Good morning, and welcome to the Hudson Pacific Properties third quarter 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there'll be an opportunity to ask a question. To enter the question queue at any time, please press the star key followed by one on your touchtone phone. If you're using a speakerphone, note you will need to pick up your headset before pressing the keys. Please note this event is being recorded. I would now like to turn the conference over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead. Thank you, operator. Good morning, everyone. Welcome to Hudson Pacific Properties third quarter 2021 earnings call. Yesterday, our press release and supplemental were filed on an 8-K with the SEC. Both are available on the investors section of our website, hudsonpacificproperties.com. An audio webcast of this call will also be available for replay by phone over the next week and on the investors section of our website. During this call, we'll discuss non-GAAP financial measures, which are reconciled to our GAAP financial results in our press release and supplemental. We'll also be making forward-looking statements based on our current expectations. These statements are subject to risks and uncertainties discussed in our SEC filings, including those associated with the COVID-19 pandemic. Actual events could cause our results to differ materially from these forward-looking statements, which we undertake no duty to update. Moreover, this quarter we've once again included certain disclosure prompted by COVID-19 business changes, which we won't maintain as business operations further normalize. With that, I'd like to welcome Victor Coleman, our Chairman and CEO, Mark Lammas, our President, and Harout Diramerian, our CFO. They will be joined by other senior management during the Q&A portion of the call. Victor. Thank you, Laura. Good morning, everyone, and welcome to our third quarter 2021 call. As we sit today, more than 18 months into the pandemic, the advantages of our focus on top-tier tech and media markets on building and reinvesting in a state-of-the-art portfolio and on maintaining a strong balance sheet have never been more evident. In the third quarter, we had a robust same property NOI growth as our office and studio tenants continued to pay rent and repay deferred rent. We had another solid quarter of leasing activity on positive rent spreads. Our stabilized lease percentage remains over 92%. We're making good progress on our remaining 2021 and our 2022 expirations. We also successfully executed on multiple studio-related acquisitions, all in spite of the pandemic's headwinds. There's definitely growing momentum around our tenants' return to the office. Some have already reintegrated at least a portion of their employees over the last few months, while others are working towards either a year-end or early 2022 return. The combination of record funding and fundraising by VCs, media company spending of over $100 billion on content, and significant national health and research spending has led to continued growth in hiring within the industries that drive demand for our assets, primarily tech, media, gaming, and life science. Across our markets, office leasing activity was notably elevated or showed healthy indicators, such as a shift away from short-term renewals to new and expansion deals. Sublease space contracted almost without exception as a result of tenants both pulling listings or backfilling space. We also saw positive absorption around many of our metro areas and submarkets, and in most cases, for the first time since the pandemic's onset. We're obviously very focused on maintaining our leasing momentum as the office market recovers, which Mark's gonna discuss further in a moment. We also made several major announcements around the successful growth of our studio platform in the third quarter. We unveiled plans for Sunset Glenoaks, which will be the first purpose-built studio in Los Angeles area in more than 20 years, growing our studio footprint in that market to 1.5 million sq ft and 42 stages. We purchased a major site north of London to build Sunset Waltham Cross, which will be a large-scale purpose-built facility with 15-25 new stages. We expanded our services platform with the purchases of the transportation logistics companies, Star Waggons and Zio Studio Services, enhancing our existing clients experience while capturing significant additional production related revenue. Our combined expertise with Blackstone across transactions, operations, and development is second to none, and we're poised to deliver and operate purpose-built next generation studios that will attract premier productions for years to come and create exceptional value for our shareholders. Finally, earlier this month, we received our GRESB 2021 Real Estate Assessment results. In addition to earning GRESB's Green Star, the highest five-star ratings for the third year in a row, Hudson Pacific was named an office sector leader for the Americas, ranking first among the 22 companies in that category in terms of our development program. In addition, we earned an A and ranked first among our U.S. office peers in terms of public disclosure. I'm incredibly proud of these results as it showcases both the dedication and the ingenuity of our team, as well as the commitment to being a leader on ESG issues. With that, I'm gonna turn the call over to Mark. Thanks, Victor. Our rent collections remained strong at 99% for our portfolio overall and 100% for office and studio tenants. We've collected 100% of contractually deferred rents due to date and 57% of all contractual