Q1 2024 Hudson Pacific Properties Inc Earnings Call

May 2, 2024

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Operator: Hello all, and welcome to Hudson Pacific Properties' first quarter 2024 earnings conference call. My name is Lydia, and I'll be your operator today. If you'd like to ask a question during the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Laura Campbell, Executive Vice President, Investor Relations, and Marketing, to begin. Please go ahead.

Hello, all and welcome to Hudson Pacific properties first quarter 'twenty 'twenty four earnings conference call.

Laura Campbell: My name is Lydia and there will be your operator today.

Laura Campbell: If you'd like to ask a question during the Q&A you can do so by pressing star followed by one on your telephone keypad.

Operator: I'll now hand, you over to Laura Campbell Executive Vice President Investor Relations and marketing to begin. Please go ahead.

Laura Campbell: Good morning, everyone. Thanks for joining us.

Laura Campbell: Good morning, everyone. Thanks for joining us with me on the call today are Victor Coleman, CEO, and chairman as Mark Lammas, President and CFO and art Suazo EVP of leasing.

Laura Campbell: With me on the call today are Victor Coleman, CEO and Chairman, Mark Lammas, President, Harout Diramerian, CFO, and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on an 8k with the SEC, and both are now available on our website. An audio webcast of this call will also be available for replay on our website. Some of the information we'll share on the call today is forward-looking in nature.

Laura Campbell: Yesterday, we filed our earnings release and supplemental on an 8-K with the SEC and both are now available on our website.

Laura Campbell: A webcast of this call will also be available for replay on our website.

Laura Campbell: Some of the information we will share on the call today is forward looking in nature. Please reference our earnings release and supplemental for statements regarding forward looking information as well as the reconciliation of non-GAAP financial measures used on this call today, Victor will discuss industry and market trends as well as other highlights from the quarter Mark will provide an update on our <unk>.

Laura Campbell: Please refer to our earnings release and supplementary materials for statements regarding forward-looking information, as well as the reconciliation of non-GAAP financial measures used on this call. Today, Victor will discuss industry and market trends, as well as other highlights from the quarter. Mark will provide an update on our office and studio operations and development, and Harout will review our financial results and 2024 outlook. Thereafter, we'll be happy to take your questions.

Laura Campbell: Office and studio operations and development and <unk> will review our financial results in 2024 outlook thereafter, we'll be happy to take your questions. Victor. Thank you, Laura Hello, everyone and welcome to our first quarter call.

Victor J. Coleman: Thank you, Laura. Hello, everyone, and welcome to our first quarterly call. Macroeconomic pressures have persisted into 2024, with the Fed contemplating keeping rates higher for longer. On the office side, speaking thematically across our markets, vacancy and negative net absorption remain stubbornly high, as many existing tenants continue to downsize. And yet, demand in terms of new requirements is recovering, sublease is stabilizing with backfills exceeding new additions, and minimal construction starts have significantly curtailed new supply. Remote-versed companies are becoming rarer, and more business-friendly, public-safety-focused policies are taking hold, contributing to meaningful reductions in crime across our urban markets.

Victor J. Coleman: Macroeconomic pressures persisted into 2024 with the fed contemplating keeping rates higher for longer on the office side speaking semantically across our markets vacancy of negative net absorption remain stubbornly high as many existing tenants continue to downsize and yet demand in terms of new requirements is recovering sublease.

Victor J. Coleman: Is stabilizing with backfill is exceeding new additions and minimal construction starts have significantly curtailed new supply.

Victor J. Coleman: First companies are becoming rarities and more business friendly public safety focused policies are taking hold contributing to meaningful reductions in crime across our urban markets.

Victor J. Coleman: In line with these more positive trends and backed by our team's persistence and creativity, our office leasing activity, along with the percentage of newly signed deals, accelerated in the first and second quarters of the year. We have always been focused on ensuring our portfolio meets the needs of today's and tomorrow's workforce, and in addition to new construction, we have consistently adapted, renovated, or otherwise repositioned our older product, which will only pay further dividends as the pipeline of new supply wanes.

Speaker Change: In line with these more positive trends and backed by our team's persistence and creativity, our office leasing activity along with the percentage of newly signed deals accelerated in the first and second quarters of the year.

Victor J. Coleman: We have always been focused on ensuring our portfolio meets the needs of today's and Tomorrow's workforce and in addition to new construction, we've consistently adapted renovated or otherwise repositioned our older product.

Victor J. Coleman: Each will only pay further dividends as the pipeline of new supply wanes today over 70% of our in service portfolio was either built or substantially renovated after 2010, such that our average building age when factoring in substantial capex improvements is approximately 10 years over 95% of our properties have.

Victor J. Coleman: Today, over 70% of our in-service portfolio was either built or substantially renovated after 2010, such that our average building age, when factoring in substantial CapEx improvements, is approximately 10 years. Additionally, over 95% of our properties have functional outdoor space, and 90% have end-of-trip facilities with bike storage, showers, and lockers.

Victor J. Coleman: <unk> outdoor space, 90% have end of trip facilities with bike storage showers, and lockers, 60% have fitness centers, 95% offer EV charging at 92% are LEED certified and 100% are carbon neutral further our expertise in place making throughout our combination of.

Victor J. Coleman: 60% have fitness centers, 95% offer EV charging, 92% are LEED certified, and 100% are carbon neutral. Further, our expertise in placemaking through our combination of strategic CapEx, retail transformation, programming, and events, as demonstrated by our successful stewardship of the Ferry Building in San Francisco and Bentall Center in Vancouver, is becoming more important than ever. We're now leveraging those learnings to the benefit of our entire portfolio, especially in our more urban market.

Victor J. Coleman: Capex retail <unk> programming and events as demonstrated by our successful stewardship of the ferry building in San Francisco and Dental centre in Vancouver is becoming more important than ever we are now leveraging those learnings to the benefit of our entire portfolio, especially in our more urban markets.

Victor J. Coleman: In terms of the studios, upon the resolution of the strike late last year, our team hit the ground running to market our stages and services. In the first quarter, as filming resumed, revenue improved across essentially every segment of our studio business. We also have promising activity on a majority of our vacant stages, including negotiating our first lease at Sunset Glen Oak. However, as has been well documented by the media, post-strikes, the film and television industry has recovered far more slowly than anticipated.

Victor J. Coleman: In terms of the studios upon the strikes resolution late last year, our team hit the ground running to market our stages and services in the first quarter is filming resumed revenue improved across essentially every segment of our studio business. We also have promising activity on a majority of our vacant stages inclusive of negotiating or <unk>.

Victor J. Coleman: First lease at Sunset clinics, however, as has been well documented by the media post strikes the film and television industry has recovered far more slowly than anticipated most of our studio business is in Los Angeles, where film La recently reported shoot days in the first quarter were down 9% year over year and while film production has largely recovered.

Victor J. Coleman: Most of our studio business is in Los Angeles, where Film LA recently reported shoot days in the first quarter were down 9% year over year. And while film production has largely recovered, television production, one of the primary demand drivers for our stages and services, was off 16% in the first quarter compared to last year, even as the number of pilots increased nearly 10 fold. There are several reasons why the ramp-up is different than what occurred following the 2009-10 pandemic.

Victor J. Coleman: <unk> TV production one of the primary demand drivers for our stages and services was up 16% in the first quarter compared to last year, even as the number of pilots increased nearly tenfold.

Victor J. Coleman: There are several reasons why the ramp up is different than what occurred following the pandemic. Many believe studios are curtailing production due to the pending <unk> and Teamsters local 399 Union contract explorations in May and July respectively.

Victor J. Coleman: Many believe studios are curtailing production due to the pending IOTSE and Teamster's local $3.99 union contract expirations in May and July, respectively. Broadly speaking, the industry seems eager to avoid another strike, and thus IOTSE negotiations are on track to be completed by late May, with all 13 Hollywood locals reaching craft-specific agreements as of last week. Other factors include logistical and resource constraints as multiple productions attempt to restart simultaneously.

Victor J. Coleman: Really speaking the industry seems eager to avoid another strike and thus IRC negotiations are on track to be completed by late May with all 13 Hollywood locals, reaching craft specific agreements as of last week. Other factors include logistical and resource constraints as multiple productions attempt to restart simultaneously.

Victor J. Coleman: Industry consolidation and shifting business models as networks pursue profitability. Unfortunately, with the IOTSE and Teamsters contract expirations imminent, it is challenging to more fully assess how these other factors will weigh on stage and services demand for the balance of the year. But there is no question that high-quality original content will remain essential to the studios growing their subscriber bases and building valuable IP.

Victor J. Coleman: Industry consolidation and shifting business models as networks pursue profitability. Unfortunately, with the Iot and Teamsters contract explorations imminent. It is challenging to more fully assess how these other factors will weigh on stage and services demand for the balance of the year.

Victor J. Coleman: But theres no question that high quality original content will remain a central to the studio is growing the subscriber bases in building valuable IP. Thus, while the industry is evolving we will see long term fundamentals is compelling.

Victor J. Coleman: Thus, while the industry is evolving, we will see long-term fundamentals as compelling. Turning to dispositions, we continue to opportunistically pursue potential sales with the goal of further deleveraging and fortifying our balance. While we cannot yet disclose which assets, we're actively exploring the sale of three office assets, collectively representing around 900,000 square feet. We're also looking at a potential recapitalization of a fourth office asset in the Bay Area. While we were most focused on dispositions, this quarter, we had a unique opportunity to purchase our partner's 45% interest in 1455 Market.

Victor J. Coleman: Turning to dispositions, we continue to opportunistically pursue potential sales with the goal of further deleveraging and fortifying our balance sheet, while we cannot yet disclose which assets. We are actively exploring the sale of three office assets collectively representing around 900000 square feet.

Victor J. Coleman: We're also looking at a potential recapitalization of our fourth office asset in the Bay area.

Victor J. Coleman: We then executed a 20 plus year lease at 157,000 square feet at 1455 Market with the City of San Francisco, which has expressed an interest in growing significantly in that building. This is the largest direct deal in downtown since 2021. The city's commitment to the mid-market neighborhood, both through its actions and its representative's commentary related to this lease, speaks volumes. We continue to believe in the long-term demand drivers for San Francisco office space and our ability to create further value at $14.55 a square foot at a very attractive all-in basis with no leverage. Finally, during the first quarter, we were once again included in the S&P Sustainability Yearbook. And last month, we published our sixth annual Corporate Responsibility Report.

Victor J. Coleman: While we are most focused on dispositions this quarter, we had a unique opportunity to purchase our partner's 45% interest in $14 55 market. We then executed a 20 plus year lease at 157000 square feet at $40 55 market with the city of San Francisco.

Victor J. Coleman: Which has expressed interest to grow significantly in that building.

Victor J. Coleman: This is the largest direct deal in downtown since 2021, the city's commitment to mid market neighborhood, both through its actions and it's represented commentary related to this lease speaks volumes. We continue to believe in the long term demand drivers for San Francisco office space and our ability to create further value at $40 55 markets at very attractive.

Victor J. Coleman: Active all in basis with no leverage.

Victor J. Coleman: Finally during the first quarter, we were once again included in the S&P sustainability yearbook and last month, we published our sixth annual corporate responsibility report.

Victor J. Coleman: Key accomplishments for the year include reducing Scope 1 and 2 carbon emissions by 36% from our 2018 baseline, such that we are on track to meet our science-based 50% reduction target by 2030. We continue to operate our assets on a carbon neutral basis, with our LEED and ENERGY STAR certification among the best in the office sector. And last year, we began manufacturing a 100% solar electric trailer as part of Coyote's Verde line, which is setting the standard for sustainable trailers in the industry and, on average, outperforms our non-solar product in terms of pricing and utilization. And most recently, Globe Street once again named Hudson Pacific a best place to work, which is a nod to our exceptional people and culture. With that, I'm going to turn it over to Mark.

Victor J. Coleman: Key accomplishments for the year include reducing scope, one and two carbon emissions by 36% from our 2018 baseline such.

Victor J. Coleman: Such that we are on track to meet our science based 50% reduction target by 2030.

Mark: We continue to operate our assets on a carbon neutral basis with our LEED and energy Star certification among the best in the office sector and last year, we began manufacturing a 100% solar electric trailer as part of <unk> line, which is setting the standard for sustainable trailers in the industry and on average outperforms or not.

Victor J. Coleman: On solar products in terms of pricing and utilization and most recently low street once again named Hudson Pacific at Best place to work, which is a nod to our exceptional people and culture with that I'm going to turn it over to Mark.

Mark T. Lammas: Thanks, Victor. As Victor noted, our office leasing momentum has accelerated since the start of the year. In the first quarter, we signed over 500,000 square feet of leases, with 65% of that comprised of deals along the San Francisco Peninsula and in Silicon Valley, where we signed nearly 300,000 square feet of new leases for 57% of all activity. Both total and new leasing were the highest levels since the fourth quarter of 2022.

Mark: Thanks Victor.

Mark: Victor noted our office leasing momentum has accelerated since the start of the year in the first quarter, we signed over 500000 square feet of leases with 65% of that comprised of deals along the San Francisco Peninsula and Silicon Valley.

Mark T. Lammas: We signed nearly 300000 square feet of new leases or 57% of all activity.

Mark T. Lammas: And our average transaction size for new leases was the largest since first quarter 2021. Significant signings included 82,000 square feet of new and renewal leases with an eight year term with consumer electronics company TDK and Vincent's at Concourse, which backfilled approximately 30,000 square feet of former Nutanix space, an approximately 11-year, 54,000-square-foot new lease with a software company at Bentall Center, a five-year, 36,000-square-foot new lease with a biotech company at Metro Center, and an approximately six-year, 24,000-square-foot lease with a semiconductor company at Metro Plaza.

