Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Douglas Emmett Inc (NYSE:DEI)
Q3 2019 Earnings Call
Nov 6, 2019, 2:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's Quarterly Earnings Call. Today's call is being recorded. [Operator Instructions] After management's prepared remarks, you will receive instructions for participating in the question-and-answer session.

I will now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett. Please go ahead.

Stuart McElhinney -- Vice President Investor Relations

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO, Kevin Crummy our CIO, and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our earnings package at the Investor Relations section of our website, you can find reconciliations of non-GAAP financial measures discussed during today's call in the earnings package.

During the course of this call we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings which can be found in the Investor Relations section of our website.

When we reach the question and answer portion, in consideration of others please limit yourself to one question and one follow up. I will now turn the call over to Jordan.

Jordan L. Kaplan -- President and Chief Executive Officer

Good morning, everyone. Thank you for joining us. Tenant demand for our office buildings is robust. We leased 1 million square feet during the quarter, including a record 461,000 square feet of new leases. Our success drove a 50 basis point increase in occupancy and increased our leased rate by almost a full percentage point to 93.1%. Our leasing gains and our continued strong rent roll up drove a 6.7% increase in same property cash NOI. Overall, our tenant demand is supported by a wide range of industries and healthy regional economic trends. On the supply side, we don't face any meaningful new construction in our markets.

Last quarter we told you about our strategy to take advantage of low long-term rates and tight lending spreads to reduce interest rates and extend maturities. I'm pleased to say that since May, we have now successfully refinanced approximately $2 billion, adding almost five years to its average term while reducing its current interest rate by nearly 35 basis points to 2.63%.

As expected, our strategic balance sheet activities reduced FFO for the third quarter by $0.04 per share, due to one-time non-cash and cash loan costs as well as equity dilution. The loan cost from our most recent financing will reduce our fourth quarter FFO by an additional penny, bringing the total reduction of FFO in 2019 from these activities to $0.05 per share. Even with this impact, we grew FFO this quarter by 3.7%. Excluding this impact, we grew FFO by over 9%.

Our AFFO growth was even stronger, as we grew AFFO by 14% compared to the third quarter of 2018. This reflects both our conversion of non-cash revenue to cash as well as our low recurring turnover costs resulting from our unique operating model. While leasing up a few large spaces have slightly elevated our turnover costs, those cost represented only 12% of our NOI, still significantly below our benchmark group average of 25%.

With that I will turn the call over to Kevin.

Kevin A. Crummy -- Chief Investment Officer

Thanks, Jordan and good morning everyone. As Jordan mentioned, we are very pleased with the results of our strategic debt program. We now have the strongest balance sheet in our history. Our net debt to enterprise value stands at only 29%. We have no debt maturing before 2023 and our pool of unencumbered properties available for future financings, now constitutes 41% of our office portfolio. We don't anticipate any more refinancing activity this year, although we will continue to monitor rates and spreads in the 2020 for further opportunities.

Turning to development. In Honolulu, we still expect to deliver the first batch of new apartment units in 2020 at our office to residential conversion project. Eventually, we plan to have almost 500 units there. In Brentwood, construction of our 376 unit high-rise apartment tower is progressing well. Our deal pipeline is picking up and we've been looking at a number of potential office and residential acquisitions. While we remain disciplined in our underwriting, the strength of our balance sheet and the available of OP units for tax-advantaged deals gives us lots of optionality in closing deals.

With that, I will now turn the call over to Stuart.

Stuart McElhinney -- Vice President Investor Relations

Thanks, Kevin. Good morning, everyone. In Q3, we signed 209 office leases covering 999,000 square feet, including 461,000 square feet of new leases, a record high for new leasing in a quarter. Leasing spreads for the quarter were 29.1% for straight line rent roll up and 10.7% for cash roll up. Lease rate for our total office portfolio increased by 94 basis points to 93.1%. Our overall portfolio occupancy increased by 50 basis points to 90.9%.

Our value assets in Los Angeles had a particularly good quarter, as we increased our lease rate for that region by 220 basis points to 92.6%. Our remaining lease expirations over the next four quarters total only 10% of our portfolio. Well below our recent historical averages, but less than typical expirations. We're hopeful that continued strong leasing will translate into even better fundamentals.

On the multifamily side, our portfolio remained essentially fully leased at quarter end. I'm pleased to report that our new apartment units at Moanalua are now fully leased. We are continuing our successful program to upgrade the existing units there.

I'll now turn the call over to Peter to discuss our results.

