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 participants are in listen-only mode. After the 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 McElhinney, Vice President of Investor Relations for Douglas Emmett. Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO, Kevin Crummy, 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. Thank you. I will now turn the call over to Jordan. Good morning, everyone. Thank you for joining us. I'm pleased to report that 2022 is off to a good start. Compared to a year ago, FFO is up over 15%, and AFFO is up over 20%. We continue to see strong demand from our affluent small tenant base and increasing interest from larger tenants. We leased almost 900,000 sq ft last quarter, including more than 325,000 sq ft of new leasing. I was very pleased to see positive absorption for the third consecutive quarter, especially considering our typically high roll during the Q1 each year. In addition, our leasing spreads meaningfully improved. After quarter end, we acquired 1221 Ocean Avenue in Santa Monica, one of the most prestigious and best located multi-family assets on the West Coast, with panoramic ocean views from every unit. Looking forward, rising interest rates and inflation will present us with both challenges and opportunities. We are prepared for the challenges and remain ready to take advantage of the opportunities. With that, I will turn the call over to Kevin. Thanks, Jordan, and good morning, everyone. As Jordan said, on 26 April 2022, we acquired 1221 Ocean Avenue, an iconic apartment property overlooking the beach in Santa Monica. The property is currently 98% leased and includes 120 units with an average unit size of 1,500 sq ft. The purchase price is $330 million, which works out to $2.75 million per unit or $1,800 per sq ft. The purchase was made by a new joint venture that we manage and in which we own a 55% interest. The joint venture obtained a $175 million secured, non-recourse, interest-only term loan that matures in April 2029. The loan bears interest at SOFR plus 1.25%, which we fixed at 3.9% through April 2026 with an interest rate swap. Turning to development, we continue to see strong tenant interest and rents above our pro formas at both 1132 Bishop in downtown Honolulu and The Landmark Los Angeles in Brentwood. When completed, these projects, along with 1221 Ocean, add almost 1,000 units to our portfolio. As I mentioned last quarter, we are also working on repositioning a number of properties that should substantially boost rents. At our recently acquired 1221 Ocean Avenue, we will be continuing a major renovation project, which includes significant upgrades to every unit as well as the common areas. We have plenty of dry powder and strong JV relationships. I remain hopeful that 2022 will bring more transactions to the market. Stuart. Thanks, Kevin. Good morning, everyone. Leasing demand was strong during the Q1. In Q1, we signed 246 office leases covering almost 900,000 sq ft, including 571,000 sq ft of renewal leases and 326,000 sq ft of new leases. As Jordan mentioned, we achieved our third consecutive quarter of positive absorption with our office lease rate increasing to 87.7%. Our leased occupied spread increased to 3.1%, an all-time high. I'm happy to report that our leasing spreads this quarter improved to + 9.4% for straight line and - 3.7% for cash. We remain focused on recovering occupancy at this point in the cycle and expect rent spreads to remain choppy. Our multifamily portfolio remains full at 99.7% leased, and rents continue to rise at a strong clip. With that, I'll turn the call over to Peter to discuss our results. Thanks, Stuart. Good morning, everyone. Turning to our results, compared to the Q1 of 2021, revenues increased by 10.4%. Same property cash NOI increased by 10.7%. FFO increased by 15.4% to $0.50 per share, mostly driven by both office and residential revenue increases, partly offset by higher expenses. AFFO increased 20.2% to $94.1 million. Our G&A at only 4.7% of revenues remains very low relative to our benchmark group. Turning to guidance, we are raising our FFO guidance for 2022 by $0.01 to be between $2.02 and $2.08 per share, which reflects an increase from our recent acquisition, partially offset by higher interest rate assumptions. 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 acquisitions, dispositions, or financings. I will now turn the call over to the operator so we can take your questions. Thank you. For our Q&A, if you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Again, in consideration of other participants, please limit your queries to one question and one follow-up. Thank you. Our first question today comes from Jamie Feldman from Bank of America. Your line is open. Great. Thanks. Thanks for taking my question. I guess I just want to go back to your first comment. You know, you said strong demand from affluent small tenant base and increasing interest from larger tenants. Can you talk more about the leases you did sign in the quarter and how the pipeline looks today? Do you think you can maintain this 800,000+ leasing volume, especially given your expirations start to moderate going into the back half of the year? Hey, Jamie. Yeah, I mean, like I said, strong quarter for leasing. We signed 246 office leases, which is, you know, a real good number from