Mark T. Lammas: Both total and new leasing where the highest level since fourth quarter of 2022, and our average transaction size for new leases was the largest since first quarter 2021.

Mark T. Lammas: Significant signings included 82000 square feet of new and renewal leases with an eight year term with consumer electronics company, TDK and Vincent at concourse, which backfill approximately 30000 square feet of former <unk> space and.

Mark T. Lammas: And approximately 11 year of 54000 square foot new lease with a software company at Bento Center, a five year 36000 square foot new lease with a biotech company at Metro Center, and an approximately six year 24000 square foot lease with a semiconductor company and Metro Plaza.

Mark T. Lammas: Quarter over quarter, we also had relative improvement in our other leasing metrics. Our gap rents grew 6.2% while our cash rents were off by 5.4% from prior levels, which reflects, in large part, the competitive rent structure negotiated to retain Vinson's for eight years at Concord. Similarly, net effective rents were modestly down in the quarter, with lower annual leasing costs and a 23 month increase in average term.

Mark T. Lammas: Quarter over quarter, we also had relative improvement in our other leasing metrics are GAAP rents grew six 2%, while our cash rents were off by five 4% from prior levels, which reflects in large part the competitive rent structure and negotiated to retain <unk> for eight years at concourse.

Mark T. Lammas: <unk> net effective rents were modestly down in the quarter with lower annual leasing costs and a 23 month increase in average term.

Mark T. Lammas: Our in-service office portfolio was 80.5% leased as of the end of the quarter, down approximately 140 basis points compared to last quarter. This is in line with our expectations and mostly related to mid-sized tenant move-outs in Seattle and the Bay Area, the largest of which were Delta EMC with 43,000 square feet at 505 First and Nordstrom RAC with 45,000 square feet at 901 Market. We had nearly 140 tours at our office assets, representing 1.4 million square feet of requirements, which included, year-over-year, a 20% increase in number and a 30% increase in average size of requirements in Silicon Valley.

Mark T. Lammas: Our in service office portfolio was 85% leased as of the end of the quarter down approximately 140 basis points compared to last quarter. This is in line with our expectations and mostly related to midsize tenant move outs in Seattle and the Bay area, the largest of which were <unk> with 43000 square.

Mark T. Lammas: At 505, one and Nordstrom rack with 45000 square feet at 91 market.

Mark T. Lammas: We had nearly 140 tours at our office assets, representing one 4 million square feet of requirements, which includes year over year, a 20% increase in number and a 30% increase in average size of requirements in Silicon Valley.

Mark T. Lammas: Our current leasing pipeline of 1.9 million square feet includes an average requirement size of around 20,000 square feet. Upon signature of the 150,000 square foot new lease with the city at $14.55 per square foot subsequent to the quarter, we still have 290,000 square feet of deals either in leases or LOIs. Our coverage on our remaining 2024 expirations, that is, deals and leases, LOIs, proposals, or discussions, is 45%. Turning to the studios, our market intel points to approximately 100 productions currently filming in Los Angeles, up from around 30 during the strikes and about 80 at the end of last year, but still significantly below more typical levels of, say, 120 to 125.

Mark T. Lammas: Our current leasing pipeline of $1 9 million square feet includes an average requirement size around 20000 square feet.

Mark T. Lammas: <unk> signature of the 150000 square foot new lease with the city at 14 55 market subsequent to the quarter, we still have 290000 square feet of deals either in leases or LOI.

Mark T. Lammas: Our coverage on our remaining 2024 expirations that is deals in leases Lois proposals are discussions is 45%.

Mark T. Lammas: Turning to the studios our market Intel points to approximately 100 productions currently filming in Los Angeles up from around 30 during the strikes and about 80 at the end of last year, but still significantly below more typical levels of say $1 20 to $1 25.

Mark T. Lammas: Most of these are returning productions, meaning they were already filming pre-strike. That and the fact major studios are directing most new films and shows back to their own facilities is further curtailing demand for independent studios like ours.

Mark T. Lammas: Most of these are returning productions, meaning they were already filming pre strikes that and the fact major studios directed most new films and shows back to their own facilities is further curtailing demand for independent studios like ours.

Mark T. Lammas: As more productions are greenlit and the majors fill up, our capture rate should start to improve. Even as tours at our studios slowed in February and March, active stage leads, that is, films or shows in pre-production with which we have been in contact, increased about 30% quarter over quarter, a potential indicator of healthier future production levels. On a trailing 12-month basis, our in-service studios were 76.9% leased, and our stages were 79.4% leased in the first quarter, which reflects a single-tenant vacating space at Sunset Las Palmas during the strike. Trailing 12-month occupancy at Coyote Studios and Stages remained flat quarter over quarter at 27.1% and 29.8%, respectively.

Mark T. Lammas: As more productions or agreement and the major still our capture rates should start to improve.

Mark T. Lammas: Even as tours at our studio slowed in February and March active stage leads that his films are shows in pre production with which we have been in contact increased about 30% quarter over quarter, a potential indicator of healthier future production levels.

Mark T. Lammas: On a trailing 12 month basis, our in service studios, where 76, 9% leased and our phases were 79, 4% leased in the first quarter, which reflects a single tenant vacating space at Sunset Las Palmas during the strikes.

Mark T. Lammas: Trailing 12 month occupancy at <unk> studios in stages remained flat quarter over quarter at 27, 1% and 29, 8% respectively.

Mark T. Lammas: We have either in-place or uncommenced leases, are in negotiations, or have expressions of interest on all 10 of our 54 in-service and Coyote stages used primarily for film and TV production. We have seven stages at Coyote that are leased primarily for commercial shoots. In the first quarter, those properties were 35% occupied, up approximately 800 basis points quarter over quarter. This activity points to the potential for near-term occupancy gains, even as those will take time to appear within our trailing 12-month lease percentage given the weightings of prior strike-impacted quarters.

Mark T. Lammas: We have either in place or unconvinced leases are in negotiation or have expressions of interest on all but 10 of our 54 in service acuity stages used primarily for film and television production.

Mark T. Lammas: We have seven stages acuity that are leased primarily for commercial shoots in the first quarter those were 35% occupied up approximately 800 basis points quarter over quarter. This.

Mark T. Lammas: This activity points to the potential for near term occupancy gains even as those will take time to appear within our trailing 12 month lease percentage given the weightings of prior strike impacted quarters.

Mark T. Lammas: The resumption of production has led to improved performance in nearly every revenue segment of our studio. In the quarter, our studio revenue increased 36% with Coyote driving the bulk of that recovery, most impactful studio ancillary revenue grew by $6.9 million, and transportation revenue grew by 2.7. Utilization across all our transportation assets was approximately 8% higher when compared to both the third and fourth quarter last year. But operations have yet to fully recover, and revenue remains about 30% below pre-strike levels. That Delta is most pronounced within our transportation segment, a major component of Coyote's business, where first quarter revenues were still roughly half of pre-strike levels.

Mark T. Lammas: The resumption of production has led to improved performance in nearly every revenue segment of our studio business.

Mark T. Lammas: <unk> over quarter, our studio revenue increased 36% with Cody driving the bulk of that recovery.

Mark T. Lammas: Most impactful studio ancillary revenue grew by $6 9 million.

Mark T. Lammas: And transportation revenue grew by $2 7 million, Utah.

Mark T. Lammas: Utilization across all of our transportation assets was approximately 8% higher when compared to both third and fourth quarter last year.

Mark T. Lammas: But operations have yet to fully recover and revenue remains about 30% below pre strike levels that delta is most pronounced within our transportation segment, a major component of <unk> business, where first quarter revenues were still roughly half of pre strike levels.

Mark T. Lammas: Turning to development, subsequent to the quarter, we substantially completed our Washington 1000 office tower in Seattle. Professional services and legal remain most active in the downtown market, while large tech demand has been slower to return. With one exception, Apple is expected to take approximately 200,000 square feet of subleased space across the street from their main building in South Lake Union. Bellevue's recent success story has been organic growth within that sub market rather than migration from the city.

Mark T. Lammas: Turning to development subsequent to the quarter, we substantially completed our Washington, 1000 office tower in Seattle professional services and legal remained most active in the downtown market, while large tech demand has been slower to return one exception.

Mark T. Lammas: Apple is expected to take approximately 200000 square feet of sublease space across the street from their main building in South Lake Union.

Mark T. Lammas: BELBUCA recent success story has been organic growth within that submarket, rather than migration from the city and the 770000 square feet of mid to large sized tech leasing in the first quarter alone. It's a huge positive for the region overall.

Mark T. Lammas: And the 770,000 square feet of mid to large-size tech leasing in the first quarter alone is a huge positive for the region overall. Our Washington 1000 Marketing Center will open in May, and we are taking an aggressive multi-pronged approach to getting the building leased. The quality of this asset will garner some of the highest rents in the market. That said, with our basis at just $640 per square foot, we can be very competitive on price.

Mark T. Lammas: Our Washington, 1000, marketing Center will open in May and we are taking an aggressive multi pronged approach to getting the building leased with quality of this asset will garner some of the highest rents in the market that said with our basis at just $640 per square foot, we can be very competitive on pricing.

Mark T. Lammas: At the end of the first quarter. We also substantially completed Sunset Glen Oaks, a key milestone in that we can now also pursue productions with near term start dates.

Mark T. Lammas: At the end of the first quarter, we also substantially completed Sunset Glen Oaks, a key milestone in that we can now also pursue productions with near-term start dates. Our grand opening event will take place this month, and we are in negotiations with the pilot for one stage as we continue to field inquiries and tours. At Sunset Pier 94, which is under construction and will be delivered at the end of 2025, we are in discussions with a tenant to lease the entire facility on a longer term basis. This is a strong indicator of demand for Manhattan's first purpose-built studio. And now, I'll turn the call over to Harout. Thanks, Mark.

Harout: Our Grand opening event will take place this month and we are in negotiations with the pilot for one stage as we continue to field inquiries and tours at.

Mark T. Lammas: At Sunset Pier 94, which is under construction and will deliver end of 2025, we are in discussions with a tenant to lease the entire facility on a longer term basis.

Harout: This is a strong indicator of demand for Manhattan's first purpose built studio and now I will turn the call over to Ruth.

Harout Krikor Diramerian: Thanks, Mark. Our first quarter 2024 revenue was $214 million compared to $252.3 million in the first quarter of last year, primarily due to asset sales, a large tenant vacating space at 1455 Market in the third quarter of last year, and lower occupancy and utilization of studio stages and services, respectively, due to the strike. Our first quarter FFO, excluding specified items, was $24.2 million or $0.17 per diluted share compared to $49.7 million or $0.35 per diluted share in the first quarter of last year.

Harout: Thanks, Mark our first quarter 2024 revenue was $214 million compared to $252 3 million in the first quarter last year, primarily due to asset sales a large tenant vacating space at 14 55 market in the third quarter of last year, and lower occupancy and utilization of studio stages.

Harout Krikor Diramerian: And services, respectively. Due to the strikes are first quarter <unk>, excluding specified items was $24 2 million or <unk> 17 per diluted share compared to $49 7 million or <unk> 35 per diluted share in the first quarter last year.

Harout Krikor Diramerian: Specified items consisted of transaction-related expenses of $2.2 million, or $0.01 per diluted share, compared to prior-year transaction-related expenses of $1.2 million, or $0.01 per diluted share. The year-over-year change in FFO is attributable to previously mentioned items affecting revenue, offset by reduced interest expense following repayment of the construction loan secured by One Westside and Westside II, and less FFO attributable to non-controlling interest resulting from the purchase of our partner's ownership in 1455 Mark.

Harout Krikor Diramerian: Specified items consisted of transaction related expenses of $2 2 million or one temperature diluted share compared to prior year of transaction related expenses of $1 2 million or <unk> <unk> per diluted share the year over year change in <unk> is attributable to previously mentioned items affecting revenue offer.

Harout Krikor Diramerian: Set by reduced interest expense following repayment of the construction loan secured by one west side and less <unk> and less <unk> attributable to Noncontrolling interest, resulting from the purchase of our partner's ownership and 14 55 market.

Harout Krikor Diramerian: Our first quarter, <unk> was $28 $5 million or <unk> 19 per diluted share compared to $35 million or 24 per diluted share in the first quarter last year with the change largely attributable to previously mentioned items affecting <unk> offset by higher cash and lower cap revenue and approximately 10.

Harout Krikor Diramerian: Our first quarter AFFO was $28.5 million or $0.19 per diluted share compared to $35 million or $0.24 per diluted share in the first quarter of last year, with the change largely attributable to previously mentioned items affecting FFO offset by higher cash and lower gap revenue and approximately $10 million less in recurring capex spent. Our same-store cash NOI was $108.3 million compared to $124.4 million, mostly driven by two tenant move-outs, one at 1435 Market and the other at Sunset Las Palmas Studios.

Harout Krikor Diramerian: Million dollars less in recurring Capex spend.

Harout Krikor Diramerian: Our same store cash NOI was $108 3 million compared to $124 4 million, mostly driven by two tenant move outs $1 40 to five market and the other at Sunset Las Palmas Studios.

Harout Krikor Diramerian: At the end of the first quarter, we had $734 million of total liquidity comprised of $114 million of unrestricted cash, cash equivalents, and $620 million of undrawn capacity on our unsecured revolving credit facility. Additionally, there is additional capacity of approximately $200 million under our Sunset Glen Oaks and Sunset Pier 94 construction loans.

