Pardon me, ladies and gentlemen, sorry for the delay. 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 of Investor Relations for Douglas Emmett. .

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO; Kevin Crummy, our CIO; and Peter Seymour, our CFO..

This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our earnings package at the Investor Relations section of our website. You can find reconciliations of non-GAAP financial measures discussed during today's call in the earnings package..

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

Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material..

For a more detailed description of some potential risks, please refer to our SEC filings which can be found in the Investor Relations section of our website. When we reach the question-and-answer portion, in consideration of others, please limit yourself to 1 question and 1 follow-up..

I will now turn the call over to Jordan. .

Good morning, and thank you for joining us. During the first quarter, we leased 1.2 million square feet of office space, which includes renewing a 250,000 square foot lease with WME through 2037. Even excluding that lease, we still did 950,000 square feet of leasing..

New leasing was just over 200,000 square feet, still not quite enough to drive positive absorption. As we said in February, we are not assuming a significant increase in new leasing demand this year.

However, our strong renewal rate tells us that our existing tenants, especially the smaller tenants, on which we have built our portfolio, are not reducing their space needs..

Despite challenges in new large tenant demand, our office leasing economics continue to perform well and leasing concessions remain low. We are still signing leases that are more valuable than the prior lease for the same space, with straight-line roll-up this quarter over 23%.

While that number benefited from the WME lease, even excluding that lease, we achieved straight-line roll-up of over 11%. As we mentioned before, our average leasing cost since the pandemic have actually been lower than our prior long-term average and remain below that of other office REITs..

We are well positioned to navigate this downturn and emerge stronger in the next growth cycle. I am confident in the long-term performance of our portfolio as our markets have excellent supply constraints and diversified demand from high-growth industries..

With that, I'll turn the call over to Kevin. .

Thanks, Jordan, and good morning, everyone. Now that we have stabilized our Landmark L.A. residential development and are waiting for the expiration of office leases to finish the final 2 floors at our office to residential conversion in Honolulu, we have shifted our focus to the fire and life safety upgrades at Barrington Plaza..

Office sale transactions remained slow in our markets. However, we are starting to see some sales in surrounding markets and hope that similar opportunities will soon come available in our markets. We remain ready to pursue acquisitions that fit into our strategy..

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

Thanks, Kevin. Good morning, everyone. During the first quarter, we signed 214 office leases, covering 1.2 million square feet, including 202,000 square feet of new leases and 987,000 square feet of renewal leases. This was the second highest quarter of renewal activity in our history..

As Jordan mentioned, office rental rates remained strong despite the challenges in new large tenant demand. This quarter, we achieved a 23.8% increase in the value of signed leases. Our in-place office rent per square foot is now the highest in our history.

Our high fixed annual rent increases mathematically lower our cash leasing spreads, though the WME lease signed this quarter lifted our average cash spread to a positive 1.9%. Even excluding the impact of the WME lease, straight-line spreads this quarter were positive 11.6%..

Our total leasing costs during the first quarter averaged $6.11 per square foot per year, slightly above our recent average due to some larger renewals. Leasing costs on new leases were only $5.64 per square foot per year, below even our recent trend and well below the average of other office REITs..

Our residential portfolio remains essentially fully leased at 98.9% and is generating healthy rent roll-ups. .

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

Thanks, Stuart. Good morning, everyone.

Reviewing our results compared to the first quarter of 2023, revenue decreased by 2.9% as increased revenue from new residential units, higher in-place office rents and increased parking revenue were more than offset by lower office occupancy, lower tenant recoveries and the removal of Barrington Plaza apartments from the rental market..

FFO decreased by 8.7% to $0.45 per share, primarily as a result of higher interest expense and lower revenues, partially offset by lower operating expenses. AFFO decreased 8.2% to $74.7 million. And same-property cash NOI increased by 0.7%, reflecting lower expenses, including some property tax refunds.

Our G&A remains very low relative to our benchmark group at only 4.7% of revenue..

Turning to guidance. First quarter FFO per share was above expectations due to lower operating expenses, and we expect straight-line revenue to be higher during the balance of the year.

Nevertheless, we have left FFO guidance for the year unchanged because we expect the operating expense savings and higher straight-line revenue to be offset by higher interest expense. As a result, guidance for full year FFO remains between $1.64 and $1.70 per share..

