Good morning, and welcome to the Hudson Pacific Properties Second Quarter 2023 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Laura Campbell, Executive Vice President, Investor Relations and Marketing. Please go ahead.

Good morning, everyone. Thanks for joining us. With me on the call today are Victor Coleman, CEO and Chairman; Mark Lammas, President; Harout Diramerian, CFO; and Art Suazo, EVP of Leasing. Yesterday, we filed our earnings release and supplemental on an 8-K with the SEC, and both are now available on our website. Our audio webcast of this call will be available for replay on our website. Some of the information we'll share on the call today is forward looking in nature. Please reference our earnings release and supplemental for statements regarding forward-looking information as well as a reconciliation of non-GAAP financial measures used on this call. Today, Victor will discuss macro conditions in relation to our business. Mark will provide detail on our office and studio operations and development, and Harout will review our financial results and 2023 outlook. Thereafter, we'll be happy to take your questions. Victor?

Thanks, Laura. Good morning, everybody, and thanks for joining our call. During the second quarter, we worked diligently to position Hudson Pacific optimally as we continue to navigate the unprecedented confluence of an unfavorable macroeconomic environment, the lingering impacts of remote work and most recently, a historic and prolonged studio union strike. Office fundamentals across the West Coast markets remain challenged in the second quarter with gross leasing either flat or decelerating quarter-over-quarter, sublease activity either stable or rising and negative net absorption in all but Vancouver. As expected, studio production in Los Angeles slowed significantly, with shoot days in the quarter falling 60% to 70% year-over-year for TV comedies and dramas, and 20% to 25% across film, unscripted TV, commercials and photo shoots. Our focus in this environment remains on occupancy preservation and expense reductions, both at the corporate level and within our office and studio portfolios as well as proactively managing our balance sheet. Mark and Harout will be discussing our progress on all these fronts in detail. But beyond today's challenges are a variety of bright spots emerging that have the potential to shift the dynamics around our business and provide for significant upside and opportunity specific to Hudson Pacific as we move to 2023 and beyond. On the office front, according to a recent JLL study, the broader U.S. office market is starting to show some signs of recovery. To date, the West Coast has lagged due to big tech rightsizing and tenants broadly staying defensive. But with mounting data pointing to historic declines in innovation, productivity and human capital development, big tech has taken notice. The 10 largest tech companies now have concrete hybrid attendance policies impacting most of their workforce with the focus shifting into enforcement. These policy changes are starting to make positive…

Thanks, Victor. We have signed approximately 50 office leases, roughly 50% new deals, totaling just over 400,000 square feet in the quarter. The average lease size was approximately 7,000 square feet, and 50% of that activity was in the San Francisco, Bay Area. Small and midsized tenants in tech and other industries continue to drive the preponderance of activity across our markets. GAAP and cash rents were approximately 4% and 8% lower, respectively, on backfill and renewal leases with a change largely driven by a few midsized leases, both new and renewal across the Peninsula and Silicon Valley and in Vancouver. Our in-service portfolio ended the quarter at 87% leased, off about 170 basis points compared to first quarter, due primarily to the move-out of midsized tenants in those same markets. Our leasing economics improved across the board quarter-over-quarter with net effective rents, up close to 9% to $44 per square foot. Tenant improvement and leasing commission costs improved close to 50%, down to $6 per square foot per annum and lease term increased by 6 months or 13% to 48 months. In terms of our 2 larger 2023 expirations, we're still negotiating a renewal of our 140,000 square foot tenant in Seattle at Met Park North, whose lease expires in late November. We're in discussions with 2 requirements that could potentially partially backfill the 469,000 square foot block lease at 1455 Market in San Francisco, which expires at the end of September, one for approximately 25,000 square feet, the other for approximately 275,000 square feet with additional tenant interest behind these. In regard to our remaining 2023 expirations overall, which were about 5% below market, we have 50% coverage, that is deals and leases, LOIs or proposals with another 5% in discussions. Outside of the 2 large expirations I…

