Good afternoon. Thank you for attending today's KRC 4Q 2022 Earnings Conference Call. My name is Tamia, and I will be your moderator for today. 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. It is now my pleasure to pass the conference over to your host, Bill Hutcheson, Investor Relations and Capital Markets. Please proceed. Thank you, Tamia. Good morning, everyone, thank you for joining us. On the call with me today are John Kilroy, Chairman and CEO, Tyler Rose, President, Justin Smart, our Incoming President and current President of Development and Construction Services, Rob Paratte, our Chief Leasing Officer and Senior Advisor to the Chairman, and Elliott Trencher, our CIO and CFO. At the outset, I need to say that some of the information we will be discussing during the 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. Both are also available on our website. John will start the call with fourth quarter highlights. Eliott will discuss our financial results and provide you with our 2023 earnings guidance. We will be happy to take your questions. John? Hey, thanks, Bill. Hello, everybody. Thanks for joining us. 2022 was a year of transition, as evidenced by substantial increases in interest rates that impacted the economy and the capital markets. As we enter 2023, there are signs of inflation cooling, the Fed slowing down the pace of interest rate hikes, and a resilient consumer. Kilroy is focused on things we can control. Our portfolio is top-notch, our balance sheet is strong, and we are patiently waiting for opportunities to allocate capital. The theme of transition can also be seen in the office market as more companies are adjusting to post-pandemic life, and many are reestablishing in-office policies. Snap, Disney, Paramount, Netflix, First Republic Bank, Salesforce, Starbucks, and Twitter are among some of the most recent to mandate a return to the office several days a week. This follows Microsoft and Apple, who have been leaders among such tech companies in returning to in-person work. In a recent conversation about remote work, Tim Cook, the CEO of Apple, stated, "You collaborate with one another because we believe that one plus one equals three." We have all heard the recent announcements regarding corporate layoffs. While layoffs are never a good thing for office companies, we believe that they have and will continue to drive an increase in physical office occupancy. For many of the biggest technology companies, headcount exploded during the pandemic, growing upwards of 50%, while office footprints grew only 10%, according to JLL. The recent layoffs are only a small fraction of those hired during the last few years and seem to consist of many folks that never went into an office nor had any office space dedicated to them. The well-reported flight to quality trend continues to get more pronounced, with trophy rents generally holding and commodity rents softening. According to JLL, newer buildings generate a 60% premium in rent compared to commodity properties. This premium has the potential to grow even larger, with the vacancy rate for older space in markets like Seattle and Silicon Valley nearly twice as high as the vacancy rate on newer buildings. In addition, there is and will continue to be a scarcity factor that exists with quality space as new supply is slowing. Per JLL, square footage under construction fell by 7.5% quarter-over-quarter and 50% year-over-year, we suspect the new construction in 2023 will fall even further. Over multiple cycles, Kilroy has strategically assembled a portfolio in premier markets that have the talent base and infrastructure to continuously pursue innovation. Innovation is alive and well. As an example, in San Francisco and Seattle, there have been compelling breakthroughs in artificial intelligence and machine learning, punctuated by the recently reported Microsoft cumulative investment of $14 billion into ChatGPT, a local San Francisco company. The Bay Area remains the largest market for venture capital and represented over 30% of U.S. funding in 2022. As this or other innovations translates into demand, we believe our portfolio is well positioned to capitalize on this growing technology sector. As we highlighted at our investor event in November, our portfolio is young, well-located, amenitized, and attractive to many of the best companies in the world. A flight to quality dynamic has never been more pronounced and should drive outsized market share for Kilroy in the years to come. Turning to recent highlights, we've signed approximately 460,000 sq ft of leases since the end of the third quarter, with an average term of approximately 7.5 years. Some highlights include a five-year, 65,000 sq ft lease with MediaTek USA, a semiconductor company in San Diego. A 5.5 year, 50,000 sq ft lease with Reddit, a technology company in San Francisco. A 7.5 year, 35,000 sq ft renewal in San Francisco with NBCUniversal, a premier broadcasting company. Over 70,000 sq ft of leasing in Indeed Tower in Austin with Page Southerland Page and HNTB Corporation, bringing the project to 71% leased. This year we anticipate some challenges in office leasing. As you likely saw in our earnings release, our occupancy will be lower, in large part to a move out at our West8 property in the Denny Regrade sub-market of Seattle. We planned for this possibility when we bought the building in 2021, and have begun implementing our plan to retenant the project and roll up the rents to market. We believe West8 is very well positioned in the market. It occupies nearly a full city block in a centralized location, and it's surrounded by lots of amenities, making it appealing to many types of companies. Turning to Life Science, which now makes up over 15% of our NOI, demand continues to be resilient. We have multiple prospects interested in Kilroy Oyster Point, Phase 2. Kilroy Oyster Point Phase 2, which consists of three buildings totaling 875,000 sq ft. Upon delivery of this project, our Life Science NOI will grow to more than 20% of the company total, and over time, we expect this number to grow to over 30% as we deliver future Life Science projects currently in our pipeline. Our retail and residential portfolio, which comprises approximately 5% of our NOI, has been steady. Residential occupancy is approximately 94%, with rents increasing meaningfully compared to last year, and limited new supply expected to deliver in our sub-markets. The investment market remains spotty, and we continue to be patient and disciplined. We have yet to see meaningful opportunities of interest. To that end, in 2022, we paused the start of new speculative developments, thereby reducing our near-term future commitments by over $1 billion. There will be a time to play offense, and having substantial liquidity will be key. In summary, our strategy is based upon three key tenets: best-in-class real estate, disciplined capital allocation, and a fortress balance sheet. This simple but effective approach is cycle tested and proven to work in various environments. On the people front, in December, we announced that Tyler Rose will be leaving at the end of this month. I wanna thank Tyler for his 25 years of service, and I know all of the Kilroy team joins me in wishing him the very best. Justin Smart, a nearly 30-year veteran at Kilroy, and currently