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Date
Wednesday, May 6, 2026 at 2 p.m. ET
Call participants
- Chief Executive Officer — Jordan L. Kaplan
- Chief Investment Officer — Kevin Crummy
- President — Stuart McElhinney
- Chief Financial Officer — Peter Seymour
Takeaways
- Positive Absorption -- Achieved approximately 100,000 square feet of positive absorption, matching the result from the prior quarter.
- Leased rate growth -- Leased rate grew by over 1% in the past six months, the best result since 2019.
- New leasing volume -- Signed over 450,000 square feet of new leases, representing the highest single-quarter new leasing volume in company history.
- Large tenant leasing -- Set a record for leasing to tenants occupying over 10,000 square feet in a quarter.
- Straight-line rent roll-up -- Realized meaningful straight-line rent roll up on new leasing.
- Portfolio expansion -- Closed two acquisitions, including a joint venture-led purchase of premium medical office properties in Beverly Hills' Golden Triangle for $260 million.
- Bedford Collection acquisition -- Acquired a five-building, 246,000 square foot medical office portfolio in Beverly Hills, holding a 13% equity stake in the $150 million of joint venture equity, with $130 million of interest-only, nonrecourse debt at an effective rate of 5.26% fixed until April 2030.
- Leasing spread -- The value of new leases signed increased by 5.3% on a straight-line basis; cash spreads declined by 7.7% due to annual rent bumps of 3%-5% on maturing leases.
- Office leasing costs -- Averaged $6.3 per square foot annually, noted as well below peer office REITs though elevated for DEI due to the scale of new and larger leases this quarter.
- Tenant retention -- Tenant retention remained in line with historical averages, with demand diversified among legal, financial services, entertainment, real estate, and accounting sectors.
- Residential portfolio -- Cash same-property NOI increased by 4.2%, with over 99% occupancy maintained.
- Revenue and FFO -- Revenue was flat at $251 million; FFO declined to $0.37 per share and AFFO to $49 million, both impacted by higher interest expense and lower interest income.
- Same-property cash NOI -- Fell by 1.4% for the quarter.
- G&A ratio -- General and administrative expenses equated to approximately 5.4% of revenue, the lowest in DEI's benchmark group.
- 2026 guidance -- Expected 2026 diluted net income per share is between negative $0.20 and negative $0.14; fully diluted FFO per share forecast at $1.39–$1.45, with FFO gains from the Bedford acquisition expected to be offset by higher assumed interest expense.
- Development progress -- Redevelopment projects at Landmark Residences, 10900 Wilshire, and Studio Plaza are advancing, with Studio Plaza having completed redevelopment and current lease-up underway.
- Signed-not-commenced spread -- The spread between leased and commenced occupancy widened by 350 basis points, signaling increased leasing activity not yet reflected in physical occupancy.
- Market share -- DEI now controls approximately one-third of Class A office space in Beverly Hills following the Bedford acquisition, enabling operational efficiencies and pricing leverage.
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Risks
- FFO and NOI pressure -- FFO and AFFO declined, and same-property cash NOI decreased by 1.4%, primarily due to higher interest expense and lower interest income, as explicitly noted in the call.
- Negative net income guidance -- Guidance for 2026 projects diluted net income per share between negative $0.20 and negative $0.14, reflecting anticipated ongoing headwinds.
- Deferred occupancy -- The 350 basis point gap between leased and commenced occupancy indicates that increased leasing has not fully translated into revenue-generating occupancy, potentially creating short-term revenue timing risk.
Summary
Management highlighted record new leasing volumes and increased absorption, citing the past six months as the strongest leasing environment since 2019. The Bedford Collection medical office acquisition further expanded Douglas Emmett (DEI +7.41%)'s market dominance in Beverly Hills, leveraging localized operating scale and synergy. A significant number of large tenant leases were executed across diverse industries, with improved straight-line lease economics despite lower cash spreads. The company's development pipeline progressed, particularly with completed redevelopment at Studio Plaza and ongoing projects at 10900 Wilshire and Landmark Residences, while residential properties continued to perform with high occupancy and NOI growth.