Peter D. Seymour -- Chief Financial Officer

Thanks Stuart, good morning everyone. We are pleased with our Q3 results. Compared to a year ago, in the third quarter of 2019 we increased revenues by 6.6%. We increased FFO 3.7% to $103.9 million or $0.51 per share. As Jordan mentioned, our third quarter FFO was reduced by $0.04 per share as a result of our strategic balance sheet activity. We increased AFFO 14.3% to $94.3 million. We increased our same property cash NOI by 6.7%. Our G&A for the quarter was less than 4% of revenues, well below that of our benchmark group.

Now turning to guidance. We are increasing our guidance range for same property NOI growth to between 6.5% and 7.5%. Our strong underlying operations and leasing has largely offset the $0.05 impact from our strategic balance sheet program. As a result, we are maintaining the midpoint for our full-year FFO guidance, while narrowing the range to between $2.09 per share and $2.11 per share. As usual, our guidance does not assume the impact of future acquisitions, dispositions or financings. For more information on the assumptions underlying our guidance, please refer to the schedule in the earnings package.

I will now turn the call over to the operator, so we can take your questions.

Questions and Answers:

Operator

[Operator Instructions] First question comes from Jason Green with Evercore. Please go ahead.

Jason Green -- Evercore ISI -- Analyst

Good morning. I know you guys have talked previously about doing more development, given the pricing in the market. I guess, given your comment on the deal pipeline, has your view on market pricing for assets changed at all? And should we expect more acquisitions versus development?

Jordan L. Kaplan -- President and Chief Executive Officer

Well development is just a slower process because we -- we start working now on entitlements and hopefully they come to fruition years away and we are doing that. Acquisitions we have less control over, I don't want to -- why don't you talk about what you think about acquisition.

Kevin A. Crummy -- Chief Investment Officer

Sure. The pipeline is looking actually surprisingly deep given the time of the year. We're looking at a number of off market opportunities, but we've still got a lot of wood to chop to get those things done. And so sometimes they hit, sometimes they don't. But relative to where we expect it to be, we're pleased with the amount of activity.

Jason Green -- Evercore ISI -- Analyst

Okay. And then on the multifamily same-store cash NOI side, that's come in around 1% the last two quarters. I guess, when should we expect that to start to turn higher just given the positive rent in the market itself?

Peter D. Seymour -- Chief Financial Officer

That number has been -- I'm not sure quarter-to-quarter even in the last few quarters that you can rely on that as an indicator of what's coming up. Of course, when you say turn, I still feel like those are aberrations as opposed to telling you where the market actually is, but we -- it is like all of us we need to play out a few more quarters and see where that all ends up.

Jason Green -- Evercore ISI -- Analyst

Okay, thank you.

Operator

The next question is from Jamie Feldman with Bank of America. Please go ahead.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Great, thank you. I guess sticking with the acquisition pipeline, can you give a little bit more color about what the assets are that are in the pipeline, whether it's Office or apartments in the size. What cap rates look like, what kind of returns you'd like to see. Would you bring in a partner and then also just as you think about financing, how much higher -- how much higher would you be willing to take leverage to get deals done?

Jordan L. Kaplan -- President and Chief Executive Officer

That's like an entire capital and acquisitions stack. So there -- most of -- kind of most current pressing things is office, generally West L.A a little bit in the valley. I would say more than the usual number of deals that are looking for some type of OP unit or to become part of the structure with us to take advantage of our management, our position. In terms of -- and a surprising number of deals where they kind of want to stay in, but have us take control the thing. I would say that because of that in terms of financing and structure, first of all, our first choice always is to use the JV platform. I just think it's important for us to keep that strong and going and broaden the number of JV partners and sovereign partners that we have. Beyond that, I don't know that many of these deals would substantially change leverage levels for us. We have a lot of positive cash flow. We have a lot of ways to do it that I don't think we would significantly impact our loan to value.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. And then you said in the Valley. So maybe can you talk about Valley fundamentals, like what are you -- what are you seeing in terms of a change in either rents or occupancy that would give you some comfort buying more there?

Kevin A. Crummy -- Chief Investment Officer

Well, in general the Valley -- so if you look at Encino/Sherman Oaks that's been strong, continues to be strong to the degree there is deals left to everybody, we'd like to do on. And in fact, we've seen a lot of strength coming out of Woodland Hills and you guys have seen in the numbers that we've been publishing that it's been improving the stuff we're looking at happens to be in kind of Encino/Sherman Oaks market.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay, thanks.

