Douglas Emmett Inc (DEI) 2025 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's quarterly earnings call. Today's call is being recorded. (Operator Instructions)

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

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

During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict.

Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website. (Event Instructions)

I will now turn the call over to Jordan.

Good morning and thank you for joining us. During the fourth quarter, we had good new office demand and very high retention. As a result, we achieved 100,000 square feet of net positive office absorption while maintaining modest concessions and stable market rents.

On the multifamily side, our strong demand and increasing rents again led to full occupancy and an increase in same-property cash NOI of almost 5% compared to the prior year. You may recall that our Los Angeles residential assets are concentrated in the very high-end Westside. I am also proud of the fact that by aggressively focusing on revenue growth and expense control, we achieved positive same-property cash NOI for the year.

For the full year of 2025, we also made substantial progress on several key capital market objectives. We acquired 10900 Wilshire and are close to beginning construction to convert it into a high-end mixed-use residential and office building. We strengthened our relationships with our joint venture partners. And as a result, we were substantially oversubscribed for our 10900 Wilshire acquisition.

We started construction at The Landmark Residences, our 712-unit redevelopment in Brentwood. In the Burbank Media District, we converted Studio Plaza into a multi-tenant office building and leasing is progressing nicely. And we successfully executed almost $2 billion in debt transactions at competitive rates, both extending our maturity profile and further fortifying our balance sheet.

Looking ahead, we have a straightforward strategic plan for 2026. Our primary focus remains office leasing, including re-tenanting Studio Plaza. Our first quarter always has somewhat higher seasonal move-outs, but our overall lease expirations during 2026 are relatively low. We will continue to refinance and extend maturities at advantageous rates.

Construction of our new high-end residential units at The Landmark Residences and 10900 Wilshire will, of course, be a key focus. We have begun planning additional residential development sites on our land in the Westside. And we believe we can make more very high-quality office acquisitions in our markets, where current valuations offers significant discount to long-term values.

2026 will surely present new challenges and opportunities. We feel well positioned for both. I remain confident in the long-term fundamentals of our markets, the high quality of our portfolio and balance sheet and our incredibly strong operating team, which has carried us through many other challenging periods.

With that, I will turn the call over to Kevin.

Thanks, Jordan, and good morning. We're making progress with our development portfolio. At 10900 Wilshire and Westwood, we expect to commence construction in 2026 to convert the existing office tower into 200 apartments and to develop an additional 123 units in a new building at the site. Our very successful phased Honolulu conversion project demonstrated that full floor office tenants and apartments coexist quite well.

At Studio Plaza and Burbank, we have completed extensive common area upgrades to transition this asset into a premier multi-tenant property. We are well into lease-up with construction fully underway on the new tenant suites. In Brentwood, we have started construction on the transformative redevelopment of our 712-unit Landmark Residences.

After refinancing over $1.6 billion of loans during the first three quarters of 2025, we had another productive quarter. In November, one of our consolidated JVs reduced its outstanding debt by $60 million and effectively fixed the interest on the remaining $565 million at 4.79% through November 2027. That loan matures in August 2028.

In December, we closed a non-recourse first trustee construction loan, which will provide up to $375 million for the redevelopment of our Landmark Residences project in Brentwood. As of December 31, we had drawn $49.5 million against this facility. The loan will mature in December 2030 with interest at SOFR plus 245 basis points.

We entered into accreting swaps that mature in January 2030 to effectively fix the interest rate at 5.8% per annum on 75% of the increasing estimated balance outstanding under this loan. Looking ahead, we are well positioned to address our remaining 2026 loan maturities and capitalize on attractive acquisitions during this stage of the cycle.

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

Thanks, Kevin. Good morning, everyone. For all of 2025, we signed 896 office leases totaling 3.4 million square feet. During the fourth quarter, we signed 224 office leases covering 906,000 square feet, including 274,000 square feet of new leases and 632,000 square feet of renewal leases. Office tenant demand continues to be spread across the multiple diversified tenant industries in our markets.

During the fourth quarter, financial services, legal, health services, education and real estate led the way, but no one segment provided more than 20% of tenant demand. As Jordan said, with the combination of good new demand and high retention, we achieved 104,000 square feet of positive net absorption for the quarter.

We continue to sign higher value new leases, increasing the straight-line value over the life of leases executed in the quarter by 2%, as our 3% to 5% annual fixed rent bumps more than offset the impact of beginning cash rent that was 10% lower than the prior leases ending cash rent.

