더글러스 에밋(DEI) 2026년 3분기 실적 콘퍼런스콜: 오피스 입주율 상승

핵심 요약

• 2026년 3분기 매출은 전년 동기의 2억 5,100만 달러에서 2억 6,100만 달러로 증가했으며, FFO는 6,850만 달러에서 6,960만 달러로 증가했습니다.
• 오피스 입주율은 1%포인트 이상 상승한 76.7%를 기록해 2012년 이후 분기 기준 최대 증가폭을 나타냈습니다. 스튜디오 플라자를 포함한 임대 계약률은 80.4%에 달했습니다.
• 더글러스 에밋은 약 100만 평방피트에 달하는 224건의 오피스 임대 계약을 체결했습니다. 임대 계약률과 입주율 간 370bp의 격차는 과거 평균의 거의 두 배에 달했습니다.
• 주거용 부동산 임대 계약률은 99% 이상을 유지했으며, 동일 자산 기준 현금 순영업소득(NOI)은 전년 동기 대비 4.4% 증가했습니다.
• 경영진은 2026년 주당 희석 FFO 가이던스를 1.39~1.43달러, 주당 희석 순손실 가이던스를 0.16~0.20달러로 유지했습니다.
• 차입 비용 상승은 여전히 실적에 주요 부담 요인으로 작용하고 있습니다. 경영진은 평균 차입 금리가 3%에서 5%로 상승해 2019년 대비 연간 이자 비용이 1억 3,500만 달러 이상 증가했다고 밝혔습니다.

핵심 재무 데이터

사업 및 운영 실적

더글러스 에밋은 2026년 3분기 중 총 약 100만 평방피트에 달하는 224건의 오피스 임대 계약을 완료했습니다. 여기에는 72만 4,000평방피트 이상에 달하는 142건의 갱신 계약과 총 약 27만 2,000평방피트에 이르는 82건의 신규 임대 계약이 포함되었습니다.

회사는 임대 계약률과 입주율 사이에 370bp의 격차가 발생했다고 밝혔습니다. 경영진은 계약이 체결되었으나 아직 입주하지 않은 물량 대부분이 향후 3개 분기 내에 입주를 시작할 예정이며, 4개 분기 내에 거의 전량이 개시될 것으로 예상된다고 전했습니다.

해당 분기 체결된 임대 계약의 정액 기준 가치는 동일 공간의 직전 계약 대비 1.8% 상승했습니다. 연간 3~5%의 고정 임대료 인상이 초기 현금 임대료 하락분을 상쇄했습니다. 임대 거래 비용은 평방피트당 연평균 5.26달러였습니다.

경영진은 임차인의 면적 확장이 축소를 지속적으로 웃돌았다고 밝혔습니다. 법률, 회계, 금융 및 엔터테인먼트 업종 임차인의 수요는 여전히 활발했습니다. 회사는 임대료 인상에 앞서 입주율 제고를 계속 최우선 과제로 삼고 있습니다.

주거용 포트폴리오의 임대 계약률은 99% 이상을 유지했습니다. 개발 프로젝트를 통해 향후 수년간 브렌트우드의 랜드마크 레지던스 712가구와 웨스트우드의 10900 윌셔 최대 323가구를 포함해 1,000가구 이상이 추가될 것으로 예상됩니다.

재무상태표 및 자본 배분

더글러스 에밋은 지난 8월 3억 6,600만 달러 규모의 오피스 대출을 차환했습니다. 새로운 비소구 대출은 4년 만기로, 2029년 9월까지 실질 금리가 6.24%로 고정됩니다. 지난 9개월간 완료된 총 차환 규모는 12억 달러를 넘어섰습니다.

경영진은 향후 도래하는 부채 만기 물량도 차환될 것으로 예상하며 이미 관련 논의가 진행 중이라고 밝혔습니다. 다만 현재 금리 수준에서는 차환 시 차입 비용이 증가하게 됩니다.