President of Development and Construction, will be assuming the role of President effective March first. I know all of us are excited to work with Justin in his expanded role. I would also like to acknowledge Rob Paratte's expanded role of Chief Leasing Officer and Senior Advisor to the Chairman. Rob has been with Kilroy for nine years and is not just an excellent deal maker, but also a leader within the company and a trusted advisor. As Bill mentioned in his introduction, Eliott Trencher has been serving as our interim CFO for nearly a year and named our full-time CFO effective as of yesterday. I'm delighted to have Eliott be our permanent CFO. The Kilroy bench is deep and talented and cycle tested. In conclusion, I want to congratulate Justin, Rob, and Eliott on their added responsibilities, I also want to thank the entire Kilroy team for its hard work and dedication. For all of our listeners, we at Kilroy are back in the office. That completes my remarks. Now I'll turn the call over to Eliott. Thank you, John. FFO was $1.17 per share in the fourth quarter, similar to the third quarter. On a same-store basis, fourth quarter cash NOI was down roughly 1%. There were several one-time items in the prior period from termination fees, tenant catch-up payments, and real estate tax true-ups. Excluding non-recurring items, same store would have grown roughly 2.5%. For the full-year, cash same-store NOI was up 7%, ahead of our increased guidance of 5.5%-6.5%. At the end of the quarter, our stabilized portfolio was roughly 91.5% occupied, slightly ahead of our full-year guidance. The portfolio remained roughly 93% leased. Toward the end of the quarter, we commenced revenue recognition for Indeed's lease in Austin. As a reminder, this lease began in the third quarter of 2021, and we have been receiving cash rent since the first quarter of 2022. For modeling purposes, it is important to note that the space put into service this quarter also stopped capitalizing interest. At the end of the quarter, we came to a resolution with DirecTV in El Segundo. As part of the agreement, we took back approximately 150,000 sq ft effective at the beginning of the year, and DirecTV continues to lease approximately 530,000 sq ft. We are pleased with this outcome as it more closely aligns with the terms of DirecTV's original contraction right. There will be an impact to occupancy and FFO in 2023. During the quarter, we moved a roughly 45,000 sq ft building at our Menlo Park campus into redevelopment in order to add Life Science infrastructure. The location is appealing to Life Science tenants, we already have several Life Science companies in other buildings throughout that complex. Looking at the balance sheet, we enhanced our liquidity during the quarter with our previously announced $400 million unsecured term loan. Post quarter end, we exercised the $100 million accordion at the same terms of adjusted SOFR plus 95 basis points, increasing the total term loan facility to $500 million. Net debt to fourth quarter annualized EBITDA remained about 6x, and we have no debt maturities until December of 2024 and limited interest rate exposure with all of our debt fixed or subject to cap. Now let's discuss our 2023 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, our 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 occupancy. With those caveats, our assumptions for 2023 are as follows. As always, no acquisitions are forecasted, and we expect dispositions to be between $0 and $200 million, weighted toward the end of the year. Similar to 2022, we do not have an immediate need for capital. We will pursue dispositions if we believe they are beneficial to shareholders. 9514 Towne Centre Drive and the balance of Indeed Tower are scheduled to come into service in the fourth quarter of 2023. The balance of our Life Science redevelopment at 4690 Executive Drive is scheduled to commence revenue recognition by the third quarter of 2023. We anticipate drawing down the remaining $300 million from our term loan throughout the first three quarters of the year. Development spend for the full-year is expected to be $450 million-$550 million, mainly driven by KOP Phase 2. We have capacity to fund our 2023 spend through cash on hand and proceeds to be drawn from the term loan. As a reminder, we have a $1.1 billion line of credit that remains fully available if needed. We expect occupancy for the full-year to average between 86.5% and 88%, a 400 basis point decline from the fourth quarter. Most of this decline can be attributed to the Amazon and DirecTV move-outs, which occur in the first-half of the year. Same-store cash NOI is expected to grow between zero and 2%. The decline from 2022 is driven by the lower portfolio occupancy from the move-outs previously discussed. G&A is estimated to range between $82 million and $90 million. Putting this all together, 2023 FFO guidance is projected to range between $4.40 and $4.60 per share with a midpoint of $4.50 per share. To provide further clarity, annualizing our fourth quarter number translates to $4.68 per share. To get to our $4.50 midpoint, we subtract a net $0.10 per share due to the lower 2023 occupancy, which factors in our move-outs, move-ins, and development contributions. We subtract $0.08 for various other items, most notably higher interest expense from our term loan and the planned dispositions. In terms of sequencing throughout the year, the second-half of 2023 is expected to be lower than the first-half due to the Westie move-out at the beginning of the second quarter and the full drawdown of the term loan by the end of the third quarter. That completes my remarks. We will be happy to take your questions. Tamia? Absolutely. We will now begin the question and answer session. If you would like to ask a question, please press star followed by on e on your telephone keypad. If for any reason at all you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We ask that you limit yourself to asking one question and one follow-up question only. The first question comes from Nicholas Yulico with Scotiabank. You may proceed. Thanks. Hi, everyone. Maybe first question is on the occupancy guidance. I know, Eliott, you did provide some color around that on the move-outs. Can you maybe give us a feel for, you know, what as well you're thinking about, what that factors in on a retention ratio, and as we're thinking about, you know, a new leasing volume, you know, this year, you know, maybe in perspective to recent years? Yeah, sure. The retention's obviously gonna be on the low end relative to our history. Historically, we're plus or minus in the 50% range. We're gonna be quite a bit below that. It gets skewed because we have a few of the large move-outs that we referenced. As far as new leasing, we do expect some. As far as the translation to occupancy, it's not going to be that meaningful because when you just think about the sequencing of it all, the timing for new leasing to happen and occupancy to actually take effect is gonna be weighted towards the back half of the year. Okay, thanks. Then I guess, second question is, you know, as we think about, you know, big tech and the impact on the West Coast, where it's, you know, it's sort of hitting the leasing market right now, not as much activity. I guess, what do you think changes that? Because, you