- CEO Kaplan noted, "two quarters is not sufficient to call a bottom," but expressed that "we are becoming increasingly hopeful" regarding a sustained recovery in leasing momentum.
- In response to questions about rent growth in the Bedford Collection, Kaplan said, "there is always a small mark-to-market opportunity in everything we have been doing, but not a stunning one."
- Crummy described cost synergies achieved through market concentration, quantifying, "we are able to lower operating expenses on average about 20%" across recent acquisitions.
- Signed-but-not-commenced leases are expected to drive incremental occupancy over upcoming quarters, with larger tenants taking longer to move in due to more extensive build-outs.
- Guidance assumes FFO benefits from acquisitions will be neutralized by higher assumed interest expense, per Seymour's statement.
- Q1 occupancy typically dips due to lease expirations concentrated at year-end, but management expects occupancy to ramp up as the year progresses.
Industry glossary
- Straight-line rent: Lease accounting method recognizing total contractual rent evenly over the lease term, regardless of cash collection timing.
- NOI: Net Operating Income; the income remaining after property operating expenses, before debt service and capital expenditures.
- Signed-but-not-commenced spread: The percentage-point difference between leased and physically occupied space, representing leases yet to take occupancy and contribute full rental income.
- Class A office: Highest-quality office properties, typically well-located, newer, and offering premium amenities.
Full Conference Call Transcript
Jordan Kaplan: Good morning, and thank you for joining us. Our operating results were once again exceptional. First, we recorded approximately 100 thousand square feet of positive absorption for the second consecutive quarter. In the last six months, we delivered our best results since 2019, growing our leased rate by over 1%. Second, we executed over 450 thousand square feet of new leases, our best quarter ever for new leasing. Third, we posted record leasing to tenants over 10 thousand square feet. And fourth, we did all this while realizing meaningful straight-line rent roll up. We understand that everyone is watching our leasing for signs of a sustained recovery.
While two quarters is not sufficient to call a bottom, we are becoming increasingly hopeful. We believe that this part of the cycle presents a rare opportunity to expand our portfolio at a significant discount to long-term value. Thus far, we have made two acquisitions, including an acquisition in which we and our joint venture partners paid $260 million for a portfolio of premium medical office properties located in the Beverly Hills Golden Triangle encompassing almost the entire 400 block of Bedford Drive. I am proud of the outstanding job done by our operations team and our capital markets group. These results reflect their sustained hard work.
As we have discussed, we remain hyper-focused on growing our earnings through leasing, acquisitions, and the redevelopment of Studio Plaza, the Landmark Residences, and 10900 Wilshire. We have also been successful extending our debt at lower rates than are available to the broader market. Before I finish, I cannot help but mention recent referrals in the media to Jevon’s Paradox, which compares the impact of AI adoption on job growth and office demand to past transformative technologies such as personal computers, the Internet, and cloud computing. With that, I will turn the call over to Kevin.
Kevin Crummy: Thanks, Jordan, and good morning. This April, a new joint venture managed by us acquired the Bedford Collection, a five-building, 246 thousand square foot medical office portfolio located in the Beverly Hills Golden Triangle. We hold a 13% stake in the joint venture’s $150 million of equity. The joint venture also borrowed $130 million secured by a nonrecourse, interest-only first trust deed loan maturing in April 2031. The loan bears interest of SOFR plus 170 basis points, which we have effectively fixed at 5.26% per annum through April 2030. The three development projects that Jordan mentioned are progressing nicely. In Brentwood, our multiyear redevelopment of the 712-unit Landmark Residences continues in full swing.
At 10900 Wilshire in Westwood, we expect to commence construction this year to convert the property into a 323-unit apartment community. At Studio Plaza in Burbank, redevelopment is completed and leasing is well underway, with some tenants already taking occupancy. With that, I will turn the call over to Stuart.