deferrals. Physical occupancy at our properties has stayed consistent over the last several months at around 25%-30%, while as Victor noted, activity around a return to the office is accelerating across our markets. Our current office leasing pipeline, that is deals and leases, LOIs and proposals, stands at 1.8 million sq ft, up over 20% quarter-over-quarter, and also 25% above our long-term average. We signed 318,000 sq ft of new and renewal office leases in the third quarter at 8.3% and 5.1% GAAP and cash rent spreads, with the bulk of that activity, about 65%, in the Peninsula and Valley. That brings us to 1.4 million sq ft of new and renewal deals year- to- date. Our weighted average trailing 12-month net effective rents are up about 4% year-over-year, while our weighted average trailing 12-month lease term for new and renewal deals held steady at five years. Despite facing about 360,000 sq ft of expirations heading into last quarter, our stabilized and in-service office lease percentages remained essentially stable at 92.1% and 91.2% respectively. Recall that the addition of Harlow to the in-service portfolio as of the second quarter accounts for more than 30 of the 50 basis points drop in lease percentage since first quarter. Harlow is 54% leased, and we are in leases with a tenant for the balance of the building. We only have 1.9% of our ABR in terms of our 2021 expirations remaining, and those leases are over 20% below market. With strong activity on our fourth quarter expirations and existing vacancy, we remain confident our year-end in-service lease percentage will remain essentially in line with third quarter levels. We also already have 30% coverage on our 2022 expirations. We continue to work on our pipeline of world-class office and studio development projects. In terms of office, we're on track to deliver our 584,000 sq ft One Westside office adaptive reuse project in West Los Angeles to Google for their tenant improvements in the first quarter of next year. We plan to close on the podium for our 538,000 sq ft Washington 1000 office development in Seattle later in the fourth quarter. We're in dialogue with potential tenants and have 12 months post-closing to finalize our construction timeline. We also recently announced plans for Burrard Exchange, a 450,000 sq ft hybrid mass timber building on the Bentall Centre campus in Vancouver. We've submitted a development permit application, and construction could start in early 2023. On the studio side, we plan to begin construction for our 241,000 sq ft Sunset Glenoaks Studios development in Sun Valley before year-end, with delivery anticipated in the third quarter of 2023. We're also working through design and public approvals for Sunset Waltham Cross Studios, the 91-acre site we recently purchased north of London, and expect to have more details on scope as well as timing as we head into next year. Now I'll turn the call over to Harout. Thanks, Mark. In the third quarter, we generated FFO excluding specified items of $0.50 per diluted share, compared to $0.43 per diluted share a year ago. Third quarter specified items consisted of transaction-related expenses of $6.3 million or $0.04 per diluted share, one-time debt extinguishment costs of $3.2 million or $0.02 per diluted share, and one-time prior period supplemental property tax reimbursement related to Sunset Las Palmas of $1.3 million or $0.01 per diluted share, compared to transaction-related expenses of $0.2 million or $0.00 per diluted share and one-time debt extinguishment costs of $2.7 million or $0.02 per diluted share a year ago. Third quarter NOI at our 45 consolidated same-store office properties increased 5.1% on a GAAP basis and increased 10.8% on a cash basis. For our three same-store studio properties, NOI increased 49.8% on a GAAP basis and 45.5% on a cash basis. Adjusting for the one-time prior period property tax reimbursement, the NOI would have increased by 27.9% on a GAAP basis and 22.8% on a cash basis. Turning to the balance sheet. At the end of the third quarter, we had approximately $0.6 billion in liquidity with no material maturities until 2023, an average loan term of 4.6 years. In August, we refinanced the mortgage loan secured by our Hollywood Media portfolio, accessing additional principal while lowering the interest rate and extending the term. We replaced the prior $900 million loan bearing LIBOR + 2.15% per annum with a $1.1 billion loan bearing LIBOR + 1.17% per annum. The new loan has a two-year term with three one-year extension options and is non-recourse except as to customary carve-outs. We also purchased $209.8 million of the new loan, which bears interest at a weighted average rate of LIBOR + 1.55% per annum. Our pro rata net debt after this refinancing remained unchanged at $351 million. In terms of our three studio-related acquisitions completed during the quarter, the Sunset Waltham Cross Studios site in the U.K. and Star Waggons and Zio Studio Services operating businesses, we funded each with a combination of cash on hand and draws from our revolving credit facility. On account of these three transactions and other corporate activity at the end of the third quarter, we've drawn $300 million under our revolving credit facility, leaving $300 million of undrawn capacity. Third quarter AFFO grew significantly compared to the prior year, increasing by $10.1 million or over 21%. By comparison, FFO increased by 9% or $6 million during the same period. Again, this positive AFFO trend reflects the significant impact of normalizing lease costs and cash rent commencements on major leases following the burn-off of