Peter Abramowitz: Just wondering if you could kind of comment on the pockets of demand you’re seeing within the different submarkets. I think Boston Properties mentioned on their call, Century City looking a lot stronger than Santa Monica and other parts of West L.A. So just curious if you could provide some context and your own thoughts on that.
Stuart McElhinney: Yes. I think that lines up with what we saw in the quarter as well. We made some gains in Century City. Century City has definitely, as we’ve discussed before, been a beneficiary of some tenants that have left downtown L.A. These are generally very large tenants. So the large tenant demand in Century City has served that market well and our buildings are doing quite well there as well. Other than that, I’d say we’re seeing — we’re continuing to see, as Jordan said, not quite enough new leasing to go positive in the rest of our markets.
Peter Abramowitz: Got it. That’s helpful. And then I guess just a follow-up on that. If there’s any kind of spillover from Century City. I think you guys have done — pretty filled up there. Where is it going? I guess, where are those tenants prioritizing if they can’t find what they need in Century City?
Jordan Kaplan: The natural alternatives are Beverly Hills and that Wilshire Westwood corridor is where I would expect they go, but I can’t give you an exact answer.
Operator: Next question comes from Dylan Burzinski with Green Street.
Dylan Burzinski: Just going back to the property taxes, I mean is it your sense that you can continue to see relief on this front as you get through the remainder of the year and into 2025? And then I know several quarters ago, you guys flagged higher insurance cost as being a potential headwind. Just curious sort of if you guys have worked your way through that or if you guys sort of envision that potentially coming up and being a risk to expense growth in the near future?
Jordan Kaplan: Well, in terms of property taxes, the simple answer to your question is, I think that it’s likely that we will be able to file appeals and get adjustments. Now the impact is years away. I mean when you do that, it takes them years to — even if they accept — even if they’re not going in a meaningful way challenge it, it can be years before you get the refund, because you have to keep paying on the old number. So when we get refunds that are complete — they’re very disjointed from when the original appeal went in. But of course, it seems like the assessor roles right now are overstating the value of many buildings, although they’re probably having as much trouble figuring out the value of the buildings as anybody is. That was your first — what was your second question?
Dylan Burzinski: Just if you guys can flag — yes.
Jordan Kaplan: Yes. So we had some dramatic increases in insurance. I still think there are increases in insurance. They’re probably not as bad as they were the last couple of years. But the insurance industry is going through a lot right now, on many fronts, not just in terms of insurance property claims, but liability claims and all the rest of it. And it’s causing us to really have to work hard to keep those costs in line. Although in general, I think we’re able to do it, including making adjustments, the policies, taking some of the early risk and stuff like that, because we’re pretty good at controlling our costs and claims. We’re very good at it actually. But because of things that are happening all around the world, were caught up in just increases. And so I don’t think it’s as bad as it was the last couple of years.
Dylan Burzinski: That’s helpful. And then maybe just a quick one on parking. You guys are still below pre-COVID levels. Is this sort of the run rate that we should expect until you guys are able to drive further occupancy in office? Or is there some other potential upside to parking income even absent additional occupancy gains?
Jordan Kaplan: Okay. So I actually think parking income is up relative to occupancy and all that’s left is to get high — is to get higher occupancy to increase parking. So even more accurately, I think that’s all we have left as a way to get back to those and above. Because we’ve already probably exceeded, for the level of occupancy we’re at now, we’ve got — actually our rates are up.
Dylan Burzinski: And sorry, kind of cut out, you said rates are up on parking?
Jordan Kaplan: Yes. So for the level of occupancy we’re at now, rates are actually up. So probably all we have left is to lease more space. And then if you’re just comparing just the gross number to the gross number before, that’s all that’s left, is to lease more space and then more people coming into the building. Because there’s not — it’s not like — I mean we can continue to make rate gains and overcome it that way. But the easiest way is just to finish — get the leasing back up.
Operator: And the next question comes from Upal Rana with KeyBanc Capital Markets.
Upal Rana: So you have about three swaps expiring this year with about $1 billion total. Is it still your expectation to let those loans float, or has that changed? And as like sort of a follow-up, what were your — how many rate cuts that you had priced in the beginning of your initial guidance versus where you are today?
Jordan Kaplan: How many rate cuts?
Upal Rana: Yes, in terms of…
Stuart McElhinney: Assumptions changed from our first to now.
Jordan Kaplan: Oh, rate increases. I mean the times that we increased what we expect the rate to be…
Peter Seymour: If you’re looking at the forward curve. I mean, basically, when we do our interest guidance, I mean, look, it’s — obviously, people have different points of view on what’s going to happen over the rest of the year. We just use the SOFR curve, the forward curve at the time, that we’re putting our guidance together. And that’s essentially what we used. So obviously, the curve is expecting rates to stay higher for longer.
Operator: Next question comes from Alexander Goldfarb with Piper Sandler.
Alexander Goldfarb: I’m still Alex Goldfarb. But Alex Gorfaf wants to ask a follow-up. Question on — and Stuart, maybe you said this in the — in — spattered about in the responses. You guys spoke about insurance, you spoke about real estate taxes. But what were the items that were below your expectations in OpEx in the first quarter? Were those the two items? Were those were just referencing other trends? Just trying to break out, and then why you think that the savings in the first quarter won’t continue on?
