Douglas Emmett, Inc. (NYSE:DEI) Q4 2023 Earnings Conference Call February 7, 2024 2:00 PM ET

Company Participants

Stuart McElhinney – Vice President of Investor Relations

Jordan Kaplan – President and Chief Executive Officer

Kevin Crummy – Chief Investment Officer

Peter Seymour – Chief Financial Officer

Conference Call Participants

Blaine Heck – Wells Fargo

Michael Griffin – Citi

Nick Yulico – Scotia Bank

Jay Poskitt – Evercore

Dylan Burzinski – Green Street

Upal Rana – KeyBanc Capital Markets

Peter Abramowitz – Jefferies

Camille Bonnel – Bank of America

Bill Crow – Raymond James

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett’s Quarterly Earnings Call. Today’s call is being recorded. At this time all participants are in a listen-only mode. After management’s prepared remarks, you will receive instructions for participating in the question-and-answer session. [Operator Instructions]

I will now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett.

Stuart McElhinney

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO; Kevin Crummy, our CIO; and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our earnings package at the Investor Relations section of our website. You can find reconciliations of non-GAAP financial measures discussed during today’s call in the earnings package.

During the course of this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website. When we reach the question-and-answer portion, in consideration of others, please limit yourself to one question and one follow-up.

I will now turn the call over to Jordan.

Jordan Kaplan

Good morning and thank you for joining us. In 2023, higher interest rates fueled recession fears. As a result, tenants became more cautious, office leasing slowed and our leasing gains immediately following the pandemic were reversed. Our office occupancy declined, but large fixed rent increases, stable rental rates and low concessions in our markets mitigated the impact on revenue. Interestingly, remote work does not seem to have meaningfully reduced demand from our tenants. In addition, due to our typical five year lease terms, more than two thirds of our current leases were actually signed after the pandemic began. As Peter will tell you, our 2024 guidance anticipates lower FFO as a result of vacating the Barrington Plaza Apartments, the expiration of one large lease and higher interest costs. Our guidance does not take into account any significant recovery in leasing demand, even though we see the potential for that as tenant confidence increases.