free rent. Now I'll turn to guidance. As always, our guidance excludes the impact of unannounced or speculative acquisitions, dispositions, financings, and capital market activity. In addition, I'll remind everyone of potential COVID-related impacts to our guidance, including variants and evolving governmental mandates. Clearly, uncertainty surrounding the pandemic makes projecting the remainder of the year difficult, and we assume our guidance will be treated with a high degree of caution. As noted, many companies are still determining return-to-work requirements and the impact on space needs. Because of this, for example, our guidance does not assume a material increase in parking and other related variable income. Overall, we assume full occupancy and related revenues will not return to pre-COVID condition levels in 2021. That said, we are narrowing full year and providing fourth quarter 2021 guidance in the range of $1.95-$1.99 per diluted share, excluding specified items, and $0.48-$0.50 per diluted share, excluding specified items respectively. Specified items for the full year, including those referenced in our second quarter SEC filings and the third quarter earnings release, include $7.4 million of transaction-related expenses and $3.2 million of costs associated with the early extinguishment of debt. There are no specified items in connection with the fourth quarter guidance. I'll point out that we incurred $1.4 million of prior period supplemental property tax expenses, as noted in the first and second quarter SEC filings, nearly all of which was offset by the prior period supplemental property tax reimbursement of $1.3 million received during the third quarter. We're not identifying a specified item related to prior period taxes for the purposes of 2021 full year guidance. Now I'll turn the call back to Victor. Thank you, Harout. As always, I want to express my appreciation once again to the entire Hudson Pacific team for their exceptional work this and every quarter. Thanks to everyone for listening today. We appreciate your continued support. Stay healthy and safe, and look forward to updating you next quarter. Operator, with that, let's open the line for any questions. We will now begin the question and answer session. As a reminder, to ask a question, you may press star then one on your touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Craig Mailman of KeyBanc Capital Markets. Your line is open. Please go ahead. Hey, everyone. Just wondering if we could get a little bit more color on the expanded leasing pipeline here. Maybe give us a sense if it's strengthening in any particular market. Also, you know, from a rent perspective, is it, you know, is that 4% net effective rent growth still kind of staying intact given what you guys have in the pipeline? Yeah. Well, Craig, let me have, Harout answer that. Go ahead. Yeah, no, absolutely. Hi, Craig. Yeah, so the expanded pipeline has been expanding really since the beginning of the year. If you think about where we were, we're at close to about 1.8 million sq ft in the active pipeline. Those are unique deals. Just to be clear, those are not duplicative deals in any one of those assets. It has grown about 800,000 sq ft since the beginning of the year. It's also grown about 350,000 sq ft here in the third quarter through the Delta variant. We're seeing an uptick everywhere. More specifically, you know, if you think about where we're hyper-focused on leasing in Silicon Valley is about 500,000 sq ft of that pipeline, so close to a third. Then, you know, there's probably about 17% in Seattle. Relative to the growth that we've seen trailing 12. You know, it's interesting on the proposals that we're seeing right now, Craig, going out the door that are kind of early stages, we're seeing an uptick. We're probably seeing a very similar uptick in face rent, and we're also seeing really less free rent being given on deals. These are deals that are going out the door that are closed kind of end of the quarter and into the first quarter. Craig, on your second question on net effectives, we you know looking back went back on trailing 12 months net effectives for several years now, and we've been able to hold that net effective rent, if not improve it, every quarter since the onset of the pandemic. I think that trend looks like it'll continue. No, that's helpful. Just curious, I know you guys have talked in the past about Qualcomm and the NFL, just an update there and whether any of that is also in the 1.8 million sq ft? Yeah. I'll start with NFL. NFL, as you know, expires at the end of next year. They exercise their termination. We are actually negotiating. We're in LOI with two users, each for the entirety of the space. Only, you know, I'll call it 170,000 sq ft is in that active pipeline currently. By the way, I would add that it's, you know, over a 20% mark on that backfill. Right. You know, back to Qualcomm. Qualcomm, we're still in discussions about a reduced footprint. We're marketing the space. We're very close, actually trading paper, on the entire project. Those marks are probably closer to 3% on Qualcomm. That's helpful. Just one last one. You guys continue to make good moves here on the studio side of things. I'm just curious. Number 1, is Blackstone at all interested in joint venturing the new acquisitions? Number 2, you know, just given the lack of comps for that business and the value you guys are creating, I mean, what's the end game there? Would you guys consider spinning it out into its own company to kind of realize the full value or, you know, how long would you guys wanna keep it in the