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 acquisitions, dispositions or financings..

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

[Operator Instructions] Our first question comes from Steve Sakwa with Evercore. .

Yes. I guess, good morning out there still. Jordan, I know given the small nature of the tenancy, it's hard to really discuss much of a pipeline because it's a little bit more like apartment leasing, it happens pretty quickly.

But can you maybe just talk about kind of what you're seeing in the marketplace? And what are some of the upcoming plans and tours looking like for re-tenanting the Warner Bros.' known vacancy up in the third quarter?.

Okay. Sorry about the delay, we had trouble getting on the website. But yes. So in terms -- I'll take them in reverse. In terms of Studio Plaza, they move out in 2 quarters. And we're going to probably do some work to the building, and we are having showings, and we're working on releasing it.

And my hope is that we release it to a multitude of tenants and not a single tenant, so that it's no longer kind of hanging over us away. But it's a great building and I'm confident we will lease it up..

In terms of the leasing pipeline, I don't know whether -- that's a tough one because the small tenant leasing pipeline is better than strong. I mean, it's great. We did -- just leave out the large lease that we did, 950,000 square feet is just a fantastic amount of leasing.

But it's really being driven by our small guys who are doing a lot of renewing and even new deals. But because of some larger ones, we're just not getting the 1/3 of new, because when a large one moves out, we're not getting the 1/3 of new that we need to make gains. And that's what's happening..

And in terms of taking temperatures, I can tell you, large tenants are very cautious regardless of whether you believe we're in a recession, going into a recession, or it's simply because the cost of capital and new investment has become so high that they're just improving earnings by shrinking their expenses as opposed to driving for new business or creating new revenue.

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Okay. And then maybe a follow-up question, I don't know, Stuart or Peter. If you think about kind of where guidance is and you look at what you did in the first quarter, it kind of implies something like a $0.41 plus or minus quarterly run rate moving forward. And I realize there's a little bit of seasonality in expenses.

But as you think about the cadence of FFO over the next couple of quarters and really the exit rate, how do you think about sort of where we'll be at the fourth quarter moving into '25?.

Yes. I mean -- it's Peter, Steve. So look, I mean you're asking for quarterly guidance. We don't really give quarterly guidance. But you know that there are a number of factors that affect us in the tail end of the year. The Studio Plaza, we mentioned, so they move out, right? So that's a negative in the last quarter.

And then, of course, Barrington Plaza is the other factor. So you see a couple of those..

You also see, we -- as you saw, we raised our interest expense guidance. And that reflects expectations that interest is going to be higher over the remainder of the year. So I think that can give you a sense of where we're headed. .

Your next question comes from Anthony Paolone with JPMorgan. .

I know this maybe sounds like quarterly guidance, but just thinking about your occupancy, because you kept the range the same for the year, but you also talked about just the retention coming in stronger.

So any thoughts on like when that troughs, or if there's a part of that range that you feel a bit more comfortable with at this point? Or has anything changed there?.

Well, I think we're pretty comfortable with the middle of the range, but that's why we gave a range. I'll tell you, I don't want to say this because we're in the middle of the year, but I'd always thought this was the year to hit the trough.

But I'm still, maybe probably because I was still a little surprised that inflation backed up, but then I was unsurprised that we had lower-than-expected new hiring, that just came out.

So I don't think we have -- you probably even have better information than we have because I really do feel like we're floating on the larger national economic trends..

I mean everything that's impacting us, and I said, important point, which is that we're not really impacted by -- we're not getting hit with work-from-home. We're not getting hit with oversupply of buildings and, therefore, we're just -- going to take a long time to absorb that new space and old space and all the rest of it.

We just have one simple thing happening, which is, in this economy, large tenants are like scaling back. And they're not signing lease. I can't -- they can't stay that way. I mean I know they have to be in business and make money..

So we're just waiting for people to have confidence in the economy and the cost of putting out new capital will be good, and then you'll -- then I think you'll say, all right, we've hit the bottom, we're climbing out. Because everything else about the company, we're working like crazy to control expenses. We're actually doing a lot of leasing.