know, it does feel like there is a, you know, in some ways a slow return to the office happening, increasingly out there, yet it's not really translating into leasing activity. Any thoughts on that would be helpful. Congrats on the promotion to everyone as well. You want to handle it, Rob? Thanks, Nick. Yeah, sure. This is Rob Paratte. Let me make five points that I think address your comment. We could get more specific if you want. The first one I'd make is, as you've heard John say, frequently in the past, you know, there's a time to act and a time to pause, Tenants are basically in a pause mode right now. As a result, that's, you know, affected demand. The second point I'd make is that demand today is primarily driven by lease expirations and also the flight to quality, which you've all read about. Another point I'd make is that the great resignation that everyone was talking about, you know, after the pandemic or kind of during the pandemic, has now given way to the great rebalancing. Layoffs are changing the dynamic between employer and employee, with leverage moving in favor of the landlord. We're seeing, I think, tangible evidence of that as national occupancy of office continues to increase. Hybrid work is clearly the dominant model going forward. Most employers today are now requiring three to four days back to the office, and some are even mandating four days to the office. We expect that trend to continue. The last point I'd make, and this goes to some of John's comments, you know, there's haves and have-nots in every market. With respect to obsolete office product, it's going to struggle in the leasing environment, whether it's tech or FIRE category tenants. The bottom line is, right now, we're in an amenities arms race, and as tenants seek the best spaces they can in order to lure their employees back to work and also retain the employees they want to keep, they're making investments in their suites themselves with different design elements and that sort of thing, landlords are also making investments in amenities. I think that last point really plays well into the Kilroy hand because of our young portfolio and the passion we've had for over a decade of really highly amenitizing our buildings with, you know, nicer lobbies, hospitality type feel, outdoor terraces, and that sort of thing. Does that answer? I hope that answers your question. Yeah, that's helpful. Thanks, Rob. Thank you. Our next question comes from Camille Bonnel with Bank of America. You may proceed. Hi. Following up on the previous occupancy question, I think you mentioned new leasing would be more meaningful towards the back half of the year. Can you speak to the occupancy trend over the next few quarters? Are you expecting it to improve in the back half? The way to think about it is we're gonna see occupancy dip in the first-half of the year because that's where the majority of the large move-outs happen. Then we think it'll stabilize towards the back half of the year. Then the other piece to remember when thinking about the sequencing of occupancy is that our Indeed Tower project starts coming into the numbers in the fourth quarter of 2023, as we mentioned, so that is factored into our occupancy projection. Helpful. Can you speak a bit more about what you're seeing in the financing environment and what further financing activity, if any, apart from the outstanding term loan is reflected in your guidance, just given your capital needs this year? There's nothing else factored into our guidance on the financing side other than what we've laid out, so the term loan and then the dispositions. As far as the sources and uses go, we don't need to sell those assets in order to fulfill our funding plan. We can do all of that with the cash on hand and the proceeds from our term loan. As far as the financing environment, I think we have thought the most effective source of capital has been the term loan market, which is why we've pursued that, and to be able to get debt at, you know, SOFR plus 95, we think is pretty attractive. We know others may take a different approach, and everyone's got to do what works best for them. It does seem like the markets are opening up. The financing markets, at least early this year, have opened up a little bit more relative to last year, but we're pretty comfortable where we sit. Thank you for taking my questions, and congrats on the promotions, everyone. Thank you. The next question comes from Blaine Heck with Wells Fargo. Your line is open. Great. Thanks. Good morning out there. John, there's a slide on capital allocation in your typical investor presentation deck that goes through your net investment decisions during economic contractions and expansions, and really shows that you guys have been countercyclical, investing in contractions and selling into strength. Like you said, 2022 was a relatively light year for acquisitions, dispositions, and development starts. As you look into 2023 and even into 2024, how do you think you guys are kind of positioned to take advantage of the weak market from a capital allocation perspective? Well, that's a good question, and it's one that will play out over time. That slide that you mentioned, I think everybody on this call that has seen it knows it's one of my favorites because it does show there are times when you want to buy aggressively, times when you want to sell, times you want to develop, and times when you want to just prepare for what's next. We're prepared. We are starting to see some assets that are coming to market or rumored to be coming to market. I don't know whether they'll transact. You know, there's still price exploration. There's so few data points, John, that for quality assets, that it's a little hard to know, you know, when it's gonna open up. I think the comment that Eliott just made that the financing markets are beginning to open up for quality deals and quality borrowers, that'll help stabilize things. With the Fed backing off, reducing the rate of increase, that's a positive sign. At some point, we'll get to a more stabilized market where there are more buyers that are able to transact and probably more sellers that are willing to transact. That's a ways off. We're prepared. We're, you know, very active in knowing what's coming to market as people start thinking about it. We don't have any specific asset that we're looking at buying right now. We're looking. Okay, great. That's helpful. Second question, can you just talk about leasing progress at Indeed Tower? You guys increased the lease rate there to 71%, you're facing some additional competitive space being delivered or subleased in the market in the near term. You know, I guess, is there any sense of urgency to get leases done there before some of that new space is delivered? Hi, Blaine. This is Rob. First of all, as you said, we're 71% today at Indeed, and we have a robust pipeline. I don't wanna predict when things will sign, but we expect that percentage lease to increase. We're, you know, Austin in general is still a pretty active market, more so than most of the country, as companies continue to seek space in Austin and the employees and talent that are there. One comment I'd make on the, you know, whether, you know, they're not rumors. Whether or not sublease space that comes on the market is that