道格拉斯艾美特 (DEI) 2026年第三季度业绩电话会：写字楼入住率上升

核心要点

• 2026年第三季度营收从上年同期的2.51亿美元增至2.61亿美元，同时FFO（营运资金）从6850万美元增至6960万美元。
• 写字楼入驻率上升超过1个百分点至76.7%，创下该公司自2012年以来的最大季度增幅。包括Studio Plaza在内的已签约出租率达到80.4%。
• Douglas Emmett签署了224份写字楼租约，涉及面积近100万平方英尺。已签约出租率与实际入驻率之间370个基点的差距几乎是其历史平均水平的两倍。
• 住宅物业签约出租率保持在99%以上，同物业现金净营业收入（cash NOI）同比增长4.4%。
• 管理层维持2026年每股摊薄FFO为1.39至1.43美元的指引，以及每股摊薄净亏损为0.16至0.20美元的指引。
• 较高的借贷成本仍是主要的业绩压力来源。管理层表示，平均债务成本已从3%升至5%，与2019年相比，年利息支出增加了超过1.35亿美元。

核心财务数据

业务与经营表现

2026年第三季度，Douglas Emmett完成了224份写字楼租赁交易，总面积近100万平方英尺。其中包括142份续租租约（涉及面积超过72.4万平方英尺）和82份新签租约（总面积近27.2万平方英尺）。

该公司报告签约出租率与实际入驻率之间存在370个基点的利差。管理层表示，大部分已签约但尚未入驻的租约预计将在未来三个季度内开始起租，几乎所有租约预计都将在四个季度内生效。

本季度签署的租约按直线法计算的价值较同空间之前的租约增长了1.8%。每年3%至5%的固定租金涨幅抵消了较低的初始现金租金。租赁交易成本平均为每年每平方英尺5.26美元。

管理层表示，租户扩租的面积继续超过缩租面积。法律、会计、金融和娱乐行业的租户需求依然活跃。在提高租金之前，公司将继续优先考虑提升入驻率。

住宅物业组合签约率保持在99%以上。在未来数年内，开发项目预计将增加超过1,000套公寓，其中包括布伦特伍德（Brentwood）Landmark Residences的712套单元，以及韦斯特伍德（Westwood）10900 Wilshire的多达323套单元。

资产负债表与资本配置

Douglas Emmett于8月完成了一笔3.66亿美元写字楼贷款的再融资。该笔新的无追索权贷款期限为四年，至2029年9月的实际固定利率为6.24%。过去九个月完成的再融资总额已超过12亿美元。

管理层表示，预计即将到期的债务将进行再融资，相关谈判已经在进行中。然而，在当前利率水平下，再融资将推高借贷成本。

在资产收购方面，公司正瞄准洛杉矶西区的高品质甲级写字楼，管理层称其收购价格折扣力度为数十年罕见。规模较大的交易预计将引入合资资本。管理层表示，股权合作伙伴随时准备为优质交易提供资金。

Douglas Emmett目前没有收购公寓的计划。管理层认为，在自有土地上开发住宅物业，比直接收购现有公寓资产能够产生更具吸引力的回报。

管理层业绩指引

Douglas Emmett维持其2026年全年业绩指引：

• 普通股每股摊薄净亏损：0.16至0.20美元
• 每股完全摊薄FFO：1.39至1.43美元

该指引不包括未来的资产收购或处置、普通股发行或回购、融资、财产损失保险理赔款、减值损失以及其他潜在的资本市场活动。

管理层认为，即便利率不出现回落，写字楼入驻率的提升以及在建住宅项目最终也能推动FFO回升至甚至超过2019年的水平。这是管理层的目标而非正式指引，且未包含住宅土地储备或未来通过私募股权平台收购所带来的潜在收益。

风险与关注重点

• 利息支出是公司明确提到的最大挑战。平均债务成本已从3%攀升至5%。
• 尽管写字楼入驻率有所改善且住宅NOI实现增长，但同物业现金NOI仍下降了3.1%。
• AFFO从上年同期的5200万美元降至4700万美元。
• 大面积写字楼租约可能需要更高的租户装修改造补贴，并且可能需要更长时间才能起租并贡献收入。
• 受现有在建工程任务的限制，未来新开发项目的开工仍面临约束。管理层正在对两个地块开展规划和建筑设计工作，但在当前项目基本竣工之前，不打算启动新的住宅项目。
• 尽管管理层决定继续进行索赔，但潜在的保险诉讼赔偿收益仍存在不确定性。

分析师问答环节要点

管理层表示，随着租户陆续入驻，较高的签约与入驻利差应会支撑入驻率的上升。大多数待起租租约预计将在未来三个季度内生效，不过大额租约的收入确认时间可能会有所不同。

据管理层称，Studio Plaza可能在未来四个季度内（甚至有望在两个季度内）达到更强劲的租赁表现。不过，由于大型租户需要时间进行场地装修和入驻，相关收入可能需要更长时间才能体现。

在写字楼租金方面，管理层表示，在签约率达到80%中段之前，现金租金调整利差不太可能出现实质性改善。目前的租约按直线法计算仍保持正向价值，但合同中内嵌的年度租金递增条款导致在当前的入驻率水平下难以实现正向现金利差。

该公司的续租率保持在70%左右。管理层继续专注于租户留存，但同时表示，积极拓展大中小型新租户是提高签约率的主要驱动力。

业绩电话会完整纪要

完整财报电话会议逐字稿

管理层陈述

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.

分析师问答

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.