There is activity in our market. There's nothing about our market that's bad. Actually, most of our market is good. People are in the office, in terms of utilization, it's basically like full. I mean maybe Friday is a little a little light, but that's it..

So I can't see anything else. So I think it all gets down to all of ours prediction about the national economy kind of encouraging large new investment again, which is the opposite of what the Fed is trying to encourage. .

And then just my other question is, can you comment on just any sort of capital markets activity you're seeing, or investment sales in your market, and maybe where values may be? And also just your own desire to put any capital out right now?.

Anthony, it's Kevin. Look, Downtown is absorbing all the headlines right now. And so there is activity, as I mentioned in my remarks, in the surrounding markets. We haven't really seen that much activity in our markets with properties that fit our investment objectives.

But we definitely are interested in putting out some capital on this market because we think that there are going to be some really incredible buying opportunities as most people are shunning office..

And we're very, very confident that the office market here, as -- based on the fundamental supply and demand, that we're very confident in the long term that we're going to do well, and we want to buy as many office buildings as we can at good pricing. .

The next question comes from Alexander Goldfarb with Piper Sandler. .

Jordan, just going back to Steve Sakwa's question on the tenants and the larger tenants.

Given that you've described L.A., and certainly, the West side is not oversupplied, or work-from-home issues, is this a matter of where the larger tenants are choosing to grow elsewhere? Meaning that, as these companies are restaffing and contending, whatever, they're emphasizing other office markets versus their L.A.

outpost? Just trying to understand..

Because, to your point, it's not like your tenants are huge 500,000 square footers that -- where you're talking 10s, 20s, 30s millions of dollars of investment. The investment is still small. So just trying to get better color into the mindset of these larger tenants of yours. Because certainly, they're smaller compared to your bigger CBD brethren. .

That's a good question, actually. I've been asked that. I do not think our problem is one of tenants choosing to relocate not only out of West L.A. or out of L.A., but out of state, which I guess is kind of at the gist of what you're saying.

And I'll admit, I'm not happy about some of the population statistics for California and movement that's happened..

But I don't think that's actually happening in our markets. And we are not seeing tenants say, "Great knowing you, now we're leaving." We're just seeing them say, "We're doing layoffs and we don't need this space now." And I don't think they're going to never hire people again or never need the space again. I just don't think they need it right now..

And a lot of that, you see that coming from tech companies, which you're hearing. I mean the people that drives a lot of that large tenant space, even larger than what we use, are tech companies, entertainment companies, like the research guys are still taking large amounts of space.

And I don't think they're saying we're abandoning California or we're abandoning L.A. I think they're just literally laying people off and saying we're taking less space and cutting our costs. .

Okay.

And second question is, as you look at your peers, your landlord peers, are you seeing tangible signs where you -- I mean, I have to believe that, given your balance sheet capital position, that there are some financially stressed landlords or maybe institutional landlords who want out of the business, where you guys would be able to win because you're willing to invest in the asset, fund the commission, the TI, what-have-you..

Are you seeing tangible signs that that's the case, or not really? I would just think that that would play to your advantage, but maybe it is and maybe that's why 70 bps down is the negative absorption, not more. I'm just trying to get a sense for how your capital position... .

Yes. I will tell you, part of what you're saying, I definitely think. I think that there are landlords that have vacancy that -- where the decision about whether they retain the building is not just a decision around, I have a loan coming up, or maybe I'm over-leveraged, or maybe they're not even over-leveraged.

But it's also a decision about the work and maybe even suffering and capital expense that they're going to have to go through to lease up a building.

And they might be saying, "Boy, we don't even have the people there to do this anymore." And that's a battle we just don't want to own right now, in terms of like dedication of expertise and all the rest..

That probably will create most of the opportunities that we'll see. I don't -- I think there might be a tiny amount of over-leveraged opportunities.

I think most of the rest of them will revolve around people just being burned out and not wanting to carry the load, the operating load of leasing up a building where they've let the occupancy slide a lot through inattention or distraction. .

And the next question comes from Michael Griffin with Citi. .

I wanted to go back to the commentary on the large space takers and being hesitant to kind of commit to leases.

Should we interpret that as meaning there is going to be continued negative net absorption later this year? And is it possible that you would look to cut up that space for some of your smaller guys? Or would you rather wait for large tenants to come back so maybe you could charge higher rents?.