oftentimes, especially if it's larger space, it takes the sublessor quite a bit of time to really understand the metrics and how to make that sublease space viable. It's, you know, it's not their primary business, I guess, is a simple way to say it, whereas, you know, owner developers like us do this every day. I guess what I'm saying is I don't, you know. Although there's been press about sublease space coming on the market, I don't see it as particularly imminent because a lot of those companies have other bigger fish to fry. That's helpful. Thanks, guys. Thank you. The next question comes from Michael Griffin with Citi. You may proceed. Great. Thanks. John, I think you started off in your prepared remarks talking about a more concerted effort from business leaders to bring their employees back. I'm just curious, in your conversations that you're having, you know, how much could we really expect this utilization rate to increase? You know, is there a chance that it ever at some point gets back to that pre-COVID utilization rate, or are we gonna be stuck in this, call it, low to mid 50% range? Any additional color there would be great. Yeah. Well, I happen to be in San Diego today. San Diego, at least in our properties, the utilization rate is back up in most cases to what it was pre-pandemic. We're seeing that in Austin as well. We've seen. I made comments back at our Investor Day in November preceding NAREIT that in San Francisco alone, it has more than doubled since Labor Day, and it's increased since then. Similarly in Seattle. L.A., we're seeing more and more people back to work. Rob can give you what the numbers are there. We've had some vacancy in Hollywood in our El Centro building that's, I don't know, 70 or so thousand feet. Don't hold me to that number, but Rob can give you the exact. We have quite a bit of interest from a multitude of companies. It's happening. It's not uniformly happening in each and every market, but it's happening. You know, I'm optimistic that we're gonna see some big improvements over the course of this year. Like anything, nothing, you know, nothing ever happens. Good stuff generally takes longer. The tough stuff, you know, generally is everybody thinks about more quickly. It's more present in our minds. I'm optimistic based upon what we're seeing, and we see it in our garage revenue. We've talked about that in prior calls. It's way up over the last couple of years. More to be seen. Does it get to your point, does it get back to pre-pandemic? The new occupancy is gonna be a little bit different. There's a lot more open space and common area space and so forth, a lot less in the way of the, you know, the work tables and whatnot. The actual occupancy in the same square footage of people, even when fully occupied, is likely to be fewer people per square foot, if that makes any sense. That's kind of the trends we're seeing. Great. That's certainly some helpful color. Maybe real quickly on Life Science, particularly the redevelopment announced at Menlo Park. I guess, why does this make sense now? Could you give us a sense if you've identified any other buildings that could be candidates for a possible redevelopment like this? We. Let me start with just the candidates. You know, we always look at our buildings, whether, you know, whether they should be converted, whether they should be renovated, you know, whether they should be some way repositioned. That's the normal course of our business. In 2021, we announced three renovations to or conversions to Life Science down in San Diego that were all leased. Menlo Park is a complex where we have a lot of Life Science, so we know what the demand is there. Rob, if you wanna give a little bit more detail, go right ahead. Sure. Mike, you know, the way I'd look at it is that, by doing this Life Science conversion, we're effectively doubling the number of prospects that we can engage with. There's, you know, a number of office tenants that are in the market, but there's also pretty much an equal number of Life Science tenants in and around Menlo Park, Redwood Shores, and Redwood City. We looked at the overall market demand from both office and Life Science. This project, given its design and being multiple buildings, we can, you know, answer to both needs. We already have Life Science in the project, so it just made a lot of sense. Great. That's it for me. Thanks for the time. Thank you. The following question comes from Steve Sakwa with Evercore. You may proceed. Yeah, thanks. Eliott, I appreciate all the detail you went through on the occupancy. I guess I'm just a little bit confused, in the sense that you're saying Indeed Tower's paying rent, but yet the building and the occupancy stats don't kind of fully flow into your numbers until the end of the year. Am I sort of hearing you correctly, or am I missing something? No, you're hearing us correctly. I think typically, we've done this in other instances, most notably with 333 Dexter, right? There's a difference between when revenue commences on a portion of the building and when the building has qualified for going into service. In the case of Indeed Tower, we are starting to get rent from Indeed. That starts the 12-month clock by which we can complete the lease up, and after the 12-month clock, it has fully finished being a development project, and it goes into service for occupancy calculations. That's something that we've done in many other projects. Okay. If I take kind of the move-outs that you described, you know, DirecTV and some other move-outs in January, plus the Amazon move-out that's coming in April, you know, if I do my math right, that kind of gets you to around the high end of your occupancy, about 88%. You're sort of talking about a low end of being 86.5%. Is that kind of geared to anything specific, or is that just, you know, sort of cautiousness or just uncertainty in the marketplace and giving yourself some wiggle room on retention and slow new leasing? I think that there are a lot of puts and takes when we think about how to get to a number, and we try to highlight the major factors. I think in two quarters ago, we referenced the Pac-12 move-out, which happens in 2023 as well. There are obviously a lot of moving pieces there, but we got a range. We think we're pretty comfortable between 86.5% and 88%. Okay. John, just on the KOP leasing, I mean, it sounds like the last couple quarters you felt like there's been good demand, but you haven't been able to kind of get anybody to the finish line. I'm just wondering, you know, if the rally in the biotech stocks and, you know, pickup in pharma has sort of accelerated those discussions, or you feel like you're getting closer with certain tenants or, you know, what do you think it takes to get things over the finish line here? Is it stock prices or just getting the building closer to finish? Well, Rob can give you the specifics on the market and what we've got going there. You know, I always go back to this, Steve, that all these companies have a lot of new products they're dealing with. They've got to figure out where their energy is gonna be spent and whether it's Life Science or others. Everybody's trying to figure out what their new footprint's going to be. With that, Rob, if you don't mind going through, just kind of drilling down into Steve's responses to his