Good morning, and welcome to the Hudson Pacific Properties fourth quarter 2022 conference call. All participants will be in listen mode only. Should you need assistance, please signal a conference specialist by pressing star key followed by zero. To insert a question queue at any time, please press star followed by one on your touchtone phone. If you're using a speakerphone, note that 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 in Investor Relations and Marketing. Please go ahead. Good morning, everyone. Thanks for joining us. With me today on the call are Victor Coleman, our CEO and Chairman, Mark Lammas, President, Harout Diramerian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on an 8-K with the SEC. 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 today 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 our 2022 accomplishments and 2023 priorities, along with macro trends across our markets. Mark will review our office leasing and development highlights, and Harout will review our fourth quarter financial results and 2023 outlook. Thereafter, we'll be happy to take your questions. Victor? Thank you, Laura. Good morning, everyone, thanks for joining us. Let me start by highlighting Hudson Pacific's 2022 accomplishments, which align with the five key objectives centered around leasing, capital recycling, development, balance sheet management, and ESG that I outlined on our call at this time last year. Let me start with leasing. We leased over 2.1 million sq ft in 2022, just shy of our long-term average and up more than 300,000 sq ft from 2021. We achieved positive GAAP and cash rent growth of 14% and 4% respectively. We executed on all four of our planned non-strategic asset sales, closing three last year for a combined $144 million of gross proceeds, with our fourth, Skyway Landing, now closed for an additional $102 million of gross proceeds for a total dispositions of $246 million. As part of our efforts to grow a portfolio of world-class amenitized, collaborative, sustainable office and studio space, we purchased Quixote, a leading stage and production services provider, through an off-market transaction. We made good progress on our two under construction studio and office projects totaling 780,000 sq ft, while securing entitlements for two future projects totaling 1.6 million sq ft. We now have $1 billion of total liquidity with a focus last year on using proceeds from asset sales and our successful $350 million green bond offering to pay down and refinance debt. We also reduced our interest rate exposure through caps and swaps to maintain our total fixed and capped debt at 85%+. We continue to return capital to shareholders throughout the year, repurchasing approximately $240 million of our common stock and maintaining our dividend with a stable full year AFFO payout ratio of just over 60%. We also continue to achieve sustainability and ESG excellence, ranking number one in the office companies in the Americas by GRESB and winning Nareit's Leader in the Light award during 2022. Most recently, we were recognized by Newsweek as one of America's most responsible companies and included in the 2023 Bloomberg Gender-Equality Index, further aligning our platform with stakeholders prioritizing sustainable and equitable workforces. I'm also very proud of the Hudson Pacific team and our ability to execute and work toward creating long-term value for our shareholders in this complex and highly dynamic environment. Our strategy places Hudson Pacific at the confluence of several macroeconomic trends that we believe are transitory. Therein lies the opportunity as we leverage our unique industry expertise and full service platform to position our company and world-class portfolio optimally for the next cycle. We continue to see utilization across our portfolio improve with multiple assets trending towards 50%-75% peak occupancy. Utilization remains very tenant and thus asset specific, but we believe growing employer mandates and employee willingness to return, especially in light of the recent layoffs, will result in even higher utilization and reemphasize on being in the office to improve workforce productivity in the coming year. Looking at the five largest layoffs among North American tech companies over the last six months, only about 15% of those layoffs, based on WARN notices, impacted our U.S. markets, accounting for about 1% of the company's total workforce. While hiring among tech and media companies was notably declined in the recent months, we recall these industries had massive hiring gains throughout the pandemic with little or no augmentation of their office footprint. In our target U.S. markets, employment levels in tech and media related sectors are still at or well above pre-pandemic levels, reflecting the inherent long-term secular strength. In the case of Seattle and the Bay Area, as much as 15% above. Software and IT job postings are still 20%-25% above in the pandemic levels, according to Indeed. We know as big tech right sizes, talent will spin out and build the next high growth companies, the next Google or the next Amazon. VC capital firms raised about $160 billion in 2022, and have record amounts of capital to invest in series A and B rounds, and they're still very active. This will give rise to innovative small and medium-sized companies that will ultimately expand within our portfolio and beyond, just as they've done in past cycles. As of the fourth quarter, top studios including Apple TV, Netflix, Disney, Amazon and others were still projecting to spend a total of $140 billion on content this year, up 11% from last year to a new high. Original content spend, which typically accounts for 20%-50% of the total spend and is perhaps a better indicator of production, was expected to increase by a more moderate 2%. We did see production activity moderate in the fourth quarter, particularly here in Los Angeles, which we attribute to several factors, including studios growing austerian measures, the Amazon MGM and Discovery Warner Media acquisitions, and caution ahead of the late spring studio union contract negotiations as well as annual seasonality. We'll continue to monitor these trends, but remain confident in the long-term fundamentals around content creation and the ability of our platform through a combination of long-term leases and increasingly diverse geographic footprint and product offering to meet the current and new client priorities and preferences. At Hudson Pacific, we're building upon a strong track record of execution via our ability to uncover opportunities, deliver premier office and studio space, execute leases and grow rents. In so doing, we've set the bar when it came to creative, collaborative, high quality, high touch, sustainable work environments and related services to inspire the world's most innovative and creative companies and their employees. As these industries evolve and grow once again, we will be at the forefront of this next shift. We will leverage our platform seasoned, cycled team that's fully tested, our full service programs, vertically integrated