Douglas Emmett, Inc. (NYSE:DEI) Q3 2023 Earnings Call Transcript

Blaine Heck : Okay. That’s helpful. And probably sticking with you, Peter. We noticed that the line of credit expired during the quarter and it didn’t look like it was renewed or be [Indiscernible]. Can you just talk about that decision kind of whether you have the ability to replace it, but just didn’t like pricing? And I guess, whether the process to establish a new line in the future is any more difficult than it would have been to keep one in place this quarter?

Jordan Kaplan: Number two. We didn’t like the pricing. So when you look at the cost — so first of all, it’s expensive to borrow for office right now. I don’t think there’s any secret about that. And then when — we’re a company that [Indiscernible] line. I think Dave charge even more and now and really gigantic unused fees. And when you look at it, you kind of end up feeling like, wow, I mean, I’d rather just do a loan and get the interest in the bank, then fees to get into it, and then colossus fees of not even having the money. So it was just priced outside of what we thought was reasonable. Now we still like it was secured by 6 buildings. And now those buildings are completely no debt on them. And by the way, there’s still — there’s 30-plus billings that are that way. So — we have a ton of buildings that we could use to secure a credit line, but it’s very poor economics right now.

Operator: Our next question will come from John Kim with BMO.

John Kim : Can you just talk about the uplift in your occupancy guidance for the year? Looks like there’s still a lot of leasing you need to do and leasing activity was up quite a bit this quarter, but just wanted some additional color on the change in guidance.

Stuart McElhinney: Yes. I think we did a little bit better on leasing than we expected. So that was reflected in the range. But you’re right, we still got a lot of leasing to do in Q4, and that’s certainly what we’re focused on. That’s been the focus around here as we’ve been saying for a lot of quarters here now is office leasing and getting back to positive absorption is our number one focus. So that remains true.

Jordan Kaplan: In my opening remarks, I said this quarter, I was glad to see we did a little better on new, and we did a little better on larger new. And like both of those are really kind of — that’s the issue because we’re doing a good amount of renewal. We’re doing a good amount of small tenants. So that’s what — there’s — one quarter doesn’t create a pattern for sure, and it might have just been a good quarter. But that’s kind of what you want to keep an eye out for because that’s what we mostly see driving our negative absorption.

John Kim : And Jordon, those new leases, are those tenants that are downsizing from other spaces? Or are they businesses that have been built up or emerge and now looking to lease office space?

Stuart McElhinney: I think we see a mixed bag of everything. I mean, we’ve got guys growing. We’ve got new business formation. We’ve got guys moving from other buildings. So we did 225 deals, so you get a lot of variety of kind of story behind those deals. And that’s always true and kind of typical for what we’re used to seeing.

Operator: Our next question will come from [Jay Paskett] with Evercore.

Unidentified Analyst: I was wondering if you could just provide a breakdown just the leasing pipeline between new and renewal tenants and just some of the main industries that are looking for safe now?