자산 인수와 관련해 회사는 경영진이 '수십 년 만에 처음 보는 할인'이라고 설명한 가격대에서 로스앤젤레스 웨스트사이드 지역의 고품질 클래스 A 오피스 자산을 타깃으로 삼고 있습니다. 대규모 거래에는 합작투자(JV) 자본이 활용될 것으로 예상됩니다. 경영진은 지분 파트너들이 적합한 거래에 자금을 투입할 준비가 되어 있다고 밝혔습니다.

더글러스 에밋은 현재 아파트를 매입할 계획이 없습니다. 경영진은 기존 아파트 자산을 매입하는 것보다 이미 보유한 토지에 주거용 부동산을 개발하는 것이 더 매력적인 수익률을 창출할 수 있다고 판단하고 있습니다.

경영진 가이던스

더글러스 에밋은 2026년 연간 가이던스를 다음과 같이 유지했습니다.

• 보통주 주당 희석 순손실: 0.16~0.20달러
• 완전 희석 주당 FFO: 1.39~1.43달러

해당 가이던스에는 향후 자산 매입 및 처분, 보통주 발행 또는 자사주 매입, 자금 조달, 재산 피해 보험금 수령, 손상차손 및 기타 잠재적 자본시장 활동은 제외되어 있습니다.

경영진은 금리가 완화되지 않더라도 오피스 입주율 상승과 건설 중인 주거용 프로젝트를 통해 FFO가 결국 2019년 수준으로 회복되거나 이를 웃돌 수 있을 것으로 보고 있습니다. 이는 공식 가이던스라기보다는 경영진의 목표치이며, 주거용 보유 토지(랜드뱅크)나 사모펀드 플랫폼을 통한 향후 인수로 발생할 잠재적 이익은 제외된 것입니다.

리스크 및 주요 관심사

• 이자 비용은 회사가 밝힌 가장 큰 당면 과제입니다. 평균 차입 금리는 3%에서 5%로 상승했습니다.
• 오피스 입주율 개선과 주거 부문 NOI 성장에도 불구하고 동일 자산 기준 현금 NOI는 3.1% 감소했습니다.
• AFFO는 전년 동기의 5,200만 달러에서 4,700만 달러로 감소했습니다.
• 대규모 오피스 임대 계약은 더 많은 인테리어 공사(TI) 비용 지출을 요구할 수 있으며, 입주가 시작되어 수익에 기여하기까지 더 오랜 시간이 걸릴 수 있습니다.
• 향후 신규 개발 착공은 기존에 약정된 공사 부담으로 인해 계속 제약을 받고 있습니다. 경영진은 2개 부지에서 기획 및 건축 설계를 진행 중이지만, 현재 진행 중인 공사가 실질적으로 완료될 때까지는 추가 주거용 프로젝트를 시작하지 않을 방침입니다.
• 경영진의 청구 소송 지속 결정에도 불구하고 잠재적인 보험 소송 합의금(수익금)은 여전히 불확실한 상태입니다.

애널리스트 질의응답(Q&A) 주요 내용

경영진은 임대 계약률과 입주율 간의 벌어진 격차가 임차인 입주에 따라 향후 입주율 개선을 뒷받침할 것이라고 밝혔습니다. 입주 예정 물량의 대부분은 향후 3개 분기에 걸쳐 나타날 것으로 예상되나, 대규모 임대의 경우 수익 인식 시점이 달라질 수 있습니다.

경영진에 따르면 스튜디오 플라자는 향후 4개 분기, 빠르면 2개 분기 내에 임대 입지가 더욱 공고해질 수 있습니다. 다만 대형 임차인이 공간을 조성하고 입주하는 데 시간이 걸리기 때문에 수익이 가시화되기까지는 더 오래 걸릴 수 있습니다.

오피스 임대료와 관련해 경영진은 임대 계약률이 80%대 중반에 진입하기 전까지는 현금 임대료 스프레드가 실질적으로 개선되기 어려울 것이라고 밝혔습니다. 현재 계약들도 정액 기준으로는 여전히 플러스 가치를 유지하고 있으나, 내재된 연간 임대료 인상 조항으로 인해 현재 입주율 수준에서는 현금 스프레드의 플러스 전환이 어렵습니다.

