Turning to office. We leased approximately 29,000 square feet in the third quarter. Our occupancy rate at the end of the third quarter was 82.6% compared to 83.0% in the prior quarter and our lease percentage was 84.3% compared to 84.5% in the prior quarter. Our leasing spreads remain positive meaning on a same-suite basis the rents we are achieving on new leases are higher than the rates of our expiring leases. This speaks to the quality of our office portfolio. On a year-to-date basis, our cash lease spreads are up about 100 basis points, while our GAAP leasing spreads are up about 4.6%. With that, I’ll turn it to Barry.
Barry Berlin: Thank you, Steve. Moving on to financial highlights. Our segment NOI increased to $11.2 million for the third quarter of 2023 compared to $10.1 million in the prior year comparable period. This increase in NOI of $1.1 million was driven by a $2.8 million increase in our Office Segment NOI partially offset by an $800,000 decrease in our lending segment NOI, a $500,000 decrease in our Hotel Segment NOI as well as a net operating loss of $400,000 from our newly acquired Multifamily Segment. Our third quarter Office Segment NOI increased to $9.3 million compared to $6.5 million for the prior year comparable period. The increase of $2.8 million was driven by an increase in income from our unconsolidated office properties largely due to an unrealized gain at one of our joint venture investments recognized during the quarter, an increase in rental revenues at an office property in Beverly Hills, California, due to increased occupancy and rental rates and a decrease in real estate tax expense at an office property in Austin, Texas.
Our third quarter Hotel Segment NOI decreased to $1.9 million from $2.4 million in the prior period. While room revenue remained flat, the decrease was attributable primarily to a decrease in food and beverage revenue. As we mentioned, we recorded a third quarter net operating loss of $400,000 from the new Multifamily Segment. We began reporting Multifamily Segment NOI in the first quarter of 2023 after we acquired two multifamily properties in Oakland in late January and late March as well as investing in another multifamily property in Los Angeles through a 50-50 joint venture investment. Lastly, our lending division NOI decreased to $400,000 from $1.2 million in the prior year comparable period. This decrease was primarily due to the increased interest expense related to the issuance of debt through a securitization transaction that closed in March 2023 as well as an increase in allocated payroll costs.
Interest relating to the securitization is directly expensed at the lending segment level, which in turn, freed up capital to allow us to further our strategic business model, including multifamily acquisitions. For our nonsegment expenses, we had two significant events. The largest was an increase of $11 million in depreciation and amortization expense. This noncash expense increase was driven by an increase in acquired in-place lease intangible assets amortization at our new multifamily properties located in Oakland. As of the end of the third quarter, these assets have been fully amortized. The second item being an increase in nonsegment allocated interest expense, which increased by around $6.5 million. The increase was related primarily due to market interest rates and the assumption of two mortgages in connection with the acquisition of our two multifamily properties in Oakland during the first quarter of 2023, including borrowing on our revolver in connection with the acquisitions.
Our FFO was negative $0.33 per diluted share compared to negative $0.22 in the prior year comparable period and our core FFO was negative $0.31 per diluted share compared to a negative $0.07 per share in the prior year period. These reductions were primarily driven by the increase in interest expense, largely due to our multifamily acquisitions, two of which are still in their initial lease-up phase. As David mentioned, we believe there is an opportunity to significantly grow our multifamily NOI. Finally, our liquidity was bolstered by raising an additional $25.1 million in net proceeds from the sale of our Series A1 preferred stock during the quarter. At September 30, we had approximately $73 million of additional borrowing capacity. With that, our host can now turn the call over for questions.
Operator: Thank you for attending today’s presentation. You may now disconnect your lines, and have a nice day.
