Good afternoon, everyone. Thank you for joining today's Q3 2022 Kilroy Realty Corporation Earnings Conference Call. My name is Dante, and I'll be the moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Mr. Bill Hutcheson, Senior Vice President of Investor Relations and Capital Markets. Sir, the floor is yours. Thank you. Good morning, everyone. Thank you for joining us. On the call with me today are John Kilroy, Chairman and CEO, Tyler Rose, our President, Rob Paratte, EVP of Leasing and Business Development, and Eliott Trencher, our CIO and Interim CFO. At the outset, I need to say that some of the information we will be discussing during this call is forward-looking in nature. Please refer to our supplemental package for a statement regarding the forward-looking information on this call and in the supplemental. This call is being telecast live on our website and will be available for replay for the next eight days, both by phone and over the internet. Our earnings release and supplemental package have been filed on a Form 8-K with the SEC, and both are also available on our website. John will start the call with third quarter highlights, and Elliot will discuss our financial results and provide you with updated 2022 earnings guidance. We will be happy to take your questions. John? Thank you, Bill. Hello, everybody, and thank you for joining us today. I'll begin with some big picture comments and then review recent highlights. Over the course of the past several months, the economy has increasingly become uncertain, while at the same time showing some encouraging data points. Labor markets remain strong, supply chain constraints are easing, and the consumer continues to spend. However, the unprecedented pace at which central banks are raising interest rates to tame inflation is, by many accounts, increasing the likelihood of a hard landing, resulting in increased volatility in the public markets and limited transaction activity in the private markets. While we cannot control the Fed or know for certain the ramifications its actions will have on the real estate market, we are laser focused on the items we can control. Just as we positioned KRC to play offense coming out of the 2008, 2009 recession, we believe we are similarly well positioned this time around. Our leverage is low. We have no debt maturities until the end of 2024, and over $1.6 billion of liquidity, including a fully untapped credit facility. While no one wants a recession, Kilroy is cycle tested and prepared. During the third quarter, the push to return to the office intensified as many companies implemented stricter policies to encourage in-person work and collaboration. These efforts have been led by financial services and professional service firms, but we are seeing increasingly technology and media companies follow suit. Multiple large cap companies and their smaller brethren are requiring employees to be back in the office 2 or 3 days a week, which has generated tangible progress in both our physical occupancy and Kastle data, which recently hit a post-pandemic high. This has also driven steady improvement throughout the year in our parking income. Like many, we believe that softness in the labor market will likely strengthen employers' resolve around encouraging work from the office and will also result in employees adhering to those plans more closely. The bifurcation between high quality space and commodity space continues to grow, which bodes well for our young and modern portfolio. According to JLL, in the third quarter, 90% of the space added to the sublease market was in older and less desirable buildings. Furthermore, throughout 2022, nearly 50% of markets nationally set records for high watermark rents on premier Class A properties. This includes several of our markets, such as San Diego, Austin, San Francisco. Companies that are making decisions today understand the importance of locating in modern, amenitized buildings, and we're seeing that. Turning to recent highlights, we've signed 390,000 sq ft of leases since the end of the second quarter, with an average term of 8 years and average rent roll-ups of +7% on a cash basis and +27% on a GAAP basis. Some highlights include a 63,000 sq ft renewal of a financial services tenant in Menlo Park, 55,000 sq ft of renewals and expansions from two apparel companies in Culver City, an 11-year, 28,000 sq ft new lease with Boston Consulting Group at 2,100 Kettner in Little Italy, a 10-year, 70,000 sq ft renewal with a scientific research and development company in Del Mar, a 7.5-year, 35,000 sq ft renewal in San Francisco, signed late yesterday afternoon with a major broadcasting company, and a 15-year, 51,000 sq ft lease with Page, a national full-service design firm at Indeed Tower, bringing this project to 68% leased. As we previously signaled, demand at Indeed Tower has increased over the last couple of quarters, and we expect to have more good news to discuss in the coming months. Life science demand, especially in top tier markets, has been holding up well. Vacancy is roughly 2% in South San Francisco and roughly 2% in the Del Mar Heights and UTC region, our 2 biggest clusters. We have multiple prospects interested in Kilroy Oyster Point phase II, which consists of 3 buildings and 875,000 sq ft. Our 1,000 luxury residential units continue to perform well. Occupancy is approximately 94% and rents increasing meaningfully compared to last year. Additionally, Los Angeles is removing the eviction moratorium effective early next year, which is another encouraging sign of policy moving in the right direction. On the capital market side, we closed the sale of 3130 Wilshire, a 46-year-old building in West L.A. for $48 million in gross proceeds, or roughly $500 per sq ft. This property no longer fit our strategy given its age and future capital requirements. Bigger picture, the sales market was quiet during the third quarter. Asset level debt is hard to secure, especially for non-trophy assets. Capital, while plentiful, is generally on the sidelines. We are pleased to close the sale of 3130 Wilshire, but as we alluded to last quarter, we