Jay Poskitt: Okay, that’s helpful. Thank you. And then just going back to the distress front as well, I’m curious if you could provide anything on just where you expect to see that, whether it’s on the office front, multifamily or maybe a combination of both.
Kevin Crummy: I’ll take that. Good morning. We’re going to see it on the combination of both. I mean when you look at the headlines, lenders are taking back both office and multifamily. And I mean, candidly, I was just at something yesterday where they were showing upcoming maturities and the pending defaults on some of these very, very low cap rate multifamily assets that were bought with floating rate debt. It’s a pretty deep bench. So I’m expecting that we’re going to see more of both of those as the year progresses.
Jay Poskitt: Great. Thanks. That’s all for me.
Operator: The next question comes from Dylan Burzinski with Green Street. Please go ahead.
Dylan Burzinski: Hi guys. Thanks for taking the question and appreciate your comment sort of on longer-term leasing expectations. But as we think about what’s embedded in the current occupancy guidance, is it your sense that call it the 700,000 square foot leasing volume per quarter is going to be more the norm here as the economy works its way through a lot of the uncertainty? Or do you think that the level seen earlier last year is more representative of what’s embedded in guidance today?
Peter Seymour: Well, I mean, actually we averaged last year, I think 800,000 or a little over 800,000 square feet. I’m hopeful, but I’m not gutsy enough to say that we’re willing to put in guidance some kind of big, big recovery. And that’s why, as we said, hopefully in terms of the leasing and what we thought would happen, that’s in our guidance and you have it now. But I’m hopeful. But just like everybody’s kind of watching the overall economy, which won’t be any different for us than it will be for the rest of the country.
Dylan Burzinski: And then as you think about acquisition opportunities, understanding that we may be in the early innings of things. But just curious internally, as you guys think about deploying capital, is there some sort of yield on cost or IRR that would really get you guys excited? And if so, can you kind of walk through sort of how you guys are thinking about that?
Jordan Kaplan: I don’t – look, each opportunity is unique based on the rent role, what the property is. The metric that gets us really excited right now is cost per square foot is going to be very attractive. And then it’s a function of taking what we believe in the leasing and the debt market and figuring out what that IRR is going to be. But the opportunities are certainly going to be richer than they were pre-interest rate environment hike.
Dylan Burzinski: Appreciate it. That’s it for me.
Operator: [Operator Instructions] The next question comes from Upal Rana with KeyBanc Capital Markets. Please go ahead.
Upal Rana: Great. Thank you. Just going back to the retention rate here. Based on your occupancy guidance, retention seems to imply about 62%, which is marginally below your historical range that you mentioned. If most of your new leases doesn’t come online in 2024 or if new leases slows, the required retention rate would need to be increased. So I was just wondering how confident you are on that and if you can achieve that.
Peter Seymour: Yes. So of course this year includes the Warner Discovery move out, which is 2.5% of our square footage. And that’s built into the range we gave you. So that’s going to skew the retention average for this year down lower than it normally would be. The high 60s retention rate, that’s our historical average is over a long period of time, but something that large will skew this year, so that’s certainly taken into account. Beyond that, one move out, as Jordan mentioned, we’re keeping our leasing assumptions pretty in line with what we’ve seen the last couple of quarters and we’re not assuming kind of any ramp up from here.
Upal Rana: Okay, got it. Thank you. That was helpful. And then just I want to get your thoughts on the future of UCLA in your portfolio. They’ve made that pretty big purchase at Westside Pavilion Mall and they do have a number of expirations coming up over the next couple of years. So want to get your thoughts on what their future looks like with you guys?
Jordan Kaplan: Wow, it’s a lot of different leases. I cannot – I know the mall deal is not – it’s all new. So it’s for – it’s a whole new program. The whole new state is funding a new center for research in immunology. And then also there’s completely separate set of backers that are funding a brand new research. One’s 500,000 feet, then there’s 70,000 feet with a brand new whole research center for quantum computing. And so that’s not in any sense a drain of anything, even from campus, I mean from anywhere. In terms of just in general UCLA’s plans and what they’re doing, it’s very hard to tell. All those leases are – the decisions about those leases are independently made by the people in those departments and so it’s hard to say one thing or another about them.
Upal Rana: Okay, great. Thank you.
Operator: The next question comes from Peter Abramowitz with Jefferies. Please go ahead.
Peter Abramowitz: Thank you. I just wonder if you could provide an update. Have you had any initial tenant conversations about potentially backfilling that space in Burbank? Is it more likely to be, do you think you can do it as one large lease or is it something you anticipate having to break up into smaller mid-size leases?
Jordan Kaplan: Well, I mean, the court [ph] – we’re doing showings and there are certainly tenants there. I think there’s reticence to committing. But I mean, I think that will happen. So I’m not nervous about leasing up the building. And all I can say is I hope it’s not one large lease again, because we’ve spent 30 years talking about that lease every 10 years when it came up. I’d rather have it be multiple leases and be done talking about, but I’m not sure how it will end up. There’s obviously large tenants in that market.
Peter Abramowitz: Thanks. And then one other, besides the move out of Discovery there, any other kind of big components in the same-store NOI growth guidance to consider sort of what are sort of the other swing factors there aside from that move out?
Jordan Kaplan: I don’t know. Same store is a tricky calculation. I couldn’t make a good analysis of that for you here. You could give Peter a call, I guess, later and try and figure if there’s something out.
Peter Seymour: I don’t think there’s anything unique in driving that – not in driving that guidance.
Peter Abramowitz: Got it. Thanks.
Peter Seymour: And also, Studio Plaza is not included in the same-store.
Peter Abramowitz: Okay. So it’s mainly the occupancy drag that’s kind of leading to the negative growth there, but other than Discovery.
Peter Seymour: That’s correct.
Peter Abramowitz: Okay. Thanks.
Operator: The next question comes from Camille Bonnel with Bank of America. Please go ahead.
Camille Bonnel: Hi, everyone. Can we get your thoughts on the media sector and how its recovery is trending since the strikes have been resolved just based on the conversations you’re having in the pipeline?
Jordan Kaplan: I mean, I don’t know that I have the great, I mean; I don’t have a lot of thoughts. I mean they’re — do you have any taught on that?
Stuart McElhinney: Camille, I’d say this, we – giving the strikes result has to be a good thing on the margin. We do certainly have entertainment clients and tenants, and so some of that stuff did slow down a little bit on the margin during the strike. So I think it’s got to be a good thing for us going forward. But I don’t know that it’s a huge needle mover in the near term. There’s still caution in the market, as Jordan’s been describing. But I think happy that those are resolved. We need those tenants to grow and hopefully that will happen here when the economy gets a little better.
