Hudson Pacific Properties (HPP) 2 May 242024 Q1 Earnings call transcript

Hello, and welcome to Hudson Pacific Properties First Quarter 2024 Earnings Conference Call. My name is Lydia, and I will be your operator today. [Operator Instructions] I'll now hand you over to Laura Campbell, Executive Vice President, Investor Relations and Marketing, to begin. Please go ahead.

Good morning, everyone. us. joining for Thanks the Lammas, are and President; Leasing. EVP on and Art Coleman, Chairman; of Mark Harout call me Victor today CEO Suazo, With Diramerian, CFO; X-K earnings available now our website. supplemental Yesterday, both on release filed SEC, and our on we an with the are and

An of will this also replay available for audio our website. webcast on call be

regarding well earnings Some in nature. forward-looking a call today release supplemental non-GAAP used of and is financial the as information on we'll share forward-looking for of reconciliation this statements reference as the our information on measures Please call.

will and office our and XXXX provide discuss an Today, and studio as Victor will from financial results our on development, industry review and well highlights as will other update Mark outlook. operations trends quarter. the and market Harout

to Thereafter, your we'll questions. happy take be Victor?

you, everyone, Thank the for call. our Macroeconomic XXXX first contemplating have to longer. keeping quarter welcome with persisted rates higher into Fed Hello, pressures and Laura.

vacancy across terms of tenants On continue in and demand the is existing office yet absorption markets, to many thematically side, downsize our new stubbornly and as net speaking high recovering. remains requirements negative

and supply. percentage along the backed year. Sublease team's companies persistence construction first the our starts reductions in new with and by and the is are second newly markets. In urban and accelerated quarters office more exceeding minimal are with with significantly of safety line leasing our trends curtailed becoming our and signed in activity, positive these contributing creativity, stabilizing additions deals have focused public to meaningful backfills new more rarities policies hold, business-friendly Remote-first taking crime across of

which needs was addition renovated supply our and construction, ensuring have new portfolio as to of products repositioned today's that in-service our are will in our adapted, XX when workforce. We have tomorrow's only facilities factoring built pay centers, always neutral. XX% of dividends been XX% on XXX% either our of the otherwise older such EV further over or certified, of substantial consistently portfolio pipeline we is wanes. Today, space, our new XX% And XXXX or after meets focused CapEx have showers bike with average XX% lockers, are end-of-trip age, and properties outdoor in renovated charging, offer substantially XX% XX% approximately LEED have fitness improvements and functional Over carbon storage, building years. the have

more our Further, the combination in of as Francisco Center retail in of ever. programming CapEx, San becoming Bentall in throughout Ferry tenanting, our place-making than and by strategic expertise and our important successful Building demonstrated events is Vancouver stewardship

those especially of to leveraging learnings urban entire benefit now the our more portfolio, markets. are We in our

segment hit business. upon every market In In the our terms essentially our ground resumed, late our last revenue first team filming to improved year, of the across stages studios, and the resolution as strike's services. the quarter, studio running of

have promising a Sunset We of first activity our also our stages, lease at majority Glenoaks. vacant on negotiating inclusive of

of film Other eager compared services and the first production reported curtailing Many respectively. factors television was craft-specific pending simultaneously. IATSE Broadly shoot negotiations and all However, reaching the XX studio multiple agreements the by by last even Most and completed the media, ramp-up why year-over-year. late restart constraints number logistical up what Hollywood has for May to in are May where be has in X% increased is Teamsters on while another avoid studios recovered, include are primary Local pilots FilmLA our the last more nearly business were demand following IATSE the And down one week. days And as to July, industry expirations quarter drivers stages production, the the are as due resource year, XX% quarter of several seems television industry anticipated. in to has is largely production locals, to in tenfold. There XXX Los to union strikes, recently believe been documented than slowly film strike. reasons occurred different and far of the post with productions recovered Angeles, speaking, our first thus, than as the as contract track attempt pandemic. well and of

year. stage Industry of original how IATSE IP. we is long-term demand it subscriber high-quality, industry fully and consolidation and shifting content contract the valuable these the for compelling. their business the Thus, evolving, weigh will models growing essential pursue the other building more Teamsters is profitability. with while factors and is to the assess see that imminent, But as as Unfortunately, networks question challenging will balance and expiration bases is studios fundamentals no remain on services there for will

to Turning dispositions.

We further sheet. continue potential with sales the opportunistically balance and goal deleveraging our pursue to of fortifying

exploring While actively square are representing we office disclose cannot collectively yet sale assets the around XXX,XXX we which of assets, feet. X

a recapitalization Area. fourth office Bay a at asset in the potential We are of looking also

most we partner's While dispositions, this had Market. our interest XXXX opportunity purchase unique we to are a quarter, focused in on XX%

XXX,XXX XXXX to to neighborhood, a both expressed volumes. related XXXX. through Francisco, We Market to in downtown commentary speaks The and significantly grow This interest lease lease the its is mid-market actions city at has XX-plus-year at representative's square city's which that in the its then deal since feet direct San with this largest commitment executed building. of

further to space no attractive with continue XXXX Market the demand our very basis for create to drivers at and office Francisco in leverage. all-in believe value We ability at long-term San

our XXXX. corporate our XX% our first XXXX Scope once year such baseline, and include by again X are carbon the the by reducing Key track we report. XX% on from we annual reduction we were that for during accomplishments quarter, X meet S&P target And emissions Yearbook. in included responsibility Sustainability published month, to Finally, last sixth science-based

and operate to certification STAR assets among LEED continue on best office our basis neutral carbon the with We in our sector. the a ENERGY

and of a the and trailers average, exceptional GlobeSt. nod on I'm part electric And is Quixote's it non-solar our as Pacific terms to Hudson outperforms began manufacturing to pricing of our Verde which Work, people standard to once recently, that, product which sustainable most And and the again we going trailers setting culture. With to line, turn last industry over as in year, utilization. in is Place solar named for XXX% Mark. Best