think it is prudent to let the capital markets stabilize before selling additional properties. On the investment side, we are staying patient, waiting to see how market conditions evolve and whether motivated sellers, excuse me, come to market. While we expect there will be acquisition opportunities at some point, we are not there yet. Our operating premise over the past 25 years as a public company is that there are times to buy, times to sell, times to develop, and times like now to be patient. To that end, we said on our second quarter call that we were delaying the start of Santa Fe Summit, a 600,000 sq ft plus life science development in San Diego. Similarly, we intend to hold off on the construction of Stadium Tower, our Austin development site, until the economy gives us more confidence, or we pre-lease a substantial portion of the project. As a reminder, the Stadium Tower site is fully designed and permit ready for a roughly 500,000 sq ft building. Since we acquired the project earlier this year, we have done pre-construction work, which reduces the lead time to deliver a completed building. Additionally, we have the right to add density now given our proximity to the light rail, which we plan to study in more detail over the coming months. As I mentioned in my earlier remarks, in 2009, we positioned the company so that we could play offense as the economy improved, which resulted in some well-timed acquisitions and development starts in the Bay Area, Seattle, and Hollywood. We are doing the same today by curbing spend, bolstering liquidity, and getting our top-notch development sites shovel-ready so that we can be an early mover when the time is appropriate. In summary, our strategy can be summarized via three tenets. Best-in-class real estate, disciplined capital allocation, and fortress balance sheet. This recipe is cycle tested, having guided us through up and down markets over the past, and we are confident that adhering to these principles positions us to be opportunistic as circumstances warrant. Lastly, we want to remind you of our upcoming investor event in South San Francisco to be held on Monday, November 14th, right before NAREIT. We are eager to show everyone Kilroy Oyster Point and have some interesting speakers lined up to talk about the project, the overall market, and the company. If you need more details, please reach out, and we hope to see you all there. That completes my remarks. Now I'll turn the call over to Eliott. Thank you, John. FFO was $1.17 per share in the third quarter, similar to the second quarter. On a same-store basis, third quarter cash NOI was up roughly 6%. The growth was driven by free rent burn-off for some office leases, improved parking revenue, and higher occupancy at One Paseo residential. GAAP same-store NOI was up approximately 2%. At the end of the quarter, our stabilized portfolio was 91% occupied and 93% leased. Included in this number are three development and redevelopment properties which were brought into service during the quarter. These three projects were 59% occupied and leased as of quarter end. Turning to the balance sheet, we enhanced our liquidity post quarter end via a $400 million unsecured term loan at a rate of adjusted SOFR + 95 basis points. We have $200 million of the $400 million outstanding, which is subject to an interest rate cap, and can draw down the balance at any point over the next 11 months. We believe this is an efficient source of capital, and it gives us enhanced liquidity to fund our development pipeline while continuing to provide predictability to our interest expense. Net debt to third quarter annualized EBITDA remained about 6x, and we have no debt maturities until December 2024. Now let's discuss our updated 2022 guidance. To begin, let me remind you that we approach our near-term performance forecasting with a high degree of caution, given all the uncertainties in today's economy. Our current guidance reflects information and market intelligence as we know it today. Any COVID-related impact or significant shifts in the economy or markets, tenant demand, construction costs, or new supply going forward could have a meaningful impact on our results in ways not currently reflected in our analysis. Projected revenue recognition dates are subject to several factors that we can't control, including the timing of tenant occupancies. With those caveats, our updated assumptions for 2022 are as follows. As always, no acquisitions are forecasted, and as John referenced, we do not anticipate any additional sales for the balance of this year. Our new term loan has $200 million outstanding as of the beginning of the fourth quarter. We do not expect to draw any more in 2022. Development spending for the balance of the year is expected to be $100-$150 million, which translates to roughly $400 million of spend for the full year. This is a meaningful decrease from the roughly $600 million of development spend we were projecting earlier in the year. We expect year-end occupancy to be at the low end of our range or approximately 91% for the office portfolio, and residential occupancy is projected to stay around the current level in the mid-90% range. Same-store cash NOI growth is now expected to be between 6%-6.5%, a 75 basis point increase from our prior estimate. The increase is due to strong results to date, specifically around parking revenue and the residential properties. Putting this all together, our updated 2022 FFO guidance is projected to range between $4.62 and $4.68 per share, with a midpoint of $4.65 per share, which is a 7-cent increase compared to our prior guidance. The increase is due to the solid third quarter results and the adjustment to our disposition expectation. The new range implies a 2-cent decline for the fourth quarter as compared to the third quarter, which is predominantly due to the term loan that closed in the beginning of October. That completes my remarks. Now we'll be happy to take your questions. Dante? Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Steve Sakwa with Evercore ISI. Your line is now open. Great. Thanks. I guess good morning out there. John, I was just wondering if you could provide a little color on the South San Francisco life science demand. We've been out there several times and, you know, it seems like demand has slowed down out there. You know, I'm just curious, you know, what you're seeing both broker deals and maybe non-broker deals for KRC too. Yeah, sure. Rob, you wanna take that one? Sure. Hi, Steve. What I would say is that for, again, let's talk about KOP compared to other projects that are out there. We have scale, we have three buildings. We can grow companies, which is what a lot of the larger companies are seeking, which is the ability to establish a toehold and grow. No doubt, as we've talked about before, early stage companies are a little bit on hold because their boards are putting them under more scrutiny and telling them to slow down, taking space while they sort through this uncertain environment we're in. I don't wanna get into a lot of detail on our discussions, but we are, as John mentioned in his comments, having discussions with several firms and, you know, we're pleased with the activity we have, and I would call it steady in terms of the inquiries we've had, the tours we've had, and we are having some fairly in-depth conversations with companies. Okay. John, maybe just on the broader leasing, you know, and maybe specifically what you're seeing in downtown San Francisco. I know you've had some either tenant move-outs or, you know, some sublease space coming back on the market like Nektar Therapeutics, and I'm just wondering, you know, what you're hearing from kind of the business leaders about leasing specifically in downtown San Francisco for either vacancy or maybe pending upcoming availabilities. Yeah. Let me deal with the big picture for a second, then I'm gonna turn it over to Rob and address some of the specifics that you raised, Steve. You know, I've mentioned on the last number of calls that in a period of volatility and uncertainty, it's natural, whether it's people or whether it's companies, if you don't need to make a decision, you don't make a decision. If you can delay a decision, you delay a decision. That's just smart. And that's, you know, that continues to be in all of our markets, although we're beginning to see a lot more activity. Specific to San Francisco, Rob, can you address that? Sure. Steve, y ou know, again, I think it's really important to emphasize the difference between properties, right? There's Class A premium properties, which I think our portfolio falls into. If you've got a young portfolio, young buildings, well-located, modern improvements, amenities, you're gonna have activity, and that's borne out in the data in San Francisco. The top 20 buildings in San Francisco, according to JLL right now, have seen effective rent gains of 15% since 2019, and in some cases, increases beyond that. Again, if you've got property that tenants want, they're gonna be very selective, and they're gonna absorb it. A really good example of that is Google taking almost 300,000 sq ft in Q3. You know, a lot of rumors float around the techs on the sideline, but I think that is not the case as we've seen in other markets we have as well. Sublease space has remained at about 7.2 million sq ft. It fluctuates up and down, but we've been holding in that range for quite a few quarters. Again, it really depends on the quality of the space. The Google lease I mentioned is actually a sublease, and that's a high-quality building that they took. So there are the haves and the have-nots. I think the last thing I'd say, if you compare the REIT industry to the private markets in terms of ownership, you know, some of the private owners are gonna have, I think, struggle as debt markets continue to tighten and lending becomes more difficult. There's gonna be difficulty in fulfilling capital requirements for leases and operating the building in a Class A manner. Kilroy positions itself as a true partner with our tenants. What we're really doing, as John mentioned, we got a lease signed later in the evening last night, and that was a true partnership with the tenant, working hand in glove with them to get their management on board with the lease, as well as making the numbers work for Kilroy. Okay. I guess maybe just as a follow-up, John, just big picture, given the discussions you've had with the mayor, I mean, do you feel like the city's made enough progress, both in crime, homelessness, and attractiveness to bring people back that you know makes the city you know sort of viable going forward? I'm gonna start with the premise that no, they have not made as much enough progress. I mean, that's requires a lot more. You know, it's that old saying, if the train is going south, you gotta stop it before you have a chance to turn around and go north. I think we're going north now. We've got a lot to do, and we have an election coming up to re-elect the mayor-appointed district attorney, Jenkins. She's running for election now. That's an important race. There's a couple of supervisor races that are important. I'll say this about San Francisco. I'm not in New York, as you know, but in terms of ownership, whether it's New York, San Francisco, L.A., Seattle, wherever. Leadership and policy makes a difference. I've been. As you all know, everybody on this call, you've heard me speak for, you know, 10 years saying my biggest concern in the world has been politicians and some of them are not in our country. But the fact is, we need good policy. We've seen some real good changes in San Francisco and elsewhere. Those elections that are coming up that affect the state, affect the country, affect the various individual cities that we're in, are all important. Some we're gonna win on, some we're probably gonna lose on, don't know. But directionally, I feel that we've really made a difference. What's happened is it's because people have united together across the political spectrum because they're sick and tired of some of the bad stuff, policy-wise, that's going on. I'm optimistic, Steve, but we need to go further. It's certainly not enough, but I'm far more optimistic