Harout Krikor Diramerian: At the end of the first quarter, we had $734 million of total liquidity comprised of $114 million of unrestricted cash cash equivalents and $620 million of undrawn capacity on our unsecured revolving credit facility.

Harout Krikor Diramerian: There is additional capacity of approximately $200 million under our Sunset Glen Oaks, and Sunset Pier 94, construction loans, our share of net debt compared to our share of unappreciated book value was 37%, while 91, 9% of our debt was fixed or capped and no material maturities until November 2025.

Harout Krikor Diramerian: Our share of net debt compared to our share of undepreciated book value was 37%, while 91.9% of our debt was fixed or capped with no material maturities until November 2025. Turning to Outlook, our in-service office and studio portfolios continue to perform materially in line with our full-year Outlook that we provided in February of this year. For our same-store office assets, this reflects both gradually improving office operating conditions combined with our positive leasing momentum.

Harout Krikor Diramerian: Turning to outlook, our in service office and studio portfolios continue to perform materially in line with our full year outlook that we provided in February of this year.

Harout Krikor Diramerian: For our same store office assets. This reflects both the gradual improving office operating conditions combined with our positive leasing momentum.

Harout Krikor Diramerian: Regarding our same-store studio assets, this reflects the more predictable cash flow derived from multi-year leases, and by extension, our ability to capture revenue generated by returning productions. However, as Mark and Victor discussed, we currently have limited visibility as to how and when production will normalize, particularly given the expiration of the IATSE and Teamsters contracts in May and July of this year, respectively. This is especially true for our Coyote business, where the majority of our stages and services are currently at least show by show, and thus, its performance is more dependent on production levels.

Harout Krikor Diramerian: Regarding our same store studio assets. This reflects the more predictable cash flow derived from multi year leases and by extension our ability to capture revenue generated by returning productions. However, as Mark and Victor discussed we currently have limited visibility as to how and when production will normalize, particularly given the X.

Harout Krikor Diramerian: Operations of the IRC and teams just contracts in May and July of this year respectively.

Harout Krikor Diramerian: This is especially true for our acuity business, which the majority of our stages and services are currently at least show by show and thus its performance more dependent on production levels.

Harout Krikor Diramerian: We are therefore only providing an FFO Outlook for the second quarter of $0.15 to $0.19 per diluted share, alongside key assumptions related to our full-year 2024 Outlook. There are no specified items in relation to the second quarter FFO Outlook. Regarding our full-year FFO assumptions, we are adjusting our range for same-store property cash NOI growth to negative $11.75 to negative $12.75 due to the potential for delayed occupancy recovery at Sunset Las Palmas through the main year of the year.

Harout Krikor Diramerian: We are therefore, only providing an outlook for the second quarter of 15 to 19 cents per diluted share alongside key assumptions related to our full year 2024 outlook. There are no specified items in relation to the second quarter <unk> outlook.

Harout Krikor Diramerian: Regarding our full year <unk> assumptions, we are adjusting our range for same store property cash NOI growth to negative $11 75 to negative <unk>, 75% due to potential for delayed occupancy recovery at sunset Las Palmas through the remainder of the year.

Harout Krikor Diramerian: A reminder that our same store portfolio excludes our QOD business; while we can more confidently project for our same store studios, given the preponderance of long-term leases, the performance of our same store office assets is the primary driver of this metric. These assumptions also include approximately $2 million of increased interest expense based on our current expectation that interest rates will remain higher for the balance of the year, and we reduced our FFO attributable to non-controlling interest by $9 million due to our purchase of our partner's 45% ownership in 455 Market in the first quarter.

Harout Krikor Diramerian: Mind, you that our same store portfolio excludes our acuity business, while we can more confidently project for our same store studio is given the preponderance of long term leases. The performance of our same store office assets are the primary driver of this metric.

Harout Krikor Diramerian: These assumptions also include approximately $2 million of increased interest expense based on our current expectation that interest rates will remain higher for the balance of the year and we reduced our <unk> attributable to noncontrolling interest by $9 million due to our purchase of our partner's, 45% ownership and 455 market in the first quarter.

Harout Krikor Diramerian: Our outlook assumes I at CN team says do not strike and production begins to pick up in early June following the successful resolution Odyssey contract negotiations, but in advance of Teamsters, which has notably smaller membership and hopefully streamline negotiations as always our outlook excludes the impact of any potential.

Harout Krikor Diramerian: Our Outlook assumes IATSE and Teamsters do not strike, and production begins to pick up in early June following the successful resolution of the IATSE contract negotiations but in advance of Teamsters, which has a notably smaller membership and hopefully streamlined negotiations. As always, our outlook excludes the impact of any potential dispositions, acquisitions, financing, and or capital markets activity. We will continue to provide a full year FFO outlook once we believe production levels have normalized to the point where we can more accurately predict future cash flows related to our business. Now, we'll be happy to take your questions. Operator?

Harout Krikor Diramerian: <unk> acquisition financing and our capital markets activity, we will continue to provide a full year <unk> outlook. Once we believe production levels have normalized to the point, where we can more accurately predict future cash flows related to our acuity business now will be happy to take your questions operator.

Speaker Change: Thank you.

Harout Krikor Diramerian: Please press star followed by one if you'd like to ask a question and answer all your devices on the Nike by nature tend to speak.

Operator: Thank you. Please press star followed by one if you'd like to ask a question and ensure your device is unmuted locally when it's your turn to speak. Our first question comes from Michael Griffin of Citi. Please go ahead, your line is open.

Harout Krikor Diramerian: Our first question comes from Michael question of J D.

Operator: Please go ahead your line is open.

Michael Anderson Griffin: Great, thanks. Maybe starting with the guidance, I just wanted to clarify, are you formally withdrawing full year guidance? And, you know, I guess maybe a broader question, you know, how should we think about the cadence of earnings throughout the year, right? If, you know, 20% of your business is studios, and 80% is office, I got to think that 17 cents on a run rate basis is close to 30% below, you know, your previous guidance. So just trying to get some clarity, particularly around the office side of the business, which it seems

Michael Anderson Griffin: Great. Thanks, just maybe starting with the guidance.

Michael Anderson Griffin: Just wanted to clarify are you formally withdrawn full.

Michael Anderson Griffin: Full year guidance.

Michael Anderson Griffin: No I guess, maybe a broader question how should we think about the cadence of earnings throughout the year right.

Michael Anderson Griffin: Call It 20% of your business. The studios, 80% is office I got to think 17 cents on a run rate basis is close to 30% below.

Michael Anderson Griffin: Your previous guidance was so just trying to get some clarity, particularly around the office side of the business, which it seems like there is more visibility there.

Speaker Change: Hey, Michael Thanks for the question good morning.

Unknown Executive: Hey Michael, thanks for the question. Good morning.

Speaker Change: So just to be clear, we provided <unk> guidance, but we also provided all of the metrics. We normally provide the grid that we provide the end of the year.

Unknown Executive: So just to be clear, we provided Q2 guidance, but we also provided all the metrics we normally provide, the grid that we provide at the end of the year. And you know, those pieces that make up FFO, the only thing that we didn't provide effectively was our QOD business results, operations, or projections. That's what's driving this change. And That's the area that we have the least amount of visibility on.

Unknown Executive: And those pieces that make up <unk>.

Unknown Executive: The only thing that we didnt provide effectively is our core business results our operations our projections, that's what's driving this change and <unk>.

Unknown Executive: That's the area that we have the least amount of visibility on pausing there because of the potential strikes that we mentioned a few times.

Unknown Executive: Pausing there because of the potential strikes that we mentioned a few times, the rest of the portfolio is consistent with what we believed back in February. Everything else is moving along, in fact, better now. The office side, you know, really good leasing and everything else.

Unknown Executive: Pausing there the rest of the portfolio is consistent with what we believe back in February everything else is moving along in fact in some ways better now the office side really good leasing and everything else is just acuity business right now we have a lack of clarity to your point about the 17th quarter annualized.

Unknown Executive: It's just the QOD business right now. We have a lack of clarity. To your point about $0.17 a quarter annualized, that is not our expectation. However, it's hard to have any pure conviction on what that's going to look like next quarter, as in Q3 and Q4, until those items related to QOD are resolved. If they're resolved, we're going to get much closer to normalization in the QOD business in the back half of the year, but there's uncertainty about that, and we expect things to continue.

Unknown Executive: That is not our expectation however, it's hard to have any pure conviction on what that's going to look like next quarter is in Q3 and four.

Unknown Executive: Until those items relate to <unk> are resolved.

Unknown Executive: They are resolved, we're going to get much closer to normalization in the acuity business in the back half of the year, but there is uncertainty about that.

Unknown Executive: And we expect things to continue to grow even regardless up yes.

Speaker Change: Sorry about that.

Unknown Executive: No, no, I understand, I mean, I was just trying to hone in on does management not have the visibility to get back to that $1.05 midpoint for this year, and that's really if there's kind of a lack of confidence in reaching that, maybe that's why the full-year guide from last quarter wasn't reiterated. I'm just trying to wrap my head around how we should think about it throughout this year, and I understand the volatility.

Speaker Change: No no go ahead Michael.

Speaker Change: Yes, sorry about that I understand what youre, saying route, but I'm just trying to hone in on.

Unknown Executive: Management not have the visibility to get back to that dollar five midpoint for this year or not really.

Unknown Executive: There is kind of a lack of confidence in reaching that maybe thats why the full year guide from last quarter wasn't reiterated I'm just trying to wrap my head around how we should think about it.

Unknown Executive: We're at this year and I get the.

Unknown Executive: <unk> around the studio business, but it would seem like if you can get back to that dollar to $1 10 that you projected back in the fourth quarter, you probably wouldn't have reiterated.

Speaker Change: Yeah, No Michael you you got it.

Unknown Executive: Yeah, no, Michael, you you, you got it. Um, we're not reiterating it because Coyote wasn't performing quite to our expectations when we got it back in February. The rest of the businesses are in line, if not better, as Harout mentioned, but Coyote isn't, show counts are lower, we're not quite getting the lift that we had hoped for, either from show counts or, you know, other metrics that weigh on the Coyote business. And so it's showing up in the second quarter results; it's unclear to us just yet what exactly it'll look like in the third and fourth quarters because until show counts and, you know, production activities, shoot days, and so forth that drive the Coyote business get back to a place of normalcy, it's very difficult for us to tell you when we get back to a normal run rate. So in short, the original guidance is no longer relevant, and we don't see that as achievable. But stemming from the Coyote, the Coyote is now a national animal.

Unknown Executive: We're not reiterating it because.

Unknown Executive: T O D isn't performing quite to our expectations when we guided back in February.

Unknown Executive: The rest of the business is it's in line if not better as <unk> mentioned, the <unk> show counts are lower we're not quite getting the lift that we had hoped.

Unknown Executive: Either from show counts.

Unknown Executive: Or other metrics that weigh on the acuity business and so.

Unknown Executive: It's showing up in second quarter results, it's unclear to us just yet what exactly it will look like in third and fourth quarter because until show counts.

Unknown Executive: And.

Unknown Executive: Production activity shoot days, and so forth that drive the acuity business until those get back to a place of normalcy, it's very difficult for us to tell you when we get back to normal run rates. So.

Speaker Change: Sure. The original guidance is no longer we don't see that as achievable.

Unknown Executive: Yes.

Unknown Executive: Stemming from the Cody.

Unknown Executive: The theater business.

Unknown Executive: Gotcha. I appreciate that. That extracurricular remark. And then, just maybe, broadly on the Quixote business. Obviously, you've made a pair of remarks kind of talking about the near-term headwinds. But if you look at issues like industry consolidation, maybe less content spent from legacy media companies, are you still confident that you can hit that, you know, 75 to $80 million run rate of EBITDA I think you laid out when you acquired the platform?

Speaker Change: Got you appreciate that.

Unknown Executive: That extra color there Mark and then just maybe broadly on the key business. Obviously your prepared remarks kind of talking about the near term headwinds, but if you look at issues like industry consolidation, maybe less content spend from legacy media companies are you still confident that you can hit that 75 to 80 million.

Unknown Executive: Run rate of EBITDA I think you laid out when you when you acquired the platform.

Unknown Executive: I think I think it's still achievable.

Unknown Executive: I think it's still achievable. It's difficult to really commit to that because we haven't seen normalcy yet, so it's hard to know what the new normal looks like. I mean, I think we just have to leave it there. I mean, it still seems possible, but we need the business to get back on its feet again. Yeah, Michael. It's Victor.

Unknown Executive: It's difficult to really commit to that because we haven't seen normalcy, yet so it's hard to new would know what the new normal looks like.

Unknown Executive: <unk>.

Unknown Executive: I think we just have to leave it there I mean, its still seems possible.

Victor: But we need the <unk>.

Unknown Executive: This is to get back on its on its feet again, yes, Michael its Victor just.

Victor J. Coleman: Just, you know, as we mentioned, the studio business is, you know, right now through April, it's off minus 16% in terms of the show counts. But that being said, our facilities that are up and running are fully occupied and completely – filming is completely going on in two of our full facilities 24-7. And so, this is not an indication of the industry going to a different level. I think it's just right now, until this uncertainty is sort of solved in May and in July. They're not going to start shows if they feel they have to stop. If they get it clear on a site, which it seems like they're going to, we'll see that normalcy pick up in the second half of the year.