platform, and our unique strategy and value of our relationships to continue to expeditiously optimize our portfolio in ways that we could create significant value for shareholders. Looking ahead to 2023, our priorities are as follows: to continue to successfully address our 2023 office lease expirations with the goal of preserving rent and occupancy. To execute on our near term value creation office and studio development opportunities, specifically Sunset Glenoaks and Washington 1,000. To further strengthen our balance sheet by delevering through asset sales and reducing interest rate risks through hedges. Finally, to continue our ESG and sustainability leadership, which has become a hallmark of our businesses and how do we create long-term value for our shareholders. I'm going to turn the call over to Mark Thanks, Victor. In the fourth quarter we signed 517,000 sq ft of new and renewal leases. This resulted in over 96,000 sq ft of positive net absorption and drove our in-service office lease percentage up 40 basis points to 89.7%. This included a 100,000 sq ft 10-year lease with a large publicly traded software company at Metro Center in Foster City, which was not only the largest deal in our portfolio for the quarter, but also the largest along the entire San Francisco peninsula and a win for the team. Our activity also included the full building 47,000 sq ft backfill of Lockheed Martin with a 17-year lease with Stanford at 3176 Porter in Palo Alto, and a 40,000 sq ft 10-year renewal with SFMTA at 1455 Market in San Francisco. Both deals addressed two of our larger 2023 expirations. Our GAAP rents on fourth quarter deals were up 16%, while our cash rents were down 0.5%, driven primarily by Stanford's renewal at 3176 Porter. Adjusted for the Stanford lease, cash rents were close to 3% higher. Note that NFL, which vacated 10900 and 10950 Washington on January 1st of this year, is still included in our fourth quarter lease percentage. Although we continue to negotiate with a single tenant for the entirety of that asset, we're actively exploring redevelopment of the property as residential to take advantage of its prime Culver City location and pending up zoning. This is a decision we expect to be able to make in the coming months as we review our options. Even as we continue to sign significant leases, we have 1.9 million sq ft of opportunities in our leasing pipeline at multiple stages. We also currently have activity on both of our only two large block expirations in 2023. Specifically, we have 60% coverage on block space at 1455 Market in San Francisco, which expires in the third quarter of this year. We're negotiating with an existing 25,000 sq ft subtenant and a new tenant with a 250,000 sq ft requirement. If we can close on these, we'll have largely addressed our only material expiration in downtown San Francisco this year. We're also in discussions with Amazon to renew their fourth quarter 140,000 sq ft expiration at Met Park North in Seattle and expect to have more visibility as to their plans by the third quarter. We currently have 42% coverage on our 2023 expirations with an average tenant size of roughly 9,000 sq ft. Approximately 50% of these are located in the peninsula and valley submarkets where we're seeing resilient small to mid-size tenant demand for our assets. According to CBRE, in the fourth quarter along the peninsula, over 70% of leases signed were under 5,000 sq ft, and in the valley, over 60% of deals were under 10,000 sq ft. We're staying disciplined in our approach to new development as we monitor market conditions. Our under construction development pipeline consists of two attractive and unique projects. Our Burbank adjacent seven-stage Sunset Glenoaks Studio, which will be the first purpose-built studio in Los Angeles in over 20 years, is on track to deliver this year. We're in discussions with several tenants regarding multi-stage, multi-year commitments, including some single tenant users for the entire lot, but we're also prepared to leverage a more traditional show by show lease model for some stages. Construction also continues at our Washington 1,000 office tower, which we'll deliver next year and is well positioned as the best of the best product in Seattle's Denny Triangle submarket. Over the last decade, we've established a proven track record of excellence in development with our platform and projects winning numerous awards from the likes of GRESB, NAIOP, and ULI. Apart from our two under construction projects, we continue to progress entitlements and designs for the balance of our 3.6 million sq ft pipeline of potential development opportunities, which contains unique projects like Burrard Exchange, which will be one of North America's tallest mass timber office towers, and Sunset Waltham Cross, which will be one of the largest studio facilities in the U.K. We're taking this time to ready our pipeline to ensure we can commence construction and create value, but only when the timing is right. With that, I'll turn the call over to Harout. Thanks, Mark. Our fourth quarter of 2022 revenue increased 12.2% to $269.9 million compared to fourth quarter of 2021. Primarily driven by income generated from our Quixote acquisition in August 2022 and the commencement of Google's lease at One Westside in December 2021. Partially offset by Qualcomm's vacancy at Skyport Plaza in July 2022. Our fourth quarter same store property cash NOI increased 2.7% to $126.9 million compared to fourth quarter of 2021. Primarily driven by increases in revenue at 1918 8th Avenue, 1161 Wilshire, 4085 Market, and Sunset Gower Studios. Partially offset by Qualcomm's vacancy at Skyport Plaza in July 2022. Adjusted for Qualcomm, our same store cash NOI would have increased to 6.7%. Fourth quarter FFO, excluding specified items, was $0.49 per diluted share compared to $0.52 per diluted share a year ago. Fourth quarter specified items consisted of transaction-related expenses of $3.6 million or $0.03 per diluted share compared to transaction-related expenses of $1.5 million or $0.01 per diluted share and prior period property tax reimbursements of $0.7 million or $0.00 per diluted share a year ago. Fourth quarter AFFO was $62.1 million or $0.43 per diluted share compared to $72.5 million or $0.47 per diluted share a year ago. Our payout ratios for the fourth quarter and year-to-date were 58% and 61.4% respectively, underscoring that our dividend remains well covered. We continue to execute on financings and asset sales to fortify our balance sheet. At the end of the fourth quarter, we had $870.8 million in total liquidity, comprised of $255.8 million in unrestricted cash and cash equivalents and $615 million of undrawn capacity under our unsecured revolving credit facility. We also add another $98 million and $59.3 million of undrawn capacity under construction loans secured by One Westside, 10850 Pico, and Sunset Gleno aks respectively. Upon repaying our $110 million Series A notes in January 2023 and using the $102 million of sales proceeds from Skyway Landing to pay down unsecured revolving credit facility this