Good morning, and welcome to the Hudson Pacific Properties Third Quarter 2022 Conference Call. All lines will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. To enter the question queue at any time, please press the star key followed by one on your Touch-Tone phone. If you are using a speakerphone, note you will need to pick up your handset 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 of Investor Relations and Marketing. Please go ahead. Good morning, everyone. Thanks for joining us. With me on the call today are Victor Coleman, CEO and Chairman, Mark Lammas, President, Harout Diramerian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on a 8-K with the SEC, and both are now available on our website. An audio webcast of this call will be available for replay on our website. Some of the information we'll share on the call is forward-looking in nature. Please reference our earnings release and supplemental for statements regarding forward-looking information, as well as the reconciliation of non-GAAP financial measures used on this call. Today, Victor will discuss macro conditions and our third quarter highlights. Mark will provide detail on our office leasing, and Harout will touch on our financial results and outlook. Thereafter, we'll be happy to take your questions. Victor? Thanks, Laura, and thank you everyone for joining us today. At Hudson Pacific, we're leveraging our expertise and relationships and continuing to hustle every day to get leases signed. I'm proud of our team's effort in effectively navigating this very persistent dynamic macro environment. The confluence of monetary policy, potential recession, tight labor markets, and a hybrid work continue to impact supply and demand fundamentals in all of our markets. One offset is that on a positive level, we are finally seeing more companies bringing employees back to the office 2-4 days a week, and office users are inquiring, touring, and trading paper. Simply though, it's just taking longer to get leases over the finish line as tenants attempt to make mid- to long-term real estate decisions in the face of considerable uncertainty. Our strategy has positioned our portfolio optimally for this challenging cycle, and strong evidence is that our year-to-date leasing activity of 1.6 million sq ft is in line with our historical year-to-date levels and up over 18% over last year. For more than a decade, Hudson Pacific has partnered with tech and media companies to create campuses and workspaces that engage and inspire employees. These companies defined what the modern workspace could be, and they invested well above and beyond our TIs to ensure that their employees wanted to spend time at the office. We, in turn, invested in the infrastructure upgrades, on-site amenities, the latest technology, and substantial ESG initiatives. As a testament to the latter, we just ranked recently number one of 96 office companies in GRESB's 2022 real estate assessment. We have a unique vertically integrated platform and a modern, sustainable portfolio essential to meet tenant demand in the current marketplace. Now let me touch on some of this quarter's highlights. We signed over 380,000 sq ft, representing 65 new and renewal leases that once again saw our GAAP and cash rents increase. This activity was largely driven by small to mid-size tenants averaging 6,000 sq ft across a range of industries, including tech, healthcare, and government. The Bay Area comprised approximately 70% of the new and renewal leasing activity, including several large deals such as renewals of RS Health for 27,000 sq ft, Amkor Technology for 23,000 sq ft, and a State of California lease for 43,000 sq ft. We're staying opportunistic in terms of our acquisitions as we continue to monitor market conditions. In the third quarter, we acquired Quixote, a leading stage and production services provider, which was a key component to our strategy to build a premier full-service global studio platform. With its combination of stage lease rights, production gear, and vehicles, Quixote further enhances our ability to capitalize on robust production spend on and off our own Sunset studio lots. Quixote is also a strong complement to our purchase of Zio Studio Services as well as Star Waggons last year. With the closing, our studio segment now comprises of approximately 13% of our NOI, with only one month of contribution from Quixote. If we were to pro forma that back to the start of the year, that number would be 15%. In terms of development, we're on time and budget to deliver 2 under construction projects totaling 790,000 sq ft. 1, our 7-stage, 241,000 sq ft Sunset Glenoaks Studio, which we're building in a 50/50 JV with Blackstone, will deliver in the third quarter of next year. As the first purpose-built studio in Los Angeles in over 20 years, Glenoaks will benefit from the same favorable supply-demand fundamentals as our Hollywood assets, where stages are full, and we can only accommodate less than 5% of our current inquiries. We already have interest from a major media company for a multi-stage, multi-year deal, even as we anticipate Glenoaks will follow a more traditional studio model of leasing at least some stages on a show-by-show basis. On the other construction project, Washington One Thousand in Seattle, it doesn't deliver till 2024. We continue to ready our 3.6 million sq ft future development pipeline, approximately 65% of which are studio or studio related office properties, so when the timing is right, we can initiate construction. During and subsequent to the quarter, we executed 3 of our 4 non-core asset sales, generating total proceeds of $145 million with no seller financing required. We're in conversations with 2 separate buyers on the fourth asset. We continually review our portfolio for potential dispositions, that is assets that no longer align with our strategy based on location and growth potential. We are committed to maintaining a strong, flexible balance sheet with excellent capital access. Following our successful $350 million green bond offering in the third quarter, as well as the sale of 6922 Hollywood last month, we now have over $950 million in liquidity with 93% of our debt fixed or hedged. Time and again, we have demonstrated our ability to adequately navigate the capital markets. Between the green bond and the preferred stock offerings earlier this year, we've raised over $650 million over the past twelve months at rates 150 and 500 basis points inside the current rates, respectively. In summary, as we face current macroeconomic headwinds, we have a team, a