Victor J. Coleman: We mentioned I mean, the studio business is right now through April it's off minus 16% in terms of the show counts.

Victor J. Coleman: But that being said our facilities that are up and running are fully occupied and.

Victor J. Coleman: <unk> felt filming is completely going on in two of our full facilities 24, seven so that.

Victor J. Coleman: This is not an indication of is the industry going to a different level I think it's just a right now until this uncertainty is sort of solved in may and in July they're not going to start shows if they if they feel they have to stop if they get it clear line of sight, which it seems like they are going to you will see that normalcy pick up for the second half of the year.

Unknown Attendee: Great. I appreciate that color, Victor. That's it for me. Thanks.

Speaker Change: Great I appreciate that color Victor that's it for me thanks.

Speaker Change: Thanks, Michael.

Blaine Matthew Heck: Our next question comes from Blaine Heck of Wells Fargo. Your line is open.

Unknown Attendee: Our next question comes from Blaine Heck of Wells Fargo. Your line is open.

Blaine Matthew Heck: Okay.

Blaine Matthew Heck: Great, thanks. Just taking a step back here, Victor, I'm sure this isn't how you wanted the year to progress, withdrawing full year FFO guidance again given the slowness on the studio side, but, you know, kind of here we are, and you've got some large known move outs still to come on the office side. I guess, how should we think about what you guys have in your power to get the stock working again, whether that includes, you know, larger spinoff-type options or highly impactful strategic moves?

Blaine Matthew Heck: Great. Thanks, just taking a step back here Victor I'm sure. This is and how you're one of the year to progress withdrawing full year <unk> guidance again, given the slowness on the studio side, but kind of here, we are and <unk> got some large known move outs still to come on the office side I guess, how should we think about what you guys have in your power.

Blaine Matthew Heck: To get the stock working again, whether that includes.

Blaine Matthew Heck: Larger spinoff type options or highly impactful strategic moves.

Blaine Matthew Heck: You know, should we just think about this as more blocking and tackling and trying to lease more on the office side, selling a few assets, and getting the studio back to where you think it should be on a normalized basis, or are there bigger initiatives here?

Blaine Matthew Heck: Should we just think about this is more blocking and tackling and trying to lease more on the office side.

Blaine Matthew Heck: Selling a few assets and getting the studio back to where you think it should be on a normalized basis or are there bigger.

Blaine Matthew Heck: Initiatives here.

Victor J. Coleman: Blaine, thanks. Listen, I think you're commenting on two specific areas, and I will comment on both. First of all, we are always going to be looking at the core business, blocking and tackling. I believe that this past quarter's leasing results were indicative of that, and so far, the start of the second quarter, as we've mentioned, is aligned with that as well. We are acutely aware of a couple of our known move-outs. They're big.

Victor: Blaine, Thanks, I listen I think.

Victor J. Coleman: You are on your comment on two specific areas and I will comment on both first of all we are always going to be looking at the core business blocking and tackling I believe that this past quarter's leasing results were indicative of that and so far to start in the second quarter. As we've mentioned is aligned with that as well we are acute.

Victor J. Coleman: Aware of a couple of known move outs. They are big large tenant activity is starting to evolve, but we're not there yet I believe that our results on the office side are going to be.

Victor J. Coleman: Large tenant activity is starting to evolve, but we're not there yet. I believe that our results on the office side are going to be very much in line with what our expectations are and what we can achieve, given where the last quarter and a half have been. That being said, that's not a standstill process.

Victor J. Coleman: Very much in line with what our expectations are and what we can achieve given where the last quarter and a half.

Victor J. Coleman: That being said that's not a standstill process. We are evaluating all of our alternatives mentioned you mentioned two clearly some of the asset sales will will kick in.

Victor J. Coleman: We are evaluating all of our alternatives. You mentioned, too, that clearly some of the asset sales will kick in. That should be evident in the second half of the year, for additional liquidity for us to look at alternatives on the existing portfolio. Then, yes, the end result is the media business has been a drag for obvious reasons, the Black Swan event of last year, that has just not recovered. Our conviction in that industry and the alternatives in that industry are basically evident for us to make some larger moves, whether it is a spin-off or whether it is a roll-up.

Victor J. Coleman: That should be evident for the second half of the year for additional liquidity for us to look at alternatives.

Victor J. Coleman: On the existing portfolio and then yes I mean, the end result is the media business has been a drag for the obvious reasons for Black Swan event as last year that he has just not recovered, but our conviction around that industry and the alternatives around that industry are basically evident for us to make some long.

Victor J. Coleman: <unk> removes whether it is a spin off whether it is a roll up.

Victor J. Coleman: We are evaluating all of that, and we're in conversations about it. I think that will be our strategy for us going forward. The volatility of that business has obviously weighed on the stock, and I think proportionately because when we see good movements on the office side, we seem to be hit relatively hard on the studio side being that it's only 20% of the business. When it was running great, we never got the full credit for it either. So we think that the best move for us is to look at some external movement around that industry and around that portfolio of ours. And those are conversations that are ongoing right now.

Victor J. Coleman: We're evaluating all of that and we're in conversations on that and I think that will be the strategy for us going forward the volatility of that business.

Victor J. Coleman: Is obviously weighed on the stock and I think in proportionately because when we see good movements on the office side, we seem to be.

Victor J. Coleman: Hit relatively hard on the studio side, Dean and then it's only 20% of the business. When it was running great. We never got the full credit of it either so we think that the best move for US is to look at some external movement around that industry and around that portfolio of ours and those are conversations that are ongoing right now.

Blaine Matthew Heck: Great, really appreciate all that color. Victor, just to follow up, you said you were kind of concurrently exploring some of those more strategic options. Anything you could say about timing and kind of what stage those conversations are in?

Speaker Change: Great really appreciate all that color Victor just to follow up you said you were kind of can currently exploring some of those more strategic options anything you could say about timing and kind of what's the age those conversations there.

Victor J. Coleman: Listen, obviously I'm not going to talk about timing and the stages. Clearly, the capital markets are a massive driver of this right now. And given the fact that there is still some volatility out there through these potential IOTC strikes and potential strikes, you know, those conversations are fluid; that will be more fluid around the external factors that are out of our control.

Victor: Listen I, obviously, I'm not going to talk about timing and the stages clearly.

Victor J. Coleman: The capital markets.

Victor J. Coleman: Our massive driver of this right now and given the fact that there is still some volatility out there through these potential IRC.

Victor J. Coleman: Strikes and potential strikes those conversations are fluid that will flip more fluid around the external factors that are out of our control.

Blaine Matthew Heck: All right, thanks. I'll leave it there.

Speaker Change: Alright, Thanks, I'll leave it there and then just.

Speaker Change: The second question just on guidance.

Speaker Change: You pointed out that the updated guidance assumes there's a successful resolution of the upcoming contract negotiations I guess to what extent you think guidance could change again, if we do run into another strike and how much visibility do you think you have into the process at this point.

Blaine Matthew Heck: And then just a second question, just on guidance. You point out that the updated guidance assumes there's a successful resolution of the upcoming contract negotiations. I guess, to what extent do you think guidance could change again if we do run into another strike? And how much visibility do you think you have into the process at this point?

Victor J. Coleman: So, you know, we can't go there on the basis of what kind of visibility we're going to have on if there's a strike or not a strike on that basis. It's, you know, it's that that is just something that right now, it will be a moment in time, and then we'll see what the resolution is. As we said in our prepared remarks, we believe that the process is fluid. It's a lot better than it was last year with the riders and SAG.

Blaine Matthew Heck: So.

Speaker Change: We can't go there on what kind of visibility we're going to have on on it.

Victor J. Coleman: There is a strike or not a strike on that basis.

Victor J. Coleman: That is just something that right now it will be a moment in time and then we'll see what the resolution is.

Victor J. Coleman: As we said in our prepared remarks, we believe that the process is fluid.

Victor J. Coleman: Lot better than it was.

Victor J. Coleman: Last year with the writers in Sag.

Victor J. Coleman: And as I said, I mean, thirteen entities have already signed off. They're now working on the basic agreement, which will take us through the latter part of this month. And then they're going to work on the last part of it, which will take us through, hopefully, the end of June. And this thing could be resolved. I mean, right now, we are optimistic, and the people who are sitting at the table are telling us that we should be optimistic. Nobody wants a strike. People are still reeling from the effects of last year.

Victor J. Coleman: And as I as I said, I mean 13 entities have already signed off they are now working on the basic agreement, which will take us through the latter part of this month and then theyre going to work on the last part of it which will take us through.

Victor J. Coleman: Hopefully end of June and this thing could be resolved I mean, right now we are optimistic and the people who are at the table are telling us that we should be optimistic nobody wants to strike people were still really and as to the effects of last year.

Blaine Matthew Heck: All right. I really appreciate the commentary, Victor.

Speaker Change: Alright really appreciate the commentary Victor.

Victor: Thanks, Brian.

Peter Dylan Abramowitz: Our next question comes from Peter Obramowicz from Jefferies. Please go ahead.

Blaine Matthew Heck: Our next question comes from Peter.

Peter Dylan Abramowitz: Pamela from Jefferies.

Peter Dylan Abramowitz: Please go ahead.

Peter Dylan Abramowitz: Yes, thank you. So I just want to follow up on Quixote here. So you did about negative 6 million in NOI in the first quarter. Just trying to kind of deduce what you're doing here.

Peter Dylan Abramowitz: Yes. Thank you. So I just wanted to follow up on key Jose here. So you did about negative $6 million in NOI in the first quarter.

Peter Dylan Abramowitz: Just trying to kind of deduce here with the second quarter Guide 17, basically unchanged quarter over quarter is the expectation that things are kind of going to stack up pretty similarly.

Peter Dylan Abramowitz: I'm trying to kind of deduce here, with the second quarter guide, 17 cents basically unchanged.

Peter Dylan Abramowitz: Unchanged Quarter Over Quarter. Is the expectation that things are kind of going to stack up pretty similarly? Just trying to get a sense of kind of

Peter Dylan Abramowitz: Just trying to get a sense of kind of what you're expecting what's embedded in that 17 to the second quarter from Kyoto.

Harout Krikor Diramerian: Hey, Peter, it's Harout. I'm just gonna answer your question there. So our expectation is that we're going to continue to improve on the QOD business in the second quarter. Just not as strong as we initially thought when we provided guidance in February, and there'll be some offset on the office side, you know, near term terminations. That's the expectation, which is why you're not seeing a change from the 17 cent midpoint.

Route: Hey, Peter It's a route just going to answer your question. There. So our expectation is that we're going to continue to improve on the annuity business in the second quarter.

Harout Krikor Diramerian: Just not as strong as we initially thought back when we provided guidance in February and there'll be some offset on the office side near term termination, that's the expectations, which is why youre not seeing.

Harout Krikor Diramerian: A change from the 17 midpoint.

Peter Dylan Abramowitz: Okay, got it. And then could you specifically talk about the pipeline at Washington 1000, what you're seeing there, and the kind of coverage on the space that you have available?

Peter: Okay got it and then could you specifically talk about the pipeline of Washington 1000.

Peter Dylan Abramowitz: What youre seeing there kind of a coverage on the space that you have available.

Arthur X. Suazo: Sure, Peter, this is Art. Right now, we're, we continue to be in discussions. There are actually three users that are multiple floor users. We are not in negotiations yet, but as you know, the larger deals that have transacted in the market have been gravitating towards some of the premier sublease space that's out there that offers, you know, tremendous views. They're, they're, you know, at a deep discount, call it in the low, low 30s, high 20s net, outsize concession packages on top of, you know, you know, premier space that's been built out.

Art: Sure. Peter This is art right now where we continue to be in discussions there's actually three users that are multiple floor users we're not in negotiations yet.

Arthur X. Suazo: You know the larger deals that have transacted in the market had been gravitating towards some of the premier sublease space Thats out there.

Arthur X. Suazo: That offers tremendous views there at a deep discount colleagues into low low thirties high Twenty's net.

Arthur X. Suazo: Outsize concession packages on top of.

Arthur X. Suazo: The Premier space, that's been built out and so the good news is that the sublease continues to tick down in Seattle.

Arthur X. Suazo: And so the good news is that, you know, the sublease continues to take down in Seattle, in particular, those spaces that I've just referenced. And, you know, we've just delivered, and we are currently building out our state-of-the-art marketing center, which will be finished within the next couple of weeks, activating all the common areas of the building in the exterior spaces. And, you know, we're poised to capture the demand that's coming down, you know, coming at us now. I will say that we, the teams out there, are uncovering all deals, be it in the market and outside the market.

Arthur X. Suazo: In particular, those spaces that I've just referenced and.

Arthur X. Suazo: So we've just delivered we are currently building out our state of the art marketing center, which will be finished.

Arthur X. Suazo: Within the next couple of weeks activating all the common areas of the building and the exterior spaces.

Arthur X. Suazo: We're poised to capture the demand is coming down.

Arthur X. Suazo: Coming at US now I will say that we the teams out there.

Arthur X. Suazo: Uncovering all deals be it in the market and outside the market.

Arthur X. Suazo: But more importantly, the kind of late 2526 expirations they're coming on are going to offer, you know, probably another 55 to 6 deals over 100,000 square feet into the market where, you know, there's been a dearth of large tenants out in the market currently. So we feel that that's very promising for the lease up of that asset.

Arthur X. Suazo: But more importantly, the kind of the late 'twenty five 'twenty six expirations that are coming are going to offer probably another five five to six deals over 100000 square feet into the market.

Arthur X. Suazo: Where there has been a dearth of large tenants out in the market. Currently so we feel that that's very promising to that.