Stuart McElhinney: Thanks, Kevin. Good morning, everyone. During the first quarter, we signed 218 office leases totaling 909 thousand square feet, including a single-quarter record of 461 thousand square feet of new leases. We also signed 448 thousand square feet of renewal leases, and as Jordan mentioned, leasing was particularly strong from new tenants over 10 thousand square feet. Tenant retention remained strong, consistent with our historical average. Our first-quarter office demand was diversified across many industries, with legal, financial services, entertainment, real estate, and accounting representing the top five. Our leasing spreads also improved in the first quarter, as we continue to sign new leases that are more valuable than the expiring lease for the same space.
The overall straight-line value of new leases we signed in the quarter increased by 5.3%. Cash spreads are lower by 7.7% as a result of our very healthy fixed 3% to 5% annual rent increases over the life of the expiring lease. First-quarter office leasing costs averaged $6.3 per square foot per year, significantly below the benchmark average for other office REITs, though slightly elevated for us due to exceptional new and larger leasing, which typically requires more tenant costs. Our residential portfolio continues to perform well, with cash same-property NOI up 4.2% compared to the first quarter of last year. Demand remains very strong across our markets; our portfolio remains over 99% leased.
With that, I will turn the call over to Peter to discuss our financial results.
Peter Seymour: Thanks, Stuart. Good morning, everyone. Compared to the first quarter of 2025, revenue remained essentially flat at $251 million. FFO decreased to $0.37 per share and AFFO decreased to $49 million, reflecting higher interest expense and lower interest income, partly offset by strong multifamily performance. Same-property cash NOI decreased 1.4% for the quarter. At approximately 5.4% of revenue, our G&A remains the lowest among our benchmark group. In terms of guidance, we still expect our 2026 diluted net income per common share to be between negative $0.20 and negative $0.14, and our fully diluted FFO per share to be between $1.39 and $1.45.
We expect the FFO gains from the Bedford acquisition to be largely offset by higher assumed interest expense, reflecting the flattening interest rate curve. For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges, or other possible capital markets activities. I will now turn the call over to the operator so we can take your questions.
Operator: In consideration of other participants, please limit your queries. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw, please press the corresponding key. At this time, we will pause momentarily to assemble our roster. We will now open the call for questions. Our first question comes from Steve Sakwa with Evercore ISI. Please go ahead.
Steve Sakwa: Yeah. Thanks. Good morning out there. Jordan or maybe Stuart, could you guys maybe just expound a little bit on the leasing volume? Obviously, the new leasing was quite strong, and we are just trying to get our arms around whether there were any larger leases that might have kind of skewed the quarterly volume here. If you could provide any insight on how many over 10 thousand got done this quarter versus historically done, just to kind of gauge the breadth of leasing activity.
Stuart McElhinney: Yes, Steve, it is Stuart. As we said, it was a record amount of leasing in that over 10 thousand category, the most we have ever had. There were a number of deals between 10 thousand and 20 thousand square feet, and there were a few deals over 20 thousand square feet. So very strong across a bunch of industries—entertainment, legal—so it was a wide variety of industries in that larger category, and it is the strongest leasing we have had of that size ever.
Steve Sakwa: Okay, thanks. And then maybe a follow-up, Jordan. Can you provide any additional valuation metrics—kind of yield, return on equity, stabilized yield—on the Bedford transaction? Obviously, we can back into a price per foot, but any kind of going-in cap rates or return on equity that you could share for Douglas Emmett, Inc. would be helpful. Thanks.
Jordan Kaplan: We agreed with the seller not to give out that information, although you do have the back-end of price per foot—I think they gave it to you. It is around $1,000 a foot, very high $900s. It is a portfolio that I have been trying to buy since the 1990s, and I am beyond pleased with the deal. I think that we are particularly lucky that it came up at a time when it was a good time to buy almost anything. I am very, very pleased with the deal. Steve, next time you are out here, we will walk you around it, and you will, I think, be surprised by the amount of control we have. Anything else?
Steve Sakwa: Those were my two questions. Thanks.
Jordan Kaplan: All right. Thanks, Steve.
Operator: Our next question comes from Alexander Goldfarb with Piper Sandler. Please go ahead.