platform, and a portfolio to succeed, and we're energized to continue to lease our assets and drive future cash flow. That now I will turn over to Mark. Thanks, Victor. Our in-service portfolio ended the quarter at 89.3% leased, driven by known vacate Qualcomm leaving 377,000 sq ft at Skyport Plaza in North San Jose in July. For Qualcomm, our in-service portfolio would have ended the quarter at 91.8% leased, down 44 basis points, which speaks to the overall strength of our tenants and assets even in the current macroeconomic climate. In terms of our leasing activity during and subsequent to the third quarter, we are executing and progressing deals with small to mid-sized tenants and with less velocity than we would like. Even so, we are continuing to reload our leasing pipeline, which includes activity on all four of the recent or pending large tenant expirations through 2023. We currently have around 2 million sq ft in various stages, including providing us with 57% coverage on our remaining 2022 expirations and 49% coverage on our upcoming 2023 expirations, which are collectively 6% below market. Let me touch on leasing priorities in each of our markets. In Los Angeles, our in-service portfolio is 98.9% leased. Our main focus remains backfilling known vacate NFL's 168,000 sq ft lease at 10,900, 10,950 Washington in Culver City, following their move to the SoFi Stadium complex in Inglewood and the lease expiration in December of this year. A highly sought after location for an array of office users, Culver City still has sub-6% vacancy, and we have two tenants interested in backfilling the entirety of NFL space, one in leases and the other in early negotiations. Apart from NFL, we have 44% coverage on 76,000 sq ft expiring in Los Angeles through the end of 2023, with no tenant exceeding 0.2% of our total office ABR. Collectively, our remaining 2022 and 2023 expirations in Los Angeles are 18% below market. Moving up to the Bay Area, our San Francisco in-service portfolio is 93.8% leased. Our primary focus is backfilling known vacate Block's Q3 2023, 469,000 sq ft expiration at 1455 Market, which we own in a 55-45 JV with CPPIB. We're already in negotiations with existing Block subtenants to remain in a portion of their square footage, as well as a new tenant to backfill an additional 250,000 sq ft, which collectively translates to 65% coverage on that space. Apart from Block, we have 75% coverage on 67,000 sq ft expiring in San Francisco through 2023, with no tenant exceeding 0.2% of our total office ABR. Our remaining 2022 and 2023 San Francisco expirations, including Block, are 6% below market. Our combined Peninsula and Silicon Valley in-service portfolio, excluding Skyport Plaza, where Qualcomm vacated 377,000 sq ft in the third quarter, is 88.2% leased. Skyport is a quality asset, but we are executing an approximately $12.5 million capital plan to further enhance interior and exterior finishes and amenities for both buildings. We are in early discussions with a potential tenant for about 50% of Qualcomm's former space. Regarding our remaining 2022 and 2023 expirations, these are predominantly small to mid-sized tenants averaging around 6,000 sq ft that typically only engage in earnest on renewals about three months in advance. Even so, we have about 40% coverage on 297,000 sq ft of remaining 2022 expirations, which are 8% below market, and 25% coverage on 807,000 sq ft of 2023 expirations, which are essentially at market rents. In Seattle, our in-service portfolio is 85.4% leased. We own four assets in the Denny Triangle submarket, which are 100% leased with no significant expirations through 2023, but for a 140,000 sq ft lease at Met Park North expiring in November of next year, which we are in very early discussions to potentially renew. Our Pioneer Square in-service lease percentage is 51.6%, largely due to Dell EMC's decision to vacate 505 First earlier this year. We are currently in negotiations with a tenant on a 240,000 sq ft requirement for that asset. Apart from Amazon, we have 100% coverage on 65,000 sq ft expiring in Seattle through 2023, with no tenant exceeding 0.2% of our total office ABR. Rents on our remaining 2022 and 2023 expirations in Seattle, including Amazon, are about 20% below market. Lastly, in Vancouver, where vacancy remains low at around 7%, our in-service portfolio is 94.4% leased. We have 47% coverage on our 197,000 sq ft of remaining 2022 and 2023 expirations, with no tenant exceeding 0.1% of our total office ABR and rents 15% below market. With that, I'll turn the call over to Harout Diramerian. Thanks, Mark. Compared to third quarter 2021, our third quarter 2022 revenue increased 14.4% to $260.4 million. For known vacancy Qualcomm and certain one-time prior period property tax reassessments, our same store property cash NOI would have increased 2.2% year-over-year rather than declining 2% year-over-year to $122.7 million compared to $125.2 million a year ago. Our third quarter FFO, excluding specified items, was $74.1 million or $0.52 per diluted share, compared to $77.3 million or $0.50 per diluted share last year. Specified items in the third quarter consisted of transaction related expenses of $9.3 million or $0.07 per diluted share, and a one-time property tax expense of $0.4 million or 0 cents per diluted share, compared to transaction related expenses of $6.3 million or $0.04 per diluted share, and a one-time debt extinguishment cost of $3.2 million or $0.02 per diluted share, offset by a one-time prior period property tax reimbursement of $1.3 million or $0.01 per diluted share a year ago. Year to date, our AFFO is $183.3 million or $1.25 per diluted share, which is $0.05 per diluted share or 4.2% higher compared to last year. Our AFFO payout ratios for the third quarter and year to date were 65% and 60% respectively, making our dividend extremely stable, if not conservative, as it does not yet reflect cash flow coming online from One Westside and Harlow. We continue to execute on financings and asset sales to fortify our balance sheet. At the end of the third quarter, we had $866.7 million of total liquidity, comprised of $161.7 million of unrestricted cash and cash equivalents, $705 million of undrawn capacity on our unsecured revolving credit facility. This reflects the use of $40 million of proceeds from the sale of Northview and Del Amo to repay amounts outstanding on our credit facility. Upon payment of an additional $85 million with proceeds from the sale of 6922 Hollywood in October, we currently have $790 million of undrawn capacity on our revolving credit facility