Arthur X. Suazo: So the lease up of that asset.

Peter Dylan Abramowitz: Got it. That's all for me. Thank you.

Speaker Change: Got it Thats all for me. Thank you.

Alexander David Goldfarb: The next question comes from Alexander Goldfarb of Piper Sandler. Please go ahead.

Peter Dylan Abramowitz: The next question comes from Alexander Goldfarb of Piper Sandler. Please go ahead.

Alexander David Goldfarb: Oh, hey, good morning, and thank you. Good morning out there.

Alexander David Goldfarb: Oh, Hey, good morning, and thank you good morning out there.

Alexander David Goldfarb: Victor.

Alexander David Goldfarb: Just going back to your comments on the.

Alexander David Goldfarb: The Hollywood negotiations this year.

Alexander David Goldfarb: Last year, there was a lot of focus on AI residuals I think with the crew theirs work hours do you get a sense that this year.

Victor J. Coleman: Victor, just going back to your comments on the Hollywood negotiations this year, you know, last year, there was a lot of focus on AI residuals. I think with the crew, there are work hours. Do you get a sense that this year it's more sort of copacetic between the sides, and they really seem to want to work towards a resolution? Or is the sense out there that it's as tense as it was last year?

Victor: It's more sort of copacetic between the sides and they really seem to want to work towards a resolution or worse.

Victor J. Coleman: Whereas the sense out there that it's as tense as it was last year from your comments it sounds like people are working.

Victor J. Coleman: From your comments, it sounds like people are working. I'm going to be a little bit closer this year, trying to avoid what happened last year, but just trying to get a sense of the real sticking issues, how close you think the sides are to really appreciating what both want to achieve.

Victor J. Coleman: Closer this year trying to avoid what happened last year, but just trying to get a sense of the real sticking issues. How close do you think the sides are to really appreciating which would what both want to achieve.

Victor J. Coleman: I mean, it's a different set of constituents, right, Alex, at the end of the day. I mean, the writers and actors were much more focused on the content, the creative side. This is backstage.

Victor J. Coleman: I mean this is.

Speaker Change: It's a different set of constituents right Alex at the end of the day I mean, the writers and actors were much more focused on the content. The creativity size. This is back of the house. This.

Victor J. Coleman: This is more of the service side. This is obviously driven by their cost of living issues and medical and other aspects, which are directly resolvable and seem to be on track to be resolvable. Yeah, there is an AI component to it.

Victor J. Coleman: This is more of the service side. This is obviously driven on.

Victor J. Coleman: On.

Victor J. Coleman: Their cost of living issues and medical and other other aspects by which.

Victor J. Coleman: Our directly resolvable and seem to be on track to be resolvable, yes. There is an AI component to it I'm not that close to that so I can't really comment on.

Victor J. Coleman: I'm not that close to that, so I can't really comment on the level by which it's impactful or not impactful and where they're going to settle out. But I think overall, your comment is accurate. They are all striving for a resolution here, and it's less of an issue of a strong arm between each other. I think it's more of an issue of coming to the table and trying to get this done.

Victor J. Coleman: What level by which it's impactful or not impactful and where theyre going to settle out but I think overall your comment is accurate.

Victor J. Coleman: We are all striving for a resolution here and it's less of an issue of strong arming each other I think it's more of an issue of coming to the table and try and trying to get this done that being said like anything else.

Victor J. Coleman: That being said, like anything else, people on either side are trying to maintain their position of strength. And so I would not be surprised if there was a vote for strike by all constituents, even though they won't strike. So I don't want people to overreact. That's part and parcel of negotiations. So there could be an overall vote, but that may not be included as to the eventuality of a strike occurring.

Victor J. Coleman: People are on either side are trying to maintain their position of strength and so I would not be surprised if there was a vote for strike by all constituents, even though they won't strike. So I don't want people to overreact, that's part and parcel of negotiations so there could be an overall vote.

Victor J. Coleman: But that may not be included as too.

Victor J. Coleman: Eventuality of a strike occurring.

Alexander David Goldfarb: Okay, and then the second question is, on 1455, the buyout. Obviously, this seems to be a lucrative area that some of the office REITs have been able to do to buy out partners at discounted prices. So one, if you can give any color around the sort of valuation or, and then two, you know, the earnings benefit of buying that out. And then I guess the follow-up question is, you know, are there other JVs that we could see you guys buying out your partners in?

Victor J. Coleman: Okay and then the second question is on $14 65. The buyout. Obviously this seems to be a lucrative area that some of the office Reits have been able to do to buyout partners at discounted prices. So one if you can give any color around sort of valuation or or.

Alexander David Goldfarb: And then to the earnings benefit of buying that out and then I guess the follow up is are there. Other JV is that we could see you guys buying out your partner.

Speaker Change: Well I'll just talk on general and I'll, let <unk> give you the details listen on the Fortune 55 transaction. This is a very unique opportunity that was available by our partner obviously, our partner who has done this.

Victor J. Coleman: I'll just talk about the general things, and I'll let Harout give you the details. Listen, on the 1455 transaction, this is a very unique opportunity that was taken up by our partner. Obviously, our partner has done this, as you all know, in some other office REITs. And as a result, they've just decided that they don't want to be invested in an office building. We didn't have what I would say was an ability to work through this, given the fact that we had REITs on leasing on both sides, and they weren't willing to put any more capital in. So this was the best resolution for both parties.

Harout: I'll know in.

Victor J. Coleman: Some other office.

Victor J. Coleman: And and as a result, they've just decided that they don't want to be investing in office.

Victor J. Coleman: We didn't have what I would say was a.

Victor J. Coleman: And the ability to work through this given the fact that we had rights on leasing on both sides and they werent willing to put any more capital in so this was the best resolution for both parties.

Victor J. Coleman: We obviously believe this asset has massive upside we've proved it with our most recent deal, which we just announced a couple of days ago, which has a follow on on several hundred thousands square feet.

Victor J. Coleman: I think we obviously believe this asset has massive upside. We proved it with our most recent deal, which we just announced a couple days ago, which has a follow-on of several hundred thousand square feet that is being looked at both by the existing entity and an AI entity as well. And so, as a result, this is a great deal for Hudson, and our basis is what our basis is on that asset, which is below what we paid for it in 2010.

Victor J. Coleman: That is being looked at both by the existing entity.

Victor J. Coleman: Entity as well and so as a result this is a great deal for Hudson and our basis is what our basis is on that asset which is below what we paid for it in 2010, and it's been a great investment for us throughout and yes, we had vacancy that.

Victor J. Coleman: And it's been a great investment for us throughout. And yes, we have vacancy that has occurred and will continue to occur with the two large tenants, one moving out now and one moving out next year. But it gives us an opportunity to lease this up, and then

Victor J. Coleman: Has occurred and will continue to occur with the two large tenants one moved out and one moving out next year, but it gives us an opportunity to lease this up.

Harout Krikor Diramerian: And then to address the earnings impact, so as I said in my prior remarks, the two areas that did change between year-end and now are interest expense and FFO attributable to non-controlling interest, and those are directly as a result of buying out our partner. So we're going to incur about $2 million more in interest expense, but we're also going to generate $9 million more in FFO as a result of that transaction, which is fantastic in the short term, and then our leasing will continue to improve that number on a go-forward basis.

Victor J. Coleman: And then.

Victor J. Coleman: Address the.

Harout Krikor Diramerian: Earnings impact so as I said in my prepared remarks, the two areas that did change between.

Harout Krikor Diramerian: Year end and now our interest expense and <unk> and <unk>.

Harout Krikor Diramerian: <unk> attributable to non controlling interests and those are.

Harout Krikor Diramerian: As a result of buying.

Harout Krikor Diramerian: Buying out our partner so we're going to incur about $2 million more of interest expense, but we're also going to generate $9 million more of <unk> as a result of that transaction, which.

Harout Krikor Diramerian: Fantastic in the short term and then our leasing will continue to improve that number on a go forward basis.

Alexander David Goldfarb: Thank you. Thank you. Thank you, Victor.

Speaker Change: Thank you. Thank you thank you Victor.

Victor: Thanks, Alex Thank you.

Ronald Kamdem: Our next question comes from Ronald Kamdem of Morgan Stanley. Please go ahead.

Alexander David Goldfarb: Our next question comes from Ronald Camden of Morgan Stanley. Please go ahead.

Ronald Kamdem: Okay.

Ronald Kamdem: Hey, just two quick ones. So one starting with the leasing pipeline, you know, you had a million nine.

Ronald Kamdem: Hey, just two quick ones, so one starting with the leasing pipeline.

Ronald Kamdem: You had $1 nine I think at the end of <unk>, just trying to get an update where that is and if you could just provide commentary where you sort of whereas occupancy you see that trending at the end of the year and if the lease with $14 55.

Arthur X. Suazo: at the end of 4Q, just trying to get an update on that. And if you could just provide commentary, where is occupancy? You see that trending at the end of the year. And if the lease with 1455 was included in the previous expectations, or is that an upside surprise? Thank you.

Arthur X. Suazo: Was included in the previous expectations or is that an upside surprise.

Arthur X. Suazo: Yeah, so I'll address the pipeline. First, you know, it's at a million nine, as you said, it ebbs and flows. It ebbs and flows anywhere from a million seven back over 2 million square feet, usually around 2 million actually. But, you know, as deals occur, you know, so if you think about the last two quarters, it's remained at that number. And we've leased just under a million square feet, right?

Speaker Change: Yeah. So I'll address the pipeline first it's at $1 nine as you said it.

Arthur X. Suazo: It ebbs and flows it ebbs and flows.

Arthur X. Suazo: Anywhere from a $1 seven back over 2 million square feet, usually around $2 million actually but.

Arthur X. Suazo: As deals as deals occur. So if you think about the last two quarters. It has remained at that number and we've leased just about just under 1 million square feet right. So that that is the piece that is the most promising is that the pipeline continues to remain robust.

Arthur X. Suazo: So that, that is the piece that is the most promising is that the pipeline continues to remain robust as we, you know, as we start to negotiate deals and so forth. And where it sits now, you know, we're still at a million, we're still at about a million nine, having leased 500,000 square feet. And as Victor mentioned, obviously, you know, we've got a big deal that we've inked since subsequent to the quarter.

Arthur X. Suazo: As we as we start to negotiate new deals and so forth.

Arthur X. Suazo: Where it sits now we're still at $1 billion, we're still at about 1 million nine having leased 500000 square feet and as Victor mentioned, obviously, we've got a big deal that we've inked since subsequent to the quarter. So we feel really good at where it is why do we feel good about where it is we've been saying for a couple of them.

Arthur X. Suazo: So we feel really good about where it is. Why do we feel good about where it is? We've been saying for, you know, for a couple quarters now that the leading indicator for our active deals in negotiation is tracking our tours, and it spiked in Q4, right? It spiked. There was about a million four worth of tours in Q4, and it sustained itself. The numbers were really right on top of each other.

Arthur X. Suazo: <unk> now that the leading indicator for our active deals in negotiation is tracking our tours and it spiked in Q4 right spiked there was about $1 million for worth of tours in Q4.

Arthur X. Suazo: So what we're seeing, and we continue to see is, you know, that tour activity, which at some point becomes deals in negotiation, has, has sustained itself, which is why, you know, the acceleration in lease velocity that we experienced in the first quarter, we're comfortable saying that it's going to continue into the next quarter.

Arthur X. Suazo: And it's sustained itself as the numbers were really right on top of each other so what we're seeing and we continue to see is that tour activity, which at some point becomes deals in negotiation has has sustained itself.

Arthur X. Suazo: Which is why the acceleration in lease velocity that we experienced in the first quarter.

Arthur X. Suazo: We're comfortable saying that it's going to continue into the next quarter.

Ronald Kamdem: Hey, this is Mark. On the occupancy, you know, last call, we gave you the building blocks to outline for you how we could potentially get back to end of 23 occupancy, which, just as a reminder, was 80.9. I'm not going to walk you back through those building blocks, but we did also indicate that our own model suggested that we would see a bit of a dip in occupancy in the 1st and 2nd quarters with improvement in the 3rd and 4th quarters.

Arthur X. Suazo: Hey, this is mark on the occupancy.

Ronald Kamdem: Last call. We gave you the building blocks.

Ronald Kamdem: To outline for you, how we could potentially get back to end of 'twenty, three occupancy, which just as a reminder was $8 nine I'm not going to walk you back through those building blocks.

Ronald Kamdem: But we did also indicate that we that our own models suggested that we would see a bit of a dip in occupancy in the first and second quarter with improvement in third and fourth quarter.

Ronald Kamdem: Hi.

Ronald Kamdem: Our first quarter results are materially in line with what our expectations were. So, in terms of just our expectations regarding occupancy for the year, our first quarter outcome seems to be essentially right on top of our original expectations, really helpful. And then just my second one was just sort of back to the studio NOI. I mean, I think you sort of talked about long-term potential, just taking a step back here, right, of $131 million. So it's sort of Quixote was doing 75 to 80, and his balance was 50 to 55.

Ronald Kamdem: Our first quarter results are materially in line with what our expectations were so.

Ronald Kamdem: Or in terms of just our expectations regarding occupancy for the year, our first quarter outcome seems to be essentially right on top of our original expectations.

Ronald Kamdem: Really helpful. And then just my second one was just.

Ronald Kamdem: Sort of back to the studio NOI I think you've sort of talked about a long term potential just taking a step back here right at $131 million. So that's sort of <unk> was doing 75% to 80.