February, we now have $1 billion in total liquidity. In January, we also entered into interest rate swaps on our $172.9 million pro rata share of our Nineteen Eighteens loan and $351.2 million net pro rata share of our Hollywood Media portfolio loan. Accounting for these debt repayments and interest rate swaps, the composition of our debt as of December 31, 2022, on a pro forma basis, results in fixed debt of approximately 82.8% and fixed and capped debt of approximately 86%. We currently have $210 million of debt maturing towards the end of 2023, which can be repaid from our line availability. This includes our $50 million Series E notes maturing in mid-September and a $160 million note of Quixote secured debt maturing on December 31. I'll turn to our outlook for 2023. As always, our guidance excludes the impact of any acquisitions, dispositions, financings, and capital markets activity. We're providing an initial full year 2023 FFO guidance range of $1.77 to $1.87 per diluted share. There are no specified items in connection with this guidance. We expect same store property cash NOI to grow, growth of 2.5%- 3.5%, which reflects the additions to the same store property pool of One Westside, 5th & Bell, and Harlow, and the removal of 10900/10950 Washington in Culver City, which we, for guidance purposes, designate as redevelopment to residential. Our 2023 full year guidance reflects for the first time the full year benefit of our Quixote acquisition, which occurred in the third quarter of 2022. Guidance does not reflect a potential disruption in studio production activity beyond the slowdown mentioned earlier in the event ongoing studio union contract negotiations lead to a strike and halt in production, which could occur as of May 1st and/or June 30th of this year. We're happy to take your questions. Operator? Hello? Sorry about that. We will now begin the question and answer session. As a reminder, to ask a question, please press star and then the one on your telephone keypad. If you're using a speakerphone, please remember to pick up your handset before pressing the keys. To withdraw your question, please press star two. Our first question is from Michael Griffin with Citi. Your line is now open. Great, thanks. Maybe we can just start off on the guidance for 2023. Victor, in your prepared remarks, you talked about preserving rent and occupancy for the year ahead. I mean, should we read this as you expect the occupancy sort of to be flat? As it relates to the same store, I mean, it seems like it's more a function of just moving assets in and out of the same-store pool, as opposed to more organic growth. I guess, do you have a sense of what that number would be if the NFL building was included in the pool this year? Let me start, and I'll get the guys to sort of jump in, Michael, on your second part of your question first. You know, we're not moving assets in and out. I think it's important to note on the NFL asset, you know, we have limited activity from single building users. When we recognize the fact that the interest was not as high as we anticipated in a marketplace that we know is in high demand for residential, and the opportunity for the upzoning in Culver City, it's now being evaluated by our team, which is the highest and best use. The return on that asset would be, you know, obviously, much higher in the residential capacity. You know, we're gonna evaluate. We'll keep you posted what we think the returns are gonna be in the construction costs and the likes of that, whether we do it or not ourselves is TBD. That being said, you know, the asset, if we had kept it in on the same-store basis, that asset was well below market anyways in terms of the NFL numbers. I do think that we were always probably looking at a 24 occupancy, physical occupancy of that asset, as the year went by in 2022, and we saw where the activity was. Harout, you want to comment on that? Sure. You know, what we don't wanna do is really do what you're trying to do right now, which is selectively add or remove certain assets that comply with our same-store policy, right? Regardless of these assets, they were supposed to come in as our policy states, which is Harlow, One Westside, and 5th & Bell. NFL being removed is because of a change in use. You notice that Skyport is in the same-store because there is no changing use in the asset. I don't think selecting one asset versus another to see what the impact of same-store is beneficial to anyone. However, if we ignore both Skyport and One Westside, and leave 10950/10900 out, our same-store cash NOI would go up by 5%. I do think that cherry-picking certain assets doesn't move any of us. This is our same-store pool, and this is what we've guided on. Right. I understand that. I guess my... Sorry. I was just gonna segue over to your question on occupancy. You know, we started last year with two million feet of expirations beginning in 2022 and signed 2.1 million sq ft, and that, you know, kept you know, our lease percentage close to 90%. This year we start with less expiration than we did last year. We're about 1.7 million sq ft. There are some pretty sizable expirations as part of that NFL and Block being, you know, two decent sized expirations. You know, our view is that. We have two million feet of activity in the pipeline now or close to that. We expect the full year leasing activity to be healthy. you know, our view is trying to pinpoint some ending year lease percentage is a bit of a fool's errand because it's so tied to our success of either backfilling one or let's say the Block space, for example, can fairly materially move the needle as of any, you know, moment in time. I think we're set up to have a really successful year, you know, in any event. Right. Again, I don't want to hark on the moving assets in and out of same-store pool. It just seems to me that if there is potential office demand for NFL, I mean, I know you have your own same-store policies, but if that were to get leased, you know, one would think that that should still be in the pool. I understand you have your own metrics for, you know, quantifying which is in or not in the same-store pool. Great. One more, if I could, just quickly. Victor, you mentioned in your prepared remarks just a comment on transitory effects in the environment right now. I guess, can you expand on that? I mean, is the long-term assumption that we go back to what the office was like at a pre-COVID level? I just found that use of the word transitory is sort of interesting just given we're sort of in this, you know, what I would interpret as more permanent sort of hybrid remote, hybrid work environment. If you could expand on that a bit, that'd be great. Yeah, I mean, listen, I can sort of tell you what we're seeing on the ground region to region all the way through. The reality is we are definitely, you know, in the latter stages of, you know, post-COVID and some sense of normality, where, you know, the majority of our tenants are three days plus a week, and some are fully up to five. You know, some of our tech tenants are fully five days a week. Some of