Douglas Emmett, Inc. (NYSE:DEI) Q3 2023 Earnings Call Transcript

Stuart McElhinney: Jay, we don’t provide pipeline, new renewal like that. That’s not something we’ve ever focused on. We’re kind of a flow business with all these small tenants and so many transactions happening. So — and it’s a relatively short pipeline. As you know, we’re not negotiating leases for the end of 2024. We’re still working on 2023 leasing and Q1 ’24 leasing in the pipeline that we’ve got. So — no real color to provide there. As far as the industries, it’s — you can look at the pie chart in our supplemental and assume that it’s going to look pretty much just like that. We haven’t seen any real major changes in trends among the industry. So still very diverse, still pretty typical for what we’ve historically seen.

Jordan Kaplan: I think that pie chart barely moves. I mean if you look at it, yes, you can go back way back, and you’ll go, wow, they’ve had the same mix of industries and tenants for very long time. And similarly, we have another chart in there that represent the size of our tenants that has been very consistent for a very long time.

Unidentified Analyst: That’s helpful. And then just a quick question on the renewal percentage in the quarter. I know you had that one larger tenant that renewed but downsized. I was just wondering if there’s anything else that helped drive that higher attention in the quarter?

Jordan Kaplan: Yes. I don’t know that it was — I know you, in your note, focused on kind of the remaining expirations that we showed you at 630 that we had left to do. And you’re right that we did renew a slightly higher percentage. It’s actually a meaningfully higher percentage with a quarter to go than we had typically over the prior year. But I think that was just timing of a couple of guys waiting a little longer to make their renewal decision so that it fell into Q3 rather than in the quarter before that, which might be more typical.

Operator: And our next question will come from Upal Rana with KeyBanc.

Upal Rana : I just want to circle back to Barrington Plaza just quickly. Do you fully intend to expect all the tenants to be out by May of 2024, and when do you expect the sprinkler installations to be complete. So I’m just trying to look for a sense of time line here for the — going forward.

Jordan Kaplan: Yes. I expect the tenants to be out. And it’s a — it’s years to do all the fire life safety work and all the modifications that I mean, obviously had to be years because we had to vacate all the buildings and to do all the work that the city required is an immense project years in years 3, 4 — it’s while.

Upal Rana : Okay. Great. That’s helpful. And then in regards to the space that Warner Bros has given back next year, how confident are you in potentially leasing that up maybe before they exit the space?

Jordan Kaplan: I would not say we’re confident that we’re leasing it up for they exited space. I would say that — I’ll give you — I can tell you this, that market historically in L.A., my 30-year run has been one of the best markets in L.A. Now with that said, there’s a lot of turmoil, and it’s driven by the fact that the studios actually have their studios there. I mean, so it’s not just like they might have of space there. I mean they’re studios all right there. It’s called the media is for the right reason. And so like, for instance, the building that we own this being vacated has never had 1 foot vacant for 30 years. So a fantastic market. Now what’s happening right now right now, large tenants are pulling back. There’s a lot of consternation in the entertainment industry.