Victor. Thanks,

average As Francisco square Victor of Silicon of noted, the has comprised the with office leasing quarter, Valley. momentum XX% year. our of accelerated the and signed first since XXX,XXX the leases along in that In deals San Peninsula of over nearly start we feet new largest leases were since and levels since quarter the feet XXXX. We size was or new XX% square leasing total new fourth transaction leases first and for signed the all highest of XXXX, XXX,XXX our Both of activity. of quarter

consumer new Bentall foot lease company, foot included square Concourse TDK approximately signings X-year feet Significant company semiconductor at Centre, at X-year square XX,XXX software XX,XXX square with approximately of lease feet of InvenSense Metro company new biotech XX-year a term and a a which an with at foot XX,XXX new lease XX,XXX and renewal approximately with square an with Metro at a square X-year backfilled XX,XXX with former Center space leases company electronics Nutanix and Plaza.

relative had our improvement also we metrics. Quarter-over-quarter, other leasing in

net part, the X.X% quarter, costs by in grew down XX-month leasing negotiated term. retain our structure rents rents for large were lower in the to X rents and GAAP in prior competitive effective modestly off X.X%, were which with InvenSense levels at rent from while Our average annual cash a Concourse. Similarly, reflects, years increase

XX,XXX with of increase XXX office at number expectations Bay is the assets, at last tours tenant Market. a leased Seattle nearly increase Valley. representing and This of in-service at our average feet down basis end XX% quarter. million year-over-year feet as requirements, of requirements XX,XXX EMC in Nordstrom square points and our XX.X% XXX the which had Our XXX to approximately Rack line in were We XX% was square portfolio the related the First XXX in midsized mostly size in X.X largest to square and which of in feet Dell Area, Silicon quarter, with a includes compared and of with move-outs office

feet the average at the we pipeline leases of size either or Market an square square in includes LOI. million signature lease XXX,XXX current around still City the subsequent requirement XX,XXX to feet of Our of quarter, foot deals new feet. XXX,XXX square have with leasing square Upon XXXX X.X

our remaining that is is coverage XXXX on expirations and Our deals XX%. discussions or leases, proposals LOIs

studios. the to Turning

to and significantly XXX typical intel strikes levels points end last from up filming say, Our XXX about XX productions the more approximately but in year, Angeles, of, market the still Los below XX XXX. to during currently of at around

demand filming studios Most shows meaning studios back productions films facilities of is like they curtailing prestrikes. most to further own their That, the are these independent were and new major returning ours. for fact directed already and

major still the improve. are As rates lit start our more and to should productions green up, capture

stages single studios in-service with March, Trailing slowed vacating in the levels. On at Even first reflects leased which at remained active indicator we quarter-over-quarter is strikes. XX.X% or stage and leads in occupancy leased XX% and XX.X%, production our a as studio that XX-month tours flat about tenant during future Las stages our preproduction have and Sunset of respectively. contact, XX-month were XX.X% in XX.X% films which trailing potential studios quarter-over-quarter, increased Quixote a at were a quarter, space our basis, Palmas healthier at been and February in shows the

of have our expressions in of or in-service XX and TV place used in for Quixote either XX interest negotiations on primarily have We film are the production. uncommenced and stages all or leases

shoots. stages We take of quarters. performance for given points gains XX% our primarily our production percentage near-term occupied, quarter, will weightings are those XXX the segment led of activity Quixote prior nearly up commercial at trailing to time revenue In potential every to leased improved business. has those of approximately to points that lease for The within basis strike-impacted as studio in were first quarter-over-quarter. This have resumption XX-month appear X the occupancy even the

operations Quarter-over-quarter, XX% our quarter still prestrike Quixote's our fully prestrike approximately were below $X.X remains roughly when revenues our across Quixote that recovery. where by ancillary half levels. by most Most X% first within business driving fourth of $X.X third a last component Utilization higher transportation with was XX% compared of studio assets of million impactful, studio major the about yet transportation all million. and pronounced bulk increased to have and levels. grew recover revenue Transportation revenue both grew revenue to That and revenue quarter is But delta year. segment,

development. square space of One the in across Subsequent office most while remain take XXX,XXX recent South large than to to the Bellevue's and Apple the our from migration region growth exception, story street leasing is been quarter feet has for Washington submarket the the to large-sized quarter, the mid- overall. slower market, downtown services in that Lake first Seattle. the been return. is feet of rather square success legal active their in has to tech positive Professional sublease completed to building XXX,XXX a we organic Union. city from approximately main XXXX expected tower demand in substantially alone within and Turning tech huge

foot, Marketing the Glenoaks, building per with XXXX can aggressive, basis substantially some pursue a will we of highest Center are on pricing. At now That productions first taking Sunset also key leased. square completed Washington near-term the will also very can we this The in at in multipronged getting milestone the Our said, the competitive of asset with May, end garner that the we an dates. quarter, just we be start $XXX to market. rents of open approach in and quality our

month to first a on we lease a deliver continue to construction grand call of over opening the are strong is entire is This and of X purpose-built event end will we Harout. a with studio. And Pier I'll as a At longer-term tours. facility turn we in stage are Sunset for to inquiries Our under Manhattan's and indicator now this tenant place discussions which for field take XXXX, in will pilot demand XX, and basis. the negotiations with