our fire-related tenants are three days a week. On the average, we're seeing that, and we're seeing that shrink, that number shrink from, you know, basically a, you know, an overall 75% pre-COVID occupancy level, a physical occupancy level to probably, I don't know where that number is gonna fall in place, but we're still, we're sort of feeling it's gonna be in that 60%-70% anyways. If you look at our portfolio today, I mean, we're in Vancouver, we're at 75%. We're in Seattle, we're roughly at 75%. In the Peninsula, we're between 45% and 60% in our portfolio. San Francisco, you know, we're looking around 25%. But if you take a look at the Ferry Building, we're at 75%. In L.A., you know, we've got assets that are 100%, and we've got our multi-tenant assets that are 50%. The average is between 50% and 100%. I do think that we're seeing a big shift, and that's gonna continue to evolve as companies look to establish their presence both physically and then socially within their own environments and culture. Gotcha. All right, guys. That's it for me. Thanks for the time. Thanks. Our next question is from Dave Rodgers with Baird. Your line is now open. Yeah. Hi, everybody. I guess first, on the lease, you talked about 42% coverage on the expirations for this year, I think you said 60% in Block. Does that include leases that you've already just signed, or is this still leases that you're negotiating? Just wanted to try to get a sense in those two particular instances, how much of that activity is already done. Hey, Dave, it's Art. Do you mean of the 42%? How much of it's- Yeah. Yes. Most of it is in negotiation. Now we've signed, I think 3 deals, but most of that is in, you know, LOI stages right now. Okay. Thanks for the clarification on that. Victor, second on the union negotiations. Can you give us a sense, I guess, across the studio business of how much of that business would that impact for you? Is that Star Waggons, Quixote, like the whole services side, as well as kind of the services you're providing or sourcing within the studios themselves? And I guess how much direct impact do you get on expenses maybe, let's say, versus just the occupancy hit of shutting the studios down? Yeah. I'll start, I'm gonna kick it over to Jeff Stotland 'cause he's here also to sort of focus specifically on this. Yes, first and foremost, Dave, I mean, the union is the union negotiation between the three, between SAG and DGA and Writers Union right now, it's a obvious hot button. Last time, you know, it was this sort of contentious was right around 2008 when we first owned our studios. We saw a 100-day strike. You know, it's a little bit of a land grab right now to see who's gonna go first. You know, our preference, like everybody else's on the ownership production side, would be DGA because they seem to have great leadership and a direction. If they can get out ahead and make a deal, which is what we're all hopeful it may set precedent, but, you know, we don't know what's gonna happen there. It specifically, you know, we're looking timeline, May, June as some sort of emphatic timeline when the actual strikes would occur. You know, we obviously are not impacted by our sound stages that are on leases. We are much more impact on our operating businesses, which will produce content up until the strike occurs, and Jeff can get into a little bit more detail on that. Yeah. You know, if the, if the strike happens, obviously it impacts, you know, occupancy and utilization, and it's a high fixed cost business, right? You know, once those impacts happen, obviously it ripples through, and it rolls down to our profitability. We have two different sides of the business, as you know. On the Sunset brand, most of our business, 80%-85% of it is under long-term lease. Really the vast majority. There's much less of an economic impact on the Sunset side. On the Quixote side, which is our collection of, you know, the stages that are under lease as well as all the service co's, that business is, you know, maybe 90% show by show, not under sort of a short-term lease. Not, not under that long-term lease model. All in, the entire portfolio is roughly 50/50. The two different businesses are pretty different. I guess the last thing I would say is, you know, we look at this as obviously it's not, it's not great, but it's obviously fully out of our control, and it's a short-term impact. Ultimately, we do believe, you know, if and when a strike happens, we'll, you know, we expect to recapture a lot of that demand. You know, whether it's Q3, Q4, or 2024, you know, we expect to recapture most of it. That's, that's kinda how we think about it. Just to recap that, about 50% of that could be at risk if all three are striking and the studios shut down. Yeah. For the temporary period- 50% of NOI. Yeah. Maybe. Yeah. Well, it's 50% of revenue. The impact to NOI would, you know, not necessarily be the exact same thing because of the cost nature of each business. Yeah, 50%, about half the revenue is under short term and about half is under long term. Okay, that's helpful. Last one for me, just on disposition, appetite, and desire to get assets into the market, currently and get those closed, you know, to continue to create liquidity for the business. You know, listen, we have a few more that we are looking at. Market conditions will obviously dictate timing and pricing on that. Nothing is eminent. We did take our Arts District assets off the market last year and have not looked to revisit to bring them back at this time. We successfully executed on our most recent disposition, which was done this quarter, but we executed it last year and we closed it this quarter. I think, you know, you could sort of anticipate that we'll let you know when we bring assets to the marketplace 'cause we're not gonna do them on our own. We'll bring third parties, and it will be public, just like it was at the Arts District. All right. Thanks, Victor. You got it, Dave. Our next question is from Alexander Goldfarb with Piper Sandler. Your line is now open. Oh, great. Thank you, and, I think it's still good morning out there. Just continuing on the, on the studio business, you guys have increased the mobile studio business. You know, just wanna know more about that. We've gotten used to the way the regular or the traditional soundstage business works through the year, but now that you have more mobile studios, wanna understand the seasonality of that. Also, just, you know, the depreciation, more of that is not an add back. Harout, just, you know, as we think about the guidance and what's in there, any sort of adjustments that we should be mindful to make sure that we properly account for the depreciation now that we have sort of a full year, of the, of the mobile studio platform? Thanks, Alex. We provided that in the guidance section. In the chart, we've kinda illustrated what our range is for 2023 in terms of the non-add back of depreciation or not realty depreciation, to be more precise. That's in our guidance, and the Q4 number is probably the closest to our run rate you'll see, just because it has a