회사의 재계약률은 약 70% 수준을 유지하고 있습니다. 경영진은 기존 임차인 유지에 계속 집중하고 있지만, 대형 및 중소형 신규 임차인을 적극적으로 유치하는 것이 임대 계약률 개선의 주된 동인이라고 설명했습니다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's Quarterly Earnings Call. Today's call is being recorded. [Operator Instructions] I will now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett.

Stuart McElhinney

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

During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website.

When we reach the question-and-answer portion in consideration of others, please limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Jordan.

Jordan Kaplan

Good morning, and thank you for joining us. We've now had our fourth consecutive quarter of positive absorption with almost 1 million square feet of office leasing. Our strong leasing this year is now translating into increased office occupancy. During the quarter, we grew occupancy by more than a full point, our largest quarterly gain since 2012. And we still have a high occupancy backlog as our leased-to-occupied spread is almost double our historic average. Our apartments continue to be a growth engine. Our portfolio remains fully leased with same-property cash NOI over 4% higher than last year. Despite a challenging loan market, we have successfully refinanced $1.2 billion of loans over the last 9 months.

During our entire 40-year history, we have never had a debt default or short pay. This track record has been key to our continuing ability to access debt and equity capital on better terms than are typically available to the broader market. We're optimistic even though the macroeconomic climate remains murky. Office occupancy has begun to recover. Our leasing pipeline is quite healthy, and our NOI has essentially recovered to its 2019 level. Credit for that goes to our very strong operating team. Our biggest challenge is interest rates with our average cost of debt increasing from 3% to 5%. We now spend over $135 million more on interest than we did in 2019. This alone equates to nearly all of our FFO decline since our 2019 FFO high watermark despite lower office occupancy.

Even if interest rates don't eventually moderate, we believe that rising occupancy and our residential developments under construction can drive our FFO back to its 2019 level and beyond. And that estimate does not include the accretive impact of our entitled residential land bank or accretive acquisitions using our private equity platform. During multiple downturns over the last 40 years, we have made generational acquisitions by having dry powder at times when other buyers and owners were capital starved. We have already made 2 great acquisitions in the current market and believe additional similar opportunities will surface soon. As they do, we will be ready. With that, I will turn the call over to Kevin to discuss our refinancing and redevelopment activities.

Kevin Crummy

Thanks, Jordan, and good morning. In August, we refinanced a $366 million office loan. The new nonrecourse loan has a 4-year term with interest effectively fixed at 6.24% until September 2029. This brings the total debt we have successfully refinanced so far this year to over $1.2 billion. Our apartment redevelopment projects remain on track to add over 1,000 units over the next few years, including 712 units of the Landmark Residences in Brentwood and up to 323 units of 10900 Wilshire and Westwood. We also continue to evaluate other development opportunities within our existing portfolio.

As Jordan said, and it is worth repeating, as more owners are forced to navigate this challenging capital constrained environment, we expect to see more of these typically rare opportunities to buy high-quality buildings at very attractive values. With that, I will turn the call over to Stuart.

Stuart McElhinney

Thanks, Kevin. Good morning, everyone. Our strong leasing again produced positive absorption, increasing our leased rate to 80.4%, including Studio Plaza. During the third quarter, we signed 224 office leases totaling almost 1 million square feet, including 142 renewal leases totaling over 724,000 square feet and 82 new leases totaling almost 272,000 square feet. Reflecting our leasing over the past year, our occupancy improved by more than a full percentage point during the quarter to 76.7%. As Jordan mentioned, our occupancy backlog remains unusually strong with a 370 basis point spread between our leased and occupied rates at quarter end. The straight-line value of leases we executed in the quarter increased by 1.8% compared to the prior leases for the same space, with our typical 3% to 5% annual fixed rent bumps more than offsetting the impact of lower beginning cash rents.