REIT and maybe not get the credit for it? Craig, listen, on the first part, the answer is 100% yes. Blackstone and we had commented on that in the past, they are in the process of coming in on those deals and others that we're working on the JV side. We're fully aligned as partners going forward in all aspects of that business and in the overall industry. In terms of the aspect of valuation, listen, we just bought that deal. It's very accretive, as you know. We're gonna run it. I think it's more of a greater question down the road what we do with the entire platform versus just the two businesses and the other ancillary income streams that we're looking at right now. Well, that's what I was getting at, 'cause you guys are kind of building a vertically integrated kind of business there. Yeah. That's what I was getting at, the whole platform, not just Zio and Star Waggons. Yeah. As I said, it's still just too early for us to sort of determine what our next steps are. All right. Great. Thanks, guys. Thanks, Craig. The next question comes from Alexander Goldfarb of Piper Sandler. Your line is open. Please go ahead. Hey, good morning out there. Maybe just following along on Craig's questioning on the studios. You know, when you now look at, you know, you have the trailer business, which, you know, I understand are more glamorous than just trailers. But you have that business, you obviously have tremendous amount of demand for content. How much of you know, when you blend these two together and say that there's a tremendous amount of demand for content production, how much more juice is there, both out of your existing studios and then out of the trailers you just acquired? In total, as we think about the combination, you know, is this, like, there's an extra 10% in aggregate NOI that you could get out of the, you know, the combined platform, 20%? Is there just some sort of metric, the way that we can think about it? Yeah. I mean, Craig, I think it's useful to think about what type of growth we call. Actually, it's Al. Oh, sorry. It's Alex. Alexander, sorry. No, different shop. Unless Craig's replacing me, which is fine. Yeah. Great to hear publicly, but. Sorry, Alex. Yeah. No problem. I mean, I think if you look at the historical NOI growth and recognize, of course, 2020 is unusual, we've always generated in essentially every year in more than a decade, double digit year-over-year NOI growth. If you consider kind of where we're likely to end up this year, we'll be back to or materially in line with 2019, which was our best year on record. We're sort of back to the, you know, to the highest NOI levels that the portfolio has achieved. I think it's fair to expect that by 2022, that NOI growth will improve at least another probably 10% year-over-year. There's a couple of drivers around that which, you know, it's probably a little too much to get into now. Zio and Star Waggons have the potential to perform in line, if not better than that, with that type of growth on a year-over-year basis. In fact, even if you look at where 2021 is coming out, it's looking like they're gonna be 5%+ better on EBITDA for the year than even we forecasted when we last guided. You know, I think it's fair for you to expect over the long- term or at least for the foreseeable future, while the content creation is as intense as it is, that year-over-year NOI growth, you know, 10% or more per annum is fair to expect. Okay. Mark, if I just understand correctly, so right now you're back to 2019 levels is what you're saying. You expect the aggregate studio portfolio, including the wagons and trailers, to grow at that 10% pace. Then you think there's an additional, on top of the entire aggregate, an additional 10% extra. I just want to make sure that we're understanding it correctly. No, I'm just saying the combined platform, including these operating businesses, are likely to generate 10%+ year-over-year NOI growth for the foreseeable future. Okay. Victor, question. You know, as you talk to CEOs, industry heads, you know, office managers, you know, we continue to read a lot about, return to office dates getting delayed or some companies even saying indefinitely. Is the reason that you see these companies delaying, is it truly because of COVID fears, or is it more fears of it's such a tight labor market that their employees are going to leave and decamp to other companies, and that's why they're hesitant? Or is it they're saying one thing publicly, but internally they're putting the screws on? Hey, listen, it's a great question, Alex. I think, you know, we're getting, you know, real-time information from not just people who are our tenants, but other decision-makers in companies and CEOs. I think there's a couple of factors here that we're realizing that are obviously coming to fruition. First of all, as the days go by, it's not even weeks and months, people are changing their tune on this, and we're seeing more activity physical activity in all of our assets. Not just ours, but just in the markets that we're in. People are starting to come back sooner than we thought because it was sort of intimated that we'd be, you know, end of the year, first quarter, but companies are making decisions. I think it has nothing to do with COVID fears, and it has all to do with flexibility in labor and fearful of people moving to other companies that are offering that right now. The window's closing in our perspective as to the fears, and I think the back to normality is going to happen a lot quicker than any of us even imagined, given what we've been seeing since really, you know, October first. Companies are