Thanks, Mark. Our second quarter 2023 revenue was $245.2 million compared to $251.4 million in the second quarter of last year, primarily due to Qualcomm and NFL vacating Skyport Plaza and 10900-10950 Washington, respectively. The sales of office properties, 6922 and Skyway Landing. Our second quarter FFO, excluding specified items, was $34.5 million or $0.24 per diluted share compared to $74.6 million or $0.51 per diluted share a year ago. Specified items in the second quarter consisted of transaction-related income of $2.5 million or $0.02 per diluted share, which includes lowering of accruals for future earn-outs related to our Zio Studio Services acquisition. Prior period property tax reimbursement of $1.5 million or $0.01 per diluted share, deferred tax asset write-off expense of $3.5 million or $0.02 per diluted share and a gain on debt extinguishment, net of taxes of $7.2 million or $0.05 per diluted share. Prior year second quarter specified items consisted of transaction-related expenses of $1.1 million or $0.01 per diluted share and prior period property tax expense of $500,000 or $0.00 per diluted share. The year-over-year decrease in FFO is attributable to the aforementioned office tenant move-outs and asset sales as well as higher studio production, higher studio operating expenses associated with Quixote acquisition and increased interest expense. Our second quarter AFFO was $31.1 million or $0.22 per diluted share compared to $60.3 million or $0.41 per diluted share, with a decrease largely attributable to the aforementioned items affecting FFO. Our same-store cash NOI grew $127.6 million, up 4.7% from $121.9 million with same-store cash OpEx NOI up 5.1%, largely driven by significant office lease commencements at One Westside and Harlow. During the second quarter, we repaid the Quixote note for $150 million, a $10 million discount on the principal balance with funds from our unsecured revolver…

[Operator Instructions] Our first question today comes from the line of Alexander Goldfarb with Piper Sandler.

So 2 questions. First, it sounds like the sales so far not contemplating One Westside. I don't know if One Westside is in the potential to additional for sale. But Harout, when you think about all the assets that you guys may sell, what is the NOI impact that we should think about? And then more to Victor's opening comment on corporate expense, if you're selling a bunch what does this mean about the need to reduce the cost structure of the company overall?

So let me answer the first question, which is we're not going to provide any NOI detail yet, primarily because the sales are uncertain. And once we have confirmation of the sales and feel confident we will share all the relevant details around them. So doing that is not appropriate at this time. As far as the G&A goes, I think we said before, we constantly look for ways to reduce our costs and reevaluate them. And depending on the sales and the impact, which will also garner our ability to reevaluate G&A. So they're always being evaluated and thought through.

Okay. The second question is on Hollywood. Clearly, I mean, you guys benefit from owning independent studios, which is good. But when we think about some of the headlines we read, Disney and others who are talking about trouble with their full -- their screen productions or streaming services, how do you weigh like over investment in streaming or ways that Hollywood may retrench after some tough goes with the resurge demand once the strike ends? Just trying to figure out, are we back to the races? Or is Hollywood reconsidering how much it puts into its production investments, just given some of the headlines we've read recently?

So Alex, as I mentioned in my prepared remarks, I mean, it's -- so far, what we found between the bigger streaming entities to date, they are on budget, at least as we know through '24 to spend at or more than their run rate has been in the past. And that's been, Netflixes and Apples and Amazons and Disneys and Comcasts, tone to date. I think it's approximately a 2% increase year-over-year. So that, I believe, will probably be greater given the fact that they're not spending the money currently today because they're on strike. So you're going to have a massive ramp up. After that, I believe we feel from what the industry is looking at that we've always mentioned that there will be some form of consolidation. Whatever that consolidation looks like, we don't know. I don't think it's going to impact the stage use and the production use because there is still a very limited number of stages in demand, in peak times are much higher than the stages that are available. Jeff, do you have any comments to that?