Operator

The next question is from Alexander Goldfarb with Sandler O'Neill. Please go ahead.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Hi, good morning out there. First on the balance sheet side, you guys are now 41% unencumbered and you had comments in the release and you spoke about possibly looking at rates and spreads heading into 2020. So just from a balance sheet perspective, would you guys -- should we think about you guys continuing to unencumbered more meaning reduced leverage, increase free cash flow. And then if you are refinancing more debt going out toward '23 and beyond, presumably this would be stuff that you would not pay a prepay penalty on, it would be stuff that's naturally coming off a swap where it's a cost free option for you. Just trying to understand your thinking given how far out you pushed your maturity profile?

Jordan L. Kaplan -- President and Chief Executive Officer

So a lot of what you say is basically right. I wouldn't say just because there is a swap, if there is a good swap, so when we're looking at refinancing something there are two benefits that we get out of that assuming -- one is it can be a just a generally net positive deal, you can refinance that and then I'll bring your cost down. And what stops you from bringing your cost down is if you have prepayment tenant those sorts of things, we don't have those. So you're correct to say that.

Now, there could be a good swap in place that we like. That swap can just continue on to the next loan because the next loan will need the swap to and then we can add a swap. What's making to the tail end that we have make sure that we're fixed for a longer period of time, which is our goal. What's making this such a fruitful environment to continue doing what we're doing is that the yield curve is so flat out there that you can have a good swap in place and add a tail to that swap and it's not very expensive, giving us a very long period of time of very good fixed interest rates. And so there is still, assuming the spreads and the indexes stay well swap rates stay low, there still could next year be some more opportunities. None of the stuff has prepayment penalties for us to further extend our maturities and reduce our cost on the debt.

And typically, when we're doing that because of the move and values, you're able to release a few buildings. So let's say you had a loan that had six buildings. Since we don't tend to be going for more leverage you probably could get that same loan at a cheaper -- this is great that's why it's environment is so good, that same loan at a cheaper price and even release when the buildings giving us even more shifts if you will for financing our flexibility in the future and another building that's in the unleveraged pool.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay, OK. Then that's helpful there and explains it. On out in Honolulu. The occupancy dropped 50 basis points. Maybe just give an update on how the de-officing, if that's a word, is going with the Bishop tower that you're converting? And how you think it's impacting the overall office market? And then how we should think about the occupancy bouncing around for you guys? Because I'm sure you got tenants who are moving out trying to find other places to move out of your existing same-store assets, while you're reallocating some of the tenants out of the Bishop property?

Jordan L. Kaplan -- President and Chief Executive Officer

Yeah, so the market for more reasons than 1132 Bishop conversion has become relatively tight. There's some other large tenants, may be seeing the writing on the wall that had wanted to be in that downtown area that have now move and settled themselves extremely firmly there. So that's rolling out, that's on top of our move. I think we -- we have about 100,000 feet available in our buildings and we need to move 300,000 plus feet out of 1132. So that's create a tight situation. I think more important than that is we're moving along quite well on the conversion in residential. And they're big game in that downtown area is to get this workforce residential built and occupied because that's what really converts that area and I'm seeing stuff literally daily of people, if you will, looking to tag on to that with improvement of other areas, other buildings near our buildings. And so I couldn't be more pleased with that strategy and the impact that it's having. Most importantly to creating that workforce housing downtown. If you're seeing little movements in occupancy, I don't -- I don't think they are meaningful. The whole market is pretty tight and we have a lot of tenants to move into, not enough space quite frankly.

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Okay, thank you.

Jordan L. Kaplan -- President and Chief Executive Officer

All right.

Operator

The next question is from Nick Yulico with Scotia Bank. Please go ahead.

Nick Yulico -- Scotia Bank -- Analyst

Thanks. I just wanted to ask you, I just get some news -- just came out about Mayor of Los Angeles, joining a couple of others now in state and supporting split roll next year. I think in the past, during -- you said that you didn't think split roll was likely. I mean, now you have the mayor of Los Angeles supporting it. What are your latest thoughts? And if you could just remind us where your taxes are versus market?

Jordan L. Kaplan -- President and Chief Executive Officer

It is very hard to know where our taxes are versus market. I don't believe they'll ever even get there. And I don't even think the markets, the market that you're thinking of, in terms of in general I still don't believe there'll be a split roll. It's extremely popular. It's extremely popular a Prop 13 and split roll has tons of impacts and ramifications and it's pulling poorly. I mean but I know that we'll keep being asked that question until the elections. I think we can keep talking about, I don't have any better or greater information beyond my opinion and where the polling is. The polling at the moment is it's a complete loser.