starting to make those moves. It is a labor issue and in our opinion, it's not a fear issue or a medical issue. Okay. Thanks, Victor. Thanks, Alex/Craig. Our next question comes from Jamie Feldman of Bank of America. Your line is open. Please go ahead. Thank you. I was hoping you can talk more about just what you're seeing in the Silicon Valley submarkets. If you look at the portfolio occupancy quarter-over-quarter, it looks like Redwood Shores, North San Jose, Santa Clara had the most declines, and your kind of L.A., Seattle markets look a lot better. Can you just talk more about, you know, whether it's the small tenant market, the larger tenant market? You know, we're hearing a lot about all the capital that's been raised out there, and that should translate into space demand. Just maybe more color on, you know, what's really happening on the ground across the different submarkets. Yeah. I mean, really, let's start with. I mean, you said it's Silicon Valley and the Peninsula. Silicon Valley. By the way, there's great news coming out of all the markets, right? Not just the ones you mentioned. You know, Silicon Valley gross leasing was up 1.2 million sq ft, right? It was the second-best quarter during the pandemic. Net absorption was down very slightly, but that was after 900,000 sq ft was absorbed in the previous quarter. Tenant demand continues to be strong, right? There are 3.2 million sq ft, which is close to about 85% of pre-pandemic levels. You know, and that's in Silicon Valley. On the peninsula, very similarly, you know, overall growth leasing was up 35% quarter-over-quarter at about 1.2 million sq ft, again, which is just shy of pre-pandemic levels. The net absorption was positive for the second time during the pandemic at 190,000 sq ft, and sublease space dropped by about 300,000 sq ft. These things are actually happening on the ground, as you say. Is it a small tenant market? Yeah. You know, really, it's driven by, in our portfolio, small tenants, but we're starting to see an uptick in early pipeline of under 10,000 sq ft tenants really coming back out, really drafting off of the larger tenants, midsize tenants that are out there. For example, you know, the largest deal we did was a 27,000 sq ft law firm, and then really right behind it, the 5,000- to 7,000 sq ft deals into our VSP program are starting to appear. We feel good, not just in the valley, not just on the peninsula, but in all the other markets where we're starting to see this buoyancy. When you, I guess when you think about the large leasing that's been done and when we hear about the pipeline, it sounds like a lot of very large tenants. You know, can you break out what the leasing pipeline looks like for stuff that's kind of more relevant to your portfolio versus the market overall? You mean the deals done in the market, those numbers that I recited to you, deals in the market? I would say really probably about 20% are deals, 20% have been deals under, call it 10,000 sq ft. We're starting to see in the early part of the pipeline, we're starting to see those numbers increase dramatically. Okay. Are there certain submarkets of yours that you think will benefit more than others? From the small tenant activity? You know, I think you nailed it. I think it's Silicon Valley and the Peninsula. I think, you know, other markets like Los Angeles, we've already started to see an increase in smaller tenant activity, although we don't have a lot of small space. We don't have a lot of small space in San Francisco. In Vancouver, really, it's always been a mixed bag. That's been our most consistent market from a small tenant and large tenant perspective. I have no concerns about Vancouver at all. Okay. Where would you put the mark-to-market on, I guess it's kind of late in 2021, I guess through 2022 on your expirations? Yeah. Jamie, it's Mark. I wanna just make sure to give you a sense of what the composition of 2022 expirations are, so you can get an appreciation of that. Right now, the mark on all 2022 expirations is a bit above 7%. You know, as with all, you know, focusing on any particular period, 66% of the expirations in 2022 are in the Peninsula in Silicon Valley, where, you know, not the least of which includes Palo Alto. So there's not a heck of a lot of positive mark-to-market in those markets combined. The markets where we do have huge mark-to-market just don't happen to make up that much of the expiration. So for example, you know, Seattle, where we have over a 30% mark-to-market, happens to only be a little bit more than 2% of the expirations. Or in San Francisco, for example, we have over a 70% mark-to-market, but it's only 7% of the expiration. So, you know, 2022, by the way, we have phenomenal coverage already in 2022. We're already over 30% covered in terms of expirations. I think, you know, tellingly is by the time you get to 2023, what you see is, because of the composition of the 2023 expirations, we're back to over a 20% mark-to-market on 2023 expirations. As you see activity roll through in 2022, which will be a combination of renewed backfill on 2022, but also some renewed backfill on 2023, what you're really gonna see is more of a blend between the two marks at probably in the mid-teens, you know, 14%, 15% mark-to-market on what'll be a combination of backfilling 2022 and 2023 space. Okay. Last from me, you know, you're starting the new studio development. You know, we keep seeing headlines of new projects out there and just more capital flowing into the space. Can you just talk about, you know, what gives you comfort on the supply side in the studio business right now? I think, listen, I