and $951.7 million of total liquidity, including our access to undrawn capacity of $141.5 million under our One Westside construction loan and $69.8 million under our Sunset Glenoaks construction loan. We currently have $1.2 billion of total capacity. As of the end of the quarter, our company share of unsecured and secured debt, net of cash and cash equivalents, was $3.7 billion, 91% of which was fixed or hedged, with weighted average term of maturity of 4.4 years, including extensions. Again, this factors in repayments of our revolving credit facility from Northview and Del Amo sales, as well as net proceeds from our $350 million green bond offering. Adjusted for post-quarter pay down of our credit facility related to our sale of 6922, 93.2% of our debt is fixed or hedged. Now I'll turn to guidance. As always, our guidance excludes the impact of any opportunistic and not previously announced acquisitions, dispositions, financings, and capital markets activity. We are narrowing our full-year 2022 FFO guidance to a range of $2.01-$2.05 per diluted share, excluding specified items. Specified items consists of $8.5 million trade name non-cash impairment, $10.7 million transaction related expenses, and $0.8 million one-time property tax expense identified as excluded items in our year-to-date 2022 FFO. Now we'll be happy to take your questions. Operator? Absolutely. 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 are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. The first question comes from the line of Alexander Goldfarb with Piper Sandler. You may proceed. Oh, hey. I think it's still morning out there, so good morning. First, just before we get into the fun on leasing and some of the tech stuff, especially the Amazon news, just want to go back to the mobile studios. As you guys assess those businesses, historically, how durable have you found the earnings, and how much of a parallel do you see that, you know, are the Studios, you know, in that you have in Hollywood, are those more durable, or are the mobile studios just as durable? I'm just trying to get a sense for the quality of those earnings from the mobile studios versus the on-site facilities in Hollywood. Hey, Alex, it's Victor. Listen, I think thanks for the question. I think you would say they're parallel because you can't do one without the other. Even on studio lot locations, whether it's the ancillary revenue services, the equipment itself, or the mobile studios, you know, they're filming for the most part on location and in studios, whether it's 40% on location, 60% studios, or vice versa, they're using both for the type of filming that we have in our studios and the relationships that we have overall. These trailers and the actual equipment that we use, generators, backup facilities, bathrooms, all of that, inclusive of L&G, is probably in line with the studio business in general. The only difference I would add is the 26 sound stages that we own now with the Quixote purchase are a lot more day-to-day show-to-show versus long-term commitments. Okay. Getting to the leasing, obviously the Amazon news today that they're freezing hiring. One of your office competitors had some pretty cautious comments about tech and West Coast. You guys appreciate the color on the space that you're trying to backfill. Just overall, how would you compare the leasing market now as far as, you know, what expectations for rents, for TIs, and just, you know, as tenants are coming up for renewal, are they, you know, taking the same amount of space, shrinking, or are they relocating? Maybe a San Fran tenant's moving to the Peninsula, or maybe it's, you know, moving to other markets. Just trying to get a real sense because obviously the headlines out of the tech companies has not been, you know, encouraging. Listen, your question is a very vague, sort of wide open. I don't mean that critically. It just, there's a lot there. Let me sort of talk high level on. Art can jump in if on some factual aspects. You know, Amazon is one of many tenants that have commented on what their game plan is. You know, overall, your understanding of the tech tenants is exactly where we see it, which is, you know, this is a time of pause, slowness, and maybe even you know, reversing paths and giving back space and you know, laying off people. We're seeing that. I think effectively, you know, on our portfolio, specific to what we currently have, we don't see an impact until potentially end of 2023 with Met Park North, and we're in conversations. Those conversations are going forward, but, you know, they're telling us they're not gonna let us know between now and, let's say, May or June, give us six months notice as to what they're gonna do. I think they're optimistic in terms of laying out whether they stay or go. We really won't know that. I know we got a couple of calls between now and then. People are gonna ask the question. We're not gonna know because they're telling us we're not gonna know. That being said, just in general, we're not seeing any, you know, lowering of rents or increase in TIs on the deals that we're making or the conversations that we're having on a material basis. Now, that's not to say it won't happen or it could not happen, but the deals that we're talking about right now, rental rates are being supported and TIs are being supported from a capital standpoint for the most part. I mean, Arthur, do you want to jump in? Yeah. It's really a function on the TI. Hi, Alex. Good morning. It's really a function Morning of construction cost, not as a function of a deal from a leverage perspective, right? It really comes down to what condition is the space in most of the markets. What condition is the space in? We figure out how much we need to spend. Again, construction costs. We're in a great place because of our VSP program, and we have pre-built space that's pretty much ready to go with minor improvements. I feel like we're well situated, especially in this environment where, you know, there's a little bit of pressure on TIs and free rent. Okay. Victor, thank you. Arthur, thank you. Appreciate it. Thanks, Alex. Thank you, Mr. Goldfarb. The next question comes from the line of Blaine Heck with Wells Fargo. You may proceed. Great. Thanks. Good morning. Just to follow up kind of on the leasing market. You guys have been very transparent with respect to recent and upcoming move-outs of, you know, Qualcomm, NFL, Nutanix, and Block, which has been really helpful, I think, in setting expectations. You know, Victor, at this point, I know you just talked about Amazon, but kind of past