Alexander Goldfarb: Sure. And good morning out there. Jordan, you mentioned Jevon’s Paradox, so I had to Google that to look what that is. But are you seeing that, or were you just making that comment on its own? Do you have real anecdotes that you are seeing in the marketplace of people saying, because of AI and all the innovations going on, we actually need to hire more? I am just curious if it was just a comment that you threw out or you are actually seeing it in leasing discussions?
Jordan Kaplan: Our leasing is really picking up, as you saw. I cannot say I have seen that exact thing happening. But the reason I was so thrilled to read about that is that I feel like I have been saying it now for a year or two years about AI. As AI empowers people to be more efficient and effective, I just think the result will be people will want to hire more people who can do that. Now there are some people, if they do not embrace it, who are going to feel left behind, and I am sure that will happen.
But if you said to me the number of people employed—or the more direct statement that your offices are going to be empty because no one needs to hire anybody—I do not believe that one bit. And if you look back at all the technologies in the past that made that same prediction—that people were going to, whether stay home or whatever the case may be—the exact opposite has happened. I was surprised to see it show up from a guy from the 1800s talking about coal, and as things became more efficient, he thought less coal would be used, but in fact more got used. There are many examples since then.
Alexander Goldfarb: Okay. And the second question is, I know I have asked you before about the South Bay, like El Segundo and those markets out to LAX, but just hearing recently about more demand for aerospace and defense and that community’s long history. As you think about acquisitions—especially since you have shown you still have a lot of JV capital that wants into the market—would you reassess and possibly consider entering some of those markets if you feel like the aerospace/defense has renewed legs over this cycle?
Or is your view—or maybe Kevin’s view—that there is enough acquisition demand in your traditional markets and maybe you are not so sure how long the aerospace demand is, so you are going to stick where you are versus possibly entering some new submarkets?
Jordan Kaplan: I think the problem with those other markets that you are mentioning is that people can still build, and if aerospace really picks up down there, they are going to build more facilities for them. That always worries me in a market because you do not have to just be good at getting in; you have to be really good at getting out at the right time.
I am much more comfortable here where even in a period like COVID, real estate recession, etc., we have—throughout it all, and I know we have lost lease rate over the last, whatever it is, six years, for the most part due to COVID—such durable demand here and such an extreme limit on supply. I am just very comfortable buying here. I look at all the other factors—the wealth here, the homes, the people that are working here, the other drivers like universities, the industries that have focused their research here, especially medical and tech research. I just have a lot more comfort here than making a farther-out bet.
And as you said, I do feel there are more deals, and we are saying that to our JV partners and so on. Everyone is focused on it.
Alexander Goldfarb: Thank you.
Operator: The next question will come from Anthony Paolone with JPMorgan. Please go ahead.
Anthony Paolone: Thank you. Jordan, you talked about just finding bottom here, but can you maybe step back and give us your thoughts on LA in general and how that is playing into tenant behavior and desire to sign leases? Just a little bit more on-the-ground terms of what the feedback has been from prospective tenants.
Jordan Kaplan: When you say LA in general, I know you are saying as opposed to another one of the gateway markets, but LA in general in many aspects just generally feels like it is coming back. You see it in the leasing. We see it in the differences of policing and attitudes in the cities that we are operating in, the way things are—people are done with the kind of permissiveness that was incubated by COVID. We see a lot of ways where things are coming back. And, of course, we are just seeing a lot more tenant demand. I hope it holds up.
Anthony Paolone: Okay. And then at Studio Plaza, you said it sounds like the tenants started to take some space there. When should we think about that just being put to bed in terms of stabilized and up and running?
Jordan Kaplan: We will call it stabilized when we get up into the 90s, and we are working our way towards that. The tenants are moving in. And separately, I am very pleased with the mix of tenants. While it was definitely great to have a tenant there that stayed for 30 years, it was always sort of a risk hanging out in our future. When Warner Brothers moved out, I will admit, I was frightened, and I was talking to Kevin about it. I am so happy now to see a real good mix of tenants, good demand for the building, leasing it up, and a good mix of some tenants who provide amenity to the building.
The whole thing is working extremely well, and the way we redid the building—so it is one of my greatest happinesses and relief to see how it is moving now.