Well, the absorption or whatever it is, is in our guidance of what we think this year. But in terms of cutting up space, we're super fast to cut up space because we lease to small tenants very fast.

Now being fast to cut up space is like talking to a guy that wants to run a 10K and go, "I'm going to run a marathon fast." I mean it's just a much longer process..

So when we -- but we don't hang out. If you get a floor back, if you don't think there's a good tenant for that floor, we cut it up and we lease it out. And it's probably because we have such a -- and that takes a very large and focused and just takes a great amount of expertise to be able to do that.

And so that's been one of our kind of superpowers, is that we can quickly cut up space..

And we have the -- we both have the construction company and the expertise to break up space, put in spaces that are very appealing to the market to take that as is. And we're able to then lease it like that very quickly. And that is, to a great extent, I know it doesn't feel like it, made a giant difference for us.

Because where we've lost 1 and 2-floor tenants, we have gotten in and dealt with it and we've leased them up. That's why we're just getting like little losses around the edges, we're not getting colossal losses..

So that's probably -- that has been a very big deal. And it kind of relates back to the last question, which is why I think there's people that have had some large tenants move out of their buildings and they're saying that -- which might be good buildings for small tenants.

But they're saying to themselves, "Oh my God, I mean, step one for me is I got to hire an architect, I got to higher space planners, I got to hire a contractor, I got to go through the city with plans, and I got to turn this into a multi-tenant floor, and this, like, I don't want to deal with it." And that's before I even have a lease.

So that might create opportunities for us, and it is something that I'm positive we're the best in this market at. .

And Jordan, how many of those large leases do you need to do in a quarter to really move the needle? And then how many are you doing actually on a quarterly basis?.

We need to do 3 or 4, and we're doing 1. And by the way, large is like over 10,000 feet. It doesn't have to be that big. 10,000 to 30,000 foot leases. And we used to do like 4 every quarter. So we just need to get a couple more back. .

Got you. And then I was curious if you could give a little more color on the WME lease.

Anything on concessions? Why offer the early termination right?.

And then, Stuart, I think you gave the GAAP rent spreads ex the William Morris lease, but can you give us the cash rent spreads ex the lease?.

You want to answer on all questions, Stuart?.

Yes. I think that -- so take in order, the concessions in the lease. Very reasonable, especially considering a tenant of this size. They were larger than our average small tenant concession, as you expect. But very reasonable TIs on that deal. Very importantly, they renewed all of their space. We've made that point. They didn't give us back any.

They took the full amount of space that they had. They extended it out 10 years, out to 2037..

The straight-line roll-up, without them in, was 11.6%. I gave that. I don't have the cash roll-up number in front of me, excluding William Morris. It was slightly negative and it was better than the prior quarter, I remember that. But I don't have the exact figure in front of me. .

The next question comes from Rich Anderson with Wedbush. .

So back to Warner Bros. Jordan, you said, gee, I hope it's not a single tenant again.

But why even let that into the process? Why not sort of driving on this break up the building as you just described you're good at, and take out that bulky situation out of the future for yourselves? So why are you even entertaining a full building release there? Or maybe you're not. I just didn't understand that. .

You know what? You should know better, that we're in the real estate business, so you know what that makes us, right? So that's right, a full tenant comes, do we have that kind of resistance? I don't know that we have that in us. That's why I say I hope instead of I insist.

I never -- it's probably built into our nature that, when we have a deal, we know we can make it and that's going to get done, we're probably going to do that deal and you get that dealt with..

But we might eat, but I will say, in reverse, which is that we're much faster than -- I think anyone else with a building like this would say, "I need to get another big tenant for it." And we don't do that. We'll start doing deals, a couple of floors here and there, and we'll just start leasing it up..

So that's, I think in the end, that is the best way to run -- it's an outstanding building. It's the best way to run the building. The building is spectacularly located. We have amazing signage we can offer. It has a huge amenity space. Exactly what people are looking for..

So I'm very confident in the success of the building. And that's probably the reason why there's a chance that one tenant would come and try and take it. But as I said, my hope is that we don't have to face that and that what happens is we get 6, 7, 8 tenants, and that's the way we lease it up, and then we no longer have this kind of event risk. .

