Hudson Pacific Properties, Inc. (HPP) Earnings Call Transcript & Summary

Good morning, everyone. I'm Jamie Feldman. I'm the office REIT analyst here at BofA. I'm delighted to welcome you to our session with Hudson Pacific Properties. Joining us today from Hudson Pacific are Victor Coleman, CEO and Chairman; Mark Lammas, President; Harout Diramerian, Chief Financial Officer; Art Suazo, Executive Vice President of Leasing; and Laura Campbell, Senior Vice President, Investor Relations and Marketing. So as with all these sessions, we're going to have the company start out with a brief overview. Any update they want to provide here at the conference, and then we'll get into Q&A. Please be sure if you do have questions to enter them into the Veracast system, and I will add them to the conversation as we go. So to get it started, I'm going to turn the call over to Victor to start the conversation, and thank you all for joining us.

Hi, Jamie, good to see you, and thank you so much for hosting this. I know it's a lot of energy for your firm, and we all appreciate the time and energy around it. So kudos to you guys. So welcome, everybody, and we welcome any Q&A on this. I'll just give a very high-level overview of where we sit in our markets, specifically because that seems to be the hot point of where you want to know what's going on. And we dive into leasing and in aspects of market rates and activity around acquisitions and dispositions and the likes of that as we get into the Q&A. But we've seen quarter-over-quarter tours increase specifically for larger tenants who obviously have a focus around a game plan or a long-term business plan that's not going to be more to the immediate need of space. The smaller tenant activity is picking up throughout our portfolio, but it's focused much more on space that's readily available to move in. I've said this since the beginning of the pandemic, the unfortunate side of tenants and landlords or the tenant leases expired during the last 1.5 years or even in the next 6 months. Those are the tenants that have to make decisions right away. And we're finding that sometimes those decisions are a little knee-jerk and sometimes they're a little bit more long term. But I mean, we'll get into a little bit of our pipeline and Art can talk a lot about that, but our pipeline is very strong. We have lots of tenant activity. We've got multiple leasing activity and some of our larger expirations currently or in place over the next 12 months, we've got activity as well. Our pipeline around our development is very strong. We are in multiple markets, evaluating either breaking ground, breaking ground down the road or looking for tenant activity, and there is an asset that we currently have right now. That is not being reviewed and looked at by the brokerage community as well as various different tenants, which is encouraging as well. I obviously will comment on the studio business in a second, but just to finish up on the office side. Our mark-to-market rents going into the pandemic, we're probably close to 20-plus. And we have been fortunate enough as we are redoing leases and renewing leases and making new deals to seeing that our mark-to-market is still in the double digits, probably in the low teens right now. So we probably lost 5 to 6 maybe 7 basis points on that. But we're still holding firm. And for the most part, that's consistent throughout our whole portfolio with the larger tenants that are looking at the activity. Lastly, we have our One Westside asset, which is our focal point asset in West Los Angeles that Google is moving into, and we should have TCO this week, and they should be taking over the space to start building out some time in the fourth quarter. So from the office side, I think it's a little bit more optimistic than it's been over the past few quarters. From our Sunset Studio portfolio, we made an announcement on 2 acquisitions, which we can get into and talk a little bit about the synergies in that. We are looking at building a couple of different studios and markets that we are currently in, in future markets that where we've announced and some that we haven't, as well as bidding on some assets. And that portfolio, that team and that relationship with Blackstone is an ongoing one and something that we're going to strive to continue to build at a rapid pace, given the capturing of content currently today. So that gives you a little bit of an update. Jamie a lot to talk about. So throw out questions to the team, I want to welcome Harout, Laura, Art and Mark, all here and they're all prepared to talk and contribute.

Okay. Great. Appreciate the overview and very helpful. So I guess just big picture. I think everyone is trying to just gauge where are the West Coast markets in terms of whether you want to call it finding a bottom or starting the recovery versus other parts of the country. I know Silicon Valley has been one of the better markets throughout the pandemic. Seattle seems like it's picking up. But maybe if you could just talk about the markets you're in and where they feel -- where do you think they are in terms of finding a bottom and maybe even starting to recover?

