Douglas Emmett, Inc. (NYSE:DEI) Q1 2024 Earnings Call Transcript

Peter Seymour: Yes. I mean, it’s Peter, Alex. And my name hasn’t changed. No. So I mean we talked about the tax refunds. That was a portion of the up in this quarter. The other savings, I mean, they were in a bunch of different categories, and some of it was really timing and may come back later in the year. Hard to say. I mean, we’re controlling expenses pretty closely. But you factor in that there are some things that is just a timing difference, and that’s in our guidance for the year.

Alexander Goldfarb: Yes. But Peter, on that front, your renewal leasing activity is pretty healthy. It’s the new that’s the issue. So it doesn’t sound like the hesitancy to change guidance is based on the leasing because that market sort of is what it is. But it sounds like you guys have some potential operating savings that maybe you’re hesitant to really commit to at this point. It almost sounds that way. Is that a fair way? It sounds like there could be further?

Peter Seymour: The biggest factor is the increase in interest expense, right? I mean, and that outweighs all the good things that we talked about. So yes, we have — we increased our straight line guidance. And yes, we saw some expense savings. But we’re also anticipating pretty steep increases in the interest expense, as you see in the change in our assumptions.

Alexander Goldfarb: Right. But let me ask you this, Peter. Yes. I mean we certainly know what interest rates are going to be if you assume flat. So my question is, if you achieve the same level of operating savings in the first quarter through the balance of the year, would that put you through — would that make you at the high end of guidance, exceed the top end, all else equal?

Peter Seymour: It depends on where the savings are. Not all of the expense savings, and it’s because we’re consolidating a bunch of JVs, it gets relatively complicated. But obviously, if we were able to maintain savings through the rest of the year, we would give a different guidance range probably.

Jordan Kaplan: Well — okay. There are savings from property taxes, which he mentioned. There’s some timing savings and there’s some permanent savings. But the interest costs overwhelmed it. And so if all you’re saying is if you just didn’t have any interest costs, then we’d have savings. That’s correct.

Alexander Goldfarb: No, no, I didn’t mean that, Jordan. I just meant like if don’t assume — okay, cool.

Operator: This concludes our question-and-answer session. I would now like to turn the conference back over to Jordan Kaplan for any closing remarks.

Jordan Kaplan: Okay. Well, thank you for joining us. And sorry about the delay at the beginning. And I’m sure we’ll be speaking to most of you individually later. Take care.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.