comments, questions. I think a little more, you know, into what John was saying, Steve, is that Life Science has traditionally been and continues to be a little more, thought, I guess, slower in their uptake of space, given a lot of the factors John said, whether it's pending patents, whether it's other, you know, new innovations they're working on. They just are a slower tenant in terms of they're more like a FIRE category tenant, honestly, in terms of their uptake of space. You hit on the second part of your question was valid, which is that, you know, the buildings right now have steel up or topped out. They're more visible, and we've noticed an increase in activity, actually. We still have large users looking, but we've noticed a marked increase in single floor or double floor users. As the buildings continue to progress, we expect that visibility to translate into more tours and demand. We're kind of still in the early stages, but now that we have steel up, things are moving forward. I guess the last thing I'd say is. No industry is immune from the uncertainty in the economy we're in. As I said earlier when I was answering Nick's question, you know, tenants are moving slower due to uncertainty. Got it. Thanks. This. Thank you. Our next question comes from Tom Catherwood with BTIG. You may proceed. Thanks. Good morning, everybody. Eliott, sorry to keep drilling on occupancy here. Just something is still not lining up for me. Yeah, I understand the move-outs, very helpful. When we look at the difference between leased and occupancy right now, it implies maybe a little over 200,000 sq ft of leases that haven't yet commenced. Is the expectation that those take longer to come online that's later in the year, which drags down average occupancy? Is it seems like that would push you up even above the top end of the range that you have now. How are you factoring that into guidance? Yeah, it's mainly a waiting thing. I think that the missing piece there. The move-outs that we talked about are January, April, kind of the first-half of the year, and the bulk of the move-ins are in the back half of the year. You're right that square footage is coming in, but in terms of the waiting for the total year, it doesn't have a full-year impact, whereas the move-outs have much more closer to a full-year impact. Got it. Got it. Thanks, Eliott. Then Rob, just wanted to loop back on your commentary about sublease space. I think you were referring primarily to Austin there, you know. In general, we've seen an uptick across your markets in the fourth quarter. It looks like some of it, at least in your portfolio, has been resolved recently. What are your thoughts on that competitive set in your market? How is it impacting kind of lease negotiations, and do you expect any near-term change on that? Sure. Well, as we've said before, there's different segments of sublease space or, you know, increments of it. Some of it's just obsolete space that is gonna be very difficult to move. I think what you're seeing, particularly in San Francisco, but other markets also, is that some sublease space is converting to direct space. Again, you can't generalize about that. Some of it'll be very good space, Class A, and some of it'll be not so good. You have that kind of convergence there of sublease becoming direct. Sublease space is always a factor in a negotiation or in a market. Again, if you're really looking at flight to quality, the sublease space that is available, using San Francisco as an example, you know, more than half of that is space that we wouldn't consider competitive to premium product, you know, and assets like we have. Another statistic kind of going off what John said in his remarks, 70% of the deals done in San Francisco in the Q4 of 2022 were going to space that was basically 2010 or newer space. Whether that's sublease or whether that's direct, the rates are gonna be higher than they would be in just kind of Tier 2 space or Class B, B+. That's universal. I mean, that's gonna be whether you're talking Manhattan or, you know, wherever. That's just a fact. Got it. That's it for me. Thanks, everyone. Thank you. The next question comes from David Rodgers with Baird. Your line is open. Yeah. Hey, everyone. Tyler, congratulations on the retirement. It's been good to work with you all these years, and congrats to everybody else. John, maybe on investments. Blaine asked the question earlier, but with respect to development versus acquisition, I'm kinda curious on your thoughts. If we're talking only the top 10 or 15% of assets now in any particular market are super attractive from a tenant perspective, I mean, do you really anticipate to see a number of opportunities that come as distressed opportunities in that 10% to 15% subset? Are you really interested in those opportunities knowing that you're facing kind of a next generation rollout, or would you rather just build? I guess I'm curious about how much distress really is attractive for you and the REITs overall versus, you know, wooing a tenant away and building them a new building. Yeah, that's a really perceptive question. You know, I don't recall, Dave, whether you were at our Investor Day, but, I commented on that then that the target list of buildings that meet our locational and our, sort of the quality, not only quality in terms of finishes and all that sort of stuff, but the floor plates, et cetera, that would be attractive to us then have to be, trading at a price that makes sense to us. I think it's gonna be harder to find, quality assets across our, markets than it has been. Having said that, you know, we're pretty innovative people. If we find something that's in the right market that can be made to be the kind of building that we know people want, we have the skill set to accomplish that. You know, there's been a lot of times, a lot of buildings and so forth, in periods where we were less optimistic than we ended up that our actions dictated. You just have to be out there. It's like a fisherman. You have to be out there fishing, and you throw a lot of them back. Maybe a bad analogy 'cause I'm not even a fisherman. On the development side, the, you're quite perceptive again. Development, you're not gonna do it unless you know, pretty confident you're gonna get the kind of return that makes sense. You got best-in-class product with long life ahead of it and so forth. We, of course, are pretty good developers and have a good development pipeline. We're gonna keep loose. We, you know, like when we started buying in San Francisco in 2010, we caught the market by surprise. We bought aggressively good product that had the physicality we wanted. We positioned ourselves for development. We moved into that quickly. You know, every cycle has a little bit different, you know, execution. You gotta be nimble, and we are. You gotta have a great team, and we do. In the context of development, sites, they are pretty difficult to find in our markets, and we control a number of them that are entitled. More to come. Maybe just to follow up, you talked at NAREIT, John, about potentially looking at other markets. Does this environment, do these opportunities make you more or less interested in adding another, you know, dot on the map, or does that not really matter? We're not looking at to use your terminology, we're not in