us. Like, we're seeing good demand from small tenants, medium-sized tenants, larger tenants for us, which I think are small for most people, but, you know, larger for us. Really good quarter and the pipeline still remains healthy. We're happy about that. I mean, would you say is there anything you can tell us about, you know, who's actually signing leases now? Are there different sectors? Are there tenants that had been on the sidelines for a while, especially on the larger side? And then also, you know, what does the pipeline look like today than maybe this time last quarter? Yeah. I think one of the strengths of our portfolio is how diverse our tenant base is and the demand drivers we have here, and that continues to be true. We put that nice pie chart in the supplemental for you guys that shows kind of all the industries that we have. We haven't seen any real material changes to those groups. We're still getting demand kind of across the board from all those industries that we've typically had. No notable shift there that I would point to. We're in kind of a flow business here. We don't, you know, we don't call out individual leases. We're doing a lot of transactions, several a day, really. You know, every business day, we're signing three or four office leases. That continues to be the case, and we're seeing good broad-based demand. You say the pipeline is still. You know, the pipeline today is as good as it was three months ago. Like, you could easily put up similar numbers next quarter? Yeah. I mean, I'm not going to make a prediction for Q2. We're early in the quarter, but the pipeline remains healthy. Yes. Okay. All right. Thank you. Our next question comes from John Kim from BMO Capital Markets. Please go ahead. Thanks. Good morning. I was wondering if you could share any characteristics on your new joint venture, on multifamily. Any characteristics about the partner that you're with? How big can this fund be? Is it a one-off acquisition, or are you pursuing other apartment acquisitions? Hey, John, it's Kevin. The partner's an existing sovereign partner that we have in some of our other joint ventures. You know, we haven't set up anything formal where we've got a plan to go out and buy a certain amount of multifamily. It's certainly an asset class that, you know, when we can get larger properties that have the right size of units, we're all over it and very aggressive for it. I don't think, you know, your question, this, Jordan, it's not a problem of having the money available. If we set up a fund to do additional deals, then we'd have an obligation to feed it with deals. It's more a problem of finding the deals. I don't think there's any problem having access to the equity to do the deals. When they come up, it's easier to make calls, and then we have a partner. Sure. I was just wondering, this is a more luxury, higher price point asset than typical in your portfolio. I was just wondering if you were targeting the higher end rental market. We definitely are. All the way across our portfolio, both in office and residential, we're targeting the high end. This was a fantastic fit for us. We just built something that's at the top end. We own other stuff here along the coast that we're doing work on that is at the top end. All the moves we've made have been to have the highest end, the most premium residential and office portfolio. You mentioned doing renovations on the assets. Can you describe the timeline of that? Will that be as the units v acate? Because I would imagine the turnover on that asset is pretty low. The turnover is a little lower in this asset, but we're just continuing a program that the previous owner started, where when we get back a unit that's unrenovated, that we spend the money to upgrade it and then release it. Okay, great. Thank you. Our next question comes from Manny Korchman from Citi. Your line is open. Hey, Jordan, just following on that line of questioning about the renovation program. How much money do you intend to put into the asset by the time that program is done, and how should we think about sort of a yield on that incremental capital? As I said in the past, most of these deals are yielding over 20% on putting the capital into redo the buildings. This one isn't any different. I suspect we'll put something less than $20 million into the project. It'll be within that range. There's also work we're doing that's a lot. If you're talking about the new deal we just bought to the lobby, and to the arrival experience, that I think will be, you know, small dollars to make a big difference. You know, I appreciate the point on moving to sort of the higher end of the market on the resi stuff. If that's the goal, why not take this one on wholly owned and JV some of your sort of more run rate, you know, properties you've owned for a while, and have the public investors exposure to the high end be higher and the JV exposure to sort of more the commodity market. We don't have a lot that is commodity, but I will tell you that, you know, you're right lined up with our investors who'd also like to have us put those projects in JV, those along with the new stuff we're buying. You're in heated agreement with them. It's much harder to put a joint venture together where I'm selling something. It's much easier when we're buying something, we're all going in at the