that, do you feel like the large move-outs or roll is likely to be lower in the future? Or are there, you know, any additional large tenants that you're just, you know, not quite sure about past those you've kind of spoken to and singled out? Hey, Blaine. I'll tell you, I think. Listen, we've laid out what we perceive to be tenants that are gonna leave or potentially leave, and you listed them. I mean, in no particular order. It is. It's Qualcomm, as we know, they're gone. NFL in about two months from now. The next wave is Block/Square. Art's got an update on that. The next one after that is Amazon. After that, we have nothing of substance until 2025, and that's Uber. Really, I mean, I think, you know, we've laid out where we see the vacancies and where we see the possibility of us signing deals, and we've got activity on a lot of that right now. You know, I think, you know, the reality is the large tenants in our portfolio are pretty stable after the ones that we've mentioned. Great. That's helpful. Victor, sticking with you. You know, we're all gonna be out in San Francisco for Nareit in a couple of weeks. You've talked about the crime and other social issues impacting the CBD in the past. You know, should we expect to see much improvement while we're there? Just wanted to get kind of your thoughts on whether you think some of these social and safety issues are still affecting your markets and the decision to return to the office. I mean, listen, we've been pretty vocal, myself, maybe more than others or maybe not as much as a few, but more than others, about where the political environment is in our marketplaces, specifically to Seattle, San Francisco and Los Angeles. You know, next week's a big week for Los Angeles. We're hoping that there may be a little bit of a sea change, like there was in San Francisco. Specific to San Francisco, I think, you know, it's got a long way to go, but we have seen a change. I think the voices are loud enough, ours being one of them. I would encourage you to come to our event on Monday, where we're gonna have the mayor there and the former mayor as well, and we're gonna talk specifically about this on a little fireside chat, which is the Monday before Nareit. I do think, Blaine, that there is progression. There is absolute reality that business needs to survive with decisions that are hard and fast and efficient. I'm not gonna stand on a soapbox and give you my political beliefs, but I do think, as I said, those messages are out there. I would caution those who've not been to San Francisco. You know, I was there three weeks ago last Monday. I was pleasantly surprised on the activity in the streets and the flow of traffic both people in and out of areas, specifically in the financial district down by our building, the Ferry Building. I do think that the ridership is completely up as a result of that. Now, you know, as you move south towards South San Francisco, up Mission and the likes of that, you will see other avenues of maybe sketchiness that has still not been cleaned up. There's a motive and there's a game plan, and I'm hopeful that that will continue to be progressive and entice tenants and residents to come back to the city in full force. That's helpful. Thanks. See you all soon. Thanks, Blaine. Thank you, Mr. Heck. The next question comes from the line of Michael Griffin with Citi. You may proceed. Great, thanks. Mark, I think you mentioned in your prepared remarks demand that you're seeing from smaller tenants taking space. The average seemed to be about 6,000 for the quarter. Is this a trend that you expect to continue in the future? Maybe kind of more broadly, do you see a pivot away from tech tenants from this demand and maybe see your portfolio growing exposure to other non-tech sectors? Yeah. I'll start with the response and Arthur add some color. You know, that comment was made in relation to the peninsula in Silicon Valley, which our portfolio largely does cater to a smaller tenant base, small to mid-sized tenant base. We actually did a deeper dive to kind of look at what the pipeline looks like in that particular market, and the average size tenant is a touch higher than the 6,000 sq ft that we've been seeing lately. It actually came in closer to 8,000 sq ft, which I think is kind of an interesting trend to watch. That's kind of gives you a sense of sizing where the demand's coming from. The other thing is, I would say we've seen, and we've been talking about this now for quite a while, a real uptick in professional services, law firms making up a significant component of the activity that we're seeing, even as we've seen a bit more of a slowdown in tech tenant demand. Arthur? Yeah. That's exactly right. As Mark said, you know, in the Valley, it's still completely driven by tech with the uptick of professional services. I will say, you know, really for the first time in Seattle, this is going back two quarters, professional service has taken, really kind of taken the lead in terms of the number of deals done relative to sector. Gotcha. That's helpful. Maybe turning to recent transaction activity, I'm curious if you can provide any additional color. I'm specifically curious about the Trailer Park building, the 6922 Hollywood. You know, how did pricing compare at execution versus when the deal was originally marketed? Then kind of any other insights or color. I know there are some bigger assets sort of on the trading block in that market. Anything you can provide there would be helpful. Sure. Pricing was a bit softer than our initial, you know, expectations kinda heading into, let's say, around the, in the first quarter of this year. I think we're still pleased with the execution. Northview held up, you know, pretty close to initial expectations. The Hollywood building, the Trailer Park building you referred to, that came in a bit lower than initial expectations, but still solid. Let me give you a couple of kind of data points, you can, you know, use either for modeling purposes, or to kind of get a handle on what the, you know, the economics look like. On a GAAP basis, we did sell 3 buildings. Let me give you that, so you can kind of get it straight in your model. If you take back half of this year NOI on a GAAP cap rate basis, the three assets we sold, and the Del Amo asset had actually negative NOI on it, came in at a 4.4 cap, and on a cash basis, it came in at a 3.4 cap. If you just take the two assets, which I think people are kind of interested in, they both came in. Again, this is on back half of the year, NOI, GAAP, and cash. They came in essentially on