than I was a year ago because we finally you know, sort of stopped the train going south. That doesn't mean it's still not going south in a few little spaces. I'm optimistic. It is a battle. It's like a health issue. You know, all of a sudden you see that your health is improving, but you still have a ways to go to get to a place where you're really healthy. I would say that's very similar. Okay, great. Thanks. That's it for me. Okay, super. Thank you. Thank you for your question, sir. Our next question comes from the line of one Camille Bonnel from Bank of America. Your line is now open. Hi. Good morning. Hello. I see leasing activity improved in October with your teams signing nearly a third of leases year to date in one month. Can you provide a bit more background behind this leasing activity in the sense of how long were these conversations going on for, and how does it compare to leases you were signing at the start of the year? Rob, do you wanna take that one? Sure. Hi, Camille. As John said earlier, I think on this call, and he said it multiple times over the year, that we're in a position right now where decision-makers are faced with a lot of uncertainty, and if you don't have to make a decision today, you're not gonna make one. That's the prudent thing to do. That's borne out in the leasing that we see and why transaction velocity seems slower. It is slower because what's happening is, on our client side, the tenant side, the real estate executives are being scrutinized more in terms of the deal that may get approved, say in May, by a board of directors or subcommittee of a board. It is coming back up for review in September, as an example, because the board wants to make sure it's still a viable, you know, is it a viable transaction for the company? Do they need it, et cetera. That is taking more time. I think that, you know, we just are very prudent about how we report our leasing during earnings calls and quarter to quarter, but we have had quite a few deals in our pipeline, which you see now coming to fruition in October. I would say, we have more in our pipeline, as John alluded to, that we'll be announcing here, hopefully shortly. It's just a complicated environment and, you've got a lot more eyes looking at transactions than you did in 2019, for example. again, if you have the right property in the right location, tenants are making choices and they're making decisions, and some are making longer term decisions to lock in that space. Yeah, I'd add to that. Okay. Since Labor Day, we've seen a big increase in tours throughout all of our markets, and we've seen more deals green-lighted that were sort of not on hold, but just going through this added scrutiny that Rob was talking about. There's definitely been a shift to the positive since Labor Day. We hope that continues to gain momentum. I think that's sort of a place at which we could say we've seen a big difference. Okay. I appreciate the color. And second question for me, can you comment on any sublease space, if any, in your portfolio, and speak more broadly on whether you're seeing any changes in the market, whether people are leasing or taking back space? Hi, Camille. It's Rob again. Yeah. As far as we know now, we don't have any new major blocks of sublease space in our buildings. Often what happens, particularly with a subtenant that comes along that is somebody we really want, we can make a direct deal. We can do a must-take at the end of the term, and that sort of thing. We do work with our tenants as well as good subtenants when we find them. So far, I think the quality of our portfolio is bearing out that we're not seeing a high proportion of sublease space. As I said earlier, you know, San Francisco sublease space has remained fairly static in the 7.3 million sq ft range. I would say that about 40% of that 7 million is Class B and C space that's gonna be the last to lease if it does lease again, or it'll be converted to some other use at some point. Taking a step back across the markets, I think a fair answer to your question is that sublease space is up in most markets, but again, it's gotta be. You really have to differentiate between contiguous floors of sublease space, which is more competitive to the product we have, versus spots of space in a building. You know, most markets have seen an uptick in sublease space, but you're also seeing pretty much a supply constraint going on also as far as new development goes. Thank you for taking my questions. Thank you for your questions, ma'am. Our next line of questions comes from the line of one Derek Johnston from Deutsche Bank. Your line is now open. Hi, everyone. Thank you. You know, John, a little while back and even briefly in your open, you know, you noted the Indeed Tower. I think the pricing was strong while the lease up was slightly behind schedule. With another lease signed, you know, can you provide an update versus plan? More broadly, what makes you confident about the demand you expect to see in the Austin market going forward? You know what? I ask Rob to comment. He's directly involved in all those deals. I'd say this, that, you know, we've increased the rents dramatically and the roster of people we're dealing with are kinda like who's who quality. I think we're gonna do extremely well in that asset. Rob, why don't you add some color? Sure. Just a little more color. What we really like about the Austin market, and if you look at our lease-up at Indeed, is that it's a diverse market. We have a mix of tech, and we have a mix of professional services, and that's borne out in our tenant roster at Indeed, and that allows us to cast a wider net in terms of who we're going after. Indeed, because of, again, the amenities, the scale of the project, the food and just the life in the CBD is attracting both sides of tech and professional services. A lot of the companies, I would say, particularly on the tech side, that are expanding in Austin and continuing to expand, are doing it because of the talent they're getting, and they're locating in locations where that talent wants to be. Where do young engineers and people coming