Yes, sure. Listen, I'll do this quickly because I know we're short on time. But let me say it this way. I think finding the bottom, seeing the activity throughout our markets, it's a combination of the market activity, the tenant demand and the availability of space and the concept of space that is being available currently today that is newer or prepared or better than A space versus B space. And then most importantly, a factor of the political environment. And we're seeing a shift in all of those. And fortunately, we're seeing a shift in the positive direction. And I would say, given where we were to where we are, we clearly have found the bottom across the board in all of our markets, and we're seeing a pickup in activity and people making decisions in marketplaces on a development, redevelopment, acquisition, sales side and on occupancy side. So really quickly, Jamie, starting with Vancouver, it's still a very hot market. The [indiscernible] factor is very low. We have lots of activity on the limited space that we have available. We have a couple of full floor yields that we're working on right now. And the market conditions are very strong. In Seattle, you mentioned Seattle. John bought a great asset, very close to our asset that we just bought earlier this year or actually was really 9 months ago and -- 10 months ago, sorry. And that marketplace is showing tremendous strength, not only in the tenant activity in the city that we have some availability and mostly in our Dell EMC space that has been vacated, and we have activity on 3 quarters of that space right now by multiple tenants at growth rates. But we're seeing a massive surge of activity in Bellevue and Greater Bellevue area, which is not a surprise, and that does lead to the political environment and the shift. And there is an election coming up in Seattle right now this year. And so I think you're going to find that, that's going to enhance even the attractiveness of the city. And we're very bullish on Seattle and the greater Seattle area and what's going on there. Clearly, San Francisco has been the slowest market mover. KKR announced a massive transaction in the PG&E building, which everybody looked at. There's a lot of money to be spent on that asset. I think they paid about $800 million. We're going to invest about $2.5 billion in residential and commercial office development. It shows support doing one of the slower markets. One of the positive aspects of San Francisco specific to the market and then directly with us is the fact that the sublease space is being eaten up in that marketplace, a lot quicker than we thought. And it's a combination, Jamie, of tenants taking space back off the market and tenants actually looking for a space that is conducive to growth going forward. The bigger companies are looking at space, the smaller companies aren't. But we're seeing at least some trend around that fortuitously for us throughout the pandemic. That's the market that's been -- and our markets have been hit the hardest, and we've had the least amount of exposure in terms of vacancy. [indiscernible] you're right. We are seeing a lot of small tenant activity. The large tenant activity has been very big. Our markets there are relatively solid. We're finally seeing executable leases. So I think that has definitely made a turn. And at the same token, we're even getting some interest level in some of our developable property there, specifically Cloud 10 and tenants that want to build on it or buy it from us and build themselves. So that's an encouraging factor there. Obviously, Los Angeles -- and specifically, the markets that we're in, whether it's West Los Angeles, whether it's Culver City, whether it's Hollywood or the Arts District, the content providers and the combination of tech and content has really pushed those markets. As well, we don't have a lot of vacancy in this marketplace that we sit -- we're currently at today. But we are seeing some really strong tenant interest, specifically in our portfolio. We talked about our Harlow asset leasing up. We've got the remainder of Harlow. Looks like we're going to be able to lease that by -- in the next 6 months as well. So that should be fully occupied, also a media tenant for that space. And we're just seeing activity in our markets that sort of revolve around tech and media and the combination of both. The only downside at Los Angeles is we've not seen rent growth here like we have in other markets. And so it's been much slower to come back on the rent growth side, but the transaction side is coming. So I do think, overall, as a catalyst across the board, we've seen much more activity in the last 6 months than in the prior 12 combined.

And where would you think tenants are in terms of changing space use, return to the office and just kind of the risk of needing less space going forward?

So Jamie, we talked about this, and I know there seems to be some sort of a button around people trying to get a handle on it. We just haven't seen tenants take less space. And they're not requiring less space. Yes, they're configuring space. But for the same amount of employees, they're taking equal amount of space, if not more. Yes, and it's not going to matter if people will come to the offices less than 5 days a week, 3, 4 or whatever. And it will eventually go back to some sense of normality. I'm not saying it's going to be 5, but it's going to be some sense of normality. But at the end of the day, they're not taking less space in anticipation of that amount of time. We are seeing much more activity in the portfolio overall with bodies coming in. And I do think that politically, you're going to find at least in California. It's not there in Washington yet. But in California, there will be some announcements around back to work, mask mandates that are going to shift that are going to be more positive to something in our estimation, it's going to be around, if you have a controlled environment, you can come back and dictate how you want your employees to come back to work. Even the Delta variant that pushed dates from September, which was disappointing for all of us when we had a massive momentum to January, some of our large tenants, named tenants have already stated that they're coming back prior to January 1. And the first was Netflix, who announced, I believe, Laura, Monday, right? -- Or Tuesday, yesterday maybe. I think it was Monday that they're coming back on October 19 in full. So since that, that's going to weigh on a few players, we're going to make those decisions, and that's good positive signs for the fourth quarter and obviously into '22.