Our lease transaction costs averaged $5.26 per square foot per year, well below the benchmark for other office REITs. Our residential portfolio continues to perform exceptionally well with cash same-property NOI up 4.4% and the portfolio over 99% leased, reflecting strong demand across our markets. With that, I'll turn the call over to Peter to discuss our financial results.

Peter Seymour

Thanks, Stuart. Good morning, everyone. Compared to the third quarter of 2025, revenue increased from $251 million to $261 million. FFO increased from $68.5 million to $69.6 million. AFFO decreased from $52 million to $47 million and same-property cash NOI decreased 3.1%. Aat approximately 4.6% of revenue, our G&A remains the lowest among our benchmark group. Turning to guidance. We still expect our 2026 net income per common share diluted to be between negative $0.20 and negative $0.16 and our fully diluted FFO per share to be between $1.39 and $1.43. For information on assumptions underlying our guidance, please refer to the schedule in the earnings package.

As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges or other possible capital markets activities. I will now turn the call over to the operator so we can take your questions.

Operator

[Operator Instructions] The first question today comes from Alexander Goldfarb with Piper Sandler.

질의응답

Alexander Goldfarb

Jordan, can you just talk about -- you guys obviously have done a very good job growing the occupancy from second quarter to now and 1 million square feet for the past 4 quarters. But can you give us a sense of how much signed but not yet commenced office leasing that you have? Just trying to get a sense for what the earnings ramp would be, how much leasing you've done that hasn't yet taken effect?

Jordan Kaplan

Well, I mean, the spread between leased and occupied is what -- 370 basis points. 370 basis points. So that is kind of high for us. I think Stuart said that in his section. I mean we're -- normal maybe 100, 150. Low is below 100, which is a drag, right, because it means you're -- either you're totally full, which is fine or you're not doing a lot of new leasing, right? 350 is a very good sign. Like you should always be happy with a big spread there because it means we're leasing kind of faster than where we're occupied and faster than with new deals.

It represents new stuff. So there's a good run on that. But I think even more interesting is that our pipeline is still like -- it's still very good. I mean we feel very good about it, and we feel very good going forward. And that's the best news. I mean, because we've been very direct with you guys as the pipeline has moved because obviously, we're a month or so into the quarter, and it still looks very good. And when it's been bad, we've been saying it's bad, but it looks very good.

Alexander Goldfarb

And then just following up on that. As we think about the cadence and how this leasing comes online, I mean, you guys are small tenants, so it's probably pretty quick within maybe 2 quarters or so, 2, 3 quarters. But is there some pace, Stuart, that you would give us so that as we think about the strong leasing that you've been doing, what the ramp is because obviously, there's normal portfolio churn. Just trying to get a sense for how quickly this will come in as we gauge earnings into next year.

Stuart McElhinney

Yes. I think -- we're happy with that widespread. I don't think we want to give kind of timing on what that means for how quickly it comes in. You're right to say that most of the leases are pretty small. So of the leases that we've signed that are not commenced, I think all -- basically all of them will commence over the next 4 quarters. So that will give you a good sense. There's not too much that's much longer out than that. And I think the next 1 or 2 quarters is the majority of it.

Operator

The next question comes from Steve Sakwa with Evercore ISI.

Steve Sakwa

Maybe to follow up on Alex's line of question on leasing. The new leases is really kind of key to kind of building the occupancy at the company. I know it's kind of lumpy, but it has come down a bit, Jordan, from the first quarter to the second quarter to the third quarter. I know it can be a function of maybe a few larger-sized deals maybe slipping. But can you maybe just talk about the dynamics of some of the larger deals? And are you seeing more of them? And what would your outlook be kind of moving forward on those larger deals?