Okay. Second question, just looking at the same-store stats on Slide 9. And multifamily revenues were exactly the same in both periods, $35.672 million. First of all, make sure that's not a typo.

Second, what flattened out revenue? Was it Barrington's impact? Was there something else? Just curious if there's anything onetime-ish in the multifamily performance this quarter. .

Yes. I mean they're looking at it. I mean I think multifamily revenue is going up and Barrington is going down, and all you're saying is that's kind of insane that those are the exact same numbers. .

So Barrington is not in there. .

That's good. Okay. .

Look, we're always going to have some variability quarter-to-quarter on revenues and... .

Not in this case. .

There's nothing -- yes. No, I know. There's nothing... .

Variability includes the same number, I guess..

Okay, let's triple, quadruple check that that's not a typo. But I don't think it is. We sure get a lot of accountants look at this thing before it goes out. .

That's right. No, we've looked at it several times, multiple times. .

All right. So there's nothing -- then what explains the flatness then if we assume it's the right number? I mean it's not... .

Yes. I mean, look, you have your rent increases and you have changes in occupancy in different buildings. I don't think there's anything unusual going on. .

I don't think -- I think it's pretty -- if there's a meaningful increase or decrease, you can look at something in the cost for it. If there's a lot of ups and downs and they happen to land at the same number, that's harder to explain. I know we don't have an explanation here for you. .

I just think in your multifamily product, it's a little bit different, a little bit more predictable and so on. So it just occurred to me. But I'll leave it at that. .

The next question comes from Peter Abramowitz with Jefferies. .

Just wondering if you could kind of comment on the pockets of demand you're seeing within the different submarkets. I think Boston Properties mentioned on their call Century City looking a lot stronger than Santa Monica and other parts of West L.A. So just curious if you could provide some context and your own thoughts on that. .

Yes. I think that lines up with what we saw in the quarter as well. We made some gains in Century City. Century City has definitely, as we've discussed before, been a beneficiary of some tenants that have left downtown LA. These are generally very large tenants.

So the large tenant demand in Century City has served that market well, and our buildings are doing quite well there as well..

Other than that, I'd say we're seeing -- we're continuing to see, as Jordan said, not quite enough new leasing to go positive in the rest of our markets. .

Got it. That's helpful. And then I guess just a follow-up on that.

If there's any kind of spillover from Century City, I think you guys have done -- pretty filled up there, where is it going? I guess, where are those tenants prioritizing if they can't find what they need in Century City?.

The natural alternatives are Beverly Hills, and that Wilshire Westwood corridor is where I would expect they go. But I can't give you an exact answer. .

The next question comes from Dylan Burzinski with Green Street. .

Just going back to the property taxes, I mean is it your sense that you can continue to see relief on this front as you get through the remainder of the year and maybe 2025? And then I know several quarters ago you guys flagged higher insurance cost as being a potential headwind.

Just curious sort of if you guys have worked your way through that or if you guys sort of envision that potentially coming up and being a risk to expense growth in the near future?.

Well, in terms of property taxes, the simple answer to your question is I think that it's likely that we will be able to file appeals and get adjustments. Now the impact is years away.

I mean when you do that, it takes them years to -- even if they accept -- even if they're not going to in a meaningful way challenge it, it can be years before you get the refund, because you have to keep paying on the old number..

So when we get refunds, they're complete -- they're very disjointed from when the original appeal went in. But of course, it seems like the assessor roles right now are overstating the value of many buildings, although they're probably having as much trouble figuring out the value of the buildings as anybody is.

That was your first -- what was your second question?.

Just if you guys can flag insurance -- yes. .

Yes. So we had some dramatic increases in insurance. I still think there are increases in insurance. They're probably not as bad as they were the last couple of years. But the insurance industry is going through a lot right now, on many fronts, not just in terms of insurance property claims, but liability claims and all the rest of it.

And it's causing us to really have to work hard to keep those costs in line..

Although I'd say, in general, I think we're able to do it, including making adjustments to policies, taking some of the early risks and stuff like that, because we're pretty good at controlling our costs and claims. We're very good at it actually. But because of things that are happening all around the world, we're caught up in just increases.

And so I don't think it's as bad as it was the last couple of years. .