Nick Yulico -- Scotia Bank -- Analyst

But were you surprised to see the mayor of Los Angeles come out and support split roll?

Jordan L. Kaplan -- President and Chief Executive Officer

I can't say that I'm surprised that he is doing something political like that I have a hard time believing he actually thinks it's a good idea. But politicians do a lot of things. I mean I don't know how they manage and decide what is the right thing for them to say at any moment in time. He is got a lot of issues on his plate at the moment.

Nick Yulico -- Scotia Bank -- Analyst

And I guess, what's the reluctance? I mean, other companies have come out, giving some sort of idea about what an impact could be to their taxes. It's really -- it's a complicated formula, but still when we look at it, it seems like you guys have a lot of assets that are older and warrant reassess to market. And so I guess, when you're saying you're not able to do the math on it, maybe that's true. But I mean, can you just give us a feel for where you think you're in place taxes are versus market? Since a year from now, there could be legislation that is coming out that could be meaningfully affecting your property taxes in the future?

Jordan L. Kaplan -- President and Chief Executive Officer

No.

Nick Yulico -- Scotia Bank -- Analyst

So you're going to continue to just give no information on where taxes are potentially versus where they could be when this legislation, if it passes, occurs?

Jordan L. Kaplan -- President and Chief Executive Officer

That's correct. I don't think that's a fruitful road to go down. I don't think it's good for the company, I don't think it's good for the politics surrounding that issue.

Nick Yulico -- Scotia Bank -- Analyst

All right, thanks.

Operator

Your next question is from Rich Anderson with SBMC [Phonetic]. Please go ahead.

Richard Anderson -- SMBC -- Analyst

That's SMBC, but close enough. So what -- my first question is on the same-store growth profile, which is improving, each quarter it seems, this time last year the numbers were much lower. I recall having -- we spent some time together, you we're handling minimum wage issues in a more immediate fashion versus kind of leading it into the system through to 2022 or whatever it was. I'm curious if you think that's a lot behind the reacceleration of same-store growth versus 2018 or do you think it's just more of a natural sort of evolution of how things are going in your space? Do you think you're getting extra same-store growth today because of how you handle same-store last year?

Jordan L. Kaplan -- President and Chief Executive Officer

Well obviously, that compares -- it's always the comparison always meaningful to look back. In general though I remember when you were here, what I said is we have a lot of pending pent-up growth from a lot of programs, not only it's developments that's coming online and gains we're making on redevelopment and redevelopment of buildings and rents moving up even though the building stay in same-store, but redoing lobbies, redoing things I said we were getting gains from that and it was gains that we were gaining we were getting from continuing to retool and work through our operating platform to further expedite things. And I said, we have a lot of strong kind of rental metrics it's is just in the market that we think we're more better and better positioned to take advantage of. I think that probably is playing a bigger role than the fact that last year we were digesting kind of fast moving minimum wage. I think that's, that was more impactful to the residential side which has more of that than the outside, but of course that impacts on whole company.

Richard Anderson -- SMBC -- Analyst

Okay. So I mean not to get 2020 guidance. But I mean is this -- are you kind of operating at a sort of a place where you think you'll be able to stay for a while, in this kind of mid-high single digit sort of range?

Peter D. Seymour -- Chief Financial Officer

It's very hard to predict how the numbers are coming out -- are going to come out because quarter-to-quarter when they get compared that can be very spotty. What I can tell you is this the fundamentals in the markets and the gains we are making currently with leasing and growing our income they still seem as strong as we thought they were going to be last year when we talked and there still cruising at a good clip.

Now that doesn't mean that some exogenous things can happen with the national economy that turns everybody around or create fear in the system, but at the moment for the industries that we have in our markets and the, speaking on the other side and the amount of supply coming on those kind of long-term -- that -- those supply demand metrics on top of the stuff we've been doing in our buildings are all conspiring to create very good returns. And I'll even say I know the question was asked about the same-store on the residential, but we're seeing a lot of strength in residential. So I'm optimistic that those numbers will even get better and this is just an aberration more than showing a long-term trend.

Richard Anderson -- SMBC -- Analyst

Okay. And then second question as much as people think of you primarily as an office REIT, just given the percentages, a lot of the discussion and excitement is around the multifamily business, with that in mind and with multifamily being a part of your D&A going back in longer history. Do you think multifamily could grow to be substantially more as a percentage of the total over the next four years or five years or are you comfortable with this sort of 90/10 types split?