Mark. Thanks,

last due tenant $XXX year asset respectively to and large studio vacating to of Market services, quarter first and quarter lower at the XXXX quarter million third sales, utilization occupancy in revenue compared in stages and space Our the last $XXX.X to was primarily million of strikes. XXXX due a year, the first

attributable $X.XX to million Westside interest $XX.X expenses Our specified the Westside excluding of in per in construction attributable per year. Specified offset $X.X FFO year-over-year and million prior transaction-related less per items previously repayment expenses the XXXX to partner's items affecting revenue compared purchase change share diluted One first $X.X consisted by to noncontrolling share. Market. $X.XX items, in diluted of The and $X.XX Two, or quarter mentioned quarter expense to $XX.X or by transaction-related loans was last year million diluted secured from per is FFO of of million following interest compared reduced the first $X.XX FFO, or share diluted resulting ownership of share or our

per a GAAP change previously $XX.X recurring Our mentioned to per or quarter revenue was cash compared in by diluted AFFO FFO first quarter first $X.XX million the million year with and in $XX million share diluted or less lower largely affecting $X.XX items CapEx $XX attributable and spend. to offset approximately last share higher

NOI was Sunset cash to mostly X Market Las same-store tenant by at Our million one and Studios. at $XXX.X Palmas driven $XXX.X move-outs, compared million, the XXXX other

$XXX facility. of million of There construction under cash, end Sunset Pier liquidity and the of we had $XXX million capacity million Glenoaks equivalents, capacity of our of the is approximately $XXX and comprised undrawn on million Sunset total credit At unsecured $XXX first quarter, XX of loans. additional revolving our unrestricted cash

Our debt or value of book maturities our share no while share compared November and fixed was debt until to was XX.X% net undepreciated of material XX% capped of our XXXX.

Turning to outlook.

in Our of office line in this our to year. portfolios we outlook provided and February in-service studio full with perform materially year that continue

combined gradual For our same-store operating this reflects momentum. with assets, our positive improving leasing conditions, office office, both

more studio by revenue our our by Regarding predictable flow to generated same-store returning reflects ability leases production. assets, capture extension, multiyear the from derived this cash and

in discussed, as expiration our for to and when However, Teamsters Victor performance will the currently how and dependent given this are limited year, production and true of leased of Mark levels. more and services the July particularly especially visibility show which by business, normalize, majority the show IATSE as and is stages production Quixote our contracts This of and we have thus, respectively. currently May its on

alongside only There quarter specified are quarter diluted our outlook. the for second $X.XX We to related full FFO therefore relation outlook. XXXX key of an are $X.XX share assumptions providing FFO to the items second in year per to no outlook

are our for at to through due that Las XX.XX% XX.XX% property Regarding same-store full the reminder assumptions, the A remainder negative to FFO cash for of year we excludes our our business. negative Sunset recovery range NOI growth adjusting FFO our occupancy year. same-store to Palmas potential delayed Quixote

rates interest remain this reduced partner's more interest of assumptions can the our $X leases, project same-store FFO given quarter. the current of XXXX for higher balance will long-term our on in we expectation of assets are performance include $X first million year, in primary purchase While based the also our the XX% interest that office driver preponderance by due for the and studios of the our of we attributable our ownership confidently noncontrolling same-store increased to to expense metric. These Market approximately our million of

Teamsters, Our early to streamlined contract the outlook and not assumes advance strike and begins successful for IATSE and in IATSE but of hopefully Teamsters in production negotiations. membership resolution up June notably pick which smaller do following has negotiations,

markets potential dispositions, of impact the excludes acquisitions, outlook activity. any financing our always, As and/or capital

production where predict have to We provide the full normalized flows more accurately cash a we once can outlook believe we point to related year levels to will Quixote our FFO business. continue future

your to happy be we'll Operator? take Now questions.

Our first Instructions] Michael of Citi. question [Operator from Griffin comes

Great.

with business that I is your close cadence starting is rate $X.XX your of maybe throughout was. the XX% maybe office, I it, the guidance? question. you call the formally below is I clarify. run of to to guess wanted think guidance. we Are to got basis guidance think should right? withdrawing And just about How I previous earnings XX% full a Just that, year, studios, a broader XX% year on

it office the get which there's business, to like visibility particularly around clarity, more of Just seems the side trying there. some

question. the for thanks Michael,

have area provided times. grid in Pausing only on. Pausing thing is QX we a effectively That's or The potential clear, in that's the provide, we driving the also metrics business of be that there, with or didn't And provided we the but believed this we else rest FFO. that is portfolio guidance, that clarity. up our back good fact, now, the really all a office business the those operations provide the February. at visibility the the results in side, have there, to Quixote pieces else. along, leasing And change. is moving lack now, It's and better that year. we strikes we Everything just end right of provide normally consistent amount we projections. mentioned some the make Just we that least what's at the of few what because everything we ways of of Quixote

expectation. To is $X.XX a that quarter your point, annualized our about not the

we're quarter to hard and to they're Quixote X going However, to normalization Quixote uncertainty look year, expect resolved, that's back to items are pure in even... in to going on conviction continue related the business to to those about get in next like If much have what as there's QX until of resolved. it's the half but And that. we closer the any grow

about sorry I'm would I'm management you throughout the should I we I and head projected that's think around on that for it wrap quarter the how to back does quarter, to really the you year, probably reaching you trying if midpoint around can the hone have just $X.XX year in have it. from fourth to kind get like trying back a business, that. that $X.XX if about in guide get that. saying, get the wasn't it studio in lack why reiterated. my but to confidence but last Q&A. And understand of the would back reiterated just volatility seem $X.XX not that's that Harout, to there's you're what Yes, Maybe this full visibility of to

