's that acceleration in rental rates that I'm hoping will offset interest rates. Now, interest rates may also come down. I don't know what will happen there. I know that for now, the reason I made that comment is because we are centered in the process, literally. of doing a lot of refis. We're refining some stuff that's farther out. We're doing a lot of that kind of work, which we'll announce when it closes. And I can see where we're headed. And we're about to move a bunch of stuff out quite a period of time. And I can see where we're going to end up. So I know I'm going to end up in that, generally, I believe, in that range that I gave you for at least the next few years. Now, if the market also improves and rental rates go up, it should offset that. And that was the point I was trying to make.

Okay. All right. Fair enough. Thanks very much.

Thank you. The next question comes from Peter Abramowitz from Jefferies. Please go ahead.

Yes. Thanks for taking the question. Just wanted to dig a little more into the comments around Studio Plaza. So when you say leasing is surpassing expectations, Is that just sort of in terms of demand and interest in the asset? Have you actually gotten anything signed there? And then just maybe kind of expectations around timing of when do you think you could be close to full occupancy again?

All three. Leasing demand, the amount of leases we're signing, and the speed at which we'll reach a very reasonable occupancy level.

Got it. I guess if you were to handicap, you know, when a reasonable occupancy level could be achieved, what do you think that is, I guess, for modeling purposes?

You know, I don't want to make a prediction about it beyond giving you that color because I've made other predictions that have been thrown back at me. But I can give you my feel about it, and we've usually been right on those fronts. And I was very nervous going into it in the market and everything. We're hearing about the studios and everything else. And this building has, you know, they're doing it. I don't know what to say. The team's doing a great job of leasing it. And this building has not been available for a long time. And it's a sought-after location and extremely high-quality building. And we've done a really beautiful redo recently. a remodel of all the common areas, and it's working. I mean, it's attracting tenants, and I'm super pleased about it because I was nervous, and now I'm happy.

And, Peter, that remodel work should be done later this year, and hopefully we'll have, you know, some of the leases that we've signed already commencing later this year as well.

You have some of that on our website?

Appreciate the color there. And then one more, just could you comment on entertainment industry demand, I guess, in light of some of the challenges of the last two years or so, sort of how that's shaping up today?

Well, we really have only that one building in the media district. We haven't been like a big landlord to the entertainment industry historically, other than the vendors, like the like the agents and whatnot, you know we renewed a giant lease with one of the big agencies and you know that we're having a good experience in the media district. We don't really, I don't think we have enough interaction to comment more largely on, you know, overall demand. And we're not in, obviously, the studio business, which is where, like, a lot of this discussion revolves.

All right. Thanks for the color, Jordan. Appreciate it.

Thank you. The next question comes from the line of Opal Rana from KeyBank Capital Markets. Please go ahead.

Great. Thanks for my question. You know, just on the recovery in LA post the fires, you know, how's that progressing broadly? You know, has there been any shifts in demand that you have noticed either by side of tenants, industry, or sub market? I know you already commented on the residential side, but just curious how it's going on the office side. Thanks.

I know we've been asked a lot or people have proposed that, you know, we should see there's billions of dollars moving into the market. That I'm definitely saying. Now, that should translate to additional office leasing, and I understand why people feel that will happen, whether it be architects or contractors or whatever it is that want to be here and near where all this construction is going on, because it's not just houses. I mean, it's streets and utilities being installed and tons of stuff. But I anecdotally only know of one or two small leases, and I can't tell you we're seeing that flood at this moment, but maybe it takes time to formulate.

Okay, great. Thank you. And then just, well, into the decision to consolidate the JV.

We redid the agreement with our partners and extended it out substantially, and It's hard to call it a decision one way or another. The terms of the agreement dictate whether it's consolidated or not consolidated. And under the new agreement, obviously, we're a very large owner, and there were other terms in there that dictate that under the accounting rules, now it's consolidated. I can't tell you I was thrilled about that. It gave us additional interest expense. It's kind of phantom because they act like you bought it. You want to talk?

Yeah, it's Peter. When we go through the consolidation process, I mean, obviously, it affected a lot of line items on the consolidated P&L, not to mention the, you know, the gain that we had to take, you know, which rolls through net income. So, you know, overall, probably slightly negative impact to interest because we had to also, you know, fair value the debt when we put it on the balance sheet. And it's obviously at a great interest rate. So we'll see some amortization roll through interest expense. maybe about a penny impact or so overall included in our guidance.

Okay, great. Thank you.

Thank you. The next question comes from the line of Seth Durgie from Citi. Please go ahead. Hi, thanks for taking my question.

I was just kind of curious, you know, would you look to do kind of future acquisitions with a JV partner or fully owned and You know, where do you see the opportunity today? Is that kind of on the multifamily side or the office side?

It's definitely – this is Kevin here. It's definitely on the office side is the resi pricing has backed up slightly, but not to the degree that the office market has backed up. And so the 10900 acquisition raised a lot of eyebrows with some of our partners and other people that we've been talking to overseas about the opportunities. And so, you know, we're going to focus on finding high-quality office buildings in our markets that we can apply the operating platform to and create some value. And our partners are very intrigued by what they're seeing.

Great. Thanks. Thank you. The next question comes from the line of Jenna Gallin from Bank of America. Please go ahead.

Thank you. You know, maybe digging a little bit deeper into that, kind of curious around your capital allocation thinking between these opportunistic acquisitions. Would they be, you know, for the property? Could you also think about third-party management and then redevelopment like in Studio Plaza or share buybacks?

Yeah, you're asking, okay, obviously we already committed to rebuild and we're leasing up Studio Plaza, so consider that one done. Now you're asking me about share buyback versus acquisitions?