Jordan L. Kaplan -- President and Chief Executive Officer

Well, we would like to do as much multifamily as we can. I just think we -- we think it is a great asset class and we are in incredible position with the amount of land that we own in these best markets because we own entire blocks of lots to spend the time, the two years to three years to whatever it takes to get that housing approved for-rent housing approved it takes a long time. It's hard for someone to buy something and say they're going to go do that because the clocks ticking on them a little faster than someone that has the land already making money off of it and then have this additional opportunity. So we're focused very hard on that even buying and developing and repositioning existing projects.

With that said, to answer your question, there is -- even though we take some very solid steps forward on multifamily you know Kevin's group does a few office deals and it goes right back over to the 10% to 15%. So it's hard to change the ratio even though we're working hard to grow that aspect of the company because we also like the office in our markets and there seem to be opportunities coming up and those are just larger deals.

Richard Anderson -- SMBC -- Analyst

Yeah, yeah. Okay, I got you. Thanks very much.

Operator

The next question is from Tayo Okusanya with Mizuho. Please go ahead.

Tayo Okusanya -- Mizuho -- Analyst

Yes, good afternoon, everyone. Could you just talk a little bit about your program for on the office side of the standardization of the suites, the signature suites program kind of how you're doing with the rollouts relative to expectations and your internal plan?

Jordan L. Kaplan -- President and Chief Executive Officer

Yeah. So we try and have in every building and throughout the portfolio a very large stock of suites that are just ready to move into. And even in many cases we furnish them and it's worked extremely well. We control the entire capital program around that in terms of the TIs, it allows us to raise the level that we're leased a little higher because if you have some maybe have some space that's all older that hasn't moved, if you're willing to go and get move in ready even if it's not in the best spot in the building, it becomes much more attractive to people and then when you furnish it and show them what it looks like, it then becomes more attractive. So that's been a fantastic process for us and very successful and I think it's fair to say not only are we doing a lot of it we would -- what we are working and designing our systems to be able to do even more of it. Because we have seen increasing returns not diminishing returns like, the more we do the even better It does so we are dedicating more and more people's time and teams to getting that done and having as many of those suites available as possible. Now all that hiring and that process takes training and time and, but we're pretty focused on that. It's been a great program for us.

Tayo Okusanya -- Mizuho -- Analyst

Could you specifically talk about if you're hitting your target build out of 30 per month and if it's better received in certain sub-markets than others, or if it certain types of tenants that are attracted to it?

Jordan L. Kaplan -- President and Chief Executive Officer

Well, I think it works particularly well in our markets because tenants, especially the tenant that's less than 5,000 feet doesn't have a real estate group. So when you give them something that's move-in ready even if it's move-in ready and they say, and we have one thing you need to move one well, that's so much easier for them to do than it is to give them a blank slate and they can feel like we have to hire designers and all of that stuff. So because our market tends to have those smaller tenants. I think this stuff probably moves better and faster here than it might have another market where the average tenant size as much larger. And we have other aspects of our operating platform that also cater to that in terms of very standardized leases and space planners that don't feel that way they can just make the change you want on their on their iPad and we just attach to the letter of intent without having to go through a lot of process.

We have design group that has already pre-match carpet and color samples and emollient and the whole deal so that you don't have to, you don't feel like you need to designer. So we've done a lot to make it easy for someone to feel confident, capable, efficient whatever -- whatever you're looking for there in terms of just leasing office space and not feeling like they had a million decisions they had to make and it was just overwhelming and that's speeding up, that process both gets them paying rent faster and brings down the turnover costs for us.

Tayo Okusanya -- Mizuho -- Analyst

Got you. Thank you.

Operator

And the next question, excuse me the next question is from John Kim with BMO Capital Markets. Please go ahead.

John Kim -- BMO Capital Markets-US -- Analyst

Thank you. Your lease rate hit a multi-year high of 93%. Do you expect occupancy to kind of creep up toward that number? And just given you have 15% of release rolling over the next couple of years, do you have any expectation of occupancy really improving?

Jordan L. Kaplan -- President and Chief Executive Officer

Well, I would generally say and it's hard, you know as the lease rate moves up, occupancy and lease squeezed together, so they can go as wide as 300 plus basis points and they can go as tight as like a 150 when they widen you're doing a lot of leasing right, and therefore you have a bigger spread between leased and occupied. I have never seen occupied get closer than about 150 basis points to leased? That's about that's about as tight as it ever gets.