serious pursuit of any other dot on the map at this point. We do have a strategy for the Greater Austin area, and we're excited about that. We're not executing any more. We don't have any land sites or anything that we're looking at buying at this point. I think that may be an area where we find some opportunity to due course. We again, we have nothing that we're looking at, but there are some folks that have approached us where they, you know, they thought they were gonna be able to title things and then move it into a sale category. Obviously, there's a lot less appetite for risk. The interest rates, and the economy and so forth has given a lot of people hope. There may be some opportunities, you know, at some point in that area. We're not looking at seriously for any near-term execution in other markets. Thanks, John. Thank you. Our next question comes from Jordi Dingler with Mizuho. Please proceed. Hey, thank you for taking my question. I know you just touched a little bit on Austin. I'm just curious, what would make the team slow or accelerate investments in the Austin? Has your view of the Austin market changed in any way? I didn't quite understand the first part of your question, Jordi. Forgive me. Yeah. I was just curious, what would make the team slow or accelerate investment into Austin, and has your view of the Austin market changed in any way? Well, our view has not changed with regard to the long term. Our view in the short term is, as is always the case, when you're in a downturn, there generally will be opportunities. We're not pursuing anything specifically at this point. Also in downturns, you wanna be more cautious with regard to what you do. There's nothing that's changed in the long term. In terms of slowing down, I mean, you saw last year, we bought hardly anything, we bought one site, we're not in negotiations right now to buy anything, building or land. It's, you know, it's sort of a time to be a little bit more cautious. To be compelling for us, something has to be terrific at this point. Great. That's helpful. Just my second question, I guess, what are you monitoring as you think about timing of capital deployment? Uh, uh, this is Elliot. Eliott, did you get that question? I did. Yeah. Yeah, I can handle that. Yeah, we're kind of looking at all the things we would typically look at, which is, what are the market conditions out there? What are we seeing on the leasing side? What are our tenants telling us? Where are values? When we see an alignment of leasing conditions that we think are going to be strong and values that are attractive, then that is something that would cause us to increase the amount of capital that we deploy and vice versa. You know, we're just gonna be at a different point in the cycle, depending on the year, but the process is pretty similar. Great. That's all for me. Thank you. I appreciate the call. Thank you. Our next question comes from Omotayo Okusanya with Credit Suisse. Please proceed. Hi. Yes. Good morning out there. Again, Tyler, all the best. Elliot and the rest of the crew, congratulations. Elliot, I think your comment about the earnings cadence this year was that first-half. Was going to be stronger than the second-half, you're going to see a gradual slowdown. I'm just wondering if we should kind of think about second-half really as the bottom or the inflection point earnings-wise as we start to look kind of beyond 2023, or if there's still... Especially when, again, you have Indeed Tower coming on board, you have Kilroy phase two coming on board. Should we kind of still be thinking about, you know, things a little bit differently about earnings cadence even beyond back half of 2023? Hey, Tayo. We obviously are talking about 2023 guidance. We don't have 2024 guidance yet, which is, I think, sort of where you're going. As you think about some of the drivers in those out years, you're right, we will have full-years from Indeed in 2024. We'll have a full-year from the two San Diego projects that are coming in on 2023. Just the big question is what happens to the core portfolio in 2024? I think those are some of the major drivers and as we kind of progress throughout the year, we'll have better clarity on how those are gonna play out in 2024. Gotcha. Thank you. Thank you. The following question comes from Dylan Burzinski with Green Street. You may proceed. Hey, guys. Thanks for taking the question. I guess just curious, you know, how are you guys thinking about the portfolio in terms of market concentration from a longer term perspective? Are there certain markets where you see yourself expanding or contracting more so than others? Yeah. This is John, Dylan. That's a good question. It's one we ask ourselves quite a bit. You know, we're three or four different products and with regard to Life Science, San Diego and San Francisco are two pretty key areas. We think we'll continue to grow in those markets. We don't have any plans at this point to be in any other markets with Life Science. With regard to office concentrations, you know, over time, and it takes a long, long time, we're likely to be more active on the buy or the buy, you know, the acquisition side, in Austin and beyond, just because of the balance issue. You know, things never work out exactly as you might plan. On the development side, you know, we have some pretty big development opportunities within the markets we're in today. That is really in all four areas or five areas, and those will play out over time. Will we add significant development again over time as it's appropriate in the Greater Austin market? Probably. You know, it's a very intellectual question, and I appreciate you asking it. I wish I could be a little bit more intellectual in answering it because at the end of the day, we don't have some internal formula about have this much here, that much there. To me, you know, you've got to keep your eye on a lot of different factors, and the factor that's first and foremost in my mind, that should be in everybody's mind is where innovation growing and what's the supply or barrier to entry equation? You know, in the comments I made, my earlier comments about artificial intelligence, I think this is gonna be the biggest thing in tech that's been, I guess, invented, if you will, in decades. It has massive legs, and we're right at, you know, main and main on that. I appreciate that. Thank you. I guess just as a one follow-up. It looked like Riot Games expanded their square footage in your guys' portfolio. There was a footnote added that they have some square footage expiring in sometime this year. I guess can you kind of update us on your renewal talks there, or if this footnote is kind of indicating that they're likely to move out of that space? Hi, this is Rob. You want to take that, Rob? I really don't wanna. Yeah, I really don't wanna comment on active discussions we're having, especially in an environment like this. I just all I can say is we're engaged and more to come. Okay. Appreciate that. Thanks, guys. Thank you. The next question comes from Peter Abramowitz with Jefferies. Your line is open. Yes. Thank you. I just wanted to ask, you have Salesforce as a top 10, and I know your leases are mostly, I think it's average nine or 10-year term remaining. Just curious, have you had any conversations with them, just given the