At an average of only $5.76 per square foot per year, our office leasing costs during the fourth quarter remained well below the average of other office REITs in our benchmark group. Our residential portfolio with cash same-property NOI up 5% compared to last year's fourth quarter, continues to enjoy strong demand and remains essentially fully leased.

With that, I'll turn the call over to Peter to discuss our results.

Thanks, Stuart. Good morning, everyone. Compared to the fourth quarter of 2024, revenue increased 1.8% to $249 million, reflecting increases in both office and multifamily revenues. FFO decreased to $0.35 per share, and AFFO decreased to $53 million, reflecting increased interest expense and lower interest income, partly offset by strong multifamily performance. Same-property cash NOI decreased 1.4% for the quarter, largely as a result of higher office operating expenses, offset by multifamily NOI growth. At approximately 4.9% of revenue, our G&A remains low.

Turning to guidance. We expect our 2026 net income per common share diluted to be between negative $0.20 and negative $0.14 and our FFO per fully diluted share to be between $1.39 and $1.45. Our guidance primarily reflects the impact of increased interest expense. We have not assumed occupancy growth despite our fourth quarter results, though we will be watching it closely.

For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges or other possible capital markets activities.

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

(Operator Instructions) Alexander Goldfarb, Piper Sandler.

Jordan, I guess maybe we'll just go to the stock first. You spoke -- I think Kevin spoke about doing acquisitions, but obviously, the stock has languished on our numbers, trading around a 9% cap. How do you -- I know that you want to assemble more assets but at the same time, the stock just seems to be incredibly attractive versus buying office directly. So given the persistent depressed value that the stock is trading, are you more inclined to dial-back from acquisitions and focus more on stock buybacks or is your view that you still want to grow assets still there?

Okay. So when you talk about stock buyback at a time like this, one of the problems for it, which I like -- I mean, I understand what you're saying because it does seem like quite an opportunity is that for the company to buyback stock, mathematically in every other way, it means I'm increasing our leverage. And I'm just going to -- I'll say right now for everybody, I'm not working to increase our leverage much, other than where I know it would really need to be judiciously used to protect the company.

We know we have leasing, we have debt that we have to be very careful and monitor. It's in a good place. We have a lot of room on it, but I don't want to let it get away. Times like this is where it can get away from you, right? We have our development projects that have to get finished, right? And then we have our kind of growth platform that we want to build, right.

So we're trying to watch all of them and moderate all of them. But for new stuff, the growth platform in buying is very forgiving because we're able to make deals with our joint venture partners. We've done a lot of work to make sure that we have them there, and we're able to get control of great properties at great prices without stretching the balance sheet very hard because we just take a piece of those deals.

And so for us now, that's the best way to go. And I'm just not comfortable doing this kind of double whammy regardless of how great the price is of buying stock, which effectively I'm doing with leverage and in like two different ways, I'm increasing our loan to value.

Okay. And then the second question is the positive absorption, clearly a good thing. You've had fits and starts before. Are you seeing a fundamental shift in market demand? Or was it just some year-end activity that drove the absorption? Just trying to understand if L.A. is finally healing or if there's still a long way to go? Obviously, your guidance suggests some caution for the upcoming year.

Well, I mean, one point doesn't create a line. But I mean, I'm obviously hopeful that, that's the case. Our pipeline today is equally as strong as it was last quarter. Now, we need to perform well for many quarters in a row for us to say that we're like solidly on the path to recovery. But I mean, I feel very good about what's going on, and I feel great about the way the last quarter rolled out and my hopes for this quarter.

Stephen Sakwa, Evercore.

Jordan, maybe just a follow-up on Alex's question on kind of leasing. We're obviously going through a bunch of kind of larger mergers within kind of the media business. And I realize the large tenants per se are not your kind of focal point for leasing but there's obviously derivatives that kind of come off of those larger companies and probably would be in your portfolio. So I guess, what concerns, if any, do you have about kind of industry consolidation within kind of the media space right now?