In terms of your question about the role coming up, we -- because we have so many tenants, our role in terms of the year we're in, one year out, two years out three years out, that kind of wave is a fairly constant wave. I haven't seen -- we might have like I know we mentioned in our prepared remarks that we have a couple of quarters with a little lower than normal, but it will catch up to itself because that wave tends to stay pretty steady in terms of their -- the year that we're approaching becomes relatively low because we've already renewed a lot of those people. The one year out from that tends to be a little higher then it trails off from there, that shape I haven't seen in very long that shape change in a meaningful way.

John Kim -- BMO Capital Markets-US -- Analyst

I guess then without providing guidance, I'm just wondering if you have an early indication where we are in the cycle and where you're seeing demand, if you think at least the lease rate will be maintained at these levels or potentially higher next year?

Jordan L. Kaplan -- President and Chief Executive Officer

Well, when you say rate, what we have like occupancy rate, lease rate, and then the amount of leasing we do in a quarter. So the amount of leasing we do in a quarter is when we have more meaningful vacancy that some more meaningful number to watch to say, OK, I'm glad there's still good flow. I'm not sure if there's meaningful today because we're up a pretty high levels today. I haven't seen anything that would say to me that our leased occupied rate are going to go down and I think we still have some opportunity for them to go up. The fundamentals in the market are good. I mean in terms of tenant demand against new supply that they can move into, we don't really have any large spaces available at all.

John Kim -- BMO Capital Markets-US -- Analyst

My second question is on the debt refinancing that you had done this quarter. Your weighted average interest rate is at 3% with a six-year maturity. A year ago is at 3.07% with a 5.6 year maturity. I was just wondering, did you get the full benefit of that refinancing this quarter, as I would have thought that you're weighted average --.

Jordan L. Kaplan -- President and Chief Executive Officer

No, the refinancing that we did -- no, we just got part of it, because it happened during this last quarter. We'll get the full benefit of the stuff we've done this year, next year, right. We have the costs and happens midyear, etc. Next year, you'll see the benefit of the lower interest rate on that, but will also continue and there will be some generally non-cash, a little bit of cash, but generally non-cash cost associated with doing it.

John Kim -- BMO Capital Markets-US -- Analyst

Okay, thank you.

Operator

The next question is from Manny Korchman with Citi. Please go ahead.

Michael Bilerman -- Citigroup -- Analyst

Yeah, it's actually Michael Bilerman with Manny. So Jordan, when you look at your lease roll as we think about 2020, you got about 14% of the portfolio rolling and other 14% in '21. Your average lease spreads have been running call it 10% to 12% cash, up 30 on a straight-line basis. The last few quarters you talked about accelerating rent growth in your markets and a lot of demand. How should we think about the mark to market in 2020 and if you want to wager I guess into 2021, your average expiring rents on a current basis are about $42, $43, yes they'll reach $43, $45 in expiration, but how should we think about where mark to market could be in those years?

Jordan L. Kaplan -- President and Chief Executive Officer

You know for a few years now, and I've been a little surprised by this, our mark-to-market held steady at 10%. I think -- what?

Michael Bilerman -- Citigroup -- Analyst

So as we. I mean you would think that with the rent growth that's been happening, you would see more of that in your -- in the rents right, we should be accelerating.

Jordan L. Kaplan -- President and Chief Executive Officer

Yeah, well I mean it's needs capturing at a pace that we're staying sort of somewhat caught up. And I guess that's a function of our -- mark-to-market and rent roll-up don't talk relate perfectly to each other. As you know because mark to markets all the lease is not just that one is coming up in the next quarter or whatever, but we're obviously capturing a lot of it just the general market gains and rental rate because there have been very strong market gains and we're also that 10% just persists, there have been times when I would have thought it would because obviously they are five-year leases on average I would think it would be a larger number, but we're capturing it. So we are getting this interesting situation of very strong roll up and still maintaining a 10% mark to market. But I don't have any -- I mean I literally don't know as I'm on this call right now what the mark-to-market will be next year.

Michael Bilerman -- Citigroup -- Analyst

I mean where do you think the -- I mean if the expiring rents are at $43, where is market for that space today?

Jordan L. Kaplan -- President and Chief Executive Officer

Well, the problem is when you say expiring rents it's depend on where those rents are expiring and what the rental rates are there I mean something that's counterintuitive is -- lately the higher the expiring rents, the higher the rollout, because when expiring rents are high, they're probably in some of our hottest markets and in the hottest markets rents are going up the fastest. When the expiring rents are a little lower, they are in markets that have run a little flatter and therefore the roll up hasn't been as much. So that doesn't give you the clue that you would think it gives you.