same price. That's a really easy phone call. We have documents done. To say to people that, "Okay, here's what we're gonna do. I'm gonna buy this," which obviously they want part of that, but I'm also gonna put these other things in which then they have to value those, and they're not trusting me to do the valuing because they have to have outside values since I'm actually a seller. It's just a harder deal to put together. I might have missed this, but have you spoken about the cap rate valuation on this purchase? I mean, you know from the past, I'm not in love with cap rates, but I think that this thing will stabilize somewhere in the mid-4s%. We're going in the low 3s%. Okay. One quick question for, excuse me, for Stuart. Stuart, just the spread between occupied space and lease space has widened a little bit. I know in the past you talked about that being attributed to sort of lighter traffic just on the tour side. Is there anything to note on that, or when does inflection point come where that flips? Are you talking about the lease to occupied spread, Manny? Right. Yep. Yeah. We have seen that gap out. It's kind of an all-time high, which I mentioned. Honestly, I hope that we continue doing a ton of leasing over these future quarters and that stays elevated, but we're probably likely to see it moderate. Really what we've seen is that during the pandemic slowdown, you know, it's stretched out our build times a little bit. It's taken us a little longer to get folks moved in. That's caused that gap to stay a little wider than we're used to. Thanks very much. Our next question comes from Steve Sakwa from Evercore ISI. Please go ahead. Thanks. Good morning. Stuart, I guess I just wanted to understand a little bit more, kind of the absorption trend. I guess I was a little surprised given the strength in the leasing. You know, you had over 300,000 sq ft of new deals, and you had very good renewal activity. If I look back to your Q4 supplement, you know, it only showed about 475,000 sq ft expiring in the Q1. You know, you did almost double the amount of activity and yet absorption and you know, the lease rate only went up 10 basis points. I'm just trying to figure out what am I missing in the math here. You know, if you continue at this pace or what pace do you need to actually see more absorption than kind of 10 basis points a quarter? What I'll tell you is this. We know that the first half of the year is very tough. I don't want to get too much into numbers because I don't know what number you're pulling. We knew we had huge roll first quarter, and we have pretty good roll second quarter, and then we have a more mild second half of the year. If you would've told me that we were gonna get it all positive during the Q1 with leasing, I was definitely happier than you are about it. I mean, I was thinking we're gonna need to do a lot of leasing to get this to be a positive quarter. You know, as Stuart said to you, we're still seeing a pipeline that looks that way, which is fantastic news. I consider the leasing that was done during the quarter and the fact that we actually had that amount of roll. Look, we did 900,000 sq ft of a positive 10 basis points. I mean, that tells you there was a lot that was going on there. Right? If it was a matter of pulling leases from other places, then you would have been a lot more positive. We had a tough quarter ahead of us. That was not only a fantastic quarter, great job done by the crew that did it, but also a good sign that it's a very lively market right now. That's the main thing I've been looking for, is, like, are the people out there to backfill and fill this thing up? You know, we saw that, and we've now seen that for three quarters in a row, really probably four quarters in a row. For sure three, 'cause now take this quarter. I think as long as the rest of the economy and everything holds and the recovery keeps going, I'm feeling very good about directionally where we're headed in terms of doing, you know, job one, which is refilling up the portfolio from the losses that we took during the pandemic. Okay. Well, we can certainly follow up offline and go through page 19 of the supplemental in more detail. I guess as it relates to the Landmark, you know, when we toured the asset, I guess in late March, you were having some very early success on the rents you were achieving against your pro formas. Is there anything you can just sort of share with us on the volume and kind of the pricing since that time? Yeah. Well, yeah, we're still having that success. I mean, people are moving in, and we're really pleased with the leasing that's going on there. I mean, I'm not changing it from saying it's gonna take two years to lease up the project, but all signs are that we'll make it in two years, and maybe we'll do a little better. I'm sure we'll make it within two years for sure now. We're getting rates that are just substantially above what we expected when we started construction. Okay, thanks. That's it for me. Our next question comes from Connor Mitchell from Piper Sandler. Your line is open. Hi, thanks for taking my question. Given the success and outperformance of Brentwood and Bishop, does it make you want to accelerate the next round of projects? Well, I probably always want to accelerate the next round of projects. Unfortunately, for the last periods