Yeah, and whether they would be with partners or on balance sheet.

So we have bought back shares. I think we bought back $115 million or something like that. But it's done. I don't like issuing stock and I don't like tinkering with our stock because I don't think we've been great at predicting where the price is or any of that. I mean, sometimes it's so extreme that we do it and we have a group here and we all, you know, talk about it, but you've got to really be really in a clear thing. In terms of doing acquisitions, I mean, I think we have an opportunity to buy stuff directly, but if we don't include our partners in our acquisitions, we're going to lose the partners because they're going to look at us like we're cherry picking. And they're going to go, oh, yeah, you come to us when you don't want to do the deal because we obviously have money to do deals. But you don't come to us when you really love the deal. So in general, everything we buy, we give them an opportunity to come in. And historically, they have. So I would expect to continue that way.

Thank you.

Thank you. The next question comes from the line of John Kim from BMO Capital Markets. Please go ahead.

Thank you. Can I just follow up on Steve's question on the multifamily growth? You had 7.7% same-star revenue, not much of pickup and occupancy. You don't have a lot of turnover in the assets, so you can't really push rents to market. So were there one-time items in the first quarter that don't carry on for the rest of the year?

No, John, no one-timers. We did have an increase in occupancy year-over-year in the same store pool, so that was a contributing factor. And, you know, we do have pretty good turnover. We do have some rent-controlled units in Santa Monica that turn over less frequently, but the rest of the portfolio besides those turns over at a pretty good normal rate. So, you know, we had occupancy contributing. As Jordan said, we're very full and good rent growth.

I think what is being missed, and maybe I'm misleading by saying we haven't raised rent since the fire. But rents have been really moving up. And just sticking even at that new number with the role that's now happening over the last few months is rolling through in terms of the 78% that you're referring to. I think that's probably the primary cause.

Yeah, I mean, it's Peter. The same store includes all of last year and rent growth over the course of that year.

So I know you don't give guidance on same store to multifamily, but high single digits, is that a good assumption?

Well, it has been, but we don't give guidance on it.

Okay. Switching gears, can I ask about Warner Center and the new Rams Village development proposal? If you're involved at all as far as potentially selling assets, to the organization or maybe overall how that impacts the office market in Warner Center?

It's very good for the market in Warner Center and the stuff that Kroenke and Otto and that crowd is doing is outstanding and we're certainly in communication with them. hugely in favor of the things they're doing and supportive.

But you're not looking to sell any assets to their organization?

Well, historically, we don't talk about deals. And by me saying yes or no, you go, you only talk about it when it's yes or no. So we really don't talk about it. If we do a deal, we'll definitely announce it.

A few years ago, I think this was a market that you were looking to potentially exit. So I'm wondering if that's still on the cards or this changes your view of your long-term ownership.

I don't think I ever said I was trying to exit this market. That's not correct. I mean, I don't know if that was out in the world, but it didn't come from me.

Okay. Thank you. All right. Thank you. Our next question comes from the line of Dylan Brzezinski from Green Street. Please go ahead.

Hi, guys. Thanks for taking the question. Most of my questions have already been asked, but I guess just can you touch on sort of the acquisition pipeline and if things are sort of accelerating as it relates to sellers willing to come to market and part ways with their properties?

What do you think?

I think that people's West Side assets are the family jewels. And so people will do as much as they can to hold onto those assets. We don't have a lot of distressed bank opportunities, but there are some core funds and other people who have other more portfolio pressure. that might end up selling some of their west side assets because they don't have liquidity in their other markets it's certainly not a flood that's for sure right okay that's helpful guys thanks thank you our next question comes from anthony paul on from jp morgan please go ahead

Yeah, thanks. Just first one on Studio Plaza. Apologies if I missed this, but what is the lease rate at this point at that asset?

Hey, Tony, we're not tracking individual buildings or leases that way, so we haven't provided a rate.

Okay. When you talk about your leasing, the new leasing in the quarter, the difference between the over $300,000 and I think the $275,000 or whatever in service, is it safe to assume that the rest of it was Studio Plaza or is there something else outside of the in-service?

Yeah, we've got two buildings in the, not in the in-service portfolio. So it will be Studio Plaza and then the new acquisition in Westwood.

Okay. Got it. And then just the other question, you did a couple of debt deals in the quarter. And so I guess next up is the 2026. Any thoughts as to when you, like are those on deck for near term or sort of imagine they'll have some implication on earnings for this year?

Yeah, that's what I was alluding to. We're working on a lot of debt right now, and we do start early on stuff. And yeah, you're right. That's why I'm able to give you my prediction.

Well, and just to remind you, Anthony, we typically like to do a seven-year loan that's swapped for five years and leave ourselves a two-year runway. And so those 2026 expirations, that's the floating rate debt that you're seeing. And so You know, we're working with our lenders right now to figure out new deals and we'll announce them when we close them.

But I tried to give you guys a feel for it because I said in my prepared remarks, I think we're going to be up one to 200 basis points over the 3% rate that we enjoyed pre-COVID.

Right. But just make sure I understand that those, because you have been pretty clear that you want to get those done you know, this year and you kind of gave us those brackets, but those aren't, but you didn't put those in your guide, right? Like we would have to kind of think about that separately.

That's right. We don't put future refinancings in the guidance. So, you know.

The guidance has a bump in it at the rate of flooding and the curve that, you know, like you guys could also figure out.

Okay. Thank you. Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Jordan Kaplan for any closing remarks.

All I can say is thank you for joining us and we'll speak to you next quarter. Goodbye.

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