restructuring plans they announced and the possible, office footprint reduction as to, kind of what their plans are, if that, you know, relates to any of the buildings you have them in? You want to take that, Rob? John, I can. Yeah. Well. Yeah. You know, in markets like this, we really stay in touch with all of our clients even more so now, but we, as a regular practice do, but now we've doubled down on it. You know, we talk to Salesforce quite a bit. You know, they successfully sublet space in 350 Mission, which is our building, we're not having any discussions with them in any way about any changes beyond that, and they're happy in the building. You know, some of the space they have on the market is a building they own and much older product. Hard to say. I think it's notable that Salesforce, which had their, you know, work from anywhere policy, is one of the companies that's come back pretty quickly to, you know, three to four days of work in the office for most employees. I think, you know, I think a lot will change in the next year or so in terms of just, again, how many people are back to work, how companies are using space, and demand will eventually play out. I mean, we're in a cycle, right? Certain cycles are like 2019, where everything's great, and other cycles we've worked through. I mean, one of the best things about our management team and the basic team we have in every region is that, you know, we're cycle tested and have been through these before, whether it's dot-com or, you know, the financial crisis or whatever. That's the best way I can answer it. Got it. Thanks. That's all for me. Thank you. Our following question comes from Jamie Feldman with Wells Fargo. Your line is open. Great. Thank you. Congratulations everyone on the promotions. Good luck, Tyler, with your next chapter. We'll miss you in REIT land, that's for sure. I guess just kinda big picture here, we've certainly seen layoff announcements in your markets. You know, can you just give more color about what's happening on the ground? I know you had mentioned that jobs are still above, you know, levels of the last of kind of pre-pandemic or the last few years. Just kind of what is really shifting that's noticeable? Maybe if you fast-forward a year from now, how do, you know, how do you think your markets look versus today? Does that change at all the type of assets you'd wanna own or maybe the size or the location or sub-markets you wanna be in? Well, that's a compound question, Jamie. Good job. We'll take it one at a time. Rob, you wanna take the first part? Sure. Jamie, good to hear your voice. It's been a while. With respect to layoffs and what we're seeing in our markets, you know, there's the headlines that all the, you know, media publishes. To your point, you get into the specifics, and when you look at some of the big tech layoffs, a lot of them have been in what I would call the softer sides of the business, where they had, you know, multitudes of event planners or, you know, very robust HR departments because they were, you know, ultimately doubling their workforce over a short period of time. That's where we're seeing, you know, a lot of the focus, and that's not unusual, right? It's usually things like whether it's marketing events, some HR, and basically sort of headquarters-type functions. What we are seeing, this is happening in the Bay Area quite a bit, is, and there's a statistic out there that the typical tech worker that's been laid off, whether it's from, you know, whatever company you can think of, basically has a new job in three to four months, and that's from ZipRecruiter. I think it's a very dynamic situation in terms of layoffs and where things go. The one thing that we've always loved about the West Coast is the talent pool that's here and the universities that keep graduating this high-tech talent that, you know, everybody wants. Although we're in a lull now, I, you know, we will get through this, and the cycle will turn. I'd make this point, Jamie, just sort of broadly speaking. This flight to quality is massive, and we think we're really well positioned. As Rob pointed out in his earlier remarks, a lot of what we're seeing, although not entirely, 'cause there was quite a bit of the recent leases we've done where there are new deals and where companies are expanding. The fact is that the predominant thing we see right now is the flight to quality, so people are moving out of a building, an older building, into a newer building, be it ours or somebody else's. That's not showing positive growth in most markets. When that collides with growth, you're gonna have a flight to quality and growth in quality, and then you look at the delivery of quality space that's way off, and I think there's gonna be a lot less under construction this year and possibly next. The dynamics can change for the premium space very, very quickly. You know, I think that's a dynamic to be aware of, and I think we'll be an early recipient of that. In terms of— I think part of your question was, what we might see in a year and how does that translate into our planning? Was that the last couple parts of your question? Yeah. I guess you're obviously much closer to it than we are, you know, based on what you've seen so far,m in layoffs and companies. Yeah. How do you think it feels a year from now? Yeah. You know, I don't know. I mean, there's, you know, there's so many factors. You've heard me speak a lot, and we've talked a lot over the years that the things that we can control, we do a pretty good job on. The things that we can't control, the macro factors, you know, we have to adapt to and react to and we always have talked about how we've built the balance sheet and the team to be able to try to withstand the downturns and take advantage of the upturns. As far as we, as we adapted, you know, our product quality and so forth to that model as well, One of the things I don't know that I'm ultra optimistic, but I'm optimistic about what I'm beginning to see and hear about interest rates increase really slowing down. At some point, that's gonna get stabilized. When it does, I think the debt market stabilize. That not only affects real estate with regard to transactions, dispositions, acquisitions, development, et cetera, but I think it also just more broadly economic clarity will give companies and decision-makers in other industries who are our tenants a lot more ability to see the future and see the growth model. You know, there's a lot of forces around the world right now that everybody is getting pounded of. You turn on the news, and you don't see and hear a lot of good things. Sometimes it's, you know, sort of overblown. It's just gonna take a little bit of a dynamic change, people getting back to you know, decision-makers, being able to see a more stable environment. I don't know when that happens. I think it's starting to happen from when I talk with various tenants of ours and various friends that run different kinds of companies and so forth. They've been in the reactive mode of how you deal with what could be a more prolonged downturn, whatever. They've been in that mode, and that obviously rattles into real estate, and real estate decisions, and a slowdown in decisions even when people wanna move forward. Generally, as things improve, you know, it takes a little