of COVID and all the rest of it, the city's been in a deceleration phase. We're just seeing. I'm not even sure municipalities are totally back in the office yet, even to respond to things. We just started meaningfully having meetings again in their offices with council members and various people, both in Honolulu and here in L.A. We're not an island. We can't just do it on our own. All of these things take, you know, agreements with cities and it just. They're just back now. Of course, I mean, even though I think with inflation and construction costs, prices have gone up, we have a tremendously good pipeline of very low hanging fruit for particularly residential construction on property that we already own. Getting it through the system and getting permits and getting all that done just takes some time, as we've been saying all along. You're right. Of course, this has been super successful, and we'd love to do more quicker. Okay, great. Thank you. Our next question comes from Blaine Heck from Wells Fargo. Please go ahead. Great, thanks. Good morning. Jordan, just to be clear on the initial cap rate you quoted on 1221 in the low 3s%, does that cap rate include management fees that you guys will be paid by your partner, or is that just on the NOI? Well, it's a cap rate, like it, of course, it includes property management fees, if that's your question. I mean, cap rate is the NOI divided by the purchase price. So you take the going in NOI of whatever expenses are allocated to the building, I mean, and divide it. That's what it is. Maybe I don't understand your question. Yeah, I'm just asking whether it's? Oh, you mean like a promote or a promoter, an asset management fee or something like that? No, it doesn't include that. Okay. Okay, that's helpful. Second question, can you just talk about any interesting trends you're seeing in your Valley markets? Are you seeing any incremental demand from companies that may want to have a location in less of an urban environment or less density? Is the utilization any different in the Valley? I guess, you know, how do you see those markets faring during the return to office relative to the West Side? Sort of that Encino Sherman Oaks strip is doing well, and it's always kind of followed pattern of the West Side. It's dense, it's hard to build there. It's got really high-end housing nearby. It's got a lot of amenities along Ventura Boulevard. The area that's kind of finally, I've said that. I don't know if I've said it on calls. You guys know that I spent like 15 years making excuses for Warner Center in Hawaii, and then a few years ago, we stopped having to make excuses for Hawaii because it came back strong. Basically, Hawaii was probably one of our strongest markets all the way through the pandemic. Now finally, there's great stuff happening at Warner Center. We kept getting hit with new supply of office, and that's over. Now we're seeing more than one deal, like multiple deals or shifts of companies out there, whether it be for studio space or taking big plots. I mean, I don't think it's a secret that the Rams are putting a practice field, right, literally right next to Warner Center. We will be looking down at the practice field that they're building. That takes all that and cleans that up. There's another project that was office that I think is probably gonna convert to residential, so that will clean that up. There's a lot of. There's, as I said, there's Amazon and some others that are moving into making commitments to that area for very robust stuff. Like, studios hire a lot of people, use a lot of people right around them. It's just been one good piece of news after another in that area. I'm very optimistic. By the way, we've been saying for a while that the residential development in that area has been stunning, and it's still going. If you go there, you will see residential being built everywhere. Now you're seeing all the other amenities, like a lot of retail, additional retail, little retail centers being built. Then you're seeing the fact that some larger users, like I just described, going out there saying, "This is where our players are, this is where our coaches, or this is where the studio people are," now building their facilities out there to be next to their people. That's all gonna make a huge difference for us. That's a great color. Thank you. Bye. Our next question comes from Rich Anderson from SMBC. Please go ahead. Thanks. Good morning. Can you give some color on the latest sort of cadence of tenant behaviors in the L.A. area, you know, as it relates to rent relief applications and all that noise and, you know, whether or not this may be closing in on the last time we have to have this conversation? Just curious what the latest observations are. Well, we said to you quite a while ago that our defaults will be less than 2%. I think at this point, we probably are already less than 2%, and still we'll collect even more. I'm feeling pretty good we're gonna collect a super majority of the money that's owed to us, and the money that's owed to us is down to a much smaller number than it used to be. As I said, as I have said, and as I'll say right now, I don't think the rest of the collections are gonna show up in any meaningful way in the numbers that we're showing you guys. I mean, it's come in or it's been put into new deals or