No. The only thing I’d add, Alex, is that what's clear with all the streamers is that original production drives a lot of subscriber growth, and it also mitigates their churn. So it's a key economic ingredient into their playbooks. Even if consolidation happens, they all know that they have to invest in original content production. And hopefully, obviously, we'll benefit from them.

The next question comes from Blaine Heck with Wells Fargo.

Just to follow up on the sales, Victor. You guys have talked openly about evaluating dispositions recently and that there are no sacred cows within the portfolio. I mean Harout's commentary was helpful, but just more generally, can you talk about what you've learned about the investment sales market throughout this process whether there's more interest in certain segments of the market? And just as you've gone through the process, whether the composition in the bucket of assets, up for disposition, has changed based on what you've learned?

Yes. I think, listen, we've -- the 3 assets that we have under contract right now are, as we mentioned, 2 individual assets and 1 parcel of land. The demand for those were relatively high on smaller user or owner user or family office-type investors. The other couple of assets that we're working on right now, I think, have a makeup of more of an institutional play change of use play. And I think that's the drive that we're looking at right now. Listen, as Harout said, we're not going to get into identifying the assets in the open marketplace. I believe that we have not explored true institutional ownership sales for large assets at this time, not to say that, that won't be something we look out in the future, but that's not part of the game plan and the assets that we're talking about right now. And so I think the bottom line is the activity is relatively good. Clearly, financing around those assets is the hurdle. And so the size of the assets from our standpoint and the type of buyer is going to be identified based on the access to liquidity and capital.

All right. Great. That's helpful color. And then just taking a little bit of a step back on the studios, Victor, can you just talk a little bit more about any insight you have into the negotiations going on related to the writers and actors strikes and just what your best guess is or maybe even what you're hearing from any insiders you're talking to on how long these strikes could last kind of based on the current state of negotiation?

Well, listen, I'll take the first part, initially. I mean, listen, what we're hearing is there's -- as I mentioned in my prepared remarks, there are a few issues on the table that are hurdles that they're going to have to try to figure out, writers' rooms, the issue, obviously, in AI, which is an undeterminable issue and a new issue for all parties. And then the residual issue are the big issues. I think the dollar issues and the issues around health care and all the perks around that are pretty much agreed to. A couple of things. The fact that SAG is at the table, I believe, helps the process because you've got now another constituent with thousands of people now involved that are more than the 3,000 writers that were involved in the past. So hopefully, that will set a precedent on some of this. Real time, we just heard last night, they're going back to the table, Friday. The writers are they have not been at the table, I believe, for 1.5 months or so. So that's a good sign. In terms of what we're hearing on the ground, we are -- as I had mentioned in the past, we don't have a seat on the table. We obviously have a lot of constituents around that are giving us information. It could start in a heated conversation to hopefully settle something out as early as September and maybe as late as year-end. But I think as every day goes by, Blaine, we're all hugely aware of the shrapnel around just the industry in general and all the residual businesses that are getting affected. And it will start to feel fairly painful for these residual companies and employees and individuals that work in the industry, and it will be damaging. And I think everybody is very cognizant of that. And hopefully, we'll try to get to some resolution quicker than we all anticipate.

The next question comes from Nick Yulico with Scotiabank.

I guess just going back to the asset sales, is there anything you can provide us in terms of a view of, if you get a certain level of asset sales done, this year, what that's going to do to improve your debt-to-EBITDA metric, which is -- went up again this quarter?

So addressing that is a little bit outside the range of what we want to talk about right now. But ultimately, it will improve it over the long term, which is kind of our main point, which is we're going to delever. And that's kind of the focus that we have, and we use different tools to do so. So not only debt to EBITDA, but also the covenant calculations, all those things, we have a very strong eye on, and we're projecting out. In fact, this quarter was in line with our projections, and we're not in a risk of breaking any of them. But like we said earlier, the delevering is a high priority for the company.