full quarter of COD and, obviously, the formerly Star Waggons and Zio products. That's all in that number and the guidance is probably our best indication of that. Yeah. Alex, in terms of your first part of your question, I mean, listen, if you recall, you know, when we first got into this industry and this business, we were really running show-by-show variability, and we converted over to long-term leasing. It's exactly what it was. I mean, as each show goes in and the success of the show, it will be based upon the success and the pickup. The biggest difference, though, today than when it was, you know, some time ago when we first bought these studios, and whatever it was in eight or nine, is that now the shows that go in on a variable basis, which are for the small screen, the series, episodic, versus features, you know, they're almost inevitably always picked up for two years. Unlike before, it would be much more seasonality and filming would be, you know, starting sometime in early, late spring, early summer, and carry through till, you know, March, April, and there would be a hiatus. Now, filming is 24/7, 12 months a year. But, you know, we do see seasonality around the mobile studio business, you know, specifically in December. Usually, we see it again, around August. There's been weaknesses in quarters at various different times, and we pointed that out. You know, the stickiness is, you know, what's gonna happen between the increase in on-location shoots and the amount of days there versus in our soundstages. What we've tried to message around this is we're capturing both. We're capturing production, on location now at a level of about almost 70% that's filmed, it's specifically in Los Angeles. We're capturing, location shoots in studios that are not just all of ours, but now our competitors and our friends' studios because we control a substantial amount of that business. Okay. Victor, that's helpful. The second question is just sort of, you know, LA has done a great job over the past several decades of diversifying its economy. I mean, it's still obviously content, but it's got a much deeper tenant base, if you will. Do you feel that Northern California and Seattle are too concentrated? If yes, is there anything that the local, you know, communities or business communities are trying to do to diversify? In your view, the upside when tech really works more than compensates for the tech downturns as far as, you know, owning and investing in real estate? Listen, I would completely concur with your statement in Los Angeles. I mean, I think people do think of L.A. as the city of entertainment, but really it is the most diversified of all the markets we're in. Whether it's entertainment, whether it's tech, whether it's small business, whether it's fire-related businesses, I mean, the diversity of our tenants is much more apparent in Los Angeles. How that has trickled through our portfolio in the Peninsula, in San Francisco, in Seattle, it is evolving by just what you're seeing statistically in our portfolio and the leasing that our team did. If you look thematically at 2022, you know, currently the makeup of our portfolio is about 40% tech. You know that, most people know that. If you look back on 2022, you know, we did about 300+ leases. Of that, I think it was somewhere around, from a number of leases, less than 20% were tech, and from a square footage, about 30% were tech. If you look at the quarter, we did about 76 leases, and if you look at this is portfolio-wide, and if you look about, 17% of those leases were tech and about 30% square footage. It's consistent that you're seeing the, the spread. What are communities doing? Listen, at the end of the day, I can't sort of comment on the political environment in community, but I can tell you there is still a welcoming thought process for small business growth, specifically in California, specifically in the Valley, that is spearheaded, and you saw my, you heard my prepared remarks. I mean, the next Amazon or the next Google is coming out of the divisions of those companies with the way VC capital has always attracted those types of tenants that start small and hopefully grow big and become successful. They're not all tech, clearly, and they're not all entertainment. So the diversity will be there. It just takes a little bit of time. The genesis of capital is driven on the success of the companies, which in the history of Seattle, San Francisco, and the Peninsula, these companies have been tech-related because that's where the successes come from. Okay. Thank you. You got it, Alex. Our next question comes from Ronald Kamdem with Morgan Stanley. Your line is now open. Hey, just going back to sort of the same store NOI question, maybe just thinking about it a different way. Is there a way we could sort it break it out, that growth and what's occupancy, what's bumps, what's free rent burning off? Just trying to get a sense of what's driving that 3% at the midpoint. Thanks. I don't know if we've ever gotten that granular on our same store disclosures. I think I illustrated earlier where if you back out the big movers, which is, Qualcomm, Google, and I guess NFL, we're still having a 5% increase of our same store. I think that's just a product of either good leasing and/or rent ups and free rent burning off. Otherwise, I don't think we can get into the very granular detail, especially in our Northern California segment, which is, you know, an average occupant of what? 5,000 sq ft? Yeah. Yeah. It's really hard to really break that down, but that's kind of the big picture of it. Helpful. Does that then just? Yeah, no, I think that's helpful. Just moving on to sort of the leasing. You know, I think you talked about sort of the 1.9 million pipeline that's in focus right now. Can you talk about sort of, you know, what the tenants are saying? I mean, you hit on the Amazon thing, which has been in the news and so forth. Just how are you guys sort of thinking about that? How are those conversations going? Thanks. Well, let me sort of start by, you know, giving the accolades to the leasing team. I mean, two million sq ft in 2022 was literally hand-to-hand combat. You know, when I just mentioned, Ronnie, that we did over 300 leases, I mean, that was a lot of hard work. I think that's indicative of where we sit right now. You know, we are still in a headwind position where tenants have choices, they're looking at, you know, the availability of space, the likelihood of the landlord to be able to write a check for TIs, and the ability to execute at their timeline, not our timeline. Never before in, you know, we've seen such a delay of tenants that are interested in leasing space but haven't committed because they don't have to until the absolute last minute. You know, if they're leaving space to come to our space or others, their current landlords are letting them extend and hold over, when in times in the past they've said, you know, the holdover ratios are 150 or 200 over rent, and you have to pay that. Now they're waiving that. It's an absolute flat, and you can take more time and