I would think that the failed referendum for the governor would actually make him even more conservative. It sounds like you're thinking the opposite.

I think you should look at who gives him the money and then what decisions he makes. Now listen, he has to be pro business on some level because of the growth patterns of the state just because the failed referendum didn't go against him. Doesn't mean that now he's going to sit in the hole for the remainder of his term. I think he's active. We spent time together around the studio media business and the bill that he signed for $350 million for tax breaks in the State of California, he did it on our property. He is definitely focused on, I think, the several players that have supported him and the business acumen around it. I mean the state has to move forward. So I'm optimistic on that basis. I don't think I'm in the minority on that.

Yes. Well, he also got a scare, I guess.

Yes.

So I mean, when I talk to investors about HPP, just a big topic is just the occupancy trajectory. Has it bottomed? Where does it go? You mentioned Dell EMC, you've also got Qualcomm to deal with next year. You've got the NFL lease to deal with next year. How should we be thinking about where occupancy could go? And if you think about those big vacancies, what's the prospect to get those backfill and what's the impact on whether it's same-store NOI or occupancy?

So it should be a focus of everybody because it's the lifeblood of our business, right? And so it shouldn't be any hidden secret. But I do want to caution people by -- because I know our team has been hit up pretty hard on this that what's happening in the year -- after year 2, year 3, year 4 down the road. I mean no tenants are looking to expand space that early, right? They're going to see what's going to go on. But in terms of the ones that we have a line of sight on, I will just mention the 3 that you mentioned, and I already talked about Harlow, I mentioned Dell EMC. That was a known move out. That tenant is a tenant that we have a very close relationship, and they moved out in all places. And so it wasn't -- it's a business decision. It wasn't a specific Hudson decision. We have backfill, I believe, on 3/4 of that space right now with activity, a couple of floors that we're looking at going into leases on. So I'm very bullish on that market, as I said. And I'm very optimistic on that vacancy being eaten up at some pretty compelling rental rates. The market there is very high because we were rolling through it at a much lower basis. And it just supports the Seattle thesis. Qualcomm has to give us notice. This is -- if you recall, we went back to them 4 years ago, they extended for a shorter period of time. There are 2 leases there. I'm being told by our team. They have not come to us yet. But my guess is they'll lose at least 1 building is probably the case. But who knows what happens between now and when they come to us. They have to make some decisions fairly imminently. So I am optimistic around the Qualcomm story on 1 building that we retain and 1 billing we lose, but we'll have to see if that plays out. I did mention -- and I do think that's our biggest exposure. And it's 300-some-thousand-feet, 40,000 feet or something of that effect. I do think that's our biggest exposure. But it's right by our Cloud 10 asset, and we've got a tenant who wants to build on Cloud 10 and needs space fairly imminently in the interim. And there could be some creative aspects there. So I wouldn't hang us on one massive exposure like that, but it is open. In terms of the NFL, I would lose 0 sleep over that. We've got 2 tenants for the whole project at great rates, and I'm very optimistic that we'll be signing those up in Italy as well. And they don't expire until '23, I think, Art, right? And so I think we've got time on that, but I do expect some decisions on that asset to come out sometime in the first quarter or so of '22. So we -- it's more about the bread and butter, Jamie. It's more about the smaller tenants. It's not about the bigger tenants. I wouldn't be as concerned about it. Just because we have exposure now it doesn't mean the markets are going to dry up [indiscernible] in position. Our asset quality is extremely high. We've put a lot of money into the assets. There isn't something that's going to set us aside or differentiate us on a negative level. Quite frankly, I think it's the positive side that's going to enhance our position in the portfolio going forward.

Jamie, the second part of your statement was about prospects of kind of backfill and things like that. Our pipeline [indiscernible] talked about starts with kind of the renewed confidence and optimism that people saw early in Q1 when the vaccine was rolling out, we had kind of talked about how that groundswell was happening, and it's increased really. So we're kind of back to normal levels on our pipeline even after leasing 1 million feet through Q1 and Q2. And we've got more to come. So I feel good about what's in there and what we're transacting on right now. If it wasn't at those kind of normal levels, I'd be a little nervous, but the way that the refill of the pipeline, the reload of pipeline has been occurring, I feel good about what the team is going to execute on.