Speaker Change: Our balance 50 to 55 was just sort of the in place presumably.

Ronald Kamdem: was just sort of the in-place, presumably. I guess I'm trying to figure out what sort of all this uncertainty with the strike as I'm thinking that.

Speaker Change: I guess I'm trying to figure out.

Speaker Change: What sort of all of this uncertainty with the strike is it thinking that that long term target is still sort of realistic or what sort of production environment, you need to get back into an MLA for those targets to sort of make sense.

Mark T. Lammas: The long-term target is still sort of realistic, or what sort of production environment you need to get back into in L.A. for those targets? sort of makes up. Yeah, no; it remains realistic.

Mark T. Lammas: I mean, I think it's important, by the way, to remember that also includes Glen Oaks, which, you know, we're in negotiations on a pilot stage there. And we have a good, healthy leasing interest there. We just got to get it leased up now. And also, ultimately, Pier 94. So are the ingredients there? The ingredients are definitely there.

Mark T. Lammas: Yes, no. It remains realistic I mean, I think it's important by the way to remember that also includes Glen Oaks.

Mark T. Lammas: Which we're.

Mark T. Lammas: We're in negotiations on a pilot for a stage there and we have good healthy leasing interest there and we just got to get it leased up now and also ultimately pier 94. So on are.

Mark T. Lammas: Are the ingredients are the ingredients are definitely there.

Mark T. Lammas: The business is been a bit slower to get back on its feet as we indicated.

Mark T. Lammas: The business has been a bit slower to get back on its feet, as we've indicated. That's, you know, reflected in the show counts, which is Victor indicated or, you know, you know, high teens below, say, that same period 2022, which is a good normalized kind of level to look to shoot days are down, you know, one other indicator of that is if you look at shoot days in the first four months of the year, compared to shoot days in the first four months of 2022, for TV, drama and comedy, they're down almost 40%.

Mark T. Lammas: Reflected in the show counts such as Victor indicated or.

Mark T. Lammas: High teens below.

Mark T. Lammas: Say.

Mark T. Lammas: That same period, 2022, which is a good normalized kind of level.

Mark T. Lammas: Level to look to.

Mark T. Lammas: Shoot days are down.

Mark T. Lammas: One other.

Mark T. Lammas: Indicator of that is if you look at shoot days in the first four months of the year compared to shoot days in the first four months of 2022.

Mark T. Lammas: So business has been slower to get back to normal than I think everyone in the industry expected. But once it gets back there, the Coyote, our Coyote business will rebound. Once it rebounds, we will get the stages at Las Palmas leased up. And as we sit today, of the 10 available stages that we have there, we either have contracts, or we have holds on six of those 10. We need to get those over the line, get those stages leased up, we need to get Glen Elks leased up, and then ultimately, when Pier 94 delivers, and then the number that you just outlined, it's still within sight.

Mark T. Lammas: For TV drama and comedy they're down almost 40%.

Mark T. Lammas: So on.

Mark T. Lammas: The business is slower.

Mark T. Lammas: To get back to normal then.

Mark T. Lammas: I think everyone in the industry expected, but once it gets back there the acuity.

Mark T. Lammas: Archie Ot business will rebound.

Mark T. Lammas: Once eight rebounds, we get the stages at Las Palmas leased up and at the as we sit today of the 10 available stages that we have there we have either.

Mark T. Lammas: In contracts or we have holds on six of those 10, we need to get those over the line get those stages leased up we need to get Glenn obviously stop.

Mark T. Lammas: And then ultimately when Tyr 94 delivers and then.

Mark T. Lammas: The number that you just outlined it's still within sight.

Mark T. Lammas: Yeah.

Speaker Change: Thanks, so much.

Mark T. Lammas: Okay.

Caitlin Burrows: Our next question comes from Caitlin Burrows of Goldman Sachs. Please go ahead.

Mark T. Lammas: Our next question comes from Caitlin Burrows of Goldman Sachs. Please go ahead.

Caitlin Burrows: Hi, good morning, everyone. I guess, similar tied to that occupancy question that somebody asked before, could you talk about your expectations for retention for the year or the rest of the year? Kind of how informed is that view at this point? And where do you think the mark to markets on expirations for the rest of the year are?

Caitlin Burrows: Hi, good morning, everyone I guess.

Caitlin Burrows: Similar tied into that occupancy question that somebody asked before could you talk about your expectations for retention for the year or the rest of the year kind of how informed us that view at this point and where do you think mark to markets on explorations for the rest of the year are.

Arthur X. Suazo: Hi, it's Art. Yeah, so our retention right now, as we reported, you know, we're about 45% for remaining explorations. That number Remember, that number includes, you know, there's probably 40% of that number is late stage, smaller tenants under 6000 square feet. So the answer is, yes, we're in discussions with most of them, most of those small tenants. As the year progresses, we'll get a better line of sight on what they're doing; they usually engage 90 days out. So that number can definitely go up. And so we feel comfortable about the 45, maybe, you know, moving beyond.

Speaker Change: Hi, yes, so our.

Arthur X. Suazo: Our retention right now as we reported were about 45%.

Arthur X. Suazo: For remaining explorations that number.

Arthur X. Suazo: Just remember that number includes theirs.

Arthur X. Suazo: Probably.

Arthur X. Suazo: 40% of that number is late stage smaller tenants under 6000 square feet. So the answer is yes. We are in discussions with most of them most of those small tenants as the year progresses, we will get a better line of sight on what they're doing they usually engaged 90 days out so.

Arthur X. Suazo: That number can definitely go up.

Arthur X. Suazo: So we feel comfortable about the 45, maybe moving beyond that.

Arthur X. Suazo: So you're saying the 45% is what you know is going to renew, but additional might on top of it? That's correct. Okay, got it. And then just back to the studio side.

Speaker Change: So youre, saying sorry, the 45% is what you know is going to renew but additional mine on top of it.

Arthur X. Suazo: That's correct.

Caitlin Burrows: I think you commented in the release that industry consolidation and shifting business models focused on profitability are also having an impact. So I'm just wondering how big of an impact you think this could ultimately have, how it could impact Quixote? And does it suggest that returning to pre-strike levels of income might not be possible? or not. I would

Arthur X. Suazo: Okay got it and then just back to the studio side I think you commented that.

Caitlin Burrows: That release that industry consolidation and shifting business model focused on profitability are also having an impact. So I'm just wondering how big of an impact do you think this could ultimately have how it could impact key Jose and does it suggest that returning to pre strike levels of income might not be possible.

Speaker Change: We're not.

Victor J. Coleman: I would not read into it that way, Caitlin. I think, listen, we don't know what the impact is, but the impact clearly suggests that a series of development or pre-development opportunities that were planned are no longer going to be executed. Therefore, the pipeline of new development is going to be a lot smaller. And as a result, the existing stages and availabilities that are out there are going to lease up, I think, a lot quicker than people had presumed.

Speaker Change: I would not read into it that way Caitlin I think listen we don't know what the impact is but what the impact is clearly suggested.

Victor J. Coleman: A series of development or pre development opportunities that were planned are no longer going to be executed therefore.

Victor J. Coleman: Pipeline of new development is going to is going to be a lot smaller and as a result, the existing stages and availabilities that are out there are going to lease up I think a lot a lot quicker than people had presumed so I would not read into a consolidation I mean right now we're.

Victor J. Coleman: So I would not read into a consolidation. I mean, right now, we're looking, obviously, at the Paramount situation, but they own their own lot, and they are in, you know, on the CBS side, they're in lots of our stages, and they're going to continue to do so with whoever their new parent potentially could be.

Victor J. Coleman: We're looking obviously at the Paramount situation, but they own their own lot and they are in our Cvs side, there are lots of ours and others.

Victor J. Coleman: Stages, and Theyre going to continue to do so with their whoever the new parent essentially could be.

Speaker Change: Okay. Thanks.

William Thomas Catherwood: Our next question comes from Tom Catherwood of BTOG. Please go ahead.

Victor J. Coleman: Our next question comes from Tom Catherwood of <unk>.

William Thomas Catherwood: Please go ahead.

William Thomas Catherwood: Thank you. Maybe going back to 1455 Market, the large lease that you signed there last month has options to take substantially more space. What are you expecting in terms of the likelihood and timing of those options being executed? And would any expansion need to go back before the Board of Supervisors for approval?

William Thomas Catherwood: Thank you, let me call back to $14 55 market.

William Thomas Catherwood: The large lease that you signed there last month.

William Thomas Catherwood: Options to take substantially more space, what are you expecting in terms of the likelihood and timing of those options being executed.

William Thomas Catherwood: And would any expansion need to go back before the board of Supervisors for approval.

Arthur X. Suazo: Hi, Tom, this is Art. Yeah, so they're not hard options to take or take up too much space. It was really the beginning of what was, you know, 12-14 months of negotiation to amalgamate a number of spaces as they became available for the city. And so we feel that, you know, very soon, probably, you know, the third or fourth quarter, we will have good news about another larger block of space.

Art: Hi, Tom This is art, yes, so theyre not hard options to take or must take spaces. It is this is really the beginning of what was <unk>.

Arthur X. Suazo: 12 to 14 months of negotiation to.

Arthur X. Suazo: Amalgamated a number of spaces.

Arthur X. Suazo: As they become available for the city and so we feel that.

Arthur X. Suazo: We're getting very soon probably third fourth quarter, we will have good news about another larger block of space.

Arthur X. Suazo: And there's more behind that Theres no theres no hard timing behind what it is we just feel very confident that.

Arthur X. Suazo: And then there's more behind that. There's no, there's no hard timing behind what it is. We just feel very confident that, very soon, we're going to look back and see the signed several hundred thousand feet of space.

Arthur X. Suazo: Very soon we are going to look back and see that we've signed several hundred thousand feet space.

William Thomas Catherwood: Got it. I appreciate that, Art.

Speaker Change: Got it appreciate that and.

Speaker Change: And then last one for me you mentioned.

Victor J. Coleman: And the last one for me, you mentioned in the prepared remarks, Victor, you mentioned three office assets that you're looking to sell and another one to possibly recapitalize in the Bay Area. What are the timing expectations for those sales recapitalizations? And given that sales weren't included in the initial guidance, did the timing have any part in the decision to withdraw guidance this quarter?

William Thomas Catherwood: In the prepared remarks, Victor you mentioned.

Victor J. Coleman: Three office assets that Youre looking to sell and another one to possibly recapitalize in the Bay area, what are the timing expectations for those sales and recapitalization and given the sales Werent included in the initial guidance did the timing has any part in the decision to withdraw guidance this quarter.

Victor J. Coleman: No, I mean, we don't include dispositions or acquisitions in our guidance and the timeline as to as to what we're talking about. As we have read it before, the only conversation around guidance is referred to around Coyote.

Speaker Change: No I mean, we don't we don't include dispositions or acquisitions in our guidance.

Victor J. Coleman: And the timeline as to as to what we're talking about it.

Victor J. Coleman: As we reiterated before the only conversation around guidance is referred to around Coty everything else is a stable business that we've that we've currently put in place and that we've discussed in terms of the dispositions I can I can say up to three one of them is being marketed the other two are off market transactions.

Victor J. Coleman: Everything else is the stable business that we've currently put in place and that we've discussed. In terms of the dispositions, I can, I can say up to three; one of them is being marketed. The other two are off-market transactions, and one of those is in contract right now. And in terms of the recap, that is in discussions as well, but we're not going to give guidance and timelines as to what our expectations are in terms of timing and expectations.

Victor J. Coleman: And one of those is in contract right now and in terms of the recap that is in discussions as well.

Victor J. Coleman: But we're not going to give guidance and timelines as to.

Victor J. Coleman: What our expectations are in terms of timing and execution.

Victor J. Coleman: Yeah.

William Thomas Catherwood: Okay. That's it for me. Thank you, everybody.

Speaker Change: Understood Thats it for me Thank you everybody.

Operator: Thank you.

Speaker Change: Thank you thanks.

Vikram L. Malhotra: The next question comes from Vikram Malhotra of Mizuho. Please go ahead; your line is open.

Operator: The next question comes from Vikram Malhotra of Mizuho. Please go ahead. Your line is open.

Victor J. Coleman: Thanks for the questions. Victor, I just wanted to clarify first that you talked about just the volatility in the business of studios, and you may be considering something external, you know, not talking about timing or anything, but I just want to be clear. Were you referring to the studio business in its entirety, Kyoto? Just maybe give us some clarity on when you meant considering something external. What does that mean?

Vikram L. Malhotra: Hi, Thanks for taking the questions Victor I just wanted to clarify first.

Victor J. Coleman: You talked about just the volatility in the business.

Victor J. Coleman: And studios may be considering.

Victor J. Coleman: Something externally not talking about timing or anything, but I just wanted to be clear.

Victor J. Coleman: You're referring to the studio business in its entirety to euro just maybe give us some clarity on.

Victor J. Coleman: Considering something externally what does that mean.

Victor: Yes, I was referring to the studio business inclusive of Sunset <unk>.

Victor J. Coleman: Yes, I was referring to the studio business, including Sunset and Coyote.

Vikram L. Malhotra: Okay, and that would be that you would consider a spin in its entirety or some sort of JV or something, I'm presuming.

Victor J. Coleman: Okay.

Speaker Change: And that would be that you would consider a spin in its entirety or some sort of JV or something I'm presuming.

Victor J. Coleman: We are looking at all different options right now and exploring alternatives.

Speaker Change: We are looking at all different options right now.

Victor J. Coleman: Exploring alternatives.