think location is gonna be one, and content demand, and the amount of capital going to the content markets, I mean, it's. You know, Jamie, you know what's out there. It's in every single headline. I mean, it's, you know, by any estimation, it's over $100 billion for the upcoming year, and it's gonna be that on multiple bases for many years to come. You know, there will be, in our opinion, you know, some supply issues, as time goes by based on some contraction or consolidation of the business. But you know, there hasn't been new studios built in years. I mean, in our prepared remarks, here in Los Angeles, you know, our studio will be the first completed, and it's gonna be the first in 20 years. There's some room, and there's room in the markets that we believe are the ones that are gonna be the stickiest that we talked about for, you know, several years on this. It's getting more headlines because obviously it's become a space that people are now interested in. You said there will be supply issues. Like, how far out are you thinking? Or, what markets? I can't even, you know, guess that. You know, clearly if everybody's gonna continue to look to build, there's gonna be some supply issues. Not none here. You're saying it's not anytime soon. No. Okay, thank you. Thanks, Jamie. The next question comes from Emmanuel Korchman of Citi. Your line is open. Please go ahead. Hey, everyone. Victor, if we continue to focus on the leasing pipeline you have, I guess over what timeframe, or I guess what start time of leases comprise that? So is that stuff that is likely, if it all lands, to be done in the next six months? Is that tenants that are looking for early 2023 and they're just starting to look and so it's in your pipeline? Just what's sort of the timing in that? Well, you know, generally, Manny, I mean, the ones we're talking about are deals that are in, you know, that are being papered now. I think maybe what you're getting at here is, and maybe I'm a little wrong, and then Art will jump in. What you're sort of getting at here is, you know, are tenants looking to lock up space at these rates for the next, you know, 12 months out or 24 months out. The reality is, I mean, we're real time on trading paper for tenants to move in as soon as the space is complete. This is. There's not a lot of lead time around that, it's really more around six months. Now, when you look at obviously a Qualcomm larger space or an NFL, you know, where we're getting leases on one tenant right now, it's gonna be a little different, right? 'Cause the lease negotiations are gonna get completed, and then we're gonna have to rebuild all the space. So it's gonna depend on the amount of TI work and the repositioning of the assets. For the most part, all of our smaller guys, it's either space ready or modification. The bigger guys, as you would obviously imagine, it's gonna be 6+ months out. That's you know been what we're seeing right now. The interest level, though, I just wanna stress what Art's numbers are. The interest level has picked up dramatically in all forms, not just the large tenants. Which is just sort of, you know, a timeline and, you know, we're gonna be two years out of the pandemic, from when it started, first quarter. Then as a result, people are starting to realize their needs. I think the bigger question at the end of the day, Manny, you've had this conversation with our team, before, is quality of real estate. The quality will shine on the higher end real estate, versus what we feel is, you know, second tier real estate, which will struggle a little bit longer like it would in any cycle. Harout, you wanna add on that? Yeah. If I could add some color to that. You know, you just talked about Victor was spot on, but if you talk about the level of the pipeline right now, I mean, if you think about pre-pandemic, our average 25 months. Our 25-month average of a pipeline was somewhere in the neighborhood of about 1.4 million-1.5 million, and now we're carrying close to 1.8 million. It gives you some perspective on the volume in the pipeline. Yeah, these are deals with minimal downtime, right? We're talking about time to build out the space. These guys aren't land banking. They're not trying to take space way into the future and trying to bank on rates now. These are tenants who need space because of demand right now. I think it's chiefly because of confidence back in the market from smaller tenants who are, again, drafting off the larger tenants who have had this confidence and are looking past the return to work date to strike deals. Are the numbers you quoted earlier for Qualcomm, which I think you said was a positive 3% roll-up, and NFL, which is positive 20%, on base rates? If so, how much work or you know concessions it will take to get there, or are those net rates? No, those are face rates that we're talking about. On NFL, really, it's a TI package. There's not going to be time, downtime to reposition space. That's going to be immediate. On Qualcomm, there's some level of work we'll still need to do to clean up the space, but not very much. Thanks, everyone. The next question is from John Kim of BMO Capital Markets. Your line is open. Please go ahead. Thanks. Good morning. Mark, you talked about net effective rents being up 4% over the last 12 months. Just isolating this quarter, it was down about 20% sequentially. A lot of that is probably due to TIs, maybe it's a mix. I'm wondering if you see that net effective rent of 4% kind of trending down given the most recent evidence. Yeah, I don't think so. I mean, you know, the third quarter is fairly common for it to be a lower gross lease amount just because of summer and so forth. So we did 318,000 sq ft compared to over 500,000 sq ft in the prior two quarters. I think importantly, new leases were a higher percentage of the overall leases in the third quarter at over 40%, compared to prior quarters. You know, Q1 was only 26% made up of new leases. If you look at the composition of that 120,000 sq ft of new leases, there's one lease in there for 27,000 sq ft. It's a 12-year deal on space that hadn't been touched in 20 years at one of the Twin Dolphin spaces. It needed a fair amount of TIs, plus at 12 years, it had a hefty leasing commission. It came in at, like, 216 a foot on a 12-year deal, which skewed the overall net effectives by quite a bit, right? 