Anthony Paolone: I mean, do you think it is another year to get to 90-plus or two years out?
Stuart McElhinney: Tony, we are not going to give a specific timeline. We are pleased with the pace so far. When it is stabilized, we will move it back into the in-service portfolio, but we do not like to give individual building data. We do not want to put a timeline on ourselves.
Anthony Paolone: Okay.
Operator: Our next question comes from Jana Galan with Bank of America. Please go ahead.
Jana Galan: Thank you. Congrats on the strong start to the year. The spread between the leased and commenced occupancy continues to widen. When you think about the expected commencements, the forward pipeline, and then the expiration schedule, does it seem like this quarter has been kind of the trough in the occupancy number?
Stuart McElhinney: As Jordan said in his remarks, we are not ready to call a bottom. We are certainly pleased with the pace of leasing in the last few quarters and hope that continues. We are really pleased to see that lease-to-occupied spread widen out.
Jordan Kaplan: Three and a half now. That means we have been doing a lot of leasing.
Stuart McElhinney: Of course, those folks will need to move in, which will happen over the next few quarters. With the larger leases that we are signing, that takes a little longer than our typical tenant. So the commencement dates are out a little further than, you know, the 2.5 thousand-foot tenant that we can get in very quickly. But hopefully that spread stays wide. We need to do a lot of leasing, and when that spread is wide, that means that we have done a lot of leasing and those folks need to move in.
Jana Galan: Thank you. And can you give us maybe just rough estimates for the under 10 thousand that would be maybe like a two-quarter lag, and then maybe the larger—or any kind of rule of thumb for us to think about in modeling?
Stuart McElhinney: For the typical 2.5 thousand-foot tenant, we can get them in very quickly. We build a lot of move-in-ready spec suites; that is a program that we are very aggressive about. We try to have all of our buildings have a couple of those suites ready to go. Those can move in extremely fast. But a more typical average for that smaller tenant is a few months, so they can be moved in within a quarter or two of when we sign the lease. For the larger tenants, it really depends on the level of build-out. Studio Plaza has some significant build-outs going on, so some of those folks will be moving in next year. That is really deal-specific.
Jana Galan: Thank you.
Operator: Our next question comes from Seth Bergey with Citi. Please go ahead.
Seth Bergey: I guess just a follow-up on some of those comments on the signed-not-commenced spread. How much of that 350 basis points is smaller tenants you can kind of get in quickly versus skewed by some of the larger leases that will take a bit longer to get those tenants moved in?
Stuart McElhinney: I do not have the breakdown between small and large in that signed-not-commenced spread. I know a lot of it is still our under-10 thousand-square-foot tenants, so I suspect we will have steady move-ins throughout the rest of 2026, and then some of the larger tenants are going to take a little longer, like I said.
Seth Bergey: Great. And then just as a follow-up, I know you are not ready to call bottom here, but what are you seeing in terms of tour activity or kind of the forward pipeline that gives you confidence that things will improve over the coming quarters?
Stuart McElhinney: It is the good activity that we have been seeing these last six months—that has continued. The pipeline is good. Healthy activity, tours, calls—all the metrics we look at all seem very healthy.
Operator: Our next question comes from Upal Rana with KeyBanc Capital Markets. Please go ahead.
Upal Rana: On the Bedford acquisition, is there any kind of mark-to-market—
Jordan Kaplan: Yeah, you are cutting out.
Upal Rana: Can you hear me now?
Jordan Kaplan: Yes.
Upal Rana: Okay. On the Bedford Collection, is there a mark-to-market opportunity there or any kind of expected rent growth that you can achieve there?
Jordan Kaplan: I think there is always a small mark-to-market opportunity in everything we have been doing, but not a stunning one like when you sometimes buy a building from a bank where the rent is less than half on an old lease. That is not there. We own a lot of medical office—it is not our first foray into that product type. We own probably about 1 million square feet of medical office. It is a fantastic product. We love the tenants. They are very sticky. They invest a lot of their own money in the space. So we are very pleased to add to that.