So if you look at the pipeline versus what you're expiring, I think you guys, as you said in the last conference call, percent lease can hold through year-end. Does the pipeline sell you can hold through next year as well based -- if you think about Qualcomm?

Yes. I mean, I think -- so the pipeline is not static, right? So you have to continue to reload the pipeline. And the fact that we have been reloading and building the pipeline is encouraging. I don't have a crystal ball into Q3 of next year. But the way that it's been reloading, Jamie, I feel very, very comfortable with where we are with the expirations in '22.

Okay. And what kind of downtime do you think for both the NFL actually for any of those spaces to get actually backfilled even if you get them leased?

Yes. I think Qualcomm is a little more difficult to answer. But NFL, as Victor said, we -- having 2 deals in negotiations currently, I think the downtime will be limited to essentially tenant build-out, right? So if you think about 170,000 square feet permitting and so forth, you're probably talking about 9 months.

Is the NFL still using that space? Or did they already move out?

They just moved out at the start of the season. I mean they have some strategy for that. But they started their new broadcast facility at the start of the season.

Right. So they moved essentially everybody out, as Victor said, but they do have to run some redundancy, right? So they -- they're just on plug and plug back in. So they're still running some of the redundancy, which we don't really have a line of sight on right now. So depending on how smooth that transition goes, sooner than later, but we don't -- it's going to happen, that's going to go on for some time.

Okay. So there's -- we shouldn't expect you might get that back early?

Well, we're hoping -- we're pushing to get it back early. But yes, I wouldn't count on it.

Okay. And then I guess just bigger picture, our thinking about the rest of the leasing pipeline, how would you characterize it in terms of small tenants versus large tenants and what market is it focused on?

I would say that across just kind of broad brush across the portfolio, large tenant activity is driving all markets right now and our pipeline is a little different. It's kind of the mid- to larger-sized tenants. That's not to say that small tenant activity has an increase in terms of interest in tours and things like that. But relative to the pipeline, I would say it's chiefly mid to larger deals. And it's distributed where you think -- where we have vacancy, where we have larger -- higher expirations. So it's distributed pretty evenly across where it's needed.

Okay. And a question just came in. Are you starting to see any changes now versus pre pandemic in lease negotiations where tenants are requiring contraction clauses or anything else significant?

No, I'm really not. Surprisingly, no. I shouldn't say that publicly, but yes, surprisingly not.

Jamie, we lost you.

Sorry. So no change at all?

No, no clauses at all, Art, right?

Yes. I mean, no different than before. I mean you're going to get your classic 10 rep brokers who are asking for everything, contraction, expansion, the whole thing, but nothing -- I'm not seeing any difference, Jamie.

Okay. And there's been a lot of talk at the conference about just the big tech still growing. The New York landlords were very positive on where they think they may be expanding in the city. I know you've got good relationships with a lot of those tenants. What do you think what's in their heads right now, given that they really were the key drivers of demand for so long across the US office market? What do you think their next steps are as they're on the one hand, figuring out when to bring people back and what -- how much hybrid they will really want versus what markets they want to be in?

Well, I think -- listen, I think the question answers itself based on what we've seen in the last 18 months, right, Jamie, they've been the most active players when it comes to leasing space or even acquiring space, and solidify their positions in markets that they believe they're going to grow in, and those markets [Audio Gap] are centralized around the employment numbers and where they want to attract employees. And so that seems to be prevalent on the coast. And we've always talked about that. They are expanding in Austin, and they are expanding in places like Denver and Asheville, but the amount of attractive talent there -- and we're seeing that in our portfolio. The relationships we currently have with our large media and tech tenants revolve around the existing portfolio that we have and what we can offer them over the next 5, 10 years. And they're looking -- we're in conversations without getting into details with these some of these tenants for occupancy for '25 as an example. They're saying, "Hey, in '25, we need x." Well, they need x amount of space in the markets that we are in and other markets too, but you're seeing them as the most active, and I don't think that's going to change in the near term at all.

Okay. And I want to make sure we have time to spend on the studio business here given the recent activity. So can you talk about the recent acquisitions you announced? I know that from the guidance a little bit, but bigger picture, what does that mean for expanding the platform beyond real estate and your growth opportunities in other markets?