Jordan Kaplan

Well, we're definitely seeing more of them. Some of it's a function of the fact that Studio Plaza just gets larger deals. But throughout the whole portfolio, we're getting larger deals. And larger deals have some good impacts and some not as good, right? The good ones are you get big chunks of space leased. But on the other side, they're going to negotiate higher TIs and they're also a little slower to move in. But I feel -- I can't tell you, we had one quarter with an enormous amount of new leasing. But I don't think what you're kind of alluding to of a downhill trend in terms of new leasing, I don't think we're feeling that. I think we're feeling a little bit of like quarter -- too much quarter-to-quarter. I think we'll end the year with a very good average across the 4 quarters of new leasing and lease rate gain, I'll call it. Maybe I should just answer your question and stop there. I was going to keep answering with something else. Go ahead.

Steve Sakwa

And then maybe you mentioned like the apartments. You're obviously very full. You've got a couple of projects underway, the conversion as well as Barrington. How do you think about new apartment starts? And where would your return hurdle be? Or have you changed your return hurdle to say, start a new apartment development project today?

Jordan Kaplan

I think our return hurdles were always high enough that they were beyond anything that like most people were doing, and they're still not far off from what if someone could get it, they would do today. We've told you we're doing a lot of this stuff at 8 caps and better, and we are. Now of course, we own the land. And buying the land and especially for kind of developers that are trying to build and sell, you have the punitive transfer taxes and a bunch of other things that we're not really subject to, right? We already own the land. And they've made the entitlement side cheaper. So we're in a position to still -- other than the cost of debt, other than the cost of debt, to still be able to be -- do very accretive new development. And we've told you that and said we continue to look at new projects.

Although I mentioned in my portion of the script that I think we will -- with what we have going on now, we can recover our FFO. Even with these high interest rates, we can recover our FFO back to and beyond where we were in 2019. And that doesn't even include taking on new resi development projects, which are very accretive, which you're about to see, for instance, with respect to Barrington and the partnership deal that we're in on Murdoch. And of course, that also doesn't include new deals that we do with our equity partners that are of the like the Bedford deal. We just think we can get there simply out of completing the 2 projects we have going now that are very accretive or 2 or 3, I guess. Barrington -- it's not called it anymore. Yes, 10900 and then finishing leasing up Studio Plaza. Remember, Studio Plaza and Barrington were a huge reduction in our FFO when both of them went offline.

So when you ask about new development, I mean, I put the stuff we're doing now to be super important and our first priority to get our FFO back to where we want it, but we still have that stuff, too. And I actually think even at this time, that stuff could still make sense for us. Too much of an answer? Or did I answer your question, Steve?

Steve Sakwa

No. I mean it sounds like you can make the deals pencil, I guess. Are you more inclined to want to start another residential project right now? Or do you feel like you have a lot on your plate getting Barrington to the finish line?

Jordan Kaplan

I mean I feel like I'm not more inclined to start another residential project right now. But we are in full construction and the rest of it. But we are doing some preparatory work on 2 sites, just kind of planning style work and architectural work. But we're not going to start anything until we get a lot of the stuff that we're working on now completed.

Operator

The next question comes from Nicholas Yulico with Scotiabank.

Nicholas Yulico

I guess first question is just on the balance sheet and thinking about, I guess, the maturity you have next year, the JV loan. We also have a swap maturity early next year. So plans for both of those and how we should think about kind of all-in rates versus what you just did at $360 million at 6.25%.

Jordan Kaplan

Well, in terms of all-in rate, I mean, you guys have -- you literally have the same amount of information we do. We have a great schedule that shows you all the loans and when swaps burn off and all the rest of it, and you guys can make determinations about where you think we'll end up. You know we've been refinancing at spreads between 170 and 2.25 over and swapping out 3 to 4 years. So that, I'll leave you, and we'll obviously give guidance on it next quarter. In terms of the loan that's coming up, as we've been able to do with all our debt, and it's kind of one of the last ones of this whole like roll-up, we'll refinance it. And obviously, the rate will move up. It's -- there's no sort of debt jeopardy there. It will just get refied. And we're already in those discussions, and we'll get it done. And we're actually kind of working on some things to even move a little farther out to buy out some years. But we're super comfortable about being able to refi the rest -- anything that's coming up, and we're super unhappy about where interest rates are.