Upal Rana: Okay. Great. That was helpful. And then could you maybe talk a little bit on the potential to do additional external growth opportunities that you are seeing in the market? I know you have talked about developing resi and trying to buy stabilized office, which you have been doing, but just curious what kinds of opportunities you are seeing and the depth that you are seeing out in your markets.
Kevin Crummy: We are seeing a lot of activity, and more than half of it is off-market where somebody reaches out. We are feeling pretty good about the engagement that we are having with people. We just need to close the gap and come up with pricing that makes sense. And as we have said, we are focused on office.
Upal Rana: Okay, great. Thank you.
Operator: Up next we have John Kim with BMO Capital Markets. Please go ahead.
John Kim: Good morning. With the Bedford Collection, you announced that you have a third of the Class A office space in Beverly Hills. I am wondering if you could talk about what kind of scale advantages or pricing power that provides you.
Kevin Crummy: There are several advantages we get from the market control we have across our portfolio. On the operating side, there are tremendous synergies. We have looked at the last 10 or 11 acquisitions we have made, and we are able to lower operating expenses on average about 20%, so it is meaningful savings. We do that because we are so localized. We have such concentrations of buildings close to each other that we can have expensive people shared across properties. We do not have to have a manager at every single building or a very expensive engineer at every single building. We also negotiate very large contracts across our portfolio, so that gets us better pricing.
Even more important than the operating side is on the leasing side: it gives us the ability to offer space to any tenant and fit them into our portfolio. If we already have them in the portfolio and they are growing or they are shrinking, we can move them across the street into one of our other buildings that has space that will work for them. Generally, with the small tenants that we have, our goal is not to rip out the space every time and spend $200 a foot rebuilding it.
The spaces are built out pretty standardized, and we want to move tenants into a space that already works for them in configuration—with the conference room and the offices the way they like it—and spend a little bit of TIs, new paint, new carpet, whatever that is, get them in quickly, and not spend a lot of capital. That is why you see our leasing costs on average are so much lower than other office REITs you will look at. Having the concentration in those markets allows us to do that.
Because we own 30% of the space in Beverly Hills, we are going to have an opportunity to take any requirement in that market and show them several options that should work for the amount of space they need.
John Kim: So it is your intention to keep this portfolio as medical office, or are you indifferent?
Kevin Crummy: If you are speaking about the Bedford Collection, it will stay medical office.
John Kim: Yeah.
Kevin Crummy: Bedford will stay medical. We own several medical office properties in Beverly Hills. Like I said, it is a fantastic product. But my comments about the synergies work across medical and regular office.
John Kim: Got it. Okay. And then when you mentioned that you are not ready to call the bottom, is that on occupancy or leasing? I am just wondering if the midpoint of your occupancy guidance is achievable or if there is the floor to come down even further.
Kevin Crummy: We definitely feel like it is achievable. That is why we left the range where it is. We are comfortable with the range on occupancy. Q1 is typically a tough occupancy quarter for us because more than their fair share of leases expire on December 31 for whatever reason. So then anybody that moves out—that occupancy dip hits Q1. It is not unusual for us to see a small decline in occupancy in Q1 and then ramp up throughout the rest of the year, which is what we expected in our own guide when we gave the range.
John Kim: Got it. Okay. Thank you.
Operator: Our next question comes from Dylan Burzinski with Green Street. Please go ahead.
Dylan Burzinski: Hi, guys. Thanks for taking the question. Maybe touching on the various submarkets. We noticed that net absorption—or at least the percentage—increased on the Westside and in Honolulu and declined in the Valley. Any sort of discernible trends from that? I mean, should we expect the Valley to maybe lag in its recovery versus the Westside?
Kevin Crummy: No, I would not expect that. I think we did some good leasing in the Valley. It is just pockets here and there that depend on whatever leases got signed that quarter, but we would expect the Valley to increase along with the Westside. We are getting good activity there. Sherman Oaks Galleria has had a lot of activity. Warner Center, which has typically been our laggard market out there, also has good tours and good activity. So no, I would not expect the Valley to continue to lag. We are working hard to increase the lease rate in all our submarkets, and we definitely think that is achievable.