isn't. isn't it's line, to The when if in it. we got February. back of because But Harout counts are business. not lower. not from the Show or either quite quite business metrics not We're performing counts our weigh Quixote Quixote in you the that on mentioned. expectations We're had the lift getting show Quixote guided is, that we rest better, Michael, as No, Yes. it hoped reiterating other

so days just to look up It's those rate. tell us Quixote normal on show we counts fourth a difficult and forth so exactly a production very that for like to quarter us to it's until activity, place you when back normalcy, until because results. what it drive unclear will second back business, third and it's get of shoot run to And showing in yet and in quarter get

no -- stemming don't Quixote is we guidance the that the So, in short, longer original see business. is achievable from

that content color Got maybe you. And just talking headwinds. industry extra at about Appreciate But are million to the laid prepared like you platform? on run Quixote hit million from business. there, Obviously, less can remarks near-term the that when kind broadly Mark. the $XX then look spend the rate acquired of you media legacy of we I companies, that confident if think consolidation, issues $XX EBITDA, maybe you you your out still

still I yet. we achievable. difficult seen normalcy because to that think It's haven't really to it's commit

to it hard its get it's know think looks new I there. to like. we but possible, we back just normal leave I still on have I feet need to again. the what So business mean seems the mean it

Yes, Michael, it's Victor.

-- is completely not full going going of X and it's and an a in indication so facilities of business does -- mentioned, the we our is mid-April, being our this mean, different completely show terms as XX% occupied counts. XXxX, in that running of the and through that the I Just that industry are now is up are But filming studio level. off to minus on right fully facilities said,

uncertainty and of second until May a year. the start I sort that line the If stop. they -- seems not which to now, like they're normally feel going get in see clear we'll of right of have to think in pick just they shows it July, sight, they if they're in it's to, this solved going half is up

Fargo. Heck from comes Wells question next Our Blaine of

withdrawing options sure how [indiscernible] studio step the slowness is given side, few full taking blocking impactful think larger FFO stock to again, to that again, get strategic the getting more the progress, year trying Victor. here, back this think should you a Or as includes but on this working year highly I'm to office you Just on the tackling studio guidance, got you've think and and a type assets power are, initiatives we be guys here? office whether still known to moves. Should I about move-outs large spin-off or we some have should and lease you we to where the just the here are basis? of come how and on side. there guess your a side? the what Selling about more it on normalized bigger back wanted in kind

specific listen, both. you're thanks. -- areas, commenting on you Blaine, I will comment two and on are I think

tackling. indicative believe First core to the of I all, were looking leasing past results this we are blocking be always that. going quarter's of that at business, and

that so the as the quarter, start well. as far, of mentioned, is we've And second with aligned

aware are in been. not we side a achieve They're to going acutely I expectations we're office are very where quarter the known that's but a We what of process. big. Large last said, have move-outs. couple that evolve, being our starting given standstill what are is our the line on of results to be with That can activity believe not much and there tenant our yet.

We evaluating alternatives. our all of are

be additional That for asset of the second of to the some Clearly, liquidity at year too. for mentioned the portfolio. look should sales half in. us will existing alternatives evident on kick You the for

we the evaluating of roll-up, us And just the that be reasons, conversations But it our I that last swan been the that for end think spin-off, conviction for then, are the of basically has it that. in is on moves are drag all forward. some not for And and I industry alternatives mean, has around business we're industry a the obvious evident around that, strategy yes, event to the a us make going larger is media that black whether and result whether year is will recovered. a

we proportionately on think the because to When on business. we office on in be good side, the being the running when movements of studio that we seem the relatively business weighed the hard has see great, never of it volatility it's got XX% either. And was stock. credit only side full that I hit of The obviously it

So look are external that And ours. best to that is that industry movement around are for at right those move the that ongoing now. we of conversations around us some and think portfolio

Great. Really color, Victor. appreciate all that

Just those those to in? you you concurrently follow Anything kind could up, options. conversations said say stage of some exploring timing were more are strategic of of kind what about you and

I'm markets potential stages. there not obviously, now. Listen, strikes going external and around still our Clearly, are factors out right out driver potential be this fluid strikes, given to fact That the that through are talk some control. the about those of the of And will conversations more timing these in the massive IATSE is a capital are that fluid. there volatility

I'll it leave just second And question, then All on there. right. just guidance.

run what You you extent guidance strike? negotiations. could this another pointed guidance resolution guess, And we think out much do at think process that successful assumes the visibility the change, to contract point? you you into have do I the again, do upcoming updated of into a there's if how

in a we kind will we're on the or to is. time, moment a have resolution basis. something and a it then So if what there can't that we'll now, what see right strike go That strike visibility of be is just there's going that on on not

a fluid. SAG. It's it writers year and was the is As we we that prepared process better said than lot in with the our last remarks, believe

be thing telling mean Nobody strike. the I this will still wants the a year. entities who end effects have hopefully now, table signed now it, will said, we basic be of off. last already XX I and people as reeling last the they're of through which take mean, to work I on we take right the working through as resolved. agreement, month, us optimistic. this part And and of the optimistic the latter People which of June, then They're going and us that are us should are part could to at on are are

next from Abramowitz Our question from Peter Jefferies. comes

I to follow Quixote here. So just up want on

negative in the So $X quarter. you about NOI did in million first

$X.XX to of are of with get second that quarter in a Is what kind trying of $X.XX the expecting, expectation deduce for to Quixote. things kind kind quarter-over-quarter. Just going second similarly, unchanged to just that basically from you're of quarter pretty stack here sense up trying what's guide, embedded the the

answer it's going question your Peter, Harout. to there. Just I'm

to is our the be expectation, is quarter, the to midpoint. when near-term the we're the continue So provided business on the just that offset office second you're as guidance Quixote in initially That's as side we from improve termination. going there'll expectation thought and $X.XX on not not a strong some why in back February, we which seeing change

