Douglas Emmett, Inc. (NYSE:DEI) Q4 2022 Earnings Call Transcript

Blaine Heck: And then last one from me. There were some reports that came out earlier this year that Regal Cinema was looking to close the Sherman Oaks location there, I think, leasing from you. Can you just comment on that situation, the potential earnings impact and any plans you may have for that space?

Jordan Kaplan: Well, I don’t want to talk about individual tenants. And it’s true, we saw that too. I don’t know in the end whether that’s what happens there or not. But I don’t want to — I mean, we don’t talk about individual tenants.

Operator: The next question is from Rich Anderson with SMBC Nikko.

Rich Anderson: So I was intrigued by your comment in the call here, Jordan, where you thought that there was more opportunity, I think I heard you right, more opportunity in office than there was in residential. First of all, did I catch that comment correctly?

Jordan Kaplan: Yes.

Rich Anderson: And then — so the answer to the question is why? I mean like when we’re in a world where hybrid office is sort of the thing, it’s not a need based situation, but a want based in some cases, whereas residential is quite different, you have a very unique residential platform. What is it that’s making it more interesting on the office side from an investment standpoint from your line of sight?

Jordan Kaplan: Well, I’ll tell you, I spend — we had this one paragraph in my prepared remarks that was at the end of my prepared remarks. And Ted called it the overwork paragraph, which you said you overlook some more, because I just want to get it right so much. But basically, what that paragraph said, which was trying to give people a feel for why I’m so positive on office in our markets is while we have gone into for real estate, at least a recessionary economy, the things that you just mentioned and the things that I’ll reiterate for you, which is whether it’d be work from home or people not being so interested in urban office or commutes or public transit, all those things that seem to be additional obstacles for people that own office buildings across the markets, I just don’t see them being here.

They’re not here. And so when COVID finally lightened up a year ago, you saw our leasing booming. I mean we were in full recovery, and I was extremely optimistic. But not optimistic because I’m just optimistic guy, optimistic because we have like some of our strongest leasing quarters of our company’s history, and we have multiple of them in a row in new and in total. So when you go that’s happening, you certainly posted time that these discussions about these other items are there. I go, okay, that gives me a lot of confidence. That’s number one, okay? So put that as a giant number one, though, because I don’t think that those are issues our markets are dealing with. And then add to that, for number two, which is we’re one of the only big gateway markets that has true diversity around the tenant base, right?