whatever the case has been. It's been vanishing fast. I think two big things. Number one. Well, there are three things. When we went into this recession and since into this pandemic, recession, whatever, there were three big impacts on Douglas Emmett. One was obviously the loss of occupancy, the loss of lease rate, which we've been talking a lot about on this call, which we've. I mean, we've for sure turned that corner, and we're doing a lot of leasing, and we need to just regain those tenants. The second was the hit we took in parking, which has been coming back. We had a very strong comeback for a while. Now, a lot of people are back, but they had a lot of must-take on their parking spaces. They're using them now. We're seeing our parking lots full, and I think we'll capture the rest of that money as long as the economy keeps going the way it's going in a reasonable, good timeframe. The last thing was the fact that, you know, you would have never imagined this, but the government told people not to pay their rent. That was kind of craziness. Most did, some didn't, and even the ones that didn't are now paying and paying back rent on some kind of programs or we're making deals. We're not down to big numbers left to where we have to make deals with people or do something about what they owe us. All three of those metrics, which were the hits we took, are all back heading in the right direction. I recall the owed rent was. I might have this completely wrong, $50 million or $60 million. What's that number now? Oh, we're, like, closer to half that. Okay. Like $30 million or something. 30. 30, yeah. It's in the 30s. Okay. Second question. You mentioned, you know, we're prepared for the opportunities that inflation brings. I wonder what that means in terms of the opportunities. Specifically, is 1221 one such opportunity? Meaning perhaps the pool of people interested in buying it got smaller, you could do it, you had the money to do it. Is that what you mean by opportunities, that you stand out relative to the competition to buy stuff? Or, you know, maybe you could just kind of clarify what types of opportunities come from an inflationary environment for you. Two things come from inflation for real estate. The classic one is that it's like the perfect hedge against inflation, right? Real estate tends, because it's a leveraged asset, real estate tends to early get hit with higher interest rates. Then as things calm down again, you end up with, like, substantial growth in value, which comes from the fact that rents are up and all the rest of it is up. So that's one opportunity that just happens. Inflationary environments tend to, on the mid to longer term, be very good for real estate. The second opportunity is properties coming available. People there have, you know, kind of scooted along with very low leverage debt. Maybe they haven't been running the buildings to get the maximum cash out of it. Now all of a sudden, the cost of their leverage, not putting them in jeopardy of losing their building, but the cost of their leverage is going up, and they're saying to themselves, "Wow, you know, I, you know, You know, I need to run my building better to deal with the fact that my debt's costing me a little more. Maybe I'm just tired of this." It just highlights once again that maybe there's an opportunity to get out of the building. Still, there's a lot of value there and might bring some more stuff for sale. That's what we're hoping for. Was 1221, you know, tethered to the environment or is that why it came free or maybe not? No, that wasn't the cost for 1221. I think 1221, you know, it wasn't the fit. The seller didn't feel it was the right fit. It was a very good fit for us, and we were able to negotiate a deal that made everybody happy. Okay. Good enough. Thanks very much. Our next question comes from David Rodgers from Baird. Your line is open. Yeah, good morning out there. I think last quarter you said something to the effect of expect most of the deferrals to come back in the way of blend and extend transactions or at least kind of model it out that way as you go forward. Can you talk about maybe the impact of those transactions on the leasing economics that you quoted? I guess the second part of that question is just trying to kind of reconcile same store cash revenues between last year and this year. There seems like a you know, a bigger delta maybe of where you're collecting a little bit more on the cash side. Those two questions, please. Well, I think the main reason we're collecting more on the cash side is even if people owe us money, almost everybody's come current. Like, some people that weren't paying us are paying us now, and what we're dealing with is the part that they owed us. That's gonna make a big difference. Is that what you're asking? Well, meaning that they're paying this month's rent and continuing to pay, you know, on a regular basis. Yes. They have some amount that they owe us from the past. This is Peter. You know, we're working through with them the past amounts. When you were talking blend and extend, I mean, you know, typically, what we do is we recognize the outstanding balance and, you know, come up with a payment program, and then the new lease is a new lease that stands on its own at market rates. I guess to that last point, Peter, that's what you're really kind