Okay. there? the could it. you seeing then And at have of Got XXXX, you're Washington talk about the what available? the Kind specifically pipeline coverage on space that you

actually floor we're to that be continue now, multiple users. X in users Right Harout. There's are -- discussions. is This Peter. we Sure,

We are yet. not in negotiations

a offers outsized concession high deals built the top have net premier of deep views. there gravitating the that on it know, some in been market you that's in the of low out As tremendous premier have XXs transacted sublease space that larger the been at XXs, that's call space discount, packages towards out. They're

that sublease continues the the so down particular, I've those news in good to And spaces tick in is just Seattle, that referenced.

we delivered. so just And

weeks, at We will be our down that's out coming are capture us. couple coming of the all within areas activating in finished the common the -- marketing the the to exterior building state-of-the-art and center, next poised we're currently demand of building spaces which

-- deals, there that will in teams the the we I Now be the out uncovering it all say market market. and outside

late where deals of that feet market there's X to into are another coming the are 'XX market, importantly, dearth 'XX, X kind expirations been offer the a tenants large going out XXX,XXX But in the probably more of square to over currently. the

lease-up to that asset. feel -- that the we to very of So that's promising that

Goldfarb from Sandler. of question Piper Alexander next comes The

your that there there's a it this sounds to think was a appreciating Victor, sticking just how the comments Last want year? Hollywood issues, to as with hours. the From year, last sense to crew, out you year, are of to I sides to lot get sides focus Do seem Or close on more copacetic that last a do it's going to you the just on it year. year. sort really working sense avoid is comments, happened tense really are the trying they what it's of both the residuals, what and your between back negotiations sense get to work But trying want real as this the closer towards like AI, think work there this a of was year, people achieve? resolution?

track it's mean, and I back the that, right, were driven out. really and not day, this be which is creativity different or of they're by close so on resolvable and the issues more is on side, is of to level impactful the to can't aspects side. that medical I'm which settle on are and more of resolvable. their obviously what I Alex, to the where set the living it. to the it's house. directly is I to on service This impactful much cost other the be focused going AI This seem comment component there by Yes, an actors constituents, at of mean, not and writers end of content, a

all here, But and of overall, arming other. strong are comment it's each resolution your an issue I think They less of accurate. a is for striving

to the and like anything That table an of position their issue trying to side get on maintain said, it's this are who coming people else, I of trying are either done. strength. think being more to of

vote constituents not for And all so I they surprised strike. though be if there even a won't would was by strike

negotiations. and don't parcel part overreact. So That's to of people want I

be could included a there that an as the eventuality strike vote, So not of be may occurring. overall but

is obviously, And be that XXXX on question at Okay. area partners to second seems have able to a of do buy the REITs then to out discounted office been buyout, the lucrative prices. this the some

give buying any that JVs could the are one, guess and we other you there two, color earnings is, benefit that valuation your I or then So the sort you see -- if out? out in? follow-up And buying around guys of of can partners then

I'll an let XXXX was this to don't be some has then didn't willing in. you on you rights our as that any what by and to and as that a sides, more in Harout REITs. given they've would put general, unique is partner. was office, available on done the had our transaction, have, invested want they say, result, an leasing ability all this, this, office a in that they in to we fact other Listen, decided give capital I partner very talk weren't just I'll we details. both the Obviously, opportunity on through And just know, Well, the work

So the for best this resolution parties. was both

days this that believe massive of thousand which obviously has deal, couple with as hundred recent square feet asset proved we at the has and think looked just announced is by a I most ago, entity being upside. We follow-on which existing AI several we it our well. on both a entity

that asset, our which the is an so gives basis been is a basis with in will for investment next deal on is a occurred And opportunity continue occur large what and that XXXX. to paid but to lease And we what this yes, X out have result, a is one throughout. out moved for we year, it great us it's has it below us And as great And this up. tenants, our and vacancy Hudson. one for moving

impact. the to And then earnings address

are interest a of those the directly attributable year-end as prepared I our in So said as noncontrolling two my interest. FFO result between areas and partner. to buying change that expense and now out And did remarks, our

interest million improve more to which the is transaction, $X short fantastic of So leasing going that FFO will then but result basis. expense, $X our we're continue and to a going term a generate as of more in to on that we're million also incur of about go-forward number

Our next question of Morgan comes Ronald Stanley. from Kamdem

quick Just ones. two

you starting of think, with one, I leasing million, So at the XQ. had end X.X pipeline, the

was you Just is see upside you that at the trending if sort XXXX of the just included trying with get And you that lease Or year. an previous expectations? where to And end -- the is surprise? occupancy update commentary if where of could is. where the that in provide an

Yes.