Vikram L. Malhotra: And then just in terms of the pipeline, so leaving pipeline for office. I was just wondering, you know, we had a lot of talk about last year, about a few big AI leases. Now we've talked about it, maybe it's thinned out a little bit. Now there's talk of perhaps more. I'd just wondering, perhaps, Art, if you could just talk about in the pipeline today, the rest of the 45% or the 55% where you're still, you know, looking for new leases or renewals. What does the AI contribution look like in your mind? That is a very long-

Victor J. Coleman: Yes go ahead, if it makes sense.

Vikram L. Malhotra: And then just in terms of the pipeline so leasing pipeline for office.

Vikram L. Malhotra: I was just wondering I know we had a lot of talk about last year, a few big AI leads us.

Vikram L. Malhotra: Now we've talked about maybe it's been down a little bit now this stock up perhaps more I'm just wondering perhaps art. If you could just talk about in the pipeline today.

Vikram L. Malhotra: The rest of the 45% or the 65% where youre still.

Vikram L. Malhotra: Looking for new leases or renewals.

Vikram L. Malhotra: What are the AI contribution looked like in your markets.

Arthur X. Suazo: That is a very interesting question. You know, we Let me just start by saying, as you know, we've talked about the AI deals that are out in the market in San Francisco. There was, you know, once upon a time, you know, million four, then we saw 800,000 feet get leased up. Now we're back over slightly over a million square feet of AI expansion in the city. Okay.

Art: That's a very interesting question.

Arthur X. Suazo: You know, in the valley, it really started showing up. End of last quarter, as a matter of fact, we leased 80,000 square feet in the valley alone. Of the new AI tenancy, 50,000 of which was Net New, and then the others were, you know, renewal, kind of expansion kind of space. So yeah, we are starting to see a lot more in the valley. And we feel very comfortable that it's going to continue to grow in the coming quarters.

Arthur X. Suazo: Let me just start by saying as we've talked about the.

Arthur X. Suazo: The AI deals that are out in the market in San Francisco there was once upon a time $1.

Arthur X. Suazo: For then we saw 800000 feet get leased up now were back over slightly over 1 million square feet of AI expansion in the city okay.

Arthur X. Suazo: Valley, It really started showing up.

Arthur X. Suazo: End of last quarter is a matter of fact, we leased in the valley alone we leased.

Arthur X. Suazo: 80000 square feet of.

Arthur X. Suazo: New AI tenancy 50000 of which was.

Arthur X. Suazo: Net new and then the others were renewal.

Arthur X. Suazo: Expansion kind of space. So yes, we are starting to see a lot more in the valley and we feel very comfortable its going to continue to grow in.

Arthur X. Suazo: In the coming quarters.

Speaker Change: Thank you.

Nicholas Philip Yulico: And our next question comes from Nick Yulico of Scotiabank. Your line is open.

Arthur X. Suazo: And our next question comes from Nick <unk> of Scotiabank. Your line is open.

Nicholas Philip Yulico: Thanks, I just wanted to turn back to the 1455 market, and I guess the first question was, should we assume that you know the package you gave the city in terms of, you know, one year free rent, $40 starting rent, and $100 TI, is that the type of package you would give for leasing the rest of the building?

Nicholas Philip Yulico: Thanks, I just wanted to turn back to $14 55 market and I guess first question was should we assume that the package you gave the city in terms of I think it was one year free rent $40, starting rent of $100 Ti.

Nicholas Philip Yulico: The type of package you give for leasing for the rest of the building.

Arthur X. Suazo: Yeah, I mean, I think the market is going to dictate what it is, but I think that's the basis. Remember, the concession package is based on 21 years, right? So yeah, depending on where the lease term comes in, you know, it'd be commensurate with it.

Speaker Change: Yes, I mean, I think the market is going to dictate what it is but I think thats the basis remember the concession packages based on 21 years right. So.

Arthur X. Suazo: Yeah, depending on where the lease term comes in.

Arthur X. Suazo: But you know, wait and see. And by the way, you know, in addition to that, it's a good question. Why?

Arthur X. Suazo: It would be commensurate with it but.

Arthur X. Suazo: A wait and see and by the way.

Arthur X. Suazo: In addition to its a good question why because it's not just the city that we're engaging right now there is probably another 125000 square feet of interest and we are.

Nicholas Philip Yulico: Because it's not just the city that we're engaging right now. There's probably another 125,000 square feet of interest. And we're, you know, negotiating on one full floor with an AI tenant. So, obviously, it's just not a government use as it was before. And we're starting to see kind of the beginnings of tech tenants coming down market.

Nicholas Philip Yulico: Negotiating on one full floor with with the AI tenant. So obviously, it's just not a government use as it wasn't before and we're starting to see the beginnings of.

Nicholas Philip Yulico: Tech tenants coming down market Street.

Arthur X. Suazo: Nick, it's Victor. I just want to clarify. I mean, you know, obviously this competition is out there for the city. Sure, the city is going to come back. If the term is the same, they're going to come back for similar terms. Obviously, you know, the AI tenant that Art is referring to and the other tenants that they're talking to are much different terms and will probably be different economics as well. Okay, I got it. Yep. Thanks. Just to follow up on that, maybe Victor is, you know, as you know, clearly, this is an asset, as you mentioned.

Nicholas Philip Yulico: Nick its Victor I, just wanted to clarify I mean, obviously this comp is out there for the city sure. The city is going to come back as the term is the same we're going to come back for similar terms, obviously, the AI tenant that art is referring to any other tenants that they are talking to are much different terms and will be probably different economics as well.

Speaker Change: Okay got it thanks.

Speaker Change: Just a follow up on that maybe Victor is.

Arthur X. Suazo: Clearly this is an asset as you mentioned that.

Victor J. Coleman: that, you know, you're, you're, you're essentially buying back at the original basis, but there is, you know, a fair amount of

Arthur X. Suazo: You're essentially buying back.

Victor J. Coleman: The original basis, but there is a.

Speaker Change: A fair amount of leasing capital that needs to go into the building. So I mean, if we think about.

Nicholas Philip Yulico: , , , , , , , you know, uber leaves, you're

Speaker Change: I don't know if the $100 is the right number for all the vacancy but once.

Speaker Change: Ooh believes you're going to have something like 700000 square feet of vacancy there and so yeah, you paid $45 million for the partner interest.

unknown: https://www.patreon.com

Speaker Change: Ultimately put in who knows is it $60 million of leasing capital, depending I guess on the package but.

Victor J. Coleman: on the package. But, you know, maybe hearing a little bit more about why you think it makes sense to, you know, reinvest that level in the asset.

Victor J. Coleman: How maybe just hearing a little bit more about why you think it makes sense too.

Victor J. Coleman: Reinvest that level.

Victor J. Coleman: In the asset.

Victor J. Coleman: Yes.

Nicholas Philip Yulico: So, you know, good question on that. Listen, I think the asset has proved itself to be successful. We originally bought that asset, and it was going to be a B of A occupied asset. You know, obviously, we shifted and brought tech tenants in. Now we've shifted out, and we're looking at, you know, obviously the city of San Francisco and other entities that are affiliated with the city of San Francisco that are looking at it right now to the tune of, you know, three or 400,000 additional square feet.

Victor J. Coleman: So.

Speaker Change: Good question on that listen I think the asset has proved itself to be successful. We originally bought that asset and it was going to be a bofa.

Nicholas Philip Yulico: Occupied asset obviously, we shifted and brought tech tenants in now we've shifted out and we are looking at obviously the city of San Francisco and other entities that are affiliated with the city of San Francisco that are looking at it right now to the tune of three or 400000 additional square feet plus we're looking at it as art said, another 100 to 200000 square.

Nicholas Philip Yulico: Plus, as Art said, another 100 to 200,000 square feet of AI or business-related tenants. You know, the four floors and the footprint and the improvements of the asset are very high. I would not read into this deal being the deal that is going to be throughout the entire lease term. However, we're confident that this makes a lot of sense on a price per pound basis. I think our IRRs and the yield hurdles, at the end of the day, when we disclose them, are going to prove out that this was an excellent acquisition for Hudson in a unique opportunity that you're not seeing anywhere else in the city, even given where some of the other depressed real estate is and is selling at or trying to be sold at. It's nowhere near at these levels. Okay, thanks. I guess just one quick follow up. I mean, you guys are confident in getting, you know, other users into the building besides yourself.

Nicholas Philip Yulico: Feet of AI or business related tenants.

Nicholas Philip Yulico: The floor plates and the footprint and the improvements at the asset are very high.

Nicholas Philip Yulico: I would not read into this deal being the deal that is going to be throughout the entire lease up we're confident that this makes a lot of sense on a price per pound I think our IRR is.

Nicholas Philip Yulico: And the yield the yield hurdles at the end of the day when we disclose them are going to prove out that this was an excellent acquisition for Hudson.

Nicholas Philip Yulico: Unique opportunity that youre, not seeing anywhere else in the city, even given where some of the other depressed real estate is in selling at or trying to be sold at its nowhere near at these levels.

Speaker Change: Okay. Thanks, and then just one quick follow up I mean, you guys are confident in getting.

Nicholas Philip Yulico: Other users into the building besides the city I mean, clearly the city had a reason to support the asset and try and revitalize that part of the city, but in terms of other tenant activity.

Victor J. Coleman: I mean, clearly, the city had a reason to support the asset and try and, you know, revitalize it.

Nicholas Philip Yulico: Revitalize that part of the city, but, you know, in terms of other tenant activity, you do think that there is a reason to be in that submarket within the city.

Nicholas Philip Yulico: Do you think that there is reason to be in that sub market within the city.

Arthur X. Suazo: Yeah, Nick, if you recall, if you can think back 10 years, that's exactly where we were in the city. We had 100 and the first tenant of the building, besides B of A, was 125,000 square feet. In the city, there were three different departments. And then, right, and then we started tracking tech tenancy. So they, you know, there were beyond the city, there was GSA in the building, and so forth.

Nicholas Philip Yulico: Yes.

Nicholas Philip Yulico: If you recall if you can think back 10 years that this is exactly where we were in the city.

Arthur X. Suazo: We did we had 100 the first tenant in the building. Besides Bofa was 125000 square feet with the city. There were three different departments and then right and then we started to tracking tech tenancy. So they.

Arthur X. Suazo: It was beyond the city that was GSA in the building and so forth and so.

Arthur X. Suazo: If you think about it we're kind of back to where we were we are.

Arthur X. Suazo: Starting with the low hanging fruit, which is governmental users that are in the neighborhood and because I think we're in a better spot why because if you think about the square and the Uber space. This.

Arthur X. Suazo: And so, if you think about it, we're kind of back to where we were; we are, you know, starting with the low-hanging fruit, which is governmental users that are in the neighborhood. And because I think we're in a better spot. Why? Because if you think about the square in the Uber space, there's, you know, 300,000, excuse me, 300 bucks a foot in that space. And so the residual value is very high.

Arthur X. Suazo: 300000, excuse me 300 Bucks a foot into that space until the residual value is very high and Ti dollars in dollars out of their pocket.

Arthur X. Suazo: I'm going to go a lot further and if you also remember we didn't have windows on the podium.

Arthur X. Suazo: And TI dollars and dollars out of their pocket are going to go a lot further. And if you also remember, we didn't have windows on the podium. Right, we installed Windows on the podium. That changed, you know, changed the game there. Great.

Arthur X. Suazo: We installed windows on the podium that changed changed the game there.

Nicholas Philip Yulico: Great, thanks. I appreciate all the commentary.

Speaker Change: Great. Thanks, I appreciate all the commentary.

Speaker Change: You're welcome.

Dylan Robert Burzinski: Our next question comes from Dylan Burzinski of Green Street. Please go ahead. Your line is open.

Nicholas Philip Yulico: Our next question comes from Vince <unk> of Green Street. Please.

Dylan Robert Burzinski: Please go ahead your line is open.

Victor J. Coleman: Good morning, guys. Just sort of wanted to touch on, you know, Outlook for leasing. You know, as we look at your quarterly leasing activity, or call it the last 18 months or so, it seems like 500,000 square feet is sort of the upper bound on the amount of leasing you can get done in any given quarter. I guess, do you feel that is sort of a good indicator or the max amount of leasing you can get done in any quarter absent any big tech or larger tenant leasing? And it's sort of a parallel to that. I mean, what is your expectation when a lot of these large tenants come back into the leasing market? What will I sort of start with?

Dylan Robert Burzinski: Good morning, guys, just sort of wanted to touch on outlook for leasing.

Victor J. Coleman: As we look at your quarterly leasing activity and I recall at the last 18 months or so it seems like 500000 square feet and sort of the upper bound on the amount of leasing you can get done in any given quarter I guess do you feel that sort of.

Victor J. Coleman: A good indicator or the Max amount of leasing you can get done in any quarter absent any big tech or a larger tenant leasing.

Victor J. Coleman: And as sort of a parallel to that.

Victor J. Coleman: What is your expectation for when a lot of these large tenants come back to leasing markets.

Victor J. Coleman: Let me sort of start with, you know, I, Dylan, I would be cautious to sort of look at saying like we maxed out at a 500,000 square foot number. You know, I think there were going to be ebbs and flows of larger tenants coming into the marketplace and going out. But at the end of the day, I think what's consistent is, as Art has said, quarter after quarter, the pipeline is consistent.

Victor J. Coleman: I mean, we did more leasing this quarter than we anticipated. And it looks like the quarter we're in right now looks very good with the start of some renewals that we're working on and existing deals that we're working on and the stuff we signed. So I wouldn't sort of lump it into say, oh, you know, half a million square feet. Therefore, it's close to 2 million a year.