Dylan Burzinski: And then just touching back on the capital markets and transaction environment, given what appears to be recovering leasing backdrops, are you seeing any increased competition from other buyers—are more getting into bidding tents—as you take a look at the transactions that you have referenced?
Jordan Kaplan: I think the term people are using is “office curious.” People are kicking the tires. There have not been a lot of the type of assets in our markets that we get super excited about like we did with Bedford. I believe—and you are seeing this up in San Francisco and in New York—as these markets recover, more and more people start to pay attention to it. But right now, we are trying to buy as much as we can because the prices relative to the long-term values are at a significant discount. I remember this kind of thing happening in the 1990s.
One of the things with office buildings when people have been exiting it for a while is the operating platforms get denuded. As they want to come back in, they are even more nervous because it is operations and the income that people are focused on more than ever now. I think it is going to give us an edge for a little while because I have seen many operating platforms dissolve and shift to third party, which means you do not really have the people and the information you need to understand deals. The capital is there; it does not mean they are super comfortable in terms of being aggressive on deals.
Dylan Burzinski: That is helpful color, guys. Thanks so much.
Operator: Our next question comes from Rich Anderson with Cantor Fitzgerald. Please go ahead.
Rich Anderson: Thanks. Good morning. Jordan, you said when Warner Brothers left Studio Plaza, you described yourself as frightened. I do not remember you saying that at the time, but nonetheless I get it. I am curious, when you think about the totality of your business today—obviously, things are looking great in terms of a possible bottoming—but where is work still left to be done? Where are the shortcomings of the Douglas Emmett, Inc. portfolio in your mind that still need your attention?
Jordan Kaplan: First of all, I actually was frightened, but I was not frightened because I thought the building would not be able to lease up. I was frightened about how long it would take to get tenants because it was right dead center at a time when leasing was at an incredible low, and the press around entertainment was very bad. It turned out that neither of those was true with respect to this building, and the redo that was done by our operations group has been very well received and appealing.
If you have a chance to come out here and see it, it is an extremely nice building, and it is attracting tenants who are voting to be there regardless of what is going on around. Today, I would say—I have a partner that runs operations, Kevin Panter—so my area that I am super focused on all the time is capital markets. Today, I am focused on finishing off our debt program. There is not a lot left to do to extend that out and right-size and get all that correct.
Then finding acquisitions and getting as much capital placed as we can while—what I consider to be, and you have heard everybody here say it—an opportunity that Kevin and I have not seen for 30 years. We talk about it all the time. I want to finish the last bits of the debt work—done, done, and done—so it is nice and clean. Then I need to get out there and make sure we make some good acquisitions and keep talking to our partners and try to shake some stuff loose.
As Kevin said, a lot of the stuff has become relationship-oriented, and some of the last things we have closed on have been people just phoning me that I have known for a long time. That has been an important part.
Rich Anderson: Okay. Second question: Stu, you said the larger tenant leasing is a mix of all different types of industries. So then what would you say the common thread is to this happening for you guys? Because this is the second time we are hearing some optimism around larger leases. What is the communication from those entities about why they are willing to do it? Is there any theme around why you are seeing more in the way of larger lease activity?
Jordan Kaplan: I think that, as I said on the last call, a lot of what we are seeing is sort of sideline fatigue. They have been holding off, holding off, holding off—trying to wait to see where things are headed. You are able to make a lot of money in this, and they finally have started breaking and saying, we are going to do deals and start expanding because we are going to get left behind. The last time I looked at the stats, our expansions were way above our contractions. And our new tenants coming into the market are rushing to set up shop and have some type of new business that makes them think they need more people.
Maybe they are just tired of waiting. There was an article recently that said that people have become indifferent towards the wild fluctuations, and they are going to do business as usual and move forward. I do not know what mix of things that is, because I think a lot of it is driven by the broader economy. There definitely has been a change in attitude.
Rich Anderson: Okay. Sounds good. Thanks very much.
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 Kaplan: I look forward to speaking with you again next quarter.
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