anywhere said. deals square over back as address first. million, X.X flows actually. It's million the million around in But X feet, X.X occur. as ebbs I'll from It pipeline and So usually million the X you

million just at So to forth. if obviously, promising piece and inked remained under as XXX,XXX right? X.X that just at we're the leased got deals still now, million, to about start X feet, feet. And sits remain square the most X you big where at that number we've the since, So last -- is is about at having quarter. to continues it million Victor about think is a we've new on that we're we've quarters, least had pipeline that it's subsequent mentioned, that deal square negotiate the so as And the X robust and still we

negotiation X.X So leading where our about feel of it on of been is, is active right numbers do for were indicator our It sustained itself, deals tours saying we right? quarters feel And in really a top for tracking in we QX, there about we've at Why worth couple million is. spiked it tours. and of each the it spiked, it's was that where QX good really other. good in now the

what which to quarter. which acceleration why the first has into experienced we're becomes we going tour activity, comfortable sustained the some that in deals continue in is is continue seeing, point, negotiation So the to we're itself it's saying that see next lease in we and quarter, velocity at that

is Mark. This

back you for as which back gave reminder, could going blocks to walk through get occupancy, last XX.X%. end the we of we outline building On you call, just the not to 'XX you I'm also fourth a how occupancy, -- we potentially suggested first to a we and quarter. our quarter of with bit indicate own third we in blocks. a occupancy that dip was would those that in building But and improvement that see in the second did model

in Our our first were. with expectations are line what quarter results materially

our outcome original right be of our on our just occupancy -- regarding of essentially expectations. the expectations in quarter year, first to seems top for our terms So

the one sort And just you potential, back here, NOI, second mean, then my Really of helpful. of studio a right, I was just step talked taking I long-term to just million. a XXX sort about think of back

doing uncertainty XX out is the guess long-term just with of in XX, L.A. the sort in-place for strike sort was as targets or production of to to sort of trying that sense? Quixote what those a environment sort XX thinking presumably. I you balance to I'm of back of still target sort that, the realistic need what make get was sort figure XX if this of all So to into to

the XX. We up think it healthy it's to remains a stage on leasing also by also that to now, got there, have interest ultimately get there. a just No, mean I we're Pier includes I way, leased for realistic. and important, which remember Yes. it in negotiations Glenoaks, and pilot good, we

So XXXX comedy, days shoot of a of if get look are feet are as in XX%. shoot business is first in reflected of drama that the has definitely the back say, kind on normalized days X good as months counts, indicated. show of we in almost are are days first to. Shoot slower period at down to TV, compared the the its ingredients look is XXXX, and The they're ingredients below, indicated, teens, you high there. there, That's been to Victor indicator to One on which, for other months bit the a which level same year X down.

gets in Las X We we as get And the But over just contracts get business I sit stages is it there, Pier outlined, that to will once Glenoaks in we're get then back leased up. line, And XX we Once today So leased that we stages rebounds, back the it's we those to XX. sight. at -- business the have either slower of of up. industry get Palmas up. holds when everyone then expected. there, the within get still the We to then need XX our those the number need have have rebound. available it Quixote think And or ultimately, on delivers. we to those stages you leased normal,

Caitlin question from of comes next Goldman Our Burrows Sachs.

that occupancy for how for tied informed view is similar this for somebody guess the rest Could year your the that expirations do the asked into of mark-to-markets talk on retention of I the are? And you the question point? think expectations before. rest about you of where at year Kind that year? or

feet. that XX% It's Art. retention number, just That XX% number as reported, includes of -- expirations. we tenants that under remaining our we're Yes, smaller is remember late-stage, square now, for right number so probably about there's X,XXX

of with those tenants. we're discussions is, answer the -- small yes, in So most them of most

XX a progresses, sight better get engage out. year They the of we'll on they're As doing. what usually line days

can definitely that So number up. go

comfortable the moving about we maybe beyond so that. feel And XX%,

saying what top but going might additional you're know like on is So is XX% -- sorry, of you renew, the to it?

correct. That's

then back Okay. Got studio it. to And just the side.

release profitability impact. the commented consolidation shifting on I think having also you industry that in models and that business are an focused

it not? impact wondering possible it prestrike big does I'm could returning you might think not how suggest how So just that of Quixote ultimately have do income and or levels be to impact could of an this

not would I into read it that way, Caitlin.

a no impact the -- to were the quicker be Therefore, people or there planned but executed. know opportunities longer lot development suggested that result, is, the to think out a as development what of is smaller. stages what that are going new series had up impact I we listen, a clearly existing don't of to are be are predevelopment the presumed. than going I is availabilities a lease and that pipeline lot And think, going

parent not others their So in so we're their are and mean the read at they I and do they're -- -- and would essentially situation, ] on the lots obviously I whoever consolidation. are their And Paramount looking be. right stages they a lot. own continue into own now, new ours with but side, [ to going of could in CBS to they

Catherwood next BTIG. comes of from Tom question Our

month large of Market, expansion substantially take options the XXXX the of And terms to Supervisors would you expecting for there back What has last of Board space. going in options to Maybe that you before those to the any timing and being need lease go back more likelihood approval? executed. signed are

XX, was of take what of options a is negotiation really beginning XX the number the so they This Tom, to hard they're months spaces to take this available of is Art. or for spaces. as Yes, become amalgamate not city. must

space. There's there's no feel fourth third, about very news we that probably have going another that to more that back quarter, soon, thousand block feet several And we're very and We we we're hard just very that. timing And behind so then what confident larger hundred behind soon look signed -- going it is. will of space. feel good to we've see of

Appreciate Art. last then me. it. Got that, And for one

office in possibly that those X this recapitalize in that sales and mentioned remarks, Bay the sales initial included looking quarter? another expectations And given What a did mentioned and any you're timing in the the the part Area. the weren't guidance, timing for guidance Victor, are to you recapitalizations. sell withdraw assets You X prepared to to have decision in

I time we include in the line we're acquisitions talking as dispositions No. mean to and guidance our about. what don't or

we in business that that place reiterated we we Quixote. around to the is As we've before, around Everything that only is a stable currently conversation referred put discussed. guidance and else

of them dispositions, terms the the is can I In one say of of marketed. being X,

and in X that timing in lines terms transactions. of and discussions But X give execution. we're right to in as guidance is other are is those in are contract recap, the going to not The now. of well. of time And And our what as off-market terms expectations