So we're consistent in our position and our statement going forward in the studio business and our media company. I mean we've talked a lot in the last couple of years about expanding that platform with our relationship with Blackstone. This is another instance of us building the Sunset Studio brand out and the alignment of growing not just the real estate portfolio, but what we call the ancillary revenues, which is 35% of the revenue in this portfolio, which everybody who follows us now knows that it's not 100% 4-wall revenue or related real estate revenue. It's about 35% ancillary, and that's a business that we want to control. And we will continue to look at acquiring other non-real estate assets to help ensure that we're providing services and capturing revenue on all avenues that we can control with our media and media-related tenants. Buying these 2 companies and merging them into Hudson is a great example of that. I mean we call it mobile real estate, but the reality of that, and I know you know the story around this and the numbers are very, very compelling. And I think that you'll see them be accretive over the next couple of years. But the short story on that is very simple. We are letting trailer and ancillary trailer revenue companies, whether it's trailers or generators or bathrooms or other aspects of mobile real estate on our lots, and we're charging them for it. And when they're not on our lots, and they're on our lots 2, 3, 4 days a week and then the other 2, 3, 4 days a week on offshoot days, they're somewhere else still mean the same show with our same tenant, we're not capturing that revenue, and we're like, why wouldn't we capture that revenue in 100% of it. So when they're on location, we're capturing that revenue of the same trailers. So that's the apparent sort of, what we would say, is low-hanging fruit process of it getting revenue stream. The second aspect of that is, it's not just us doing it on our own location, sell stages and studios, but others in other marketplaces. And it enhances not only our relationship with the production companies and the consistency of us delivering services, but it also gives us exposure to these other facilities and other owners that we can have relationships with based on our services and enhance those relationships and growth models going forward. So it's a win-win across the board for us and in our portfolio. And I think you'll see more of that going forward in the future.

And as you do more of these types of transactions kind of nonreal estate, what does that do to the volatility of the earnings stream?

Listen, I think that's a great question, and I'll let Mark sort of jump into it. But listen, we have a lot of capacity in our taxable REIT subsidiary. So there's a lot of room there. I also -- as you know, we have a partner that is in Blackstone, they will own a piece of this vehicle. They will be coming into this vehicle forward. They own a piece of the Sunset brand. And so we'll even have more capacity on that level. And I do think that it's going to be in education, it's going to be a little bit more work for guys like you to understand it, but you know what, it's part and parcel of the process. Mark, do you want to get into it?

Yes. I mean I would just emphasize that both of these companies have great growth prospects, I would say in keeping with our -- the historical growth in the studios. And I think you, Jamie, our investor base is really at this point, up to speed on seasonal patterns as it relates to our ancillary revenue and these -- these 2 acquisitions are likely to have some of that same seasonality. But -- as you know, the streaming content providers have sort of muted some of the volatility by committing on these longer-term deals. So to the extent that the -- this contributes to ancillary revenue, it might follow a pattern that people have grown, I think, at this point, very accustomed to in terms of seasonality. But I think more importantly, when you look at it as we do over, say, annual windows, what you'll really see, I think, is just steady growth similar to what we've seen at the studios themselves.

Okay. That's helpful. And I mean we have a little bit of time left. But I guess, just kind of big picture. You've had a round of meetings. I know you've been talking to investors a lot lately. Stock has been struggling a little bit versus peers or versus REITs overall. I mean what do you think people are missing in the story these days?

I mean we get this question every single meeting. And the answer is the same. If we knew, we would change it. I am not being facetious in any form or function. I mean we literally get that question. I mean, all we do is make money and nobody cares. And so I just think we have an investor participant group right now that doesn't seem to care. I mean we increased guidance and bought a company at effectively an 8 cap when we're buying stuff in the 4s, and it doesn't matter. So I don't really know, Jamie, other than we'll continue to perform, and we'll continue to evaluate the differentiator between our current stock price and where we know NAV is, which is massively higher. And I'd say that because it's -- we're trading, I don't know, in the 20, mid-20s, I guess, or something to that effect that last I saw it, something like 26. And our NAV is 40 plus. And the private market, and we've had this conversation many times, we're not benchmarking ourselves and coming up with excuses as to why valuations are there or not. The private market has proven out and the public market has proven out the value of real estate because of the transactions that have taken place. I mean -- as I mentioned earlier, John Kilroy made a great deal on an asset and paid more than we did. And we got -- which was, as I said, 9 months ago, and he's a public market guy as well, and that's where market values are. So I don't have a direct answer. I wish I did. But maybe it's time for us to sort of evaluate what people really think of. It's not just our sector, but the entire REIT sector and what our decisions and options are going forward.