Nicholas Yulico

Got it, Jordan. I guess second question is just on Landmark and 10900 Wilshire, the development portfolio there. How much is left to fund on those 2 projects? And are you still thinking that you could get some level of proceeds back from the insurance litigation?

Jordan Kaplan

So we're right on target or a little better. So I think we -- I think we put the balance of the construction loan as of the end of last quarter in our schedule. But we'll use the construction loan, and it will fund like finishing the buildings, okay? So we're in good shape there on funding. What was the second part of your question?

Nicholas Yulico

That the insurance -- potential insurance litigation proceeds?

Jordan Kaplan

Yes. I mean, of course, I do. I wouldn't be continuing to pursue the litigation. But there are a number of times I've been wrong where I thought this is a slam dunk in front of the courts, you can count -- you need more than one hand to count on. So yes, I don't understand how we lose that, but whatever, that's going.

Operator

The next question comes from Blaine Heck with Wells Fargo.

Blaine Heck

Jordan, might be a little early to ask, but I'm going to anyways. And I guess in light of yesterday's elections, can you talk about whether anything changes materially for your business in L.A., particularly around residential conversion approvals or ground-up development or even rent regulation and whether there are any specific outcomes that could move projects forward in your pipeline or even change the level of political spending that we should expect in G&A next year?

Jordan Kaplan

There might be some political spending in G&A next year because we still have transfer Texas to deal with statewide. We got very close, and I think we can win that one. I think there's a deal there to be made. The rest of the stuff with the state, at least in conversations I've had with now Governor Becerra, I think, are probably going in an okay direction for us. And I don't know what's going to happen locally, although locally it depends a lot more on counsel and some other things. But that's in terms of that stuff. Federally, I think that people are feeling now that some of the more inflationary things that the federal government has been pursuing are going to be forced into moderation. And that's super big for us.

I mean, I said in my notes, it's all about the cost of debt and interest rates and how much they've moved up on us. And I think I'm kind of optimistic now. I thought we'd have to wait 2 years before someone really did something to get control over all that. And I think now we're going to see something happen in the next couple of years that will start a process that will be probably pretty good for the economy and get us into a less inflationary and less of an up arrow on interest rates. And I'm very optimistic for that. And we'll see if we can -- the House and the Senate are able to kind of push some stuff through or make deals that get that happening. That makes -- I mean it's the biggest thing for us. That's the biggest thing.

Blaine Heck

We noticed the amount of space expiring in 2027 came down pretty significantly this quarter. I guess, can you just talk about how much of that early renewal activity was driven by tenants coming to you versus an intentional push by you guys to address those a little bit early? And how you think the economics of those early renewals compare with what you might have been able to achieve if you waited closer to the natural expiration?

Jordan Kaplan

Well, we start -- I mean to say we start a year early trying to renew people probably understates it. So I mean, a lot of what happens at the buildings is the day the guy moves in, we're thinking about the renewal, and we're trying to give a level of service that makes them want to renew. And by the way, it's reflected, right? We're like 70% renewal year in and year out. So I mean, have we done more than that? I don't know that we've done more than that. In terms of the economics going forward, I don't think we spend a lot of time trying to determine if we weigh or whatever, what the future economics would be on a lease. We want to be full. We want our buildings full. So we'll make deals today that keep our buildings full even if we're extremely confident that rents are going to be up next year. I mean we want to lease up the portfolio. So that is so -- such an overwhelmingly dominant goal that I don't think anyone would even consider if a tenant was ready to go to say, let's stall it and hope that rates rise.

Operator

The next question comes from Rich Anderson with Cantor Fitzgerald.

Richard Anderson

So Jordan, you just mentioned sort of nice lead into my question, my first question, 70% tenant retention. How do you move that number up? And what's -- besides price, obviously, like why are people leaving? And what can you do to turn that 70% into 80%? Or is it just frictional stuff that's unavoidable, and that's just the way the cookie crumbles in your world?