The of Mizuho. Malhotra next comes question from Vikram

business just I to timing to and first, the maybe about considering I referring something not about volatility in just external, just you or business talked in its I'm in studio But were wanted be to want Quixote. clarify talking Victor, clear, entirety, studios you the the anything.

when on what does something mean? that give clarity you maybe us Just considering meant some external,

Yes.

to studio and was inclusive So the referring I Quixote. Sunset of business

of -- in sort its Okay. or JV presuming? spin entirety would you or that that some would be consider I'm something, And

right options different all at looking are now alternatives. and exploring We

know just had And big a makes was about leases. just leasing year, Yes. in I of of pipeline, lot sense. Got we few I the then AI it. last pipeline office. a so wondering, That talk for terms

Now does we've the just more. I'm maybe could contribution rest still or the look like renewals. AI pipeline for of in in bit Art, if talk just out about a talked perhaps, you're just talk the XX% it of looking perhaps about leases the pinned your little wondering, where now, markets? new you What -- or today, XX% the

That's very interesting a question.

by there Let in Francisco, deals as time, start leased once was AI X.X we we've million, up. about San market XXX,XXX get then upon me that talked feet are just in saw the out the saying,

the Now showing In of quarter. expansion over over we're back okay? slightly X last AI Valley, the of city, it feet end in square million really started up

we alone, the we kind and new, expansion of fact, matter in which of XX,XXX others Valley then tenancy, XX,XXX leased leased a net was As AI space. the square of -- were of feet renewal new kind of

see starting are we more going it's feel Valley, in a to yes, we So and lot very to quarters. to the in comfortable coming continue grow the

Scotiabank. our Nick question comes Yulico from of And next

city free Market. you back I the the TI. the gave that of was, And first the give $XXX was rent, $XX year wanted to one of question starting we building? you turn rent, Is like type rest terms for package XXXX just leasing assume of that the package should for I it would in guess to

why? a square XXX,XXX it's not Because AI we're right There's -- way, would of And the years, Remember, we're the with another -- but Yes. I wait to on is in lease package engaging comes feet interest, XX an on with is, So going the one by basis. dictate that's term think tenant. and it's probably see. full think and it is addition concession I that market mean in, good it's be now. depending commensurate floor the what based negotiating it on I to where city the right? the but just yes, question, it,

obviously, So before, tech to wasn't down and market as the starting of use see it's not it we're coming tenants just street. a beginnings government of kind

going mean, to term AI for will obviously, the other the as just I want and is tenant out if to the for this Obviously, are the and tenants that terms. different Victor. much well. different the going it's same, I back come there referring talking Nick, back come is terms to to that economics the they're they're Art city. clarify. similar be Sure, is is to city comp probably

Yes. it. Okay. Got

as that, Just an capital at a on clearly, the mentioned you're go leasing potentially is, building. but asset needs of into original is to Victor you that, back amount follow buying up the to fair that that maybe is this basis, there

we like the feet if So you're for vacancy think of XXX,XXX leaves, I don't something I number have going mean, to once TI know is $XXX vacancy, there. the square if about, but Uber the right all

Is think depending, million a put why going $XX reinvest But to paid you bit makes the -- the how partner guess, capital package. so just level I leasing And that for on million interest, sense knows? little to ultimately in the of who it more you're it you in hearing asset? maybe about $XX

think and successful. I bought proved to to tenants So asset, BofA be going the We good question be originally shifted Listen, has brought and it asset on that itself was tech we occupied asset. that. Obviously, in.

XXX,XXX Art Now at we've are City it right and lot shifted is looking at, out, confident plus XXX,XXX asset deal going to of looking price of affiliated a XXX,XXX throughout the City the Francisco We're sense feet entities very footprint other read lease are at, and entire now square would with additional another the we're said, high. up. as feet, are not San I to we're of square that looking obviously, this the to per or of pound. of that the San deal a Francisco tune makes or improvements this XXX,XXX that tenants. [indiscernible] of AI on the into be and that business-related being

in of else when even I excellent real these prove at nowhere end in at unique think at anywhere city, yield are where trying selling acquisition seeing a opportunity out some or sold not day the estate the it's is them that for the depressed going to of to you're be near hurdles that an other and the we that the and IRRs our disclosed was given levels. this Hudson

city quick support I I that mean guess a mean, reason had building I just one confident in terms And the other the follow-up. to that in you in into city. getting Okay. within is to guys there activity, clearly, but are of users the of reason city, part revitalize try the besides and be other you do and the the that think tenant city. submarket asset

were. recall, we Nick, think we you then, the tenant X that departments. we tech started we exactly XX There square this did the -- the And BofA can building first besides with if where years, had then different if In city. tenancy. you -- was XXX,XXX back feet and tracking were city, right, the in is

there that So was beyond was the and the city forth. GSA and building so

of And so -- where if you think we're we it, back about kind were. to

which is fruit, in I into about better $XXX space, Why? Uber governmental low-hanging spot. if the space. the there's a think And think Square neighborhood. -- a because are with in starting Because we're the the and that foot you that are We users $X,XXX

right? podium, windows and the very installed pocket the game is we And so podium going We and the of residual the further. have if on dollars windows And lot remember, are high also you go out value TI on their dollars that to there. a didn't changed