Michael Bilerman -- Citigroup -- Analyst

Maybe turning to the balance sheet, and you talked a little about the transactions, it sounds like maybe perhaps more a balance sheet deals then fund deals given some of the structuring. If I think back last couple of years, you've issued a bunch of equity, which I think now you held sacred for many years following the IPO, the share basis increased 12% 13% over time. Your stock is now at a discount to consensus NAV at 43% versus 46%. And I'm sure you have a different view of what your equity in NAV is, but I guess how should the market think about your use of your currency in growth going forward?

Jordan L. Kaplan -- President and Chief Executive Officer

Well, I don't think I'd characterize what we've done in the past of issuing a bunch of equity. We looked at that and I think we've issued roughly 1% a year, where this is our 13th year, I don't know that's a large amount compared to others in our similarly situated companies that's from the time we went public. The -- in terms of just our general thought about issuing equity, I'm not a huge fan of it, which is why we put so much pressure on and we're even willing to spend money to maintain that private equity platform that's been put together in the JVs. I just think it's very important to use that and be more restrictive In terms of our equity in the public company to allow us to continue to grow and control the real estate that we want to control and get the gains, but not dilute because I think it is dilutive to issue stock. So there's been times when we've had to do it, I agree or that we felt we should do it for whatever a variety of reasons you know, going back. You follow us from the beginning, but I don't think we've done it very much.

Michael Bilerman -- Citigroup -- Analyst

Yes. That's helpful. I mean, there hasn't been a lot I think would say be more recently, right. I think you didn't issue equity for a long time then I would have said last couple of years.

Jordan L. Kaplan -- President and Chief Executive Officer

Yeah, that recent one that was in interest, yes, that was -- we got in between two things. And we did issue equity for that when we are buying that apartment building and then in end dropped in the JV, but that happens sometimes that was a couple of hundred million dollars.

Michael Bilerman -- Citigroup -- Analyst

Okay, thanks.

Operator

The Next question is from Craig Mailman with KeyBanc Capital Markets. Please go ahead.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Hi, guys. Just looking at across your markets, year-to-date you've had pretty good uplift in the lease rate in all, but kind of Brentwood one in Westwood. Could you guys talk a little about the dynamics in those two markets that have kind of hindered your ability to truly push to lease rate?

Kevin A. Crummy -- Chief Investment Officer

Sure Craig. I think that in Brentwood, one thing we're really excited about is the park we're building for that -- for that sub-market. So that's coming in a few years. I think that'll be a great benefit for not only the apartment building we're building there, but we've got 700 units next door and a couple of million feet of office in that market. So that will be great for that neighborhood.

You're right to point out that Brentwood has been a little bit lower than we would have otherwise expected. It's a great Westside sub-market, no reason it shouldn't perform just like the rest of our Westside sub-markets. So we're optimistic about that maybe some potential repositionings in that market in the future there.

And then Westwood we've seen since we purchased a huge chunk of Westwood a few years back, we still kind of digesting that it's bounced around a little bit. We've made some gains, but that's typical for us when we buy something. It takes us a few years to kind of work through the rent roll get everybody on our leases on our credit. So not unusual to see some noise and occupancy rate after we do acquisitions in the market.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

That's helpful. Have the spreads kept up with the other sub-markets on the Westside or have there been any kind of headwinds on that side as well?

Kevin A. Crummy -- Chief Investment Officer

No, we're still seeing good spreads in those markets.

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Thank you.

Operator

Your next question is from Dave Rodgers with Baird. Please go ahead.

Dave Rodgers -- Baird -- Analyst

Hi guys. Jordan, I Wanted to ask about the office redevelopment that you're doing kind of larger programs that you've mentioned on previous call, you know is that having an impact on the occupancy and the ability to lease more quickly. And I guess maybe the point of the question is, just to kind of get at the new leases you signed in the quarter and anything maybe in particular that was driving that?

Jordan L. Kaplan -- President and Chief Executive Officer

Yeah, I think it had, yeah I should be just as clear as I can. So we're completing some of those projects or virtually completed, you can see where they're at, and I told you the one kind of Canary we had in the coal mine was, was a deal where there was a good comp right mix. Rents have been going up in general and so the question is, when we think capital to reposition building are we getting more than just the fact that rents are going up, which is very hard to calculate. We had one situation where there are building next to another building both similar views, similar access to the mall, the whole deal. And we are redoing the billings not even completed yet. And what we do is we measure the gap between, let's say this building. much more dated to the other building that had we had been redone and we said can we close that gap. And on that one, I could say we closed the gap and it's a lot. I think we probably picked up $0.75 to a $1.00 a foot a month to close the gap that was that wide.