Jordan Kaplan

You know I run the company with a partner, Ken Panzer, the 2 of us run the company. And you are on Ken's favorite subject. Ken wants to find a way to increase the renewal rate. It is enormously difficult because it's already at a high level. I'm not going to bet against him, but he really has thought about that and is thinking of ways to do that and is always trying things out. So we want to increase that. But more important, the way we're moving up our lease rate is real aggression on large and small tenants and going after them, just going after them. And I'm seeing it. I mean, I see -- Ken is doing leases again. I mean, he oversees a huge amount. He is down calling on leases right now. He wants leasing, and I see it happening. And he's got that whole team. I mean you go -- I mean, on Halloween, they had one team that did a song. And kind of the repeating phrase was leasing, leasing, leasing, which he's saying in every meeting. So we're super focused on it right now and getting the lease rate up. I mean that's the best I can tell you in terms of those 2 things.

Richard Anderson

All right. And then second question, I got a couple, but I only have one more. So if Barrington or whatever what's it called now Landmark.

Jordan Kaplan

Landmark Residences.

Richard Anderson

Yes. If that's a kind of 2- or 3-year process, how far inside that will Studio Plaza be done, do you think, in terms of it being fully leased up?

Jordan Kaplan

Well, I'm so bad at making those predictions, but I think we'll be in a very good position, certainly within the next 4 quarters and maybe within the next 2. But then these are big leases. They have to move in and do the rest of it. So for the income to roll in, might even take a little bit longer.

Operator

The next question comes from Jana Galan with Bank of America.

Jana Galan

Following up on the interest rate environment potentially causing investment opportunities. Could you provide some parameters on what you're looking for? Would it be stabilized buildings, redevelopment opportunities, any new submarkets?

Jordan Kaplan

Yes. We're looking for super Class A office at discounts we haven't seen in decades and -- but super Class A. So we'll pay for them. I mean we'll be paying for them, but we'll be paying a lot less than we would have over the last 10 or 15 years or even more. And I think that's just an incredible opportunity. We know the list of buildings we want. We're talking to them. We're chasing very large deals, very large super Class A deals.

Jana Galan

I was going to ask any apartments, but thank you for clarifying.

Jordan Kaplan

No, we will not buy apartments. Apartments are still trading at higher cap rates than historically, but still not very high cap rates, call it, 5, maybe even high 4s. And we just think we can build at much better, much more accretive cost than that.

Jana Galan

And then maybe just kind of in terms of the capital that's looking to potentially partner with you. Curious what that looks like in terms of capital raising.

Jordan Kaplan

I mean, that environment is excellent. I mean we owe them more deals. That's where that's at. I mean they know the stuff we're chasing and they're more than ready. I mean -- they like want to come in. They're more than ready. We got to make the deal, though.

Operator

Next question comes from Seth Bergey with Citi.

Seth Bergey

I guess just to kind of follow on that similar line of question. Kind of how are your IRR expectations? Or kind of how do you think about what returns you're trying to solve for when you look at those kind of Class A office opportunities that are out there?

Jordan Kaplan

We're obviously going in with much higher yields than historically we would have been able to. And in terms of long-term IRR, that has a lot to do about your optimism about office and office rates and what's going to happen in these markets. But I think we're looking at some pretty good all-cash and leveraged IRRs. And as you guys know, we don't use very high leverage. So -- and leverage at these rates, you've got to be at a very good all-cash IRR for leverage to help it. So I think we're feeling that those numbers also in that world are historically high.

Seth Bergey

And then maybe just going back to kind of the leasing activity you've done in that 370 basis points. Just given a lot of your deal sizes are smaller, how kind of quickly do you kind of anticipate that pipeline converting into occupancy?

Peter Seymour

Yes, I think of the leasing that's not yet occupied, most of it should move in over the next 3 quarters.

Operator

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

John Kim

On the acquisitions, should we assume you're going to be funding that with the JV partner? And how do you look at the earnings accretion versus share repurchases?