Our next question Green comes of from Burzinski Street. Dylan

on to Just outlook sort of for leasing. wanted touch

at get amount amount parallel a the come tech large lot or to that feet the your is call a of max I look or so, or what we absent guess is given sort do feel XXX,XXX tenants upper months leasing done can in And As quarter. leasing the your square for I get activity bound last any or XX quarter that, leasing to larger leasing like quarterly the a indicator you sort it of you leasing? of on of when any good of seems back as sort in mean you big expectation tenant can markets? of done these it, any

saying cautious Let of a be foot I would me start of at number. Dylan, to with we've sort square look at sort XXX,XXX like -- maxed out

the than flows pipeline to Art think an good is more what's larger I said of in the after it some that we're existing working did consistent. I this on like consistent was stuff we're end the just the and in quarter right that we very But going renewals now think leasing the tenants quarter signed. of and is and looks we we're looks quarter marketplace going as the we mean working is startup of deals day, anticipated there be out. at ebbs with I coming on and quarter

to what in million feet. million it square lump to of it year, sort wouldn't Therefore, it's that's I a say, is. X So close X.X

to I think it's going ebb and flow.

of it's it's terms talked starting very starting a And in gets Seattle. the us the some strong with larger hot, run Those open with city peers and back and of in as had clearly, open to our up decades, to AI, we've hot. about and and hot, up in then Bellevue right? tenants, the Bellevue. forth, go for Clearly, and gets Bellevue in Seattle they then markets has have gets city

the in much you're so there that And because for rebound leased being will back estate the marketplace. But are as that's not feel in that's equally to of with have Bellevue, to quality some it real we going of is product as good Bellevue. the the from availability that alternatives the amount new in stuff now the city

It but tenants do statement So Art? I time, they comfortable that blanket is feel I are coming wouldn't make larger a coming taking are back. that. on back.

Victor. You nailed it,

question of next Our comes of America. Bonnel Bank from Camille

I I team have side. to the a a tenant. signed office on saw two biotech questions lease the

if life higher the spaces Bay science in from these from seeing curious benefits priced for companies down Area? any you're certain trade functions Just

Yes.

X would the square than feet. -- I is out right, think almost mark. last We've was of largest. X it of I a tenants say the this X biotech way, the there's XX,XXX suppose it again, in uptick seen there, seen largest, I or we've which is biotech. by an the XX% over benefit that the quarters, this more is would

certainly up. they're willing So pay to

in And of are your you -- pipeline? in tenants pickup a those seeing

stage In Peninsula. tours, mentioned on which we mostly it and pipeline, tour tour I've have is the our in elevated seen an activity In the current no. yes, numbers, in the our activity, also early

supplemental, about in my not the XX%. vacancy about on for looking question, you And the is your occupancy accounting of X/X second at so Okay. provided but below portfolio's detail ownership, the

the And for strategy seeing So of are these could are on a you're trying bucket? business in buildings? disposal any Just specifically? activity get Or of comment you to your these plans for your the sense what these touring there? buildings

the all markets, it the Yes, the buildings. question, in part I'll of first that mean consistent. applies mentioned That's our or consistent which are portfolio, that I've answer all literally I good a really, of is is throughout tour just numbers weighted to is leading into it's the entire news, indicator on. the heavily right? again, Vancouver. which -- activity negotiating It's really what we'll It's not Valley be

It's Camille, Victor. Yes,

at of that asset list, I you're I think in referring disposition the to. that looking is only vacancy one the think

Our of next Securities. question comes Anderson Wedbush from Rich

do of possibility here get a ultimate the creates is you have leased Stating sure? for the ownership obvious sold? full goal optionality at view it Is a up of long-term to it you. XXXX for ownership, Or least and

I think, and lots Rich, options, got we've of yes, and yes.

the a wondering groups maybe domino of to of effects not And what then shoe that claim a And X guess. groups, that I you sort happened could sort the business back the there's But the risk, question, another Okay. are happen out need. potentially over interworkings the point, seen studio had what scenes year drop? happened of scenes. Fair Or or from works any have enough. of past I and watching that think other nowhere know things That's this behind has do anything you've be could there's else that series we've behind I copycat to of here. second if really office I'm to like all how of don't

is in place. had a since since Yes. you've got external had we're then industry, go after now hopeful of it been volatility mean, put strike what's sort the 'XX, up they But And that XXXX I comes doing in of 'XX, hadn't we've this of reoccurrence negotiations. the obviously, and this risk for you of There continue you norm strikes XX no in is we'll the 'XX, one back to as that years. no to and renew

BMO question final John And Markets. comes Kim Capital our of from

peak studio up I multiple Obviously, earnings. multiple peak just mean timing. question and going the just would just the wanted follow and do strategic business. And use alternatives you proceeds. scenario the potential get be But believe timing earnings. on of wanted the the I to I really peak on you're to depressed on that question to

I suffice think that, Listen, say are I to John, we as it's evaluating alternatives. said,

even options. not take line are of is We going The say, level, by and very to multiple a entities time place. high intimate from interest which could a those alternatives will I

haven't look in position And going of even clearly, And of not use the place. at proceeds we're to at so it. about got talking a when we're transaction we

story was upside the is growth if just I'm growth a of maybe it Okay. some drivers, the delayed. for in thought I of volatility there you the wondering similar see that all business, studio near-term we behind office. mean so

lease Mark the is mean, occupancy, the obviously isn't ongoing that speaking. upside. mean Well, our we -- say I given of expirations. this tour is activity, clearly pipeline, level current have to see we I there that

questions think to with get to we've response 'XX that, occupancy tracking levels back get absorption. And historically are original in -- indicated levels. retention there's can retention that we we to get we of our the year-end respect new to that We to we the respect net hit the occupancy one that hit -- with on projections have

Do do. upside? short yes we And the see potential is so, Of answer. we course,

the Q&A concludes session. This

the for turn to back over any Coleman closing So Victor I'll call remarks.

Thank you.

to and Talk everybody's time over ran we quarter. next you Sorry, appreciate support.

Thank today's you concludes This call. Goodbye. for joining.

lines. your disconnect now may You