Yes. And Nick, just to add to that, the assets that were in escrow or under contract with and the other 2 we're talking about and then the next sort of tiers that we're looking at, none of those assets currently have debt. So effectively, all that -- all the cash flow -- I'm sorry, all the proceeds from the sale will go to pay down current debt. So we're not replacing -- we're not getting rid of existing encumbered debt on assets in any asset at this stage. So it's all going to be very helpful.

And just to touch upon the net debt to EBITDA -- real quick, sorry, to address our EBITDA comment, it's being artificially reduced by the strike. And so it doesn't really reflect a normalized net debt to EBITDA as a result of the strike. And so it is being, like I said, artificially being reduced or increased, I guess.

Well, and I guess I just -- I wasn't sure if there was any specific target you're trying to get to on that metric, realizing that the EBITDA for the studio business, there's uncertainty about how long that could be under pressure. You also have some move out still on the back half of the year, that hasn't been released. So I wasn't sure if you just -- there was a sort of plan in place where you have a target and you think that the dispositions can get you to that target?

Yes, there's a plan in place. The plan is get it lower. And we're doing that through these announced disposition goals. I'll add to the comments that Harout and Victor have already shared. One of the asset sales is land. So that's 100% accretive to debt to EBITDA because there's no EBITDA associated with it and it goes all to debt reduction. So the plan is to get it lower. We have always said that we want to be below 7x debt-to-EBITDA. We understand that there are tenants rolling. There's other areas impacted like the studio and the strike things we don't control. But everything we can control, we are laser-focused on following through with in -- with the goal of getting that metric -- improving that metric.

Okay. And then just one other question, if I could, on Silicon Valley and thinking about your portfolio there. And I think, historically, there was talk that the portfolio would benefit at times from just ancillary services supporting the large tech community there. And I guess I'm just trying to understand better the dynamic right now where we all hear that large tech is more on hold with leasing. And I'm not sure if that's also impacting some of the kind of ancillary companies that support tech. Is that also sort of affecting that tenant base as well? Or is it more that just large tech is slowing in Silicon Valley?

I think it's not affecting as much as I think we would have thought it would, Nick, to be candid with you because as you could see by our numbers, the majority of leases that we're doing in the Peninsula and the Valley are smaller tenants. I mean we've got a handful of tenants in the 50,000 square foot range, but the majority of those tenants are 5 to 20. And so -- and as you can see by our numbers this quarter and the number of deals we've done, there's a lot of activity in the Peninsula and the Valley. Also, the physical occupancy is in the Valley and the Peninsula has increased dramatically, and that's converted to more people looking at space and touring and the likes of that. Art, do you want to comment on that?

Yes, Nick, the answer is we are -- as tenants are starting to discover how they're going to utilize space, right? So return to office is really kind of on the forefront and they're enforcing these return to office mandates, they're discovering how much space they're going to need to rightsize. We're seeing those rightsizes cut both ways, but we are seeing tenants coming back and looking for more space. That's going to affect both the large and the smaller users. So it's going to play all the way through.

The next question comes from Michael Griffin with Citi.

I wondered if you could expand on what you mentioned in the release about extended times for decisions to be made on leases. Is this just a function of space takers more hesitant to take space? Is it supply? Any incremental commentary you could give there would be helpful?

Yes. I mean, listen, it's so hard to pinpoint. Every case is a case by case. We've seen tenants come negotiate feverishly and have leases out for signature and we've waited. I mean we've got 2 fairly substantial leases that have been on the depths of the legal counsel fully negotiated for a matter of months, 1 overseas and 1 domestic. So Michael, I just think that it's just taking time. And maybe if you want to read into it a little deeper, I don't think it's about looking at the footprint or the competitive landscape. I just think it's a need currently versus a need in the future. And maybe that's where the decision tree is right now. Obviously, things have changed expeditiously in terms of back to work and the number of tenants that have come out and companies have come out with policies, the next phase of policy is enforcement. And I think that level of enforcement goes to execution of leases. And I think that's exactly where we are right now. We're on that precipice of everybody's policies are in place. Now they're going to be enforced as the example we gave with Amazon, which is a great example. Now the enforcement comes into place. So now they recognize the need and then the executions are the next stage. Art?

Yes. But we've seen forward thinking on this relative to all the 10 bases across our portfolio. Why? Because over the first half of the year, we've seen a spike in tours early activity. And that early activity is going to translate into actual transactions downstream. And so they've already been thinking about this and the return to work, I think, which has caused the spike in early interest.

Great. And then just going back to the writers' strike. I mean, obviously, I think it's anybody's guess as to when this thing ends, but is there a worry if it gets protracted kind of into the latter part of this year that given you have a seasonal aspect of this business that production could be slower to ramp up into 2024?

Yes, it's a great question. Listen, I think we're very confident that when this ends, the ramp-up will be nonseasonal and it will just go. And as I said, we just had an example of this with COVID 2 years ago, and we saw the results and they were pretty spectacular. I think seasonality is out the window. I do caution, and I know Harout has made it evident to everybody who he speaks with. We're not saying that next day things jump. I mean this is a business and an industry that you're going to have scripts written, you're going to have sets designed, you're going to have actors hired and then you're going to have production in play, and that does take time. I think they're getting prepared for it behind the scenes, but there will be some form of a ramp up. I don't know when it's going to be. But when it's up and running, we're going to benefit from it, and we think it's going to be fairly expeditious and furious.

Our next question comes from John Kim with BMO Capital Markets.

With the repayments of the Quixote note, you now have $528 million outstanding on the line. And I was wondering how you plan to pay that down, whether it's disposition proceeds? I'm not sure if the 5 assets are enough to fully pay that down, free cash flow or long-term debt refinancing?

Yes. I mean I think the first 2 are the sources, along with the dividend cut. So expect to see cash flow and our coverage on dividend continue to improve, especially when studio operations return to normal. That net cash flow net of debt and dividends will go towards either the payment of capital requirements that otherwise would have required the use of the line or reduction of the line. It will just depend on the period of time that we're talking about. So that will do -- the asset sales also go to reduce that, the line balance. The use of -- it's possible if the capital markets are more available and the cost of secured debt is attractive, potentially, we would access the secured markets to reduce it. But I think the excess cash flow and asset sales are really where we're going to get the debt reduction.

Okay. Some of the multifamily companies this quarter talked about property tax relief in Seattle. I don't think we've heard you or other office companies talk about this. But I'm wondering if you see a similar trend either in Seattle or just property taxes, in general, being alleviated?

Yes. Listen, I think we are all over it in all of our markets. We are seeing a very good resetting of valuations and property tax benefits to the company in all of our assets in California and in Washington at the same time. I think our team is way ahead of the curve on that, and you'll see some impacts in the quarters to come. We have already gotten wins. I think the wins will then impact the bottom line expense reduction on taxes and potentially some rebates as well across the board.

Okay. And Victor, you talked about AI demand and the potential opportunity. I was wondering if you had seen or talking to any tenants currently in your portfolio, either direct or sublease, and if there's any way to quantify how much demand there is out there?

Well, I can tell you, like in my prepared remarks, as I said, San Francisco seems to be leading the pack on where the AI demand is. It's currently today at about almost 900,000 square feet. We've seen a couple of deals done. Hayden is an AI company that did 42,000 square feet in the city. I also think that another -- Hive, which is another AI company did, I think, about 60,000 square feet. There's another 800-plus thousand square feet of activity right now. Some of it has been for sublease space and some of it is direct deals. So I think the numbers that we're quantifying at least that are real. It's about 600,000 square feet of net absorption. And then just like it was asked about the residual, then you're going to see the follow-on on ancillary companies that are servicing these AI companies hopefully growing. And we're optimistic that it's going to make some kind of an impact. But it's real, it's now, and we'll see where it goes in the next couple of quarters. But we're looking at a couple of tenants that are very active in the marketplace and trading paper back and forth. So we're hopeful that we can execute on that.

Our next question comes from Julien Blouin with Goldman Sachs.

Harout, maybe for you, what is causing the increase in the interest expense guidance? Is it just the forward curve going up and the impact on floating rate debt and I guess also the interest rate cap expirations you have coming up this quarter?

It's a few things, but you hit upon a couple of them. One is the forward curve increase. Also while this doesn't help interest expense, it does -- accretive to us, which is we pay off the Quixote loan and generated $10 million savings. However, the cost of that loan versus the current curve is increasing interest expense.

Got it. Okay. That makes sense. And we were -- I was encouraged to hear that the covenants came in line with your projections. It sounds like you don't really expect any issues there. I guess just could you sort of walk us through what the deterioration in the unsecured indebtedness to unencumbered asset value was? And I guess also when you say you don't expect any issues, does that sort of assume sort of any length of strike? Or is there maybe a minimum level of leasing or tenant retention through the end of '24 that needs to happen?

So yes, the deterioration is really a combination of the increase in the unsecured debt balance stemming from the repayment of the Quixote, which was a secured debt that went on -- that became unsecured upon repayment. And then there's almost 40 assets running through the unencumbered asset calculation and some of them increased in the quarter, some of them decreased. The net decrease was about $112 million. We stressed test the metric, including a protracted strike all the way through the end of '24. And even in the most impacted quarter, we still, on that metric, remain more than 300 basis points above the threshold. So the studios -- neither of the studios, I should mention, run through the unencumbered asset base or 1455, which I think some people may focus on due to the block expiration, doesn't affect those valuations at all. There's an indirect effect due to the cash flow, right, because to the extent that we are generating more cash flow from the studios, it would be available to repay the debt, which will eventually take hold. So that metric improves as we see the studios normalize. And yes -- and we've factored in or sensitized that for, like I said, the protracted strike, all the known move-outs, everything we can project all the way through the end of '24.

The next question comes from Camille Bonnel with Bank of America.

I wanted to pick up on a comment about how market -- mark-to-market opportunities are around 5% for 2023 expirations? If we think about the negative cash rent spreads on the leases you've signed to date, has this been in line with your expectations given you're still seeing positive rent growth -- net effective rent growth?

Yes. And our mark on the remaining '23 expirations remains a positive 5%. A couple of deals really account for that 8% drag on the March market. It's the Rivian 60,000 feet extension through '28 within -- we had hit that Rivian deal at literally peak market rents in Palo Alto. And we're obviously glad, we were able to get that significant extension, but it reflects current market so it was a negative 18% mark. We also did a 3-month extension with Luminor. It also dragged that number down a bit. If you account for those 2 deals, you're essentially flat mark-to-market. So yes, our numbers still show that the remaining expirations are: one, that was our expectation for the quarter; 2 we expect to see something like 5% mark.

Yes, more color. That -- both of those yields happen to be in the same exact same market where we hit peak rents and now we're adding market rent, which is also a very healthy rent happens to be -- happen to be well below the mark.

So just specifically within that market and just given demand still remains below, I guess, where you need to be to support stronger pricing power there? Do you expect that these negative rent growth trends will continue over the next 18 months? Or any thoughts if we're close to a bottom here?

Well, I mean, our numbers, which reflect refreshed MLA assumptions to get done every -- I mean, we're constantly refreshing our MLAs, show a positive for the balance of '23, and we're essentially flat on our expirations in '24. And in '25, there's a slight positive. So looking through the lens of our assets and assumptions associated with our assets, it suggests sort of a bottoming out.

Our next question comes from Dylan Burzinski with Green Street.

I guess just going back to big tech leasing, and I appreciate your comments so far. But one of your peers mentioned that they don't expect big tech leasing to materialize or recover even through next year. So just curious, is that how you guys are sort of viewing this tenant cohort? And if so, what do you think ultimately brings them back to wanting to lease more space?

Listen, I don't know what other landlords are saying. What we're seeing is we're seeing activity in big tech in certain markets. We're seeing a -- already a decision tree that's made as to how space is going to look, and now they're looking to find out where they're going to accommodate in the space. Obviously, we're seeing a flight to quality just doing like everybody else, our higher-quality assets -- the highest-quality assets have the most activity and there's tech activity around that. I'm not going to venture into same big tech is not coming back or they are not coming back anytime soon. I just know that what Art's team has seen is that, I believe that our tours are higher than most that we've seen in the past, and we're seeing that activity. I do think that in reference to specific to big tech, I mean just look at Amazon. I think their return to the hub messaging last week was dramatic and absolute. And when there was pushback, they said, you know what, if you aren't going to be within an hour's time line of where your current office is, you can apply to another job. And if you don't, you're expected to be considered as unemployed going forward.

Right. And it's not just big tech, right? We're seeing it from these comments from AT&T, Farmers, et cetera. It's starting to -- you're starting to see kind of the trickle down.

Appreciate those comments. And I guess just in those discussions, any noticeable trends with regards to changing space layouts?

Yes. I mean, listen, Dylan, we're getting a handle on this real time, and we're seeing the same thing. As I mentioned in my prepared remarks, you're seeing a lot more conference room facilities, a lot more space per head. We've seen that number go up to like 165 or more, maybe even close to 200 feet per person when it was as low as like 120. And so that -- those numbers are consistent throughout, more space for less people. And I think that seems to be the trend, obviously, amenity driven. That's the trend and location and quality, which we've talked about since the beginning of this downturn.

Our next question comes from Ronald Kamdem with Morgan Stanley.

Just going back on the leasing, really helpful color on the '23, 2 large expirations in the Amazon deal. But any sort of updates on the -- remind us on the Nutanix space as well as the towers at Shore Center coming due in 2024. Any sort of color or context there, how are conversations going?

Sure. This is Art. Nutanix is -- remember, it's the contractual giveback, we extended them for 215,000 square feet for an additional 7 years. And so this was part of their contractual giveback. The piece that came back in the quarter, it was about 51,000 square feet. We're in leases for half. Half of that currently. Going forward, the next large piece in '23, which is up in May, we're just currently marketing the space. We don't have a backfill user inside, but we are touring currently.

Got it. And then Poshmark, sorry?

Yes, Poshmark were in negotiations. They're -- if you think about it, they're a 3-floor tenant, we're in negotiations for 2 floors at the current time, right? So we'll see as they assume what kind of footprint they're looking for, it might be all 3. But right now, we're focused on 2.

Got it. And then zooming out to the -- you talked about the 2 million square feet in the pipeline, is there a way to thematically break that down a little bit? Like, is there like AI, financial services, tech, is there a way to sort of dive into that number a little bit more?

Yes. I don't -- right now, I mean, I don't dissect it in that fashion. But I will tell you the sense that I'm getting on that 2 million feet. By the way, that 2 million feet is up 100,000 square feet quarter-over-quarter after having leased 400,000 feet. So that's -- that early interest that I had been talking about on repeat is real, and it's starting to work its way into our pipeline, which again bodes well. I would say that because of the markets that we're in, I would say probably 60% of that is -- 60%, 65% of that is tech. Now I can't break it down to AI versus hardware, software, but it's 65% squarely is tech.

This concludes our question-and-answer session. I would like to turn the conference back over to Victor Coleman, Chairman and CEO, for any closing remarks.

Thank you so much for participating in this quarter's call, and we'll speak to you all in the next quarter.

The conference has now concluded. You may now disconnect.