'Cause not only do you have higher new deals as a percentage of overall deals, and you have a 27,000 foot deal that makes up 23% of all your new deals. If you adjust for that, what you see is your TILCs actually drop to $54 a foot, which is low, actually lower than prior quarter and well lower than the trailing nine months. You know, as we've often said in the past, if you get too caught up on, say, a smaller sample size, in this case, 318,000 sq ft, and don't recognize that you have other footage amounts that are much larger and more impactful in prior periods, you can get kind of a distorted understanding of what's going on. I do think the positive net effective trend, you know, appears to be sustainable. I think it's important, though, just to underscore the point, it's really important not to get too caught up in any one particular quarter's activity for reasons I just, you know, outlined. Okay. That makes sense. Can I ask, what drove the same-store NOI growth of 10.8% on a cash basis this quarter? It looks like maybe half of that was free rent, but looking at the occupancy year-over-year, it's down pretty significantly. I was wondering what else has been driving and offsetting that occupancy loss. Your observation is spot on. Most of it has to do with free rent burn-off, primarily at our Epic building. As that asset came online, it's now producing cash NOI. There are some prior year concessions related to Ferry that's, you know, helping this quarter, meaning in the third quarter last year, we had concessions that didn't reoccur this year. Finally on Rincon, Google's lease commenced, I think earlier this year from a deal we signed in the previous year. So that's contributing cash NOI and a little bit of the sublease rental revenue from the sublease that Salesforce has. Those are the main drivers. Parking was not a contributor? Very little, unfortunately. Okay. There's more upside there. Great. Thank you. Thanks, John. The next question comes from Blaine Heck of Wells Fargo. Your line is open. Please go ahead. Great. Thanks. Victor, just to follow up on the studio side and specifically on acquisitions. Obviously, as you said, interest in the property type has increased pretty dramatically as, you know, content creation has become a theme. Can you just talk about the size of the opportunity set to acquire studio properties, versus traditional office, and whether that's gonna have any limiting effect on your ability to grow that side of the business? Or are you just more focused on development and redevelopment, and the lack of acquisition opportunities or maybe competition for them shouldn't really have a major impact on your plans? Well, competition is gonna have an impact on everybody's plans, right? I mean, Blaine, I think the underlying aspect around the competitive set, it's been that, you know, we're not making a market now. The market's being made for us. When you're looking at our valuation of what our portfolio is valued at, what the street's valuing at and what the real market's valuing at is a massive disparity. That's only helping us in terms of that aspect. In terms of what we see in the market, the competitive landscape has also enabled us to see some deals being marketed and some deals not being marketed. I think our ability to grow in that area is very consistent. I do think that you'll see us do a number of deals, not just from the development side, but on existing, well-located themed marketplaces that we've identified. We're gonna continue to be a player in that. There is enough product out there for us and others. I do think that that's gonna continue for some time. Okay, that's helpful. Shifting gears, can you give us any more color on your Washington 1000 project? Mark, I think you said you have 12 months to determine a construction timeline after closing. I think previously you guys talked about the possibility of starting that project towards the end of 2022, early 2023. Is that still kind of the most likely timeline, or does it, you know, really just depend on prospective tenant interest in that asset? Yeah, I mean, certainly we have the freedom to commence late in 2022. You know, we're monitoring the market. We have really compelling tenant interest, early tenant interest in it. You know, we're so fortunate to have bought when we did. Our all-in costs are somewhere maybe $400 below what anything has traded for of comparable quality in the market. You know, even with, kind of, if we run a really conservative rent assumption on it, you know, we're pointing to close to an 8% cash-on-cash return. I think probably more importantly is gauging the market, meeting tenant demand, and getting underway on that so that we can deliver and take advantage of, you know, satisfying that tenant requirement, you know, as you know as soon as, you know, we see it on the horizon. I, you know, could see a start before then. It