out of college wanna be? They most generally wanna be in a CBD where you have an active nightlife and things to do after work. I think that's a fair description of what gives us confidence about the market. I can't disclose, but I just know what our pipeline is and the negotiations and discussions we have going on. As John said in his comments, we expect to be able to make some more announcements. All right. Excellent. Thank you. Look, I know you mentioned this is a market to be patient, right? But with 55% of development committed to life science, you know, that'll bring the exposure to just under a third of NOI. So I guess I wonder, you know, what's the capital investment priority between, you know, at some point at least, right, when we're not patient anymore, between increasing life science exposure, and/or pushing into new markets? How do you balance both of these? Well, I mean, you know, that's an evolving question, obviously. We spent five years analyzing Austin and looking for the right opportunity. We would've been there earlier if we had found the quality that we wanted. But, you know, we don't have another market that we are looking at in earnest. We look at a lot. We always have. We're probably looking less right now. In terms of product, you know, we have, I think, what is gotta be, if not the one of the best located position life science projects in the country in KOP. That's a very proven market. We have incredible amenities and physical characteristics of that property that people love. As Rob mentioned, we've got some real great interest in there, and I think we're gonna be very successful in phase two. I look downstream, and I go, we don't have a magic ratio with regard to what should be life science, how much should be, you know, in new markets. We're gonna be very prudent as we have been in the past. When we go into a market, it will be to establish a beachhead quickly, end up with sufficient scale to have the right kind of people, make sure that we have a product that differentiates itself, so that we're not just a commodity or just another player, where we really think over time we can create a lot of value. That's kind of a big picture. We're gonna be flexible. You mentioned patience. You know, I've been doing this for longer than most people in the REIT world today, a lot longer, just 'cause I'm older. I've been through a lot of cycles. As a private company, I've seen near-death experiences. I've had a lot of friends that have had death experiences in terms of business. Liquidity is all important. The thing I would emphasize about us is the balance sheet is in fabulous shape. Liquidity is huge. We've got plenty of capital, and we have a very straightforward story. We're not complicated. Everything is pretty simple, and we're very straightforward with our client base, and we work with them a lot about where they want to go. That's what drove us to Austin to begin with, is a number of our tech companies saying, "Hey, you need to be there. You guys can really differentiate. We like your kind of product, and we think you'd do well there." That's just big picture, and we'll see. All right. Great. That's it for me. Thank you for your question, sir. Our next line of questions comes from the line of one Nicholas Yulico from Scotiabank. Your line is now open. Thanks. Hi, everyone. First question is just on the lease expirations over the next year. Hoping to get an update there on, you know, the traction you have on space. I know last quarter you mentioned, you know, one likely move-out in San Francisco. So just to get a kind of feel for, you know, what activity is like on the expirations. Hi, Nick. This is Rob. We have four expirations over 100,000 sq ft in 2023. One of them is a known move-out, which is Pac-12, which we've announced. The other three we're in active discussions with, and that's about all I can say. We continue to have dialogue with the remaining three. Okay, thanks. In terms of, you know, the asset sales, reducing that guidance, sort of wanna dig into that a little bit. You know, was that a situation where you specifically brought assets to market, and you got disappointing bids? Or is it just, you know, sort of informed by your, you know, your color you're hearing from the investment broker world that, you know, on a real-time basis, asset values are down by some level because, you know, debt costs are up, and so, you know, you just chose to avoid selling right now for that reason? It's the latter. We actively put 3130 on the market. Eliott, I think we had more than a dozen bids or whatever. We had a lot of, I believe, dozens and dozens of people sign NDAs and whatnot. That was a fairly efficient process. As far as the other buildings that we were thinking about, we didn't take to market. We monitor the market. We you know regularly dealing with the big brokerage companies, the Eastdil Secured of the world and so forth. We're also having conversation with some of the logical buyers, not specific about an asset, but we follow them with regard to the level of activity that they have. We kinda understand whose debt's dependent and the kind of debt that they like to have and the percentages and so forth. In a volatile or confusing time like right now, if you're gonna sell an asset, we have plenty of assets that we can sell that for fabulous prices that are long-term lease to high-quality tenants, but we really don't wanna sell those assets. We just say to ourselves, "Why sell into an inefficient market where you have fewer bidders, more contingency or with regard to debt or otherwise?" That doesn't make any sense. We built the company around the premise of having a stalwart balance sheet, and that allows us the opportunity to be sellers when it makes sense, but not have to sell to fund things, and that's what we've elected to do. The markets will come back. I mean, who knows what the new normal will be. There are a lot of things in the system right now that create uncertainty. You know, we built the company to weather the storm. When it returns, then we'll be back as sellers of some of the properties we wanna sell. Okay, thanks, John. You're