Yes. I mean I do think office has obviously been challenged, lack of visibility on what's really to come over the next couple of years. West Coast probably feels a little different. And then I do -- I get a lot of questions on the occupancy. I know people talk a lot about the occupancy. So if people can get clarity that it will stabilize or even improve as clearly a key data point that everyone's watching for.

I think it is. And I think we're proving that out given the leasing that we're doing, and it is taking more time. We've talked about that, that the time line is longer to get leases done just given the fact that people aren't in bodies and seeds. I do think there is a little bit more a reality of people looking at immediate return versus long-term return, and we're in a long-term return business. Real estate is, if this is the worst office gets, you should be jumping in now, right? I mean this is -- this is -- if we think this is the bottom and then you should be jumping in now at these levels, knowing that we're going to get back to some level of where we were fairly quickly because the markets are usually ahead of the reality of the impact of the day-to-day operations.

Yes. I mean do you have any asset sales teed up that might reflect values or show demand for assets?

We called our portfolio fairly efficiently. We do have a few assets that are languishing in our portfolio that we will be selling or attempting to sell. We've got one right now that we're working on it. And it looks like Mark has got a direct line on a second fairly substantial one that we're working on and maybe even a third. We have activity on these 2 assets, it looks like that we should be hopefully getting done first quarter of next year. There's a couple of assets that we've had some reverse increase on in the Peninsula that are going to be much more life science conversions that we would not do. And so that could be an interesting opportunity for us. But I wouldn't expect us to have a tremendous amount, Jamie. So don't sort of underwrite it that way because I think we've really, really like what we have and the assets that we have. We've completed in terms of their positioning to be Class A assets going forward, and we should achieve leasing and high rents on those assets that we're going to retain.

Okay. I do have a question that came in. So what's your average tenant size now? And how do you -- how is that broken up by larger versus smaller tenants? And are smaller tenants rolling off at higher rates than normal during the downturn? Or did they during the downturn?

So I'll deal with the latter part of it. Mark or Harout, you can talk about the average tenant size or Art can jump in on that. But as I mentioned before, we -- in my prepared remarks or in my first remarks, the mark-to-market is across the board. It's not smaller or larger tenants, but we were in the double digit 20-plus mark-to-market. And so that's only gone down because we've seen the market shift going down. But we still are mark-to-market, small or big tenants going forward. As I said, in probably the mid-teens or low teens starting 13%, 14%, 15%. And that's only going to get better as the markets get better. So that's a positive sign. We are a lot bigger in terms of average sized tenants than most of our peers. What's the actual number, Harout or Mark?

Yes, right around 14,000 feet.

Yes.

Okay. All right. Great. Anything else we didn't talk about that you guys want to cover? I know we're winding down here on time.

No, Jamie, we appreciate you doing this. It's not easy. Thanks so much for spending time with us, the Hudson crew.

It's our pleasure. So just to wrap up here, we do have 3 closing questions. Number one, which of the following is the greatest challenge facing U.S. public REITs today: Fed action and higher rates; supply chain issues, which includes labor and logistics; or flows to non-traded REITs?

The middle one for sure.

Over the next 5 years, which markets will outperform, urban, coastal or Sunbelt?

Urban coastal. Shocker.

Yes. And then finally, for your company's office plans post pandemic, will you: a, have no change from prepandemic? b, leave it up to the individual teams? c, offer a hybrid; or d, go full remote?

We will have a slight modification to full time in the office. So I guess that would be the third one.

For hybrid. Okay. I mean is that based on the department? Or are you guys doing differently?

We've already put our plan in place. We are 4 days a week in the office and 1 day remote. And that's -- it's not going to get less than that, it may get more, but it's not going to get less.

And your tenants who are doing the same thing? Is anyone trying to figure out how to shrink their space?

No. We have not had one tenant come to us and said, of any -- first of all, we wouldn't entertain a small thing, right, because it doesn't make any sense. So -- but nobody has come to us and none of the big tenants have come to us and said, "Hey, let's shrink the space and let's modify."

Okay. All right. Unfortunately, we're out of time here, but thank you very much. Thank you, Mark, Art, Harout,and Laura, I really appreciate your participation in the conference and your time today, and we look forward to talking to you again soon.

Thank you.

Thank you.

Thank you, Jamie.

Thanks, Jamie.