of quoting from a cash spread. It's not really reflecting kind of the higher rent and past due collections in those numbers. That's correct. We're quoting just the lease, not the payment program and our spreads. Yeah. I think that answered both questions. Thank you. We have a follow-up from Jamie Feldman from Bank of America. Please go ahead. Thanks. You may have just answered, but maybe I didn't hear it right or misunderstood the answer. So your leasing spread spiked up to kind of - 3% this quarter on a cash basis. They were as low as - 9% last quarter, and they've been kind of on this sequential quarterly decline. I mean, how would you explain that move? Leasing spreads are on the sequential quarterly increase. They're not on the decline. No, I'm saying last quarter, I think it was -9% cash. This quarter, it was -3% cash. Cash, yeah. You know, I think in the past. They're improving. Right. Yeah. They're improving. Of course, that number is. That number tells you something, but I wouldn't grab it too tight because depending on what rollovers in any particular quarter, that number can really jump around. Generally, as things recover, that number hopefully turns positive again. I think more what's reflected even in the -9% on cash, but the fact that the straight line is now up is during the pandemic, I know you'll remember, Jamie, people kept asking, what's happening with rents? We said, rents aren't as far off as you might think. In fact, I'm not sure rents fell off such a huge amount. They fell off, and we gave you the best of what we could guess of those numbers, and that's what this is a proxy for when you do, you know, roll up, roll down, and all the rest of it. They haven't fallen. All of these numbers, because you're doing. Remember, our leases have very big bumps in them. When you say ending cash to starting cash, 3% difference, that's one year of growth. Beyond that, you're saying you still got your four years of growth that you got from when that lease was signed. That's a good thing to tell you, hey, people are coming back and rents are not. I mean, it doesn't. Rents are not going that meaningfully different. We're seeing that. You're seeing it. I think the straight line comparison gives you the total value of the, you know, the lease compared to the prior lease, and you see those, you know, positive spreads. We don't have a lot of free rent anyway, so it's, you know, it's really giving you a pretty good measure of the change in value of the lease. Okay. Yeah, just I'm thinking about your messaging over the last year or so and, you know, you kept talking about, well, if we can get to, you know, X occupancy in the portfolio, we can really start pushing rents. Has that changed? Yeah. No. No. I think that it's one thing to push rents, it's another thing to not lose ground on rents. I just don't think we've lost as much ground as you might have thought through that tough period of the last two years. Now we just need to lease a portfolio. But I will also say, while I'm happy that we aren't losing as much in rental rate, the thing that we want to is lease up the portfolio. That's the job. Okay. It sounds like the takeaway is it was definitely a better quarter. Maybe it's not the trend to think is written in stone for the going forward, but things do feel better. I Yeah. Don't use this one quarter as the curve, Jamie. Like I said in my opening, you know, it's, they're gonna be choppy quarter to quarter. We'll have. This number moves around. A lot depends on, you know, we have such a mix of leases that get signed in the quarter. Don't, yeah, don't use this as the curve going forward. We're happy it's improved, but you know, it's not. Yeah Gonna be smooth sailing. This is a very good leasing quarter. Now, I hope every quarter of the next quarters is this good, but no recovery happens in a straight line. Okay. Do you have any updates on some of your larger expirations this year or next year, just in terms of new move-outs that we didn't know about three months ago? No, nothing noteworthy. I mean, we have pretty steady roll. We always have some of our larger guys rolling out. You know, nothing that's noteworthy. Okay, great. Thank you. Our next question comes from Bill Crow from Raymond James. Your line is open. Yeah. Good morning out there, guys. Thanks for the time. That last discussion actually led me into my two questions that I had. The first one is, Jordan, you talk about rents not really going down, but do you see more tenants leaving because of asking rents or lack of TIs? Or I guess, is there any reason why any commonality of the reason why tenants don't renew? Our renewal rate has been pretty steady, and it's been pretty good. Matter of fact, oddly, last year it was higher than normal. The reason for the loss to lease rate has totally to do with the fact that the new tenants weren't moving around as much, so they were moving less. Now they're moving more. Now we're getting more new tenants. That's why you guys have gotten focused on that number. I mean, the reason I said it was such a spectacular quarter is 300, what is it, 330,000 sq ft of new. That's like a fantastic quarter. 