That's helpful. And then maybe just a quick one on parking. You guys are still below pre-COVID levels.

Is this sort of the run rate that we should expect until you guys are able to drive further occupancy in office? Or is there some other potential upside to parking income even absent additional occupancy gains?.

Okay. So I actually think parking income is up relative to occupancy and all that's left is to get high -- is to get higher occupancy to increase parking. So even more accurately, I think that's all we have left as a way to get back to those and above.

Because we've already probably exceeded, for the level of occupancy we're at now, we've got -- actually our rates are up. .

And sorry, you kind of cut out, you said rates are up on parking?.

Yes. So for the level of occupancy we're at now, rates are actually up. So probably all we have left is to lease more space. And then if you're just comparing just the gross number to the gross number before, that's all that's left, is to lease more space and then more people coming into the building.

Because there's not -- it's not like -- I mean we could continue to make rate gains and overcome it that way, but the easiest way is just to finish -- get the leasing back up. .

Makes sense. .

And the next question comes from Upal Rana with KeyBanc Capital Markets. .

So you have 3 swaps expiring this year with about $1 billion total.

Is it still your expectation to let those loans float, or has that changed? And as like sort of a follow-up, what were your -- how many rate cuts that you had priced in the beginning of your initial guidance versus where you are today?.

How many rate cuts?.

Yes, in terms of... .

Assumptions changed from our first guidance to now. .

Oh. Rate increases. How many times have we increased what we expect the rates to be... .

No. If you're looking at the forward curve. I mean, basically, when we do our interest guidance, I mean, look, it's -- obviously, people have different points of view on what's going to happen over the rest of the year. We just use the SOFR curve, the forward curve at the time that we're putting our guidance together.

And that's essentially what we used. So obviously, the curve is expecting rates to stay higher for longer. .

The next question comes from Alexander Goldfarb with Piper Sandler. .

I'm still Alex Goldfarb. But Alex Garfaf wants to ask a follow-up. Question on -- and Stuart, maybe you said this in the -- spattered about in the responses. You guys spoke about insurance, you spoke about real estate taxes.

But what were the items that were below your expectations in OpEx in the first quarter? Were those the 2 items? Were those were just referencing other trends? Just trying to break out. And then why you think that the savings in the first quarter won't continue on. .

Yes. I mean it's Peter, Alex. And my name hasn't changed. Yes. No. So I mean we talked about the tax refunds. That was a portion of the up in this quarter. The other savings, I mean, they were in a bunch of different categories, and some of it was really the timing and may come back later in the year. Hard to say..

I mean we're controlling expenses pretty closely. But you factor in that there are some things that is just a timing difference, and that's in our guidance for the year. .

Yes. But Peter, on that front, your renewal leasing activity is pretty healthy. It's the new that's the issue. So it doesn't sound like the hesitancy to change guidance is based on the leasing, because that market sort of is what it is.

But it sounds like you guys have some potential operating savings that maybe you're hesitant to really commit to at this point, it almost sounds that way.

Is that a fair way? It sounds like there could be further?.

The biggest factor is the increase in interest expense, right? And that outweighs all the good things that we talked about. So yes, we increased our straight-line guidance, and yes, we saw some expense savings. But we're also anticipating pretty steep increases in the interest expense, as you see in the change in our assumptions. .

Right. But let me ask you this, Peter. Yes. I mean we certainly know what interest rates are going to be if you assume flat.

So my question is, if you achieve the same level of operating savings in the first quarter through the balance of the year, would that put you through -- would that make you at the high end of guidance, exceed the top end? All else equal. .

It depends on where the savings are. Not all of the expense savings -- because we're consolidating a bunch of JVs, it gets relatively complicated. But obviously, if we were able to maintain savings through the rest of the year, we would give a different guidance range probably. .

Well -- okay. There are savings from property taxes, which he mentioned, there's some timing savings, and there's some permanent savings. But the interest costs overwhelmed it. And so if all you're saying is, if you just didn't have any interest costs, then we'd have savings. That's correct. .

No, no, I didn't mean that, Jordan. I just meant like if we don't assume -- okay. Cool. .

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

Okay. Well, thank you for joining us. And sorry about the delay at the beginning. And I'm sure we'll be speaking to most of you individually later. Take care. .

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect..