Douglas Emmett Earnings Call Insights: Q4 Move-Ins and Flexible Debt
Brendan Maiorana – Wells Fargo: So Ted I wanted to follow-up on the same-store guidance I think you said plus 0.5 cash for the year and I think we had talked earlier last year that as you guys sort of looked at rent spreads they would be offset by in place bumps and then you had get occupancy gains which would sort of drive the remainder – drive the increase overall and if I look at I guess where your average occupancy was in 2012 I think it was around 88.3% or 88.4%. Even if you back off the 60 basis point of tenants moving out beginning of the year it sort of puts you at 89% and it looks like you are going to move up 100 basis points from there. I think that same-store would be a little higher. Is there something else going on?
Theodore E. Guth – CFO: There is – we did have an awful lot of move-ins in the fourth quarter and so we got some concessions that kicked in during 2013. So we don’t get the full impact of that rental growth until towards the end of year.
Jordan L. Kaplan – President and CEO: Brendan I got to tell you we looked at that number ourselves and said we are not in love with that number let me just say. If you remember from last year we started out saying our same-store NOI was 1% and that ended up being 2.5%. I am not gifting any badges on those for predicting how our same-store NOI and I am kind of waiting to watch that number play out a little more. I hope that it’s an extremely conservative number.
Brendan Maiorana – Wells Fargo: I mean it is the same. Did you sort of arrive at that same guidance level the same way you arrived at the plus 1% initially for ’12?
Jordan L. Kaplan – President and CEO: Yes. It’s kind of ground up modeling and I guess when you started to ground you are so tired by the time you get to the top you don’t exactly hit it perfectly. So we need to play through a little and watch the numbers rollout and I think we will have a better directional feel on that.
Brendan Maiorana – Wells Fargo: Then just the follow-up for Ted on the interest expense, is it fair to assume that you’re going to the swap’s burn off you are going to let that float and there is no pay down of the debt with the cash that sits on your balance sheet today?
Theodore E. Guth – CFO: I think that it’s fair to say that we will let this — the swaps stay off as we typically do while we think about when and how to refinance it. I think that we are looking at some — I think that our modeling assumes that we use $100 million of our cash for something whether it is debt pay down or acquisitions and so I think that there is some change there.
Alexander Goldfarb – Sandler O’Neill: I’ll ask my follow-up question first and then I’ll ask my first question. Just following up on…
Theodore E. Guth – CFO: I’m going to consider your follow-up question to be your first question, go ahead.
Alexander Goldfarb – Sandler O’Neill: Okay. Well, I’m just following up on Brendan’s question. So, I’ll tag out to that. As far as modeling goes, what should we be expecting for the downtime of you guys having the swaps out there, is that like a first quarter, second quarter that we should have expect lower interest expense and then have it go higher the back half of the year, how should we be thinking about that?
Theodore E. Guth – CFO: I don’t think we have made a final — they will float until we decide to refinance that debt. I think it will be — at the earliest will be much later in the year.
Jordan L. Kaplan – President and CEO: Yeah. The only flexible debt we have left is that debt. So, I’m not – we’re not anxious to lock that up because it gives us a place to do pay downs that we want to do that because we are seeing a lot of cash. It gives us a place to flexible to pull cash out, I mean if we start executing swaps than that makes that debt a lot more rigid and we want to have some play in the system. We don’t want to have three point – whatever $3 billion of totally rigid debt so that’s why we’re letting that portion flow.
Alexander Goldfarb – Sandler O’Neill: Then as my follow-up question to the first follow-up, you guys – obviously the news article on the Hustler building out there, if you guys given that there doesn’t seem to be that many deals out there at least the one’s that we read about, what are your thoughts on taking a mezz approach like Slug does here in New York where you get involved in doing financing on buildings that you’d love to own, but you’re not necessarily the winning bidder on?
Jordan L. Kaplan – President and CEO: I’ve noted in it – I’ve never been a big fan of that. I’ve always felt like mezz lenders have the worst of both worlds they don’t really control the building and there upside is capped. With that said I don’t know if there is an tenant opportunity out there to put mezz loans on the buildings that we want to own. I mean I don’t think that is does there out looking necessarily for that kind of debt. More commonly there is a debt structure that can be used sometimes in order to get through to get control of the building because the guy had some ruling with taxes or who knows, water timing issue and we do, do that.
Theodore E. Guth – CFO: Yeah, I think you can think that with Jordan’s anxiety over the last few years to try and up the number of acquisitions we’ve considered most everything that we can do, but I agree with Jordan that unfortunately the mezz thing is not likely to be one that’s going to work in our markets very much.
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