And so therefore, I know that on that building the $17 million that we spent that's going to get paid for varies, that's a 400,000 foot building. And that was a monthly rate I gave you. So we know on our redevelopment in general, when there was a gap that can be measured it's working out now in other buildings we're just seeing some of those repositioning just hitting new heights and rental rate, lot harder to measure because the markets tight and rents are going up.

So, it's harder to say to attribute some like fixed amount to the work we're doing, but it seems pretty instinctive that the work we're doing has been very helpful to the buildings. We've done the work that we've worked on because we're just getting such great activity and they are so full. But we are looking for the response in rental rate, not necessarily occupancy. We have pretty good occupancy across a lot of that stuff.

Dave Rodgers -- Baird -- Analyst

Right, that's helpful. Thank you.

Operator

The next question is a follow-up from Jamie Feldman with Bank of America. Please go ahead.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Great, thank you. I'm just curious, since we were pulled this IPO, have you seen any change in either the co-working market, either the number of players that are looking or maybe smaller users looking at your portfolio, more than they did in the past. Just any noticeable change in operating conditions as a result?

Jordan L. Kaplan -- President and Chief Executive Officer

You know I think that the whole time I know that reworks thing is finally kind of coming down, but I know that the whole time that were discussions about reworks and reworks changing the way that office leasing happens I felt like we've been doing that for years anyway having like ready to go office space for people that just want to move in. I know I was asked that question earlier about our signature suites program. But in general, we've been trying to appeal to people that needed kind of ready to go space, the only thing we haven't been doing is giving up the month to month leases. We've been insisting on the longer leases on the space that we've had ready to go. And you know as we've been saying for years we've we're talking about reworks. This is an extremely successful program for us and it continues to be an extremely successful program.

Is it more successful now that it's become more accepted in the office environment to come and just immediately lease space at the end. Maybe it is, maybe they've retrained people a little bit to be even be more comfortable coming in, seeing a space and going, that will just work for me, I'm going to move in. I know I'm hearing stories regularly now of people looking at space and saying not only we'll take it, will take it with the furniture like we can always move furniture to another spec suite and see if people and reuse it, but a lot of times people are saying we'll even take the furniture. So, maybe they are being sort of trained or adapted to moving away from the complete designer and space planner model to this more expeditious model. Hard to believe that the larger the full floor, then multi-floor tenants are going to go to that, but certainly the tenants in our market were already leaning that way and that program has been successful for a long time.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. I mean have you seen a pickup in demand since rework has slowed down for that space? Or --?

Jordan L. Kaplan -- President and Chief Executive Officer

I would say, I mean that would be hard to split out. I'd say we just have really good demand. I mean in a world the demand that's just strong as we have today, it would be hard to say reworks -- reworks I don't think reworks was at any point in time very impactful to our markets.

Kevin A. Crummy -- Chief Investment Officer

They don't have a huge presence in our markets, Jamie on the, on the Westside. We looked at that, it's very small. It's only like 1% of the market they hadn't penetrated into these markets very deeply because we don't have a lot of available space.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right. And then, have you guys already back filled all of the Century City move out you had or is there still more to go?

Kevin A. Crummy -- Chief Investment Officer

Yeah, I think you saw we just posted a 95% lease number for us. So that with a small tenant -- kind of the nature of the portfolio that's essentially full we did backfill that space that you're referring to.

James Feldman -- Bank of America Merrill Lynch -- Analyst

Okay. All right, great, thanks.

Jordan L. Kaplan -- President and Chief Executive Officer

Thank you.

Operator

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

Jordan L. Kaplan -- President and Chief Executive Officer

Thank you everybody we'll speak with you again in a quarter.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Stuart McElhinney -- Vice President Investor Relations

Jordan L. Kaplan -- President and Chief Executive Officer

Kevin A. Crummy -- Chief Investment Officer

Peter D. Seymour -- Chief Financial Officer

Jason Green -- Evercore ISI -- Analyst

James Feldman -- Bank of America Merrill Lynch -- Analyst

Alexander Goldfarb -- Sandler O'Neill -- Analyst

Nick Yulico -- Scotia Bank -- Analyst

Richard Anderson -- SMBC -- Analyst

Tayo Okusanya -- Mizuho -- Analyst

John Kim -- BMO Capital Markets-US -- Analyst

Michael Bilerman -- Citigroup -- Analyst

Craig Mailman -- KeyBanc Capital Markets -- Analyst

Dave Rodgers -- Baird -- Analyst

More DEI analysis

All earnings call transcripts

AlphaStreet Logo