make your decision. With that as a backdrop, you know, on our 1.9 million sq ft in the pipeline, you know, as, as Mark indicated in his prepared remarks, you know, 400,000 feet of Sorry, 300,000 feet of that is two tenants at Block. That, you know, there's two tenants. One's 250 and one's a little over 25. Those two tenants, you know, we are working hard on those two tenants. If you take the next 1.6 million, I can let Art sort of address that. Yeah, I mean, Victor Coleman, you're spot on. I mean, the 1.9 is a very healthy level, as Mark Lammas indicated earlier, that we carry. Be mindful of the fact that we had just finished leasing 500,000 sq ft plus, our ability to reload the pipeline in this environment is has been a feat for our team on the ground. We do anticipate the demand to be at healthy levels going forward because of the successes we've had. That remainder of the square footage that Victor Coleman was talking about, I mean, we're chiefly talking about tenants that are roughly about 6,000sq ft-7,000 sq ft. These tenants, have dominated most of the markets, I will say, with the exception of Silicon Valley, where it's still tech driven. You know, all the other markets, have seen an uptick, a significant uptick over the last couple of quarters in, you know... Fire sector and professional service firms. As a matter of fact, it really, which was shocking two quarters ago, those two sectors, you know, surpassed tech in the Seattle market. Those are the types of tenants we're looking at right now. You know, as you might imagine, you know, this demand generally favors our portfolio. Why? Because we have, you know, our VSP program, which is the market-ready suites that have been super successful. I think, you know, as we build them out, we've over time leased them at a 80% clip. That's why we feel really bullish about the small tenant activity back in the market. Great. That's it for me. Thanks so much. You got it. Our next question is from Camille Bonnel with Bank of America. Your line is now open. Hello. There's been a number of big tech firms coming out recently stating that they're planning to cut back on their office footprints, Google being the latest. I know that your leases with Google are longer term, but wanted to understand if you see any risks of subleasing or lease termination from them as they're your largest tenant in the portfolio. Yes. Well, listen, we're in constant contact with Google, and we have obviously several leases with them. I think, you know, we have not seen any indication of subleasing in any of our assets with them to date. I think in one of our assets, we have an early term at the end of 2024, which is Hillview, and I think that's about 200,000 feet or so. And they've had some chat about keeping half and maybe, and maybe terminating half. That's moved because it's in three different departments. That's moved around. I think that's the only conversation that I could recall that our team has had to date. As I said, that's at the end of 20- Beginning of 2025. Beginning of 2025. Thank you. Yeah. That's Camille, that's all that we know to date. Okay. From any other tech or any other tenants, within the portfolio, any increased risk for subleasing there too? No. I mean, listen, the only other one in the portfolio that everybody already knows about is Uber, 'cause they're at 1455, and they expire in 2025, end of 2025. You know, they've been trying to sublease their space and one of the transactions that we're working on would include part of that, but that's it. Got it. Can you spend a bit of time talking about the Skyway Landing sale you recently closed on, the types of buyers that you were seeing and any color around how pricing came out versus your expectations? Yeah. I'll just, you know, talk a little bit. If you recall, we de-tenanted the building to approximately, I think, 30% occupancy over the last year plus on the ability for us to maybe convert this for life sciences for either ourselves to do or for a particular buyer. The life science interest buyers were who was looking at this asset. I think we sold the asset for about, you know, effectively vacant, for about $400+ a foot. We're pretty pleased with the number. I think as a result, the execution was one that in today's marketplace, you know, we did not entertain nor were we asked to carry back financing. I think it was clean. Mark, you wanna add to it? Yeah. I mean, just in case you want it for your numbers, that's, you know, less than a 1% gap and cash cap rate on Q4 annualized. It makes effectively no difference to our operating results going forward. As Victor points out, we did north of $400 a foot on the sale. Good execution on that. Perfect. Thank you. Our next question is from Nick Yulico with Scotiabank. Your line is now open. Yeah, thanks. Going back to the same-store NOI guidance for this year, I wanted to see if you could, break down, you know, the impact between office and studio for the components. Yeah. You know, Nick, you know, we're guiding without that. We don't think. I mean, first of all, our peers are not separating out when they have, you know, multi or whatever in their numbers, right? life sciences. Life sciences. I mean, suffice to say, office is the vast majority of that same-store NOI. To get to the 3% at a midpoint office would have to be darn close to that number to begin with, which, you know, ought to give you a pretty good idea of the composition of the two numbers. Okay. Got it. I guess just following up on that, in terms of, you know, I know, I know you talked earlier about it's hard to forecast where, you know, the lease rate might be for the portfolio at the end of the year, but, maybe you could give us a sense for, you know, an actual, like a same-store office occupancy type of number that's embedded, you know, the change in same-store office occupancy, you know, embedded in your, same-store cash NOI growth. Look, Nick, I respect the tenacity, but, you know, look, if we were gonna guide to it, we would have guided to it. Okay. All right. Just one last question is, going back to 1455 Market. The tenant, the prospective tenant you're talking about there. I guess, at this point, you know, is it solely relying on that one tenant? I think in the pitch, you might have said it's a government tenant, I'm just trying to figure out, you know, sort of the likelihood or risk of, you know, actually that deal, you know, getting done. Listen, I can't tell you if it can get done or not. We're the only place that they're looking at, I'll say that. It either makes or it doesn't with us. I think I'm not gonna put a number on what it is. We're hopeful that something comes out of it, and if it doesn't, we'll figure something else out. To answer your question directly, that's the only one tenant of size currently today that we're entertaining. Okay. more... Is it a government tenant? I can't say. Okay. Fair enough. Thank you. Thanks. Our next question comes from John Kim with BMO. Your line is now open. Thank you. I wanted to ask about your fourth quarter cash same-store growth, which in office was positive at 1.9%. You also had occupancy drop 510 basis points year-over-year. It's a big, you know, a big headwind to overcome. Were there any one-time items in there, whether it's termination fee or free rent burnout that really helped with this quarter's results? If there were any termination fees, they were probably de minimis, so I don't think there's anything in there. It's a combination of, you know, partial quarter increases in occupancy and rent bumps. There wasn't anything, as I recall, one time in those numbers that would drive it. It's just rental income. Maybe collection of some rents that, you know, basically free rent burn off. Okay. Just to clarify, you don't include termination fee in your guidance, correct? If we do, we call it out. In our guidance? No. We don't include termination fees. We really haven't had much, you know, material termination fees, unlike, you know, many of our peers. It hasn't played much of a role in our numbers. The last time we had a big one, we were very clear on calling it out everywhere, so people understood the impact of them, either in same store or total even FFO. This might be a little bit premature, can you talk about the conversion opportunity at the NFL Culver space, whether it's multi-family or condo conversion that you're contemplating, and whether or not you're looking at other assets in your portfolio for either resi or life science conversions? Yeah. Maybe a clarification around the conversion. What we're exploring at 10950 in Culver City is really a full redevelopment. It's not. We're not envisioning taking the 170,000 feet and adapt, you know, sort of converting that to residential. The upzoning that's currently underway in Culver City is to densify sites along transportation corridors, and we think our site could support as many as, say, up to 470 units. There are comps within, say, a mile radius of us that are, you know, good, you know, residential co-comps that are under development today that point to valuations for our site at that density level. It's somewhere maybe double our current GAAP basis, which is why we think it's a compelling opportunity to pursue. As for other conversions, you know, it's obviously happening in various markets, residential conversions, more on, you know, B or even C quality type real estate. We don't really have that within the portfolio. We are looking at sort of what it entails to convert on assets that maybe physically are well situated for conversion or maybe happen to be in markets that have nearby residential, so that we're at least informed about what the opportunity for conversion looks like. I mean, I think we, you know, Victor has said on past calls, I don't think we think there's much of our existing portfolio that's, you know, a real candidate for conversion given the quality of the assets. Okay. Just one more from me on your dividend and your decision to maintain it. I think it's refreshing you're not following the herd necessarily, but how committed are you to maintaining the dividend for the year, just given you're trading at 9% yield, and you might have some use of proceeds on retaining that capital? Hey, listen, we're completely committed to maintaining the dividend. I mean, you can see where our FFO ratio is right now. It's one of the lowest we've had, I think, in quite some time. I think, you know, whether we're following the herd or we're creating our own, the reality of the situation is the amount of differential here for access to capital, given our liquidity position right now, is not materially. There won't be a material change if we lowered our dividend. We just think that given this is a, hopefully a indication of the strength of the company, one, and two, the position by which we're gonna take going forward, which has been consistent throughout. I mean, at one point last year, we were having conversations about increasing our dividend because of o ur FFO, where it's going to. Harout, do you wanna comment? Yeah. I just wanted to add, and not to take away anything that Victor said. We always evaluate our dividend policy and coverage and factor in current economic conditions, leasing activity, interest rates, everything that we also put into our guidance. So Again, thinking it through all that, we've decided to maintain our dividend in the short term, at least. Whether or not we increase or decrease it later on, is something we evaluate on an ongoing basis. Great. Thanks for the color. Our next question comes from Yong Koo with Wells Fargo. Your line is now open. Great. Thank you. Just want to go back to the commentary on Google. I think you mentioned Hillview as a potential early termination. Other than that, are there any other chunkier leases that we should be aware of that's coming up by end of 2024 that could potentially move out? No. There's nothing in the end of 2024. I think the next lease is probably Foothill in 2025 sometime maybe. It's in our supplemental release expirations. For Google, yeah, it's all laid out in our top 15 tenant listings, and has all the breakdown of all the leases there. All of our expirations are outlined for the next eight quarters in the supplemental. Okay. That's helpful. Yeah, just, since you mentioned Google again, what kind of utilizations are you seeing at the different spaces of the leases? I think. I know at Hillview they're almost 100% because it's two different groups. I think at Foothill, we have two buildings. One's, I'm pretty sure one's fully occupied. One of the buildings I believe there was vacancy there that they never built out, but not a tremendous. I thought it was, I'm going off memory, like 20,000 feet or less. A little bit more than that. Yeah. Yeah. Something, something to that effect. Yeah. Got it. Okay. That's helpful. Harout, I think you might have mentioned this, when you were talking about guidance. You're not baking in any potential strike on the studio side, that's in your guidance right now, right? That's correct. Okay. What kind of FFO impact would there be if, let's say, the strike took place and then, you know, there was minimal kind of production for back half of the year? I'm gonna just let Jeff Stotland answer at least the relation to this question. Yeah. Hey, I would say rather than attempt to, you know, quantify this now if the strike materializes, because again, we're not like 100% certain that it's actually gonna materialize. If it does, it wouldn't really officially start until May 2nd, because the contract expires May 1st. I think we have our next earnings call, like, May 3rd. Probably at that point, we'll have a better sense of the timing and the impact. Maybe we can give you a better sense then. Right now it's premature. Okay. Got it. That's fair. Thank you. Our next question comes from Dylan Burzinski with Green Street. Your line is now open. Hey, guys. Good afternoon. Thanks for taking the question. Just curious, from a capital allocation perspective, any desire to start some of the developments that you guys have laid out in your prepared remarks? Well, I think we did. Yeah, we indicated, there's no, we're not anticipating a near-term start on what