welcome. Thank you for your question, sir. Our next line of questions comes from the line of Blaine Heck from Wells Fargo. Your line is now open. Great. Thanks. Thanks. Just following up on new leasing demand. Again, we're hearing that large tenants are at least taking a step back recently. You know, if you could just talk a little bit more about the profile of tenants that have active requirements in your markets, and maybe some context on the size of that requirement pipeline relative to kinda historical averages, I think that'd be helpful. Sure. Hi Blaine, this is Rob again. Yes. As John mentioned earlier, since Labor Day, we've seen a real uptick in activity tours and actually deal making, and that's really led by Los Angeles, San Diego, and Austin. San Francisco and Seattle are a little more muted, although again, you can't generalize, and there is activity that's going on in those markets. As I said earlier, life science is steady, with you know, users continuing to seek out the highest quality space they can. Some examples for you are, you know, Seattle, we have Blue Origin doing a 250,000-foot expansion, not in one of our buildings, but in the Seattle market. Alaska Airlines is growing by 120,000 sq ft in Seattle. I mentioned the Google Cloud deal of 300,000 feet in San Francisco, and U.S. Bank expanding in San Francisco. For example, in South San Francisco, recently, Astellas Pharma signed a 154,000 sq ft lease, and Amgen did a renewal for 120. I think, you know, San Diego's just been amazing. It just has a continued expansion of FAANG. I can't. I, you know, one of the companies we do business with has just recently expanded by another 500,000 sq ft down there. Can't mention the name, but it's a FAANG company. You look at vacancy in both Del Mar and UTC, roughly at 2%. I think the market dynamics are just set for these larger tenants. Again, in specific markets, you're seeing activity, and when you have quality space, you'll see activity. Is it slower than 2019? Absolutely. Are some tech companies sitting on the sidelines? Absolutely. You can't generalize that all tech is on the sidelines. If you look at the examples I just went through, it's sort of a mix between, you know, there's a bank, there's Google, there's Blue Origin, there's science, there's, you know, professional services. That's pretty much what we're seeing. I think the pipeline for those deals is a hard thing to predict. You know, what we're seeing and what we feel is that this will improve, but it'll be moderate. I think John used the term sort of fits and starts is what we see. Great. Thanks, Rob. That's really helpful. Second question, you guys have a relatively strong balance sheet compared to peers, which is certainly an advantage in this environment, but you do still have some more spend associated with your development pipeline and dispositions are likely a little tougher, as John just talked about. I guess, how should we think about sources and uses and how leverage could trend as we look forward? Hey, Blaine. This is Eliott. I can take that. I think the way to think about it, we touched on our liquidity a little bit during the prepared remarks, but between the cash we have and the $400 million of unsecured term loan that we raised, we have about $500 million. We also have $1.1 billion on the line, which compares to a remaining spend of the projects under construction of about, call it $750 million or so. That gets us a lot of the way there. Frankly, the term loan that we did in the fourth quarter was $400 million. The midpoint of our disposition guidance was $350 million. We actually enhanced our liquidity as well. We do think we have quite a bit of runway to fund the pipeline. As we get a little bit further down, we can make a decision on how to fund the balance. We think a lot of the near term question has been resolved with the term loan. As far as leverage, you know, we're at about 6x now. You know, I think what we've said in the past is not that we intend on debt fund everything, but if we did debt fund everything, just to show a sensitivity, that 6x goes up to 7x, and then once the pipeline is leased, it gets back down to around 6. Great. Thank you, guys. Thank you for your question, sir. Our next question comes from the line of Michael Griffin with Citi. Your line is now open. Great, thanks. Maybe back on, onto leasing. Rob, I'm curious, have you noticed from prospective tenants you're talking to, anything that they're sort of asking or looking for that they might not have been, call it 6-12 months ago? Michael, I think from a, you know, concession point of view, there haven't. The one thing that's happened with concessions is, and I wouldn't call it a concession, it's just a fact of life, that with inflation, tenant improvement costs have gone up. We're not seeing anything out of the ordinary, at least in the deals we're making in terms of free rent and other concessions. What tenants are really looking for and what, you know, what we're doing with them is they're looking for partners, meaning we need to partner with them. We have to help them in creative ways make deals where they're having to navigate their management and their CFO. They know they have the head count, they need, they know they need the space, but we're having to do creative deal structuring. That doesn't mean, you know, tons of free rent and then a high coupon rent, so things look good. It means figuring out how to help them grow, how to help them grow in sort of a phased way in certain cases if it's a large tenant, working with them to really help make a transaction that, you know, works for both sides and that, you know, probably is taking more time than it did in 2018 and 2019 because things were just moving at a quicker pace. Thanks. Maybe shifting back onto the political landscape in some of your markets. You know, while it seems like things have improved somewhat, I think John alluded to, you know, we have to stop the train before we turn it north. I mean, if you do end up seeing a deterioration in the environment from a regulatory perspective in some of these markets, would