top of each other at a 5 cap GAAP and at a 4 cap cash. Early indications when we were talking about those three assets being up for sale, on a cash cap rate basis, our thinking was we were in like a 2.8 kinda cash cap rate for the three assets, and as I've just indicated, they came in at, like, 3.4%. They're really not much different from what our initial hope was, but just a little, you know, a touch softer in terms of final value. Yeah, Michael, I'll just jump in on. You know, I think you probably know in the markets that we're in, there's very few transactions that are getting executed at where the initial underwriting was, let's just say, 90 or 120 days ago. A lot of these transactions clearly are asking for seller financing. You know, that's a little bit of the weakness on 6922 Trailer Park for us, is that you know we had some you know solid interest, four or five real buyers there. A few of them wanted seller financing, and we weren't prepared to do it at the terms that they wanted, and so we went with the all-cash buyer with the sure deal. I... You know, the stuff that we see in the marketplace right now, obviously the multi-tenant stuff is very challenged in terms of getting the execution where people perceive values to be. Gotcha. Well, I appreciate the color. Thanks so much. Thanks, Michael. Thank you, Mr. Griffin. The next question comes from the line of John Kim with BMO Capital Markets. You may proceed. Thanks. Good morning. You talked a lot about backfilling and addressing some of your upcoming expirations, but also recognizing the economic environment has changed and, you know, we're seeing decision-making has slowed. I'm wondering if you had an update as to when you think occupancy is gonna bottom in your portfolio. Yeah, sure. I mean, listen, I think, I mean, Arthur could sort of walk you through our main big deals. Our occupancy bounce is gonna be effective when we execute a couple of the big deals in Seattle and San Francisco that we're working on right now. Then I think, you know, to backfill NFL. You know, I don't wanna give any perceptive analysis other than what Mark's prepared remarks were on our Qualcomm building. You know, that building, we just don't have the type of activity that we would have hoped for currently after they've moved out in August. The other buildings that we're talking about, we have lots of activity, and we're hopeful that we can execute a few deals. Arthur, do you wanna get into some specifics around that? Yeah, absolutely. The next two, obviously, NFL, which we are, you know, in leases on and have a backup deal behind that. We feel, you know, pretty confident about that. The one that's staring everybody in the face is the Block space of 47,000 sq ft that comes up in September of next year. We already have 65% coverage on that. What does that mean? Well, 250,000 sq ft of net new, you know, deals that we're negotiating, a deal that we're negotiating on currently. There is about 125,000 sq ft of subtenancy within that number, and we're gonna, you know, we're gonna keep these two subtenants, by the way. We're gonna keep both of them in some footprint, collectively bringing us to 65% coverage, effectively a year out. We're being, you know, as aggressive as we need to do to get activity and to get deals closed in that market. What about on the studio side? I noticed that occupancy did tick up 40 basis points sequentially. Is that momentum gonna continue over the next couple quarters? Yeah, it should. I mean, we've been, you know, sort of giving some of the background around that. That's the result of improved occupancy in the component of the studios that is our office users that use space unrelated to stage use. People in the entertainment business, but not the actual stage users. I think we've indicated that since we measure occupancy on the studios on a trailing twelve-month basis, we saw, you know, during COVID a bit of a pullback on that type of occupancy, and we've seen that improve over the last two or three quarters. On a trailing twelve-month basis, you should expect to see that steadily improve. Sticking with the studio business, it looks like you made a small acquisition in New Mexico. I was wondering if you could discuss the pricing, rationale and if it was related at all to the Quixote acquisition. Well, it is related to production services business. If you read the footnote, we try to give some color around what the nature of this property is. It's 35,000 sq ft of a part office, part kind of industrial that historically has had occupancy from media companies, most recently Warner. More importantly, it sits on a very, very large parcel, 29-acre parcel, and we currently park over 90 transportation vehicles, Star Waggons vehicles, that both serve the Albuquerque studio owned by Netflix, which is about 2.5 miles away. All of the other studio business in and surrounding Albuquerque, which is, you know, a busy media market. We had an opportunity to secure this site to give us the long-term ability to park our trailers, perhaps down the road, maybe even lease that 35,000 sq ft to a user. Most importantly, it's there to service that very busy production services market. Thanks for that. What was the price? Well, there's no point in giving a cap rate because it wasn't occupied when we bought it, and we didn't buy it for that purpose, but it was approximately $8 million. Okay, great. Thank you. Thank you, Mr. Kim. The next question comes from the line of David Rodgers with Baird. You may proceed. Yeah, good morning out there. Victor, in your opening comments, you had talked about being opportunistic with acquisitions, and I think that was probably your entry into Quixote. Curious on what you're seeing in the acquisition market today, and then maybe a dovetail to that is obviously you took studios, cut it in half, and now have tripled it. Can you give us a sense of kind of where that might be going here with this opportunistic acquisition comment at all? Thanks. Yeah. I mean, listen, you nailed it. It was correlated around the Quixote acquisition because we really hadn't talked about it, you know, since we closed the transaction. Yeah, 100% correlated to that. You know, I'll start on the office side. As I said, you know, we're seeing some deals in the marketplace, nowhere near the flow, just given where the debt markets are and the appetite of people to sell into an increasing cap rate marketplace. I do think you're gonna see. I know of some institutional quality assets that are going to come to market, whether they trade or not on the office side in our markets are gonna