are really kind of. On the office side, we've got Burrard. We're monitoring it. I, you know, we'll make sure it's, you know, ready to go if the market conditions support it or if we had some significant pre-leasing. The studio side's a bit different. You know, we're pretty far along. We're fully entitled on Waltham Cross, which you'll recall is a studio development site that we own in partnership with Blackstone. We own 35% of that. That one could start. You know, again, we're monitoring it. Market conditions remain very good. We are out looking for construction financing, which, you know, we'll have to... We don't quite know yet how that pricing is gonna shake out. It is feasible that that could start this year. Other than that, you know, we don't have any other near-term starts. Okay. That's helpful. Just curious, what's the overall mark-to-market on the portfolio today? Yeah. The spot mark-to-market across the entire portfolio consolidated is about 2%. The 2023 mark on expirations is about 4%, both positive. Okay. Thank you. Our next question comes from Vikram Malhotra with Mizuho. Your line is now open. Thanks for taking the question. Just wanted to follow up on two specific tenants, just see if there's any update on thoughts. One is just Salesforce, given the news of them restructuring or terminating leases. Just wondering if there's any specific update you have on your Salesforce lease. Then WeWork as well. They've already, I think, given back 40 buildings last year or 40 spaces. Any update on just how the WeWork spaces are performing? I mean, Salesforce, we still have a considerable amount of time on that lease. I mean, with the earliest expiration of 83,000 feet not occurring until middle of 2025, and then we have, like, sort of two-year staggered expirations thereafter. It's fully subleased to Twilio. I mean, there's really nothing immediate to update you on Salesforce. Let me just add to that. Not only is it sublet to Twilio, it's sublet at an above market rate. The idea of Salesforce returning that and giving up. Yeah ... their upside profit would be strange. Well, yeah, I'll clarify. Not necessarily above market, but above the underlying direct lease. We're sharing in the profit of that. Salesforce is highly motivated to do whatever it can to maintain that lease. On the WeWork front, you know, we have four locations with them. They've approached us, and we're, you know, we're talking to them. You know, for the time being, you know, they look to be pretty profitable on at least three of those locations, and they seem pretty incentivized to do whatever they can to maintain those locations. The fourth is at 1455 Market. Even though they've had high attendance there, apparently they're not generating quite enough membership. We're in... That one, you know, we probably end up being in more of a negotiation with them at some point. Okay. That's helpful. Maybe I guess what you're saying, part of WeWork or one of the three could potentially be terminated or given back, as of now, three of them are performing really well. Is that fair? Yeah. I mean, at least, really well, I suppose is up to WeWork to decide. From the financials we've reviewed, they all look to be profitable. Okay. Then just on back to the occupancy, I respect that you can't give a specific number, but I'm just looking for like guardrails or ultimately just ranges, assuming you do very little new leasing, and we all know the known move-outs as well as the expirations, that, you know, that are there in the book today. I'm just wondering, like as of spot occupancy, if you can clarify where was spot occupancy on January 1? If you were to do no new leasing or no new backfilling, can you just give us sort of a range or sort of where you think the low point could be, just trajectory-wise? It just could be helpful because, you know, it's tough to just say. Vikram, I'm just gonna stop you now, okay? Cause we're not gonna go here, okay? You're the fourth guy on this call that asked the question, and the answer still is the same, okay? It's the same question if you say, "Give me the high end." You know? What's the best case scenario? We leased out 1.9 million sq ft. We're not gonna do that either. Let's go on, okay? Okay, fine. I mean, I guess ultimately for real estate, there's occupancy and rent, so it's just hard for us to sit here and say where is it gonna be. I, I- Maybe in mid-year or next- I can- ... quarter you can give us. Okay. Maybe just last one on FAD? Go ahead. Maybe just last one on FAD. I guess your comment was around, you know, this year at least, you're committed to the dividend. If I just look at sort of CapEx, assuming similar CapEx levels that you saw last year, is it safe to say like, based on your FFO range, a FAD of, if my math is correct, FAD of around $130-$140, is that the equivalent to what you've guided to on FFO? I mean, we can run the numbers. I mean, I guess, you know, if you're backing into it that way, I'm sure those numbers work. First of all, I think when you say FAD, you mean AFFO, right? Just 'cause they're. That's right. In my mind, they're two different calculations. Yeah, I mean, Look, you're sort of extrapolating, which is fair, right? You're looking at FFO, kind of the year-over-year change on that and what that might imply in terms of AFFO. You know, there's a lot of other adjustments, as you know, that make, you know, the correlation between FFO and AFFO, you know, a little, trickier to pin down. I would say, maybe to give you a sense as we look at the model, between Google and Company three cash rents commencing this year, those significantly mitigate the impacts of vacancy like Qualcomm, NFL and Block, and should help us maintain an AFFO level pretty close to 2022. That we have to normalize, you know, TI and LC spend in order to kinda, you know, get to that level, which is totally reasonable. I wanna point out, by the way, 'cause I think it gets lost a little bit as people think about just maybe the trend on FFO and AFFO. You know, it can be. You can lose track of what's going on directionally in terms of TIs, LCs, and net effective rents because those have, you know, a much more profound impact over the long term. If you look at what's going on directionally in terms of average lease term. Our leases signed in 2022 were 17% longer than they were in the prior year, so we're elongating our leases. They were 5.5 years in 2022. I think what happened in the most recent quarter is also really important. Our TI costs were 36% below what they were in Q4 of 2021 and 57% below on a per square foot basis than they were in 2019. I think, you know, these drivers of AFFO are improving, if you will. I think that should give you know, some comfort in terms of how our coverage could trend. Okay. Thank you. Operator, we're over our time limit. I wanna thank everybody for participating in the call and apologize that we're slightly over what our hour commitment was. Appreciate everybody taking interest in Hudson. We look forward to talking to everybody next quarter. Bye-bye. Cool. The conference has concluded. You may now disconnect.