Jordan Kaplan

Yes. We've historically done things, especially larger transactions with JV partners, and they're the best source of capital out there right now, and I don't know why we've changed that.

John Kim

Yes. I just want to make sure because you talked about very attractive IRRs, thanks for confirming. Looking at your cash spreads, I guess it's not a big surprise that they're negative given 3% to 5% annual escalators or fixed rent increases. But when do you expect market rents to exceed that 3% to 5% level, so that cash spread figure improves?

Peter Seymour

Yes. I think at 80% leased, as Jordan has been emphasizing, we're very focused on leasing and occupancy at this point in the cycle. So once that lease rate has a strong up arrow on it, and we're moving up in the mid-80s, then rents will likely follow at that point, and you could see that turn around. But at this point in the cycle with -- you said it right, with our bumps, 3% to 5% bumps, ending rent is 12% to 16% higher than it started. It's very hard to have a positive cash spread with those built-in escalators. So it's not unsurprising that they're still negative. We're very pleased that the overall straight-line value has remained positive. So the leases on average are still more value. But we're really focused on occupancy and rate will follow once we've got a good trajectory there.

Operator

The next question comes from Upal Rana with KeyBanc Capital Markets.

Upal Rana

Jordan, on the large Class A office assets that you're pursuing, are any of those in new markets? Or are you sticking to L.A. for the time being?

Jordan Kaplan

Well, it's correct to say we're sticking to L.A. But then within L.A., the markets in L.A., it's generally even in markets. There's one deal that's in another market I've always wanted to be in. But that's in L.A., really should count as Westside. But other than that, yes, it's like Westside L.A.

Upal Rana

And then maybe on touching on tenant industries. Maybe you can give us an update on which ones are currently driving the most demand and where you're seeing expansions versus downsizing?

Jordan Kaplan

Yes. Pleased to see that we're still seeing expansions easily outpacing contractions, and that's been true for several quarters. Demand remains very strong across our diverse group. That pie chart that we give you is still very instructive. It's legal, it's accounting, finance, entertainment, all very good and very active.

Operator

The next question comes from Dylan Burzinski with Green Street.

Dylan Burzinski

I appreciate your comments on sort of the demand backdrop. But I guess just maybe looking at it a little bit deeper, when you guys sort of look at your pipeline and specifically focusing on sort of new leases or vacant space leasing, of that demand, would you say most of it or could you break it down by percentage on new-to-market tenants, expansionary versus sort of musical shares within a market and you guys taking share? And then I guess as you sort of think about the near-term recovery, is it such that you guys need to see a continuation of just broader market-wide demand growth in order to sort of achieve some of your goals on that front?

Jordan Kaplan

Well, I mean, if you look at what the sort of the public kind of market lease rates are being published by like the big brokerage firms, I don't -- I think the growth -- I don't think anyone is stealing from anywhere. I think it's like growth. Now whether it's organic and people expanding or whether it's coming from the outside and new leases coming in, I think both of those are happening in our portfolio. I mean, we're also taking tenants from other buildings, but it's super hard to figure out other than to compare our growth and what's going on in the submarkets that we're in to say -- I mean, I don't see -- as we move up, they seem to be moving up. So we're probably not robbing Peter to pay Paul. We're probably seeing a return of market strength.

And I think that's also reflected in the fact that even when we have a kind of very big, very, very big fly trap. I mean, almost everything that flies in, we can get a grab on. But we weren't able to get large deals going until large tenants just started doing deals. And trust me, we would have been willing to take them out of other buildings. So I think now we're seeing people kind of expand or come back in or whatever the case may be or open a new office because they want everyone -- I don't know what all the list of stuff is. But we're seeing a lot of deals that I don't think we're looking and going, they came out of here to go here. But we are saying they came out of here to go come to us too. I think they're both happening.

Operator

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

Jordan Kaplan

Well, all I'll say is thank you all for joining us, and I look forward to speaking with you again in 3 months. Goodbye.

Operator

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