be very interesting to see where that pricing comes into play. On the studio side, there is currently one asset that's come to market that we'll be curious to see where that price is. So far what we're seeing from the first-round bids and understanding is it's fairly aggressive and a very minimal increase in cap rate on that asset. There's another potential asset that possibly comes to market. After that, I don't see a lot of depth on the studio side. I do, Dave, see, you know, maybe an acquisition or two in the services side, not for us, but they are gonna be coming out. That would support where I think our valuation is on our Quixote, Star Waggons, and Zio purchases in the last year plus. That sort of gives you a snapshot of what's out there. It is obviously apparent that the flow of deals is nowhere near what we've seen in the past. I appreciate the color, Victor. On the one asset, the studio asset in the market and maybe one coming to market, are those assets you're bidding on or are those just gonna be good comps, you think, for your company? One of the assets we are going to be bidding on, which is the one coming into the marketplace. We did not bid on the one that is in the market now. All right. I appreciate that. Maybe just a follow-up, shifting over to NFL. You've been talking about those two tenants for a while. It sounds like maybe one is close to inking the deal. Can you talk about rate and then maybe any downtime as you're negotiating those leases and as we get closer here to the expiration? Yeah. You know, we've been in leases for some time. It's a complicated transaction, and the deal behind it really came up, you know, not too long ago. We do think of it as a viable backup. Can't get into rate. We're in negotiations right now. We're not gonna get into rate and deal specifics with you at this point. We do feel like, you know, I think we've talked about it's gonna be a kind of early, you know, early 2024, first quarter, second quarter, occupancy. All right. Thank you. Thanks. Thank you, Mr. Rodgers. The next question comes from the line of Daniel Ismail with Green Street. You may proceed. Great. Thank you. Maybe going back to the New Mexico deal. Assuming that deal is also being included in the Blackstone partnership. Dan, this is Mark. The short answer to that is no. It's as you know, we own those, the production services business, and this acquisition is part, you know, it sort of supports that production service business, so, you know, we own it on our own. While we have you on the phone, Dan, we wanted to take the opportunity to add some information, if you will, on the back of your note the other day regarding dividend coverage, which I realize is not in response to your question, but we're gonna do it anyway. We ran some math around it, and let us give you just our math around your math, if only to, you know, kinda give investors a little bit more to go by. Your, for those who haven't read the note, you had our dividend distribution 98% for 2022. That year is essentially, I mean, we have three quarters actual, only one quarter projected. Off of our essentially actual NOI, we expect to be more like 65% distributed relative to your 98%. Now, you're careful in your note to point out that you normalize. The main difference is probably the normalization of recurring CapEx, TI, LC recurring. We took your convention relative to 2022, and even under your convention, so, you know, putting aside what we actually expect to spend, even under your convention, we get to 78, not 98. Again, that's against 2022 actual. The other thing we did too, just to kind of gut check it all, is we ran 2-year forward, 3-year forward, 4-year forward, and 5-year forward projections against our NOI, but using your convention of spend relative to NOI. The peak amount, just in terms of the percentage distributed during that period, it never exceeds 85%, and that's in this 2- to 3-year period while we're dealing with some of these bigger vacancies. Over the five-year period, it's 78%, so, you know, similar to where 2022 landed. We never get anywhere remotely close to 98%. Again, that's using your convention on recurring CapEx. Anyway, we thought it was important to round out the explanation. I would also just add, for what it's worth, I know you're using a convention. I think that's sector-wide convention on recurring NOI. If we go back all the way to 2016, I think we went back. We've actually been spending closer to 24% on recurring CapEx relative to NOI. Under your convention, we're, say, you know, 400 or 500 basis points higher than what our historical spend has been. Okay. Appreciate those comments. We'll have to go back and look at my assumptions. Happy to take it offline too and chat more about the differences in methodology, but appreciate the comments nonetheless. Maybe just a second question regarding the transaction market. You know, Victor, you mentioned the lack of comps and the difficulty in obtaining financing. I believe you have two assets on the market in downtown L.A., pretty decent quality assets, long term. I'm just curious, you know, how marketing is going for those assets. We heard seller financing was being included in the marketing of those deals, and was curious if that's attracting any more bidders than anything else you guys have been marketing out there. Yeah. Daniel, there are two assets in the portfolio that we're marketing. We've got multiple offers on them. They all include, with the exception of one, some form of seller financing. I obviously am not gonna get into the terms and conditions of that. But it's up to 50%, and that's the limit. There have been bids on both assets from people and then individual assets. You know, depending where pricing comes into play, we'll make a decision what we're gonna do. One of the more interesting buyers is a user for one whole building, which is fully leased for seven more years, but there's an ability for them to get the asset back. We'll keep you posted as things go forward. Got it. Appreciate the color. Thanks, everyone. By the way, I forgot. You know, we also, as Mark mentioned in his prepared remarks, you know, we sold three of four assets. The fourth asset, our Skyport asset, where we talked a couple of quarters ago about the life science industry and the attractiveness of that asset, and it has been sort of being prepared for that. Our intent, as we said, was not to do that. The market had cooled on that and as a result, it's come back. We've got three potential buyers for that asset as well. We'll keep you posted on that one too, Daniel, going forward. There's