Well, I'm not concerned that the consolidation will impact us, if you're saying concerns with respect to Douglas Emmett. I do think the consolidation will help to kind of rejuvenate the making of movies and all of that. But because I think the guys that are buying those other platforms aren't buying them to shrink them. But whether it be Netflix or else, I don't see --

And the tenants we have probably at this time are growing and making money because of the consolidation because they're all the service providers of those guys and the lawyers and all the rest of it. And I don't see them going going down. Now, of course, at the same time, we feel pretty good with how things are going at Studio Plaza. So maybe it's having a positive impact for us out there. I don't know, but we're certainly still leasing there.

Okay. And the second question, I guess, last quarter or this quarter, you've disclosed you have about 9,000 apartment units that you could develop, I think, primarily on either vacant land or parking garages. It really doesn't disrupt much of the income-producing assets that you have. I'm just curious, how quickly are you able to kind of put those into service? Are most of those kind of entitled and ready to go and it's just a question of designing new buildings? Or what do you think the rollout of that pipeline looks like? And what are the yields that you can get on those assets if you were to start them today?

So I actually mentioned in the prepared remarks, there was like one little short sentence that we have already started on planning -- architectural planning on two more projects. And we got kind of first rounds on that, and that's now moving through the system, and that will represent -- that's another pretty good amount of units, similar to what we've got going on right now. So that's been started with the architects. That's on both, on Westside sites. I'm excited about both of those because it's fun, this part is fun. Every other part is not fun after this. But those have gotten going.

So to answer your question directly, we're actually already moving to another, I don't know, 500 or 1,000 units. And what was the second part of your question, what kind of yields would we get? I don't think --

Yeah, what kind of yields on cost?

Yeah. So I don't -- like obviously, we own the land, and you stated correctly that it's not very disruptive. Most of these sites are not very disruptive to the income-producing properties that are already on that land. And I just can't imagine we're going to do anything that's being -- be less than like when finished an 8% cap rate. And I hope better. And historically, it has been better. But nothing is going to be below an 8%. Of course, it's not including the cost of the land. And so I'm not saying something that's so spectacular.

Nick Yulico, Scotiabank.

I guess, first off, I just had a question on the guidance. Can you explain in terms of the straight-line rent this year is higher than it's been in prior years, kind of what's driving that? I wasn't sure if it was all related to Studio Plaza. And if you could also just tell us sort of what's assumed in terms of NOI benefit for Studio Plaza this year, if any?

Yeah. Hi, Nick. It's Peter. So yes, our guidance for straight-line is higher this year. It's an estimate of what we think it's going to be. Obviously, a lot goes into that. Studio Plaza is a piece of it. You'll see that last year's straight-line was higher than the year before. So it reflects the existing leases that we have, it reflects the new leasing that we do and the occupancy that takes place. And we're not ready at this point to give a breakout on NOI on Studio Plaza.

Okay. And then the second question is in terms of leasing and just thinking about kind of the bogey you guys have to hit each quarter. I mean it does feel like it's sort of in that 250,000 square feet of new leasing, which you did got done above that this quarter to kind of drive absorption versus your expirations. Is that kind of the right way to think about it in terms of the math of how you can keep up positive net absorption is hitting that type of new leasing number each quarter?

Hey, Nick. It's Stuart. I think better than a number like 250,000 or 300,000 square feet, look at the percentage of leasing we're doing new versus renewal. We know pretty reliably that our retention rate is around 70%. So if we're doing 30% or more of our leasing as new leasing, when we look at those quarters, those are generally positive quarters. That was true this quarter. It was about 30% new leasing overall new versus renewal. So sometimes we've had quarters that are positive less than 250,000 square feet and sometimes we do more than 250,000 square feet, and it's still a negative quarter. But I think that kind of 30% is more reliable.

Blaine Heck, Wells Fargo.

Hoping you could talk about UCLA. They obviously are still your largest expiration this year and have additional space expiring through 2033. Jordan, last quarter, you talked about some issues with government funding impacting them, but it looks like their total lease with you increased this quarter. So maybe talk about what happened there and whether you have any updated color to provide on your ability to retain them as their leases expire.

So when you look at UCLA, I know you're looking at like that largest tenant thing on all the leases together. They really do operate as completely separate groups, leasing or not leasing based on the departmental or whether it be the medical center or whatever's needs. And there are just many independent divisions that could be or not be leasing. I think that in general, I don't see them substantially trying to shrink anymore.

But like I said, to make a global statement about the university and their desire for outside office space is a huge mistake. I mean you got to look at whether individually the medical center or individually what's happening in the other departments that MBA program or whatever that have space scattered around or admin divisions. But do you have something you want to say?

Yeah, Blaine, I was just going to mention that the expirations this year, that's five leases. So they're not large leases. I mean they're around 12,000 square feet on average. They're not very big.

So some might go out, some might stay, some might expand. You just don't --

No, that's fair. That's helpful color. Second, I was hoping you could just provide a little color on any political initiatives you guys are pursuing in '26. I guess what specific regulations are you kind of targeting in that process? And how is that impacting G&A in '26?

So over the last, I don't know, six years on the even years, which is when elections are, we've seen politics having a meaningful impact on the operation of the company, and we realized we have to get engaged in that. And so when there are things going on that can impact Douglas Emmett, we have to get engaged in it, and we are. And therefore, we're running into these additional costs that run through G&A in each of these periods. I hope that will wane over time. But certainly, politics are a hot topic right now, and it impacts real estate in California and in our city.

Yeah, it's Peter. I'd also just point out, we've historically had lower G&A than other office peers, and we do expect that to continue even with a little bit of room for advocacy spending.

Seth Bergey, Citi.

I just wanted to ask a little bit more on the additional residential development sites that you mentioned in your prepared remarks. What is kind of the size and scope of those projects? And how do you think about funding needs for those?

They range from 300 to 500 units for each of them, maybe as low as 250, but really more 300 to 500 that you might be able to build more, but it's probably kind of the type of sizing we would build. We typically fund all the early stages and then we look at the cost to do the construction. And then at the time we're doing that, we got to look at our cash positions and the rest of things regarding the company, and we can bring in -- it's very --

Those are the type of deals that -- very easy understates how easy it is to bring in partners on those deals. But also, they're pretty high-yielding deals because remember, I was asked before, and I said I think it's like an 8% cap and put a plus sign on that. And because it doesn't take a huge amount of capital out of the gate, right, because when you're doing construction, you're leaking equity in, over a couple of years as you're doing the work. Most, many times, we can fund it ourselves. But then, of course, there could be a time when we have to bring in a partner.

That's helpful. And then I guess just on the leasing, I think you kind of said the pipeline size is kind of similar to last quarter. Are you seeing any of that change between the mix of new versus kind of renewal leases? And then just broadly, any kind of changes that you're seeing with tenant behavior, whether continuing to look for additional space or anything to call out with different industry groups there?

Yeah. Seth, when we're talking about the pipeline, that's kind of only talking about new. Our renewals, like I said, very reliably going to be in that 70% range. Last quarter was a little higher, which was good. But typically, it's right around 70%. So the pipeline that Jordan referred to is on the new side. You asked about industries or you asked about expansions and contractions. Last quarter, our expansions outpaced our contractions. We look at that every quarter. It's generally been more expansions than contractions the last few quarters, which is also good to see.

Rich Anderson, Cantor Fitzgerald.

So I know you don't want to divulge too much on the process at Studio Plaza only to say that it's progressing nicely. But 450,000 square feet, obviously going multi-tenant. Do you think that the average tenant size at the end of the day will be still larger than your typical for the company? Or do you think it can get into that sort of 5,000 square foot average range? I'm just wondering what the end tenant might look like at the facility?

It's larger. My guess is we end up with like an average size of a full floor, and maybe even bigger.

What does that equate to?

For like 25,000 feet --

I think those floors are bigger than that. But yeah, it will start out larger and then over time, probably shrink, but it's going to start out much larger than our typical building.

I don't -- we only have a couple of floors that kind of broken up to the smaller tenants. I don't think we have a lot of that.

Yeah. Okay. And then second question, sort of absent from the conversation a little bit lately has been Honolulu and just because of everything that's going on in L.A. I'm curious how you're feeling about the market today. You've got Bishop done, obviously. Is there anything on the priority list in Honolulu? Is it kind of running on autopilot right now? I'm just curious if you have any comment at all on the market as it stands today.

First of all, I've never met over 1 million feet that ran on autopilot with the tenants we have in Honolulu. And not to mention the -- what do we have 2,000 or 3,000 apartment units on 70, 80 acres. So it's definitely not on autopilot.

If you're talking about like next capital step, next steps in the capital side, not -- I mean, in a sense, you got to love autopilot because it means you're leased in the 90s, which -- it's a bright star in the portfolio. But the next big move there very likely is we had started and even during COVID, Kevin on Zoom spoke to the City Council and got some special entitlements for us on, with respect to residential towers. We have a 12-acre trying to sit downtown. We have 30 acres that we've already built 500 units on, in that Red Hill area next to Tripler Hospital. And then we also have 30 acres out in the rural Kunia area.

