John Kim: Okay. So getting to $0.30 in third quarter and fourth quarter would imply $0.28 FFO in the second quarter. What are the chances that that disappoints just given the slower ramp up of production?
Harout Diramerian: It’s really hard to know. I — we finally finished first quarter, for us to go ahead and comment on second quarter and thinking it might disappoint is a bit early. I don’t think we would have provided the guidance numbers we did if we thought it was going to disappoint. So I think we feel pretty comfortable with them, and yeah, that’s all I can say.
John Kim: Okay. My next question is on leasing activity. I think, Mark mentioned, two-thirds of that was in the Bay Area this past quarter, but then also tour demand has accelerated. I was wondering if you could break down that tour activity among your major markets, LA, Seattle, San Francisco and Silicon Valley.
Art Suazo: Sure. This is Art. Tour activity really kind of goes hand-in-hand with what we have in our active pipeline. And I would say that 65% of the $1.9 million is spread out throughout the Bay Area pretty evenly. So, we’re talking about $1.2 million of the $1.9 million is across the Bay Area. And so the team is working ferociously to try to get all of those through the pipeline. It’s going to come down to deal velocity, how long it’s going to take to do some of these deals. And going back to the first part of that question, which is tour activity, right, that’s the precursor to all of this. And so, the fact that we’re up kind of 6% quarter-over-quarter, both in number and square footage, bodes well for the coming quarters. And so, Seattle — of that percentage, Seattle — both Seattle and — Seattle’s 20%, close to 25%, and the rest rounds out LA where we don’t have a lot of vacancy or expirations and Vancouver.
John Kim: I may have missed this, but what was the 6%? I thought the activity was 50% higher.
Art Suazo: The tour — no. The tour activity.
John Kim: The tour activity was 6% higher?
Art Suazo: Yeah. Year-over-year, it’s 50% higher, right, 6% sequentially, yeah.
John Kim: Sequentially. Okay. Got it. Got it. Great. Thank you.
Operator: The next question comes from Rich Anderson with Wedbush. Please go ahead.
Rich Anderson: Hey. Good morning. On the topic of sort of green lighting, new production and understanding, it’s going to take some time because the writers were on strike as well. To what degree did that take you off guard like it did the street, apparently, in terms of how the cadence of your quarterly guidance, your quarterly results that we’re envisioning for 2024? But a bigger question is, does this suggest that there could be like this pent-up option or activity, I should say, in the back half of the year? You don’t want to guide to that, but maybe there’s a real chance to have a 2x type of catch-up in your studio business on the other side of all this. Is that something that’s at least possible?
Victor Coleman: Well, let me sort of make a sort of a general comment. I mean, once the stages are leased, they’re leased, right? So, you’re going to have the revenue stream on the stages whenever they’re fully leased. In terms of the ancillary revenue in the Quixote business, yeah, I mean, still on the market share for our transpo business, we still have 70% of the market share. So, when that industry is fully up and running, we’re going to benefit from it. I don’t know if, you know, Rich, I don’t know if it took us off guard. I mean, listen, what took us off guard was the fact is that the industry stopped and it never started even when the strike was over. It didn’t start until January because it wasn’t ratified till December.
They didn’t work in December. So, there is a ramp-up period. We’ve always said that that ramp-up period should be fairly aggressive and we’re going to benefit from it. I guess what surprised us was really the green lighting of shows was truly the writers didn’t write. I mean, as opposed to if you look back at COVID, there was communication and writing and when they got to the point that they were going to produce content, it started right away. This is just taking time. As we mentioned in our pair of remarks, the majority of our tenants in the industry have still maintained a budget of production content that is going to be for this year. It will be back-ended, but they’re not coming off of their numbers and we don’t think it’s going to be the case for 2025 or going forward.
So, I think, we’re pleasantly looking for production to start and once that ramp-up starts, it should continue.
Rich Anderson: Okay. And then second question is on 2025, Mark, you said, we’re back to 1.5 million square feet for 2024 in terms of office expirations, but it pops back up a little bit in 2025 and approaching 2 million square feet and 18% of the portfolio. Do you guys see anything there that is sort of on your radar screen, sort of like a watch list further out or are things feeling a little bit more stable with a longer term view?
Mark Lammas: Well, I mean, we’ll tag-team this with Art. I mean, as you know, we’ve got Uber in 2025 — early 2025 at 325,000 feet. Victor mentioned activities we have at 1455 Market, which helps address the square expiration and could even get us a head start on inroads there. After that the expirations in 2025 at least taper off. We’ve got Google for 180 at Foothill. We’re keeping an eye on that. And we — I don’t want to get too far into Art’s commentary here, but as we go throughout the rest of the year, the expiration size at least comes down from there and there is some activity on that. Art, do you want to?