three to talk about in the future. Sounds good. Thanks, everyone. Thanks. Thank you, Mr. Ismail. The next question comes from the line of Ronald Kamdem with Morgan Stanley. You may proceed. Hey, you got Tamim Sarwary on for Ronald. Just wanted to follow up on the prepared remarks. I think you said you had a tenant that's interested in 50% of the Qualcomm space. Just remind us, you know, if that tenant was to move in, would there be, you know, what are you expecting in terms of downtime and so forth? Thank you. Listen, you know, thanks. You know, as I said, Listen, we have a tenant. It's a user, maybe it's a potential ownership. I think it's just way too early for us to underwrite and give you some projections on that. I'll go back to what I said earlier. You know, of the assets that we have large vacancy and the disclosure and transparency that we're giving you, I would not put a tremendous amount of credit in those two buildings versus the other stuff that we're talking about. Got it. Thank you. Just to follow up on, you have some debt coming due, next year and the year after that. What are your plans to take care of that? Probably use the line. I mean, we've got, you know, almost $800 million available on the line. If any of the asset sales we've been focused on happen, that would likely just you know, improve that capacity. In the very near term, you know, we've got the $110 coming due in January. Can easily address that on the line. $50 a little later in the year, again, on the line. Then, you know, we can accommodate the final $160, that's all the way at the end of next year, also on the line if necessary. You know, a lot can happen between now and then. We always review the capital markets, so we use the line as our You know, temporary holding period, but, you know, we always look at the bond market, the private placement market, the term loan market to help us address all of our financing needs. Suffice to say, I mean, we've got a lot of liquidity right now on the balance sheet to get us through, you know, nothing major after what Mark had mentioned comes due until 2025. Great. Thank you, guys. Thanks, Ronald. No, sorry, it wasn't Ronald, was it? No, it wasn't. Yeah, Tamim. Got it. Told you. The next question comes from the line of Camille Bonnel with Bank of America. You may proceed. Hi. Following up on earlier questions, I noticed that the average lease term on your renewals were pretty short. We've been hearing that occupiers are looking for flexibility in their leases, given many are still trying to understand the impact of hybrid working on their office footprints. Are you seeing any change in the lease structures you are signing, whether there are additional clauses being put in place for expansion or contraction or even early breaks? Yeah, Camille, this is Arthur. It is true, we had a sequential downtick in length of lease term on a blended basis. If you look, our new deals ticked up probably about 7 months on the average of 7 months. It was really the renewals. There were three renewals in there that really dragged it down, dragged the average down to about 30 months. If you look at, you know, where length of term has been trending from Q2 2020, that's really where it bottomed out for us. We've steadily been increasing our length of term on deals from again, from somewhere around 32 months to 52 months. We feel pretty comfortable about it directionally. I just think that it was just three deals really on the renewal side that dragged down the quarterly average. Yeah, if I could just maybe add some analytics around Arthur point because it's dead on. If you look not just at the recently completed quarter, which can be overly influenced by, you know, a couple of deals. If you looked 9 months, the full 9 months of this year, it's actually up, just on the renewals about 4% at 49.1 compared to 47.1 for the 9 months of the same period last year. We're actually seeing an improvement. I would even add to that if you want more to contextualize that. If you looked at overall lease terms, while this particular quarter on a sequential basis was down, if you looked, say, at a trailing twelve-month basis, for the most recently completed quarter, and you compared that to, say, trailing twelve months pre-COVID, you know, the last quarter of 2020 going back twelve months, they're essentially in line. We're like 0.5% lower than we were pre-COVID. Okay. I appreciate all the details so far around the leasing pipeline. Can you remind us what the retention rate was for this quarter, and what do you view as the new normal, on a go-forward basis for the company? Yeah. We, you know, we've been, I think certainly the last 8 quarters or so, but we've been trending around 60, somewhere around 60, 65% on retention. I think we're gonna be pretty close to that. Thank you. Just switching to the financing side, can you talk to what the embedded costs were for the caps and swaps you obtained this quarter? I believe you have $125 million of swaps burning off soon. What's your thinking about hedging this floating rate exposure through 2023? All of the caps and swaps that we enumerated in the supplemental had preexisted, so we didn't incur anything as it relates to hedging instruments in the quarter. I think with the exception maybe of BentallGreenOak, which happened, I think, in the current quarter. Sunset Glenoaks was when we did the construction loan and the 3.5% on the Hollywood Media Center happened as of the financing of that instrument. As it relates to that swap, you know, that's a swap we actually had from a while ago. We paid off term debt, and then we were able to, you know, keep that in place to continue to offset floating rate exposure. You know, when it burns off, we're gonna look at what floating rate debt we have, which is a little bit more than $400 at that point. You know, we're always monitoring hedging opportunities and, depending on, you know, how that looks, you know, later in this year, we might put further hedges in place. Okay. Thank you for taking my questions. Thank you, Ms. Bonnel. The next question comes from the line of Nicholas Yulico with Scotiabank. You may proceed. Oh, thanks. Hi, everyone. First question is just on, you know, thinking about the overall balance sheet, leverage, debt to EBITDA has gone up a bit. You also have, you know, an issue over the next year where some of the move-outs aren't factored into EBITDA. I know you get some EBITDA also from, you know, One Westside. But how should we think about, you know, how are you gonna manage the balance sheet, you know, in regards to a leverage