330,000 sq ft of new. So if that new number is the key number to grow us back up, we've held steady very good on our renewal. The new number is also a good sign if you say, "What's going on with the economy? What's going on with people going back to work?" Okay, you're gonna see all that in the new number, the new leasing. Bill, when we survey our tenants moving out, there's, you know, obviously, you can guess there's a million reasons why tenants move out. They're shrinking or they're growing, or they're going out of business or they're, you know, moving markets, stuff like that. We're just getting the same list of reasons why guys are moving out. You know, there's no major shift in that. It's still a big spread of different reasons. All right. No, that's helpful. Jordan, you just mentioned look at the new leasing as a sign of the local economy. Where are we relative to 2019, whether it's based on new leasing or back to office rates or parking revenue? Are we 50% back, 75% back of what we've lost? Where are you in the momentum scale? Well, in income, because a lot of the stuff we've done, we're almost catching up to 2019, but we've done a lot of new business. When the whole company's up to full tilt, we're gonna be looking at some pretty spectacular numbers. We gotta look, you can't ignore the fact that we're still down almost 600 basis points, and that's a lot of money. As that recovers, you know, that's gonna make a giant difference. I mean, apart from the rest of these, all other numbers will pale next to that number. I mean, what I keep pointing out, but this is all around the fringes, is the good news is huge new tenant activity, rents are still there and going strong. You know, every sign is that. I keep saying, as long as the economy holds, but every sign is that with this economy, we're on a really good trajectory. you're not getting the political pushback or you feel better about the overall environment, I guess, today? Well, you know, certainly, the environment's improved politically in terms of removing rent moratoriums and stuff like that. I'm not, I mean, I'm not loving the politics, but, you know. Yeah. That's not my number one problem at the moment. All right. Listen, thanks for the time. Appreciate it. Thanks. Thanks. Our final question comes from Daniel Ismail from Green Street. Your line is open. Great. Thank you. Maybe just going back to the acquisition in Santa Monica. I'm just curious, is that a rent-controlled building? If so, how many units are, you know, currently well below market, if you're able to share that figure? A good number of them, but it is a rent-controlled building. I'm not sure that rent control plays as big a role in that building as it has in other buildings. I mean, some of what's happened in that building is that rents have just moved up very quickly. Even maybe deals that were done during the pandemic or earlier are pretty far off the market of where current rents are. As those roll, we'll pick that up. That's why there's such a meaningful spread between the going in cap and what I would call the stabilized cap. Got it. Then, Jordan, appreciate the comments on inflation and interest rates. I'm just curious, have you guys noticed any tangible price movements, either on the office or residential side in terms of, you know, cap rate movements due to the rise in rates? I don't think there's been enough in the way of transactions. I mean, this is a phenomenon that's at best just two months old. I'm not sure there's enough transactions to show that. The place where there's a lot of transactions, where I think you're seeing the world already slow down is in attached homes, single-family homes. I think that move in interest rates has very quickly slowed down the trajectory of pricing and transactions around the single-family home market. Got it. Thanks for the color. All right. We have a follow-up question from Steve Sakwa from Evercore ISI. Please go ahead. Yeah, thanks. Just a quick one. Jordan, I guess there was a story or an article about a potential Mansion Tax in L.A. that would really go to fund homeless issues. I mean, the article reads as if it's just on housing that's over like $10 million. I just wanted to be certain that that was truly on housing and nothing non-commercial. Yeah, I think that's a transfer tax. Calling it a Mansion Tax is a little bit of a strange name for it. I think it's just like in many of the cities, it's a transfer tax that was proposed. You know, it'll have to make it through. People are kinda negative on taxes right now, and that might be one more thing, and we gotta look at all this stuff and see, you know, how to fight these various things. It's just a transfer tax. Just on single family, not on either your type of residential and certainly not on commercial. Is that correct? To my knowledge, I saw what you sent me, which I suspect was just extremely misleading, that article. To my knowledge, it's just a transfer tax. It's just a transfer tax. It doesn't matter if the house is industrial or anything else. It's just a transfer tax. You know, the way they described it in the article you sent me was so odd that I'd have to look. I haven't heard of it there being something just on mansions, even though that's the way that newspaper happened to describe that. Okay, great. Thanks. We have no further questions. I'll now hand back to Jordan Kaplan for closing remarks. Okay. Well, thank you all for joining us, and we will speak to you again in a quarter. Today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.