really just depends on what we're seeing in terms of like what, you know, major tenants and their need for, you know, delivering space. Yeah. I just want to jump in on that. There's gonna be a couple of announcements that are deals that are about to be signed in Seattle that's gonna take some massive amount of space off the marketplace that's been sitting there. These are, you know, large credit tenants that are absorbing a lot of the space that we were concerned about. We'll be the first project when we're ready, that's ready to go because we're entitled and virtually able to build, as Mark said, as early as mid-2022 probably. Yeah. These deals that Victor's referring to are not just direct deals, but they're also large sublease deals that are out there, and our delivery window couldn't line up better, especially with the positive momentum in the market right now. Great. Thanks, everyone. The next question is from Ronald Kamdem of Morgan Stanley. Your line is open. Please go ahead. Just a couple quick ones. Just going back on the pipeline, any more color in terms of the geographic breakdown of the pipeline? Is it sort of properly indexed to the portfolio? Is one region sort of jumping out in the pipeline? Thanks. Yeah, I mean, I think I mentioned it before, but as you might imagine, Peninsula Silicon Valley, you know, takes up about a third of that active pipeline with activity. Really, it starts to disperse evenly, kind of 20%, 15% as we talk about West L.A., San Francisco. Again, San Francisco, not very much in the way of vacancy right now. You know, Vancouver with some small tenant activity. It's exactly how you would look at our portfolio in terms of vacancy and upcoming expirations, and we line up nicely. Great. The second question was just, you know, obviously there's a lot of development activity happening and when you're thinking about funding sources and sort of the private market. Does this incrementally make you maybe look at the disposition market more favorably as a funding source? How are you guys thinking about that over the next couple of years on the disposition side? Yeah, Ron, we're acutely aware of the bid-ask process right now with assets, and we've got specifically. Three assets that we've got BOVs out right now and interest in by our brokers and third party buyers that we're gonna evaluate a timeline. You know, I anticipate, you know, probably you know, something to be done by late this year or early first quarter, in terms of our decision and then some execution on some PSAs. Yeah, the We are very much on top of that. As I said, there's two or three assets for sure that we're looking at very seriously to bringing them to market. Got it. All my questions. Thank you. Thank you, Ron. The next question is from Nick Yulico of Scotiabank. Your line is open. Please go ahead. Thanks. I guess just going back to the leasing volume in the quarter, I was wondering maybe, you know, for Art or Mark, you know, in terms of whether, you know, the spike in Delta, you know, affected closing of deals, whether there's, you know, specific square footage you can cite that, you know, got spilled over here into the fourth quarter and is now going to get signed. You know, any perspective you can give on that? Yeah. I'll jump in, Mark. You can follow up if you'd like. No, you know, we didn't see that. You know, deals have their own timeline and their own flow. The deals that did not close, and again, there's 620,000 sq ft in leases or late stage LOI that we're planning to close imminently. I just think it was just the timing of those deals closing that you'll see some of them in the fourth quarter and some of them, you know, well into the first quarter. No, it wasn't. It was surprisingly not due to Delta. As a matter of fact, the front end of our pipeline, the front end of our activity actually accelerated during the Delta variant. Okay, thanks. I guess just the second question is on occupancy. I know Mark, you said, I think he said it should be roughly flat fourth quarter versus third quarter. I mean, any rough feel you guys can give us for, you know, how to think about occupancy over the next year? The reason why I'm asking is because it looks like your expirations next year are actually higher than your expirations this year, and you did lose, you're down, what, something like 200 basis points on occupancy year-over-year. Just trying to think, you know, how we should get comfort in, you know, that occupancy doesn't continue to fall based on the lease expiration schedule. Yeah. Look, it starts with, you know, the coverage on expirations. As we mentioned on the call, we're over 30% covered on expirations and, you know, and it'll grow from there. It also is important I think, to recognize that, we'll get, you know, 60%-70% retention before the year is over. It's also important to realize, you know, of the 1.7 million of vacancy we have, we're over 40% covered on, you know, deals at least in negotiation or better on that existing vacancy. If we can make, you know, meaningful inroads on that and get to that, you know, 60%+ retention, we have the. You know, I think our view that we've stabilized in terms of our in-service lease percentage should carry out through the balance of next year. Okay, great. Thanks Mark. Appreciate it. This concludes our question and answer session. I would like to turn the conference back over to Victor Coleman, Chairman and CEO, for any closing remarks. Thank you for the participation and all the hard work from the Hudson team. We'll talk to you all next quarter. Have a good day. The conference has concluded. You may now disconnect.