And so we have significant development sites there. And so the next step as like costs and everything lines up there and frankly, capacity and attention and all the rest, we need to move and start building out those additional units that work extremely well. They're putting the light rail in. It's very close to our projects. So there really will be a good way to get back, not that downtown needs to help. Downtown is doing extremely well. But these projects are well suited to get like, get back and forth to where the density of jobs are.

So I mean, it's just great because we spent so many years explaining to you guys we thought Hawaii was going to come back. And so I don't feel like I got my due to ask the question the same amount of times now that Hawaii is doing so well. But those are the next steps on capital.

Okay. Great. And if I could just sneak in one quick one. Last quarter, I asked about Olympics and whether there's any sort of forces at work positively, and you pointed out the Olympic Village at UCLA and some other stuff going on in Santa Monica. Is there any update to -- is it just too short of a time, three months previous? Or is there any update to anything going on that's sort of tethered to the Olympics that you're getting yourselves involved in?

Well, we are seeing -- I have been in some meetings recently. There's a lot of tension now, that's being focused on preparing the village for the Olympics. I've been in some meetings for it. And people are definitely now taking seriously the time we have left and the stuff that needs to be done, and I see them working on it. And it is coming out of the council, it's coming out of UCLA, it's coming out of private ownership in the village. Everybody is having meetings and focused on it.

Jana Galan, Bank of America.

Congrats on a nice fourth quarter. When thinking about your 2026 cash same-store NOI guidance, what are the assumptions for kind of cash re-leasing spreads? Is there a range there? Or do you think we remain in this kind of low to mid $40 per square foot? And then if you can maybe give a little color around which submarkets you think that may start to inflect positive?

Yeah. I think you should assume the leasing spreads stay -- we've been in a pretty consistent range over the last couple of years. Our contractual rent bumps built into all our leases, we get between 3% and 5% increase every year on basically all our office leases. So our straight-line spreads have stayed positive. The overall value of the leases has been increasing. That's been nice. That increase in cash every year is really nice to get. It makes that cash re-leasing spread metric really hard to go positive unless your market rents are really moving up at a good clip. But I would expect those metrics to stay pretty stable.

As far as submarkets, I don't want to make any predictions about submarkets and which ones inflect. I think we've got a lot of leasing to do with the exception of Hawaii kind of across the board. And all our markets had good positive momentum in Q4. So we'll hope that continues.

And then just following up on the residential development. When will the kind of first units at Landmark start delivering? And then maybe when is 10900 Wilshire expected to start delivering units?

We got a couple of years on Landmark L.A. It's years out. Construction has started, but you're looking out two, three-plus years. And at 10900, it's a different type of conversion. So it's both building a building in the back and then converting floors, which, of course, we, at the same time, are also willing to have office tenants here.

So the first move that's going to probably happen there is the amenities. We try and get them in and then we just start moving through full vacant floors building out and building out the apartments. Historically, once we get them built out, which is at construction, we expect to have start this year. Once we do it, the single floors tend to lease very fast. So my guess is -- my hope is that we'll get those floors. We're going to start that later this year, and those floors will be ready and start leasing. I'm not sure you'll see much of an impact of revenue actually as compared to our whole company in 2026, but pretty hopeful for 2027.

Upal Rana, KeyBanc Capital Markets.

Jordan, going back to the first question on acquisitions versus buybacks. It sounds like you prefer acquisitions at the moment. Maybe you could talk a little bit about the transaction market in L.A. and what kind of opportunities you're seeing out there and what kind of opportunities maybe would get you to transact today?

Well, I thought the way that Stuart drafted the first round of our script, and the way he said it, that was such a good way to say it, that we probably repeated it three or four times. But the long and short of it is, you can never argue that value today -- oh, yeah, the value we're getting today is less than the value today. The value today is the value it sells for. That's the value today.

But what he said was, which is how we feel is, I think that the transactions we're doing today and that we can buy today will be -- the pricing is very good compared to where we think the long-term value is, for these properties. And that's a reason -- and it's always hard in markets like this to do this. That's a reason -- and I mentioned it with respect to our capital -- our equity partners and the time we're spending with them. That's a reason to work double hard and make sure that even though you have a huge focus on whether it be refinancing your debt, huge focus, obviously, on leasing, you can't take your eye off the ball of an opportunity like this.