level and whether, you know, you do have more, let's say, asset sales, contemplate or something else that would, you know, maybe address your leverage over the next year? Sure. I mean, just to address the net debt to EBITDA. It is a little elevated this quarter primarily because there's only one month of Quixote adding value. If you normalize that, it comes down a little. You're correct, the future burn off of tenants that are expiring isn't reflected in the current one, and neither, like you said, is One Westside. The One Westside is significantly more impactful than the burn off of almost all the tenants that are rolling. From that perspective, we feel pretty good about how that's gonna continue. You know, obviously we're gonna be focused on leasing. Sorry, in addition to Harlow, let's not forget that has not provided any cash net debt to EBITDA as the cash rents start in the current quarter in Q4. Yeah. Just to add a little bit more specifics around this. We've given indications in the past over what pro forma adjustments look like on, you know, for Harlow, for One Westside. We could do likewise for Quixote. But what you would see quickly, Nick, is that it drops below 7 on a pro forma basis. You know, last time we ran it was like a 6.6, debt to EBITDA. I mean, you can expect that to materialize as the cash rents from those kick in towards the end of this year and into next. All right. That's helpful. Thanks. The second question is on Washington One Thousand. You know, I don't believe you have a construction loan in place. Just wanted to hear, you know, latest thoughts. Are you trying to pursue something there? Then also, you know, in terms of that project, realizing, you know, attractive location and, you know, very attractive design and, you know. At the same time, you know, we are moving into a more uncertain environment from a leasing standpoint. So just trying to understand why you're still confident in, you know, going forward with that project right now, and if there's any chance that you would actually consider, you know, pausing it from a construction standpoint, you know, to preserve capital or, you know, wait for maybe a less uncertain leasing environment. I'll just address the capital side and then Victor or Arthur will address the question around leasing. In terms of capital, we're fully locked in on cost, Nick. We're underway. It's you know, probably close to being topped out by this point. All costs are under a guaranteed contract, so we have no cost risk. There's only about $170 million of spend left to go to complete that. It's not gonna be burdensome, particularly in terms of capital availability. You know, there's obviously, once we have a tenant in tow, there's the spend associated with TIs and commission, which we would be more than happy to spend, obviously. It really is not, Nick, a material burden on our capital availability. Yeah, I mean, Nick, you said it's a great location. It's also a fantastic asset. There's a handful of large deals out in the market. We're talking to all of them. We're in negotiations with one in particular right now, you know, from 2-250,000 sq ft. Yeah, we still feel bullish on the large tenant demand and the trophy assets, you know, the newer space is garnering all the attention. We still feel good about it. We have a little bit of time, but we're out hustling to kinda get the next tenant behind this one as well. Yeah. Lastly, Nick, listen, there's, you know. As you know, there's flight to quality here. We believe in this asset. There's no turning back now, though. Let's be very candid. It's not like we're gonna, you know, stop construction and get in a situation where this building is not gonna be completed. As Mark said, the capital spend is already in place. We have a lot of activity specifically around 200,000 square footers. You know, if that means we gotta go to ground war and do full-floor deals, that's what we'll do to get the rest of it leased. All right. Thanks, everyone. Thank you, Mr. Yulico. The next question comes from the line of Omotayo Okusanya with Credit Suisse. You may proceed. Hi. Yes, good afternoon, everyone. First of all, just around the Quixote deal. Again, if you took the September NOI that you guys provided in the supp and just annualize that, it looks like that deal was kind of done at like a 9% cap. I think in the past when the deal was first announced, it kinda was meant, you know, we thought it was like a 12%-13% cap type transaction. Could you just help us understand that a little bit better? I don't know if there's some seasonality in the business, which is why just analyzing the September numbers may not be the right way to look at it. Yeah, I mean, you nailed it. You got 1 month of results there. You can't gauge the valuation of this business off of 1 month of results. We'll see where full 2022 ultimately shakes out. When we were guiding, we were really focused more on 2023 because that would be a full year of ownership where it's under our, you know, under our structure. It takes into account other opportunities we have of having combined this business with our preexisting business. We're still confident that this business off of 2023 relative to the $360 we paid for it, is like an 8-8.5x multiple on EBITDA. You know, you'll just have to continue to monitor the disclosure around that as we have more months to put in front of you to see how closely we are to achieving that multiple. Gotcha. Thank you. Just second question. Just again, given all the conversation around slowdown in tech demand, I mean, how do we start to think about kind of potential new development starts going forward in regards to, you know, is that landing a big pre-lease? Is that. You know, how do we kind of think about when, you know, you may start something new if at all? I mean, the market shift has led us to obviously be in a position where we would do it. One of the multiple deals that we currently have in various forms and functions to break ground would have to be a pre-leasing component. The amount of pre-leasing and the tenant quality is obviously up in the air. It's changed from how we looked in the past. Gotcha. Thank you. Thanks so much. Thank you, Mr. Okusanya. That concludes our question and answer session. I would like to turn the conference back over to Victor Coleman, Chairman and CEO. Thank you so much for the participation, and appreciate all the questions, and we'll look forward to seeing most of you at Nareit in about two weeks. Goodbye. That concludes the conference call. Thank you for your participation. You may now disconnect your line.