it make sense to reallocate at some point out of some of these markets and into, you know, a Texas, maybe a continued expansion there, more kind of business-friendly kind of environments? This is John. I think you have a good question, and I think it's sort of self-evident what the answers to that would be. We have a lot. I think everybody knows I'm kind of a hard ass when it comes to these people having their policies right, and I make no bones about what I think they ought to do, and if they're not doing the right thing, then forming coalitions to try to change. You start with that, and we are, like we said earlier, we're starting to see some real improvement. You know, we probably have 40 years of abuse in some of these cities. They've just lived in la-la land, and now they're having to come to reality. As a company, I'm not gonna make a call yet with regard to we should invest more in this area and less in another area. You know, we're pretty logical people, and you had a very logical question, and that's about as specific as I can get because I'm not gonna rock boats in various places. You know, we talk. I don't think you could have any doubt, Michael, about my directness. I'm kind of known for it, and I have a lot of calls with politicians every day. Well, John, I think we appreciate the no-nonsense and the candor there. Thanks for the time. Well, you know, I got to tell you this. To everybody else in REIT industry that owns properties in these cities, they, I'm seeing a lot more join in, but more need to join in. This, you know, this a battle. It's a battle all over the country, and we just got to make sure that sensible minds prevail over time. As I say, I am encouraged. It's transcending the political landscape now because people have had enough. I don't really need to say more. I'll probably get into trouble, but thank you. Thank you for your question, sir. Our next line of questions comes from the line of Dave Rogers with Baird. Your line is now open. Yeah. Good morning out there. Eliott, wanted to start with you. I think other income was up a little bit, not a big deal this quarter, but wanted to ask then further about kind of parking deferral, retail, ancillary income, how much more you might have to go in terms of a recovery against what your physical occupancy might be and maybe how that's impacting that other income line. Yes. The biggest driver in the quarter and frankly in the year to date is on the parking side. If you look at our same-store parking year to date, we're up about $4.5 million versus last year. So we've seen tangible improvement there, mainly due to higher physical occupancy. That's what drove both, you know, a portion of the same-store increase as well as the guidance increase. So we're pleased about that. As far as, you know, where we go from here, you know, tough to say, but we're not ascribing millions and millions of dollars of upside from where we are. We think there's a little bit more room to grow, though. Appreciate that. That's helpful. On Indeed at Indeed Tower, can you give us an update on any timeline for move-in, rent payments, build-out, et cetera, that might impact your expectations going forward? Yes. Specifically around the revenue recognition for Indeed, which is what I think you're referring to, they are paying cash rent. We are not recognizing revenue yet, and we expect to start recognizing revenue sometime next year. Any more clarity on kind of the timing around that? Obviously pretty big lease. First half. Is that incumbent upon? First half. Was that first half? First half. Yeah. All right. Appreciate that. Then last one, maybe this is for Rob on the leasing front. It's a little ways out, 2024, the LinkedIn space. You probably aren't talking to them yet, but I guess maybe the question would be, are they using that space? Do you expect them to stay pretty engaged in that space? It's a fairly large size lease, and so just wanted to kind of touch on that quickly. Yeah, Dave. Silicon Valley in general has been really active in the last year, actually year and a half. LinkedIn loves that space. They love the buildings. They've been in them quite a while. We've had some inquiries from others, and I don't wanna give any other color than that, but it is a ways out, but I feel at least with what we're hearing and seeing in the market, that it's gonna be attractive to more than just LinkedIn. I'll put it that way. All right. Thank you. Thank you for your questions, sir. Our next line of questions comes from the line of Vikram Malhotra with Mizuho. Your line is now open. Thanks so much for taking the questions. Maybe just first one, you know, bigger picture You talked a lot about cycle tested, you know, the well-positioned balance sheet, et cetera. I'm just wondering, like, assuming we see a turn in fundamentals here, from a capital deployment or, you know, broadly strategic perspective, what would you sort of repeat as you've done in prior cycles? What sort of either products or avenues of growth would you just completely stay away from given this market that's become one of haves and have-nots? I'll start with that. This is John. Vikram, how are you? We talked a lot about over the years the increasing obsolescence of the office stock, and that has been accelerated by COVID, and it just continues to accelerate. Said another way, you know, larger percentage of the traditional stock is less desirable or not desirable to an increasing group of users. If I sort of think about when we came out of 2008, 2009 and sort of began to buy property in 2010, we were very focused on properties. They may not have been in perfect shape, but they had the bones, the physicality that we thought was important, that where we could modernize them, and they would be desirable to the modern tenant. Of course, we bought a number of buildings, some that were, you know, recently completed, and then we did a lot of development. The problem that this transition to, you know, sort of obsolescence has made the universe of buildings or the percentage of buildings that one can buy is sort of reduced with regard to what qualifies for us. We're