while to get going again. I think I'm hearing more people feel like, "Hey, maybe the downturn isn't gonna be as bad as we thought." Again, If I knew the answer to your questions, I'd be a wealthy person. I'd be picking stocks, I guess. I'd be Warren Buffett or junior Warren Buffett, and I'm certainly not that. All right. That's a fair answer. Our team came across a tweet today from the CEO of ChatGPT about San Francisco talking about the tug-of-war between the negligence of the San Francisco government and the power of being the center of the AI revolution. San Francisco remains super relevant for the next decade. You know, when we saw you at NAREIT, Blaine and I were just discussing, you know, there was some optimism about the direction of San Francisco on the political side. Is there anything that you can refer to that gives you more optimism here or makes you feel better about what's to come? Have, you know, has what's happened on the layoff side motivated the government at all to make even, you know, more aggressive changes to the positive? Well, I think there's a number of things. Some of them are government, some of them are individual companies and so forth. You know, people have been frustrated, rightfully so. People of all walks of life, all political spectrums, companies, et cetera, with the, you know, I think it's basically negligence, to allow things to have got deteriorated to the point they did. Of course, they recalled the District Attorney in, and District Attorney Jenkins was then elected recently to a full term. You know, the school board things that everybody's aware of that happened before that. There's a bunch of organizations that have become incubators for next generations of leaders, and that are, you know, a lot more responsible than some of the folks that were making decisions before. There's some new board of supervisor people. There's I think there's a trend that's positive. You know, it took a long time to end up with some of the things that we've ended up with, and it's gonna take a long time to change it around. What I think is really positive is now with companies beginning to really come back to work, and Rob mentioned how Salesforce had a work from anywhere, and now it's get back to the office as just one example of a company that has changed. As more and more people come back, there are more and more people that, and more and more companies that are putting pressure on the city to make better decisions. I think that's a really positive thing. We're obviously active in all of that. I'm optimistic. I would say I'm cautiously optimistic because, you know, these things do take time. We have a real issue that is a health crisis with people on the street that requires thoughtful consideration of how we get them off the street. More and more people are dealing with that, more and more organizations. You know, there's a group down here in San Diego, where they don't have anywhere near the level of homelessness that they have in San Francisco 'cause it's not as concentrated one area. A group that's working with the federal government to make federal land available to create a responsible, healthy environment for folks and get them off the street. You didn't hear any talk like that, you know, six months or 12 months ago, at least I didn't. I think there are a lot of positive forces. The fact is, California has great schools. It's been the cradle of innovation for the Western world, if not the entire world. There's more innovations coming, that's growing, and stuff is. You know, people are starting to take much more seriously and become much more active as individuals and companies in putting pressure on government. There's a lot of before, the, "Hey, everything's going kind of okay. Yeah, I don't like this." It's sort of like any kind of decay, you need to remove it because it's gonna grow. For a long time, it was allowed to grow unchecked. I hope those comments help, but, I'm, as I say, cautiously optimistic, and I think the, I think better, much better days are ahead. All right, great. Well, we appreciate your thoughts, and good luck. Thank you. Thank you. Thank you. The next question comes from Derek Johnston with Deutsche Bank. Please proceed. Hi, everyone. Hi, John. Thank you. You know, in the opening remarks, you talked about 2022 being a transition year. As we looked at the setup to 2023, you know, we felt as this would also be a continuation of that transition. I thought it was interesting that you talked about a potential shift to offense. You know, what would you need to see in order to be able to shift to offense? You know, what would that shift to offense, John, you know, mean for Kilroy? You know, what direction do you think you would, if you had it your way, what would you pursue? I think I was pretty specific in my opening comments that we anticipated another challenging year for office, and I think that's, I stand by that. I think it will be challenging. It will be different in each market, it always is. To be offensive, it would require for us some, obviously some confidence if we're buying buildings that they're obviously gotta be the right buildings from a, you know, the kinds of buildings we like and the locations we like and so forth. They'd have to be buildings we can make money on. There's gonna be need to be a real value-creating proposition for us to be active in acquisitions. Obviously, we work really hard and we will continue to work very hard on making sure that we have plenty of liquidity. There's always that to consider, what our needs are, and we don't wanna get to a point where we're low on the liquidity side of things. That has to feel good. With regard to development, I don't see us starting any spec development until there's a real need. At the point I made to some other person's questions earlier about the lack of new construction, the flight to quality, at some point, there will be a pretty obvious inflection point of a shortage that's looming, based upon what is forecasted demand. When I say I'm optimistic, I'm optimistic it's gonna happen. I'm optimistic about some of the things that I'm hearing, some of the changes I've seen. Like a locomotive, if it's going from right to left, it's gotta stop before it goes from left to right. I haven't seen that phenomenon happen yet. What I'm seeing now is it getting less worse in some cases, and then that generally is a foreshadow to getting better. I make no pretense about having some magic insight, obviously, in when that's gonna occur. Yeah. No, thank you. Timing is always certainly tough. You know what? Let's just end it there. That's it for me, John. Thanks a lot, guys, congrats on the promotion. Yeah. Okay, Derek. Thanks. Thank you. Our final question is a question from Omotayo Okusanya with Credit Suisse. Please proceed. Hi. Yes. Just a very quick follow-up. 2023 guidance, are there any term fees in that number? There's a little bit in the first quarter. Expect a few million bucks in the first quarter. Okay. Nothing else for the rest of the year? Not at this point. Okay. Thank you. Thank you. There are no further questions at this time. I will now pass it back to Bill Hutcheson for closing remarks. Great. Well, thank you, Tamia, and thank you everyone for joining us today. We appreciate your continued interest in Kilroy. Have a great day.