Speaker Change: Let me sort of start with.

Victor J. Coleman: I would be cautious to sort of look at saying like we maxed out at a 500000 square foot number.

Victor J. Coleman: I think there is going to be ebbs and flows of larger tenants coming in the marketplace and going out but at the end of the day I think what's consistent is as artist said quarter after quarter as the pipeline is consistent I mean, we did more leasing this quarter than we anticipated and it looks like quarter. We're in right now looks very good with the startup of some renewals that.

Victor J. Coleman: We're working on an existing deals that we're working on in the subsidiary side, So I wouldn't sort of lump it into say <unk>.

Victor J. Coleman: Half a million square feet. Therefore, it's close to $2 million a year. That's what it is I think it's going to ebb and flow and in terms of the larger tenants.

Victor J. Coleman: That's what it is; I think it's going to ebb and flow. And in terms of the larger tenants, it's starting to open up in the city clearly, as we've talked about with us, and some of our peers, and with AI. And it's starting to open up in Seattle. Clearly, Seattle has had a very strong run in Bellevue. But those markets go back and forth, and they have for decades, right? Bellevue gets hot, then the city gets hot, then Bellevue gets hot.

Victor J. Coleman: It's starting to open up in the city clearly as we've talked about with us and some of our peers and with AI and it's starting to open up in Seattle.

Victor J. Coleman: Clearly Seattle has had a very strong run in Bellevue those markets go back and forth and they have for decades right. Bellevue gets Hot then the city gets hot MW gets hot and so we feel that with the amount of product that's being leased in Bellevue. It will rebound back now to the city because the alternatives.

Victor J. Coleman: And so, you know, we feel that with the amount of products that are being leased in Bellevue, it will rebound back now to the city because the alternatives are equally as good from quality real estate for some of the new stuff that's in the marketplace, but the availability is there that you're not going to have as much in Bellevue. So I wouldn't make a blanket statement on that. I do feel comfortable that larger tenants are coming back. It is taking time, but they are coming back. All right, you nailed it.

Victor J. Coleman: <unk> are equally as good from quality of real estate for some of the new stuff that's in the marketplace, but the availability is there that youre not going to have as much in Bellevue. So I wouldn't make a blanket statement on that I do feel comfortable that larger tenants are coming back. It is taking time, but they are coming back.

Victor J. Coleman: Victor.

Unknown Attendee: Our next question comes from Camille Bunnell, from the World Bank of America. Please go ahead.

Victor J. Coleman: Our next question comes from Neil <unk> of.

Unknown Attendee: Bank of America.

Unknown Attendee: Please go ahead.

Arthur X. Suazo: Hi, I have two questions on the office side. I saw the team signed a lease to a biotech tenant. Just curious if you're seeing any benefits from these life science companies trading down for certain functions from higher-priced spaces in the Bay Area?

Unknown Attendee: Hi, I have two questions on the office side I saw the team signed a lease to a biotech tenant just curious if youre seeing any benefits from these life science companies trade down first starting functions from higher price spaces in the Bay area.

Arthur X. Suazo: Yeah, I think over the last two quarters we've seen, by the way, this was the largest, right? 36,000 square feet. We've seen an uptick in biotech; I would say there are more than two or three biotech tenants out there, again, of which this is the largest. You know, I would suppose the benefit of it is that it was almost at the 50% mark. So, you know, they're certainly willing to pay.

Unknown Attendee: Yeah, I think over the last two quarters, we've seen by the way. This was the largest Reits 36000 square feet.

Arthur X. Suazo: We've seen an uptick in biotech I would say that.

Arthur X. Suazo: Yes.

Arthur X. Suazo: More than two or three biotech tenants out there again of which this is the largest.

Arthur X. Suazo: I would suppose the benefit of it is it was almost a 50% mark so.

Arthur X. Suazo: Certainly willing to pay up.

Arthur X. Suazo: And are you seeing a pickup in those tenants in your pipeline?

Speaker Change: And are you seeing a pickup in those tenants in your pipeline.

Arthur X. Suazo: In the current pipeline, no. In our tours, in our tour activity, which I've also mentioned is at elevated numbers, yes, we have seen that in the early stage of tour activity, and mostly on the peninsula.

Arthur X. Suazo: In the current pipeline no in our tours in our tour activity, which have also mentioned is at elevated numbers.

Arthur X. Suazo: Yes, we have seen it in the early stage tour activity.

Arthur X. Suazo: And mostly on the peninsula.

Unknown Attendee: Okay, thank you. And on my second question, so not accounting for your ownership, but looking at the occupancy detail you provided in the supplemental, about a quarter of the portfolio's vacancy is about below 70%. So could you comment on the touring activity you're seeing for these buildings specifically? And are any of these in your disposal bucket? Or, what are your business plans for these buildings? I'm just trying to get a sense of the strategy there.

Speaker Change: Okay. Thank you.

Unknown Attendee: And my second question, so non accounting for your ownership, but looking at the occupancy detailing provide in the supplemental about a quarter of the portfolio is vacancy is below 70%. So could you comment on the touring activity Youre seeing for these.

Unknown Attendee: Specifically and are any of these in your disposal bucket or.

Unknown Attendee: What are your business plans for these buildings just trying to get a sense of the strategy there.

Arthur X. Suazo: Yeah, I'll answer the first part of that question, which is the tour activity that I mentioned. It really applies to all markets in all buildings. I mean, it's really consistent. That's the good news, right? It's not just heavily weighted in the Valley or Vancouver. It's literally, you know, the numbers are consistent throughout our entire portfolio, again, which is a leading indicator of what will be negotiated. Yeah, Camille, it's Victor. I think, you know, looking at

Speaker Change: Yes, I'll answer the first part of that question, which is the tour activity that that I've mentioned is really.

Victor: It applies to all markets and all buildings I mean, its really consistent that's the that's the the good news right. It's not just.

Victor: Heavily weighted in the valley or Vancouver, it literally the numbers.

Victor: Our consistent throughout our entire portfolio again, which is a leading indicator of what we'll be negotiating.

Victor J. Coleman: Yeah, Camille, it's Victor. I think, you know, looking at the list, I think only one asset is in the disposition of that; they can see this role that you're referring to.

Arthur X. Suazo: Yes, Neal it's Victor I think looking at the list I think only one asset is.

Victor J. Coleman: In the <unk>.

Victor: And of that.

Victor: Vacancy thats that youre, referring to.

Victor J. Coleman: Yes.

Speaker Change: Thank you.

Richard Charles Anderson: Our next question comes from Rich Anderson of Wedbush Securities. Your line is open, please go ahead.

Speaker Change: Our next question comes from Rich Anderson of Wedbush Securities. Your line is open. Please go ahead.

Richard Charles Anderson: Thanks for hanging with me. Stating the obvious, full ownership of 1455 creates optionality for you. Is there at least a possibility the ultimate goal here is to get it leased up and sold, or do you have a long-term view of ownership?

Richard Charles Anderson: Thanks for hanging in with me, stating the obvious full ownership of 14 55 creates.

Richard Charles Anderson: Optionality for you.

Richard Charles Anderson: At least a possibility ultimate goal here is to get it leased up and sold or do you have a long term view of ownership.

Richard Charles Anderson: For sure.

Victor J. Coleman: I think, I think, Rich, we've got lots of options. Yeah, and yes, and yes.

Speaker Change: I think I think rich we've got lots of options.

Victor J. Coleman: Yes.

Speaker Change: Yes, and yes.

Richard Charles Anderson: Okay, fair enough. That's all I need.

Speaker Change: Okay Fair enough and then second question I don't claim to know the inner workings of how.

Victor J. Coleman: And then second question, you know, I don't claim to know the inner workings of how the studio business works behind the scenes, but you know, you've had a series of domino effects of things that have happened here. And I'm wondering if there's any sort of other groups, back office groups that maybe are watching from behind the scenes and potentially could be another shoe to drop. Or do you think that, based on what we've seen to this point, there's not really anything else that could happen out of nowhere? Like, you know, like what has happened over the past year or two? sort of a copycat risk, I guess. Yeah.

Victor J. Coleman: Yes.

Victor J. Coleman: Studio business works behind the scenes, but you've had a series of Domino effects of things that have happened here.

Victor J. Coleman: And I'm wondering if there's any sort of other groups back office groups that maybe are watching from behind the scenes and potentially could be another shoe to drop or do you think that what we've seen to this point, there's not really anything else that could happen out of nowhere like like what has happened over the past year or two.

Victor J. Coleman: Sort of a copycat risks yes.

Victor J. Coleman: Yes, there is no external risk after what's what.

Victor J. Coleman: Yeah, there is no external risk after what's put in place, but obviously, you know, the volatility of this industry, I mean, we've been doing it since 2007, and the reoccurrence of negotiations. And, you know, you hadn't had a strike since eight, and then you had one in 23. And now you've got this comes up in 24. You know, we're hopeful that as they continue to renew, that will go back to sort of the norm of, you know, no strikes.

Victor J. Coleman: Put in put in place, but obviously the volatility of this industry I mean, we've been doing it since 2007.

Victor J. Coleman: Is the rare re occurrence of negotiations and you hadn't had a strike since eight menu had one in 'twenty three and now you've got this comes up in 'twenty four.

Victor J. Coleman: We're hopeful that as they continue to renew.

Victor J. Coleman: We'll go back to sort of the normal no strikes for 15 years.

Victor J. Coleman: Yes.

Richard Charles Anderson: Okay, fair enough. Thanks very much.

Speaker Change: Okay fair enough thanks very much.

John P. Kim: And our final question comes from John Kim of BMO Capital Markets. Please go ahead.

Richard Charles Anderson: And our final question comes from John Kim of BMO Capital markets. Please go ahead.

Victor J. Coleman: Thank you. I just wanted to follow up on the potential strategic alternatives for the studio business and question the timing. I mean, do you believe you're going to get a peak multiple on depressed earnings? Obviously, the best scenario would be a peak multiple and peak earnings. But I just wanted to question the timing and the use of proceeds.

John P. Kim: Thank you.

John P. Kim: I just wanted to follow up on the potential strategic alternatives on the studio business.

Victor J. Coleman: And just really questioning the timing I mean, do you believe youre going to get peak multiple on depressed earnings obviously.

Victor J. Coleman: Best scenario would be peak multiple peak earnings.

Victor J. Coleman: Just wanted to question the timing and the use of proceeds.

John P. Kim: Listen, John. I think it's suffice to say that, as I said, we are evaluating alternatives. But we are not even going to give you a timeline by which those alternatives will take place. The interest level, I could say, is very high from a multiple of entities and options. And so we're going to look at it. And clearly, we're not at the position of talking about the use of proceeds when we haven't even got a transaction in place.

Speaker Change: Listen John I think it's suffice to say that as I said, we are evaluating alternatives we are not.

John P. Kim: Even going to intimate the timeline by which those alternatives will take place the interest level I can say is very high from a multiple of entities and.

John P. Kim: And options and so we're going to we're going to look at it and clearly we're not at a position of talking about use of proceeds when we haven't even got a transaction in place.

Mark T. Lammas: Okay, I mean, for all the volatility of the studio business, there was a growth story behind it. There are near-term growth drivers. So we thought maybe some of that might be delayed. I'm just wondering if you see similar upside in an office.

Speaker Change: Okay, I mean for all the volatility of the studio business. There was a growth story behind it the near term growth drivers. So we thought maybe some of that is delayed and I'm just wondering if you've seen similar upside.

Mark T. Lammas: In an office.

Mark T. Lammas: Well, this is Mark speaking. I mean, given our current level of occupancy, the pipeline, and the tour activity, we clearly see upside. I mean, that isn't to say that there is, you know, we obviously have ongoing lease expirations; we have to get our, you know, the retention, hit the retention levels that we've historically hit, with respect to that, get net new absorption. And we indicated in response to one of the questions that we are tracking with respect to our original projections on occupancy that we think there is, we can get back to year-end 23 occupancy levels. And so, yes, is the short answer. Do we see potential upside? Of course, we do!

Mark T. Lammas: Well this is mark speaking I mean, given our current level of occupancy the pipeline the tour activity, we clearly see upside.

Mark T. Lammas: That isn't to say that there is.

Mark T. Lammas: We obviously have ongoing lease explorations, we have to do.

Mark T. Lammas: Get the retention hit the retention levels that we've historically had with respect to that get net new absorption.

Mark T. Lammas: But.

Mark T. Lammas: And we indicated in response to one of the questions that we are tracking with respect to our original projections on occupancy that we think there is.

Mark T. Lammas: We can get back to year end 'twenty three occupancy levels and so yes is the short answer do we see potential upside of course, we do.

Speaker Change: Okay. Thank you.

Operator: This concludes the Q&A session, so I'll turn the call back over to Victor Coleman for any closing remarks. Thank you.

Mark T. Lammas: This concludes the Q&A session. So I'll turn the call back over to Keith. Thank you Coleman for any closing remarks.

Victor J. Coleman: Thank you. Sorry, we're out of time, and we appreciate everybody's support.

Victor J. Coleman: Thank you sorry, we're out over time and appreciate everybody support.

Operator: This concludes today's call. Thank you for joining us. You may now disconnect your line.

Victor J. Coleman: Talk to you next quarter.

Operator: Goodbye.

Victor J. Coleman: This concludes today's call. Thank you for joining you may now disconnect your line.

Operator: Yeah.

Operator: Ooh.

Operator: Yeah.

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