not going to buy in areas we don't think have great trends to go up. They can go up and down, as we're seeing. Over time, you know, we wanna know that the location is gonna go up. With regard to physicality, we're even that much more fixated. I think one of the things that has really been interesting. I think our average age of our portfolio is 10 or 11 years, and it was probably 12 or 13 years, 3 or 4 years ago. Why is that? Because we've sold off older stuff, and we've built so much new stuff. I think that's gonna be the place where we are very like, well-positioned because we understand development. We're known for development. Our tenant base knows us to be very good developers. I think that's gonna position us very well. That doesn't mean there won't be opportunities to buy great buildings. There may be. There may be, you know, too much competition there. I just don't know. We're gonna be flexible. What we're not gonna do is buy a portfolio of buildings where they're mostly old and have problems just because we wanna enter a market or because it's for sale. That's just not our style. You've not seen us do that. The only company we bought in 25 years was a little one for $300 million, and it was almost all new product, and that was The Allen Group in San Diego in 1997. That was it. I think that we're just that much more resolved towards the kind of buildings that you gotta have to really have a good run of over a long period of time, and we're fixated on that. Okay. That's helpful. I guess just on that, deployment, I remember last quarter, you had talked about potentially, incremental opportunities, either acquisitions or development in Austin specifically. Can you just update us sort of where are you in that process? What's emerging? Well, we do have the site we bought. I think we closed on it, and that was March or April or thereabouts. We call the Stadium, which is all approved and entitled, and we have permitted, and we're ready to go on that one if it makes sense. We do have a number of tenants that we're working with on that building, so we'll see what happens. I'm not going to get into specific sites that we're looking at. We do like The Domain area. There aren't that many opportunities there. We do like downtown. There are a couple of good opportunities that we think are going to emerge. There are a few other areas that we're looking at, but nothing that is actionable at this time. I don't see us loading up on new development for the foreseeable future. Do we pick off one or two sites that might make sense? Possibly. We're in a far more in the risk off mode given this climate than we are on the risk on mode. We wanna make sure that if we buy something that it is a site that is whether if we have to wait a cycle or whatever, that it's still gonna be good. It's not gonna go bad because we overpaid for it or whatever. That's big picture, but I can't get into specifics because I'm not gonna give our competitors that knowledge. Sure. Fair enough. Then just last one maybe for Eliott. I guess, sorry, I joined the call late, I may have missed this, but I did see a specific occupancy updated guide or just guide in the press release on the supplement. Is this sort of a metric that you just didn't provide this quarter, or is it something you don't intend to provide going forward? Yeah. What we said during our prepared remarks is that similar to what we spoke about on the call last quarter, we expect to be at the low end of our range or about 91% on the office portfolio. Resi will be around current levels, which is sort of in the mid-90% range. This is, I mean, I guess, just a metric, one of the components of guidance eventually when you provide next year. You will have an occupancy estimate. That's our plan. Okay. Thanks. Thank you for your question, sir. Our next live question comes from the line of one Tayo Okusanya. Your line is now open. Hi. Yes. The announcer. Good morning, Hello? Excuse me. I beg your pardon. This is John Kilroy, the announcer there. We didn't hear, at least I didn't. It cut out on the name of the person speaking, asking the question. Could you repeat that, please? Oh, yes sir, of course. It is Tayo Okusanya with Credit Suisse. Okay, great. Thank you. Yes. Good morning everyone over there. My question is around the asset sales. Eliott, of the $0.07 increase in the midpoint of guidance, how much of it is just because of the lowered asset sales outlook? Second of all, if asset sales, you know, continue not to happen because of transaction markets or capital markets or what have you, how does one kind of think about funding future development going forward? The second half of the question is similar to what Blaine discussed or asked earlier. Just to reiterate there, we have $500 million of liquidity and $1.1 billion of an untapped credit facility, and call it about $750 or so remaining in our development pipeline for projects currently underway. If we chose to debt finance everything, we're not saying we're gonna do that, we temporarily go from six to seven and then back down to six as it gets leased. As far as the first part of your question, the $0.07 is roughly split equally between, well, dispos less term loan. It's important to remember that while we cut our dispo guidance, we did do a term loan, which was not in our guidance previously. That's about half of the delta. The other half of the delta is a combination of our revenue recognition on two life science projects, happened a month earlier than we thought, and our parking was $a few million better than what we expected as well. That drove both the same-store increase as well as a portion of the guidance increase. Great. Thank you. Thank you for your question, sir. With that, we have exhausted all questions. I would now like to pass the conference over back to Bill Hutcheson for any closing remarks. Great. Thank you, for joining us today, everybody. We appreciate your continued interest in KRC. Have a great day. With that, we will conclude today's Q3 2022 Kilroy Realty Corporation earnings conference call. Thank you for your participation. You may now disconnect your line.