So we're working very hard to make those happen. I am extremely confident that we will deliver more on the acquisition front to you in 2026 of deals done that we really feel are good deals. I'm not telling you they're off market to today, but I'm telling you, I think they're very good deals for companies like ours to run over a period of time, and you'll get an opportunity to see those. We are going to make those deals. I don't know how many but we'll make some.

Okay. Great. That was helpful. And then could you spend some time talking about where L.A. stands in terms of the anti-rent gouging ordinance that was passed last year after the fires and what that could mean for future multifamily rent growth for the company this year?

That was very odd. I mean I don't -- where we stand, we don't -- actually it expires again in like three months or something. Is that --

Yeah. I don't think it's been super impactful. I don't think it's material for what we're doing, for our existing tenants, the increases. We weren't generally trying to go up huge amounts on them.

Yeah, we weren't trying to go up that amount.

And you saw our multifamily growth. It's been fantastic in 2025. But the Anti-Gouging thing really hasn't had a material impact.

I mean we're calling fantastic [5s] and [7s] and stuff that I think gets you to like 10%. To me, it's the worst form of just like political grandstanding, but I'm not sure what it's doing to actually -- whether it's having any impact on anyone. And by the way, the people -- I don't want to spend time on it. It's not doing anything.

Dylan Burzinski, Green Street.

Maybe just touching on sort of -- or I guess, could you touch on any differences in depth of demand across the Westside versus the Valley? Are you guys seeing any sort of outsized strength in the Westside? And maybe you can kind of just talk about expectations for whether or not you see the same timeline of recovery for those areas within the portfolio?

Yeah. Well, I'll say that we did have positive -- the positive absorption we saw was across the board. The only market that we actually had a dip a little bit in Q4 was Hawaii, which is our strongest market, and our pipeline there is very good. But every other market we're in, in L.A. moved up in the fourth quarter. So great to see that demand kind of across the board.

In past cycles, we've had markets that historically were Santa Monica and Beverly Hills for a long time were our strongest markets. I suspect for -- they've got unique aspects that drove certain tenants there, to those markets. I suspect that those markets over the long term will continue to be some of the best. But our markets were in our core markets for all the reasons we like, the supply constraints, the proximity to expensive housing, the amenities in these areas. So I expect them all to perform well over the long term.

John Kim, BMO Capital Markets.

I wanted to ask about how you see the occupancy trajectory during the year? Looking at your lease expirations, it is heavily weighted towards the fourth quarter. So I'm wondering if you envision occupancy kind of picking up during the year until you hit that headwind?

John, we mentioned a little bit on the call the seasonality of move-outs for whatever reason, more than their fair share of leases expire at 12/31. And those move-outs tend to impact the first quarter, but those expirations are -- they listed in Q4, at the 12/31 expirations. So that's typical seasonality for us. The overall move-outs for the year are below kind of average, the rollouts, I should say expirations, not move-outs. So the expirations relative to kind of historical averages are low, which has us optimistic. And we do expect a little bit of seasonality always to happen for those 12/31 expirations.

Okay. And just wanted to ask on your views, Jordan, on the Hollywood Union negotiations, which have started up again beginning with SAG-AFTRA. Has this impacted leasing demand at all in your portfolio or for an asset like Studio Plaza? When I look at your 2023 leasing, that was sort of a light year, and that's the year of the big Hollywood strikes. So I'm just wondering if you view that to be a potential issue this year?

I'm sure for some people, it will be an issue. For us, I don't view it as having -- any issue for us at all. I think we barely have any exposure, and I haven't -- other than knowing it's happening, I haven't been following it. And believe me, I follow a lot of other things that I am worried about, but that's not on the list.

The people you talk to, business leaders, are they more concerned of a Hollywood strike?

I don't know. I am surrounded by entertainment people, and none of them have brought me -- come to me and going and said this is the disaster in the making. So I don't know if it's just that unions have gotten used to doing. I really don't have an opinion on it. It hasn't been a subject even with the people in the entertainment business that I'm talking to.

And that concludes our question-and-answer session. I'd like to turn the conference back over to the company for any closing remarks.

Well, thank you all for joining us, and I'm sure we'll be seeing many of you during the quarter. Goodbye.

Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.