Douglas Emmett Inc. (NYSE: DEI) Q1 2020 Earnings Call Transcript

Douglas Emmett Inc. (DEI) Q1 2020 earnings call dated May 08, 2020

Corporate Participants:

Stuart McElhinney — Vice President, Investor Relations

Jordan L. Kaplan — President & Chief Executive Officer

Kevin A. Crummy — Chief Investment Officer

Peter D. Seymour — Chief Financial Officer

Analysts:

Jason Green — Evercore — Analyst

Craig Mailman — KeyBanc Capital Markets — Analyst

Jamie Feldman — Bank of America — Analyst

Emmanuel Korchman — Citi — Analyst

Alexander Goldfarb — Piper Sandler — Analyst

Frank Lee — BMO Capital Markets — Analyst

Dave Rodgers — Baird — Analyst

Rick Anderson — SMBC — Analyst

Peter Abramowitz — Jefferies — Analyst

Daniel Ismail — Green Street Advisers — Analyst

Tayo Okusanya — Mizuho — Analyst

Michael Bilerman — Citi — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett’s Quarterly Earnings Call. [Operator Instructions]

I’ll now turn the conference over to Stuart McElhinney, Vice President of Investor Relations for Douglas Emmett. Please go ahead.

Stuart McElhinney — Vice President, Investor Relations

Thank you. Joining us today on the call are Jordan Kaplan, our President 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 the course of 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.

I will now turn the call over to Jordan.

Jordan L. Kaplan — President & Chief Executive Officer

Good morning, everyone. I hope you are staying safe and healthy. I know we are all focused on the current situation. Before addressing that, I want to briefly report on our first quarter results.

We had another excellent quarter. We grew our FFO by 8.5%, our AFFO by 16.4% and our same-property cash NOI by 7.7%. The straight-line value of our office leases signed during the quarter was 23% greater than the prior leases for the same space and we made good progress on our two multifamily development projects. Of course, that was in the first quarter.

As is true everywhere, our tenants are now struggling with the impacts of the pandemic on their business. In addition, the cities in which we operate have passed unusually punitive ordinances, prohibiting evictions and allowing rent deferral for residential, retail and office tenants regardless of financial distress. By eliminating any fees or interest and providing long payback periods, tenants essentially have the option of a free loan.

Given the current uncertainties, in our earnings package we provided you with our April rent collections data in lieu of guidance. To date, those collections represent 87% of aggregate rent billed with residential at 95%, office at 90% and our small retail component at 22%.

We don’t know whether April will prove to be a good predictor of the next few months or the remainder of the year. While we also do not know how long that pandemic will last, over numerous cycles during the last 30 years, we have designed our operating platform, capital structure and investment strategy to weather downturns.

We entered this downturn with strong cash flow and a very healthy balance sheet. At the end of Q1, we had $175 million of cash on hand, an undrawn $400 million line of credit, no debt maturities before 2023, no financial covenants that could force us to issue equity at the wrong time and 41% of our office portfolio is unencumbered. In the end, we own many of the highest quality properties in the strongest, most desirable submarkets of Los Angeles.

Our diverse tenant base represents our nation’s most competitive industries and limits our vulnerability to any single tenant or industry. Our markets have no meaningful new supply, so we face no overhang from new construction as we recover from this crisis.

Now, I will turn the call over to Kevin.

Kevin A. Crummy — Chief Investment Officer

Thanks, Jordan, and good morning, everyone. On the operational front, our buildings remain open, safe, and available for our tenants. We’re focused on providing excellent service, while instituting stringent cleaning protocols, safe distancing, face coverings in common areas and reduced elevator density.

As you might expect, we’re seeing low attendance at our office properties which will likely continue at least until the lifting of the stay-at-home orders. During this time, we expect some savings from variable expenses to help offset expected declines in parking revenue.

As Jordan mentioned, the cities where we primarily operate, Los Angeles, Beverly Hills, and Santa Monica have all enacted enforcement moratoriums to cover our residential, retail and office tenants. The ordinances have some carve-outs for large tenants and generally prohibit landlords not only from evicting tenants, but also from imposing any late fees or interest.

Under the ordinances, tenants are required to pay back the deferred rent within three to 12 months after the end of the emergency.

On the capital front, construction is continuing on our two large multifamily development projects, although it may take a little longer under current conditions. In Honolulu, where we are developing 500 apartment units at our office conversion project, we have already pre-leased a number of units and expect to deliver them over the next few months.

For our Brentwood apartment tower, we currently expect delivery of the first units to be pushed into 2022. For the moment, we have suspended work on new office repositioning projects and acquisitions in our market seem to be on hold as buyers and sellers evaluate the new conditions.

With that said, we are well-positioned to take advantage of any opportunities that emerge.

I will now turn the call over to Stuart.

Stuart McElhinney — Vice President, Investor Relations

Thanks, Kevin. Good morning, everyone. In Q1, we signed 174 office leases covering 702,000 square feet, including 184,000 square feet of new leases. Leasing spreads for the first quarter were 22.6% for straight-line rent roll up, 9.3% for cash roll up. As we discussed last quarter, we had a high number of expirations impact Q1 and anticipated an early dip in occupancy this year. The decline in occupancy for our total office portfolio to 90.8% was in line with our pre-COVID-19 expectations.

By late March, the pace of new leasing in our office portfolio slowed to a trickle, but we are starting to see some signs of life as tenants and brokers adjust to the new normal.

We have often talked about how we make the leasing experience in our small tenant office portfolio mirror the ease and speed of that at our apartments. As a result, we were early adopters of virtual touring technology and we are well-equipped to complete the entire leasing process remotely, from tour to space planning, to electronic document execution. This experience should serve us well in the current environment and going forward.

On the multifamily side, our portfolio remained essentially fully leased at 98%. Residential new leasing activity also slowed somewhat in late March, but not to the same extent as office.

I’ll now turn the call over to Peter to discuss our results.

Peter D. Seymour — Chief Financial Officer

Thanks, Stuart. Good morning, everyone. We are pleased with our Q1 results. Compared to a year ago in the first quarter of 2020, we increased revenues by 12.1%. We increased FFO 8.5% to $112 million or $0.55 per share. We increased AFFO 16.4% to $99 million. We increased our same-property cash NOI by 7.7%, and at only 4.1% of revenues, our G&A for the first quarter remains well below that of our benchmark group.

As Jordan said, we don’t know what will happen in May or in subsequent months. Many things could change even before the stay-in-place orders begin to be lifted. Many of our small tenants have applied for federal assistance, which can be forgiven if they pay their rent by June.

The local governments that have authorized rent deferrals are considering excluding office tenants, which would reduce or eliminate that headwind. Leasing could start to recover as tenants come closer to the end of their existing leases. On the other hand, we could see more tenants stop paying rent if the impact to their business grows.

These uncertainties are compounded by many other critical variables on which we have little information. How long the current stay-in-place orders remain? How they are phased out? How businesses react after they are phased out? And whether there is a second pandemic wave in the fall?

While in past recessions, our tenants have shown low default rates, we can’t be sure what will happen this time. As a result, we have withdrawn our guidance for all of 2020.

I will now turn the call over to the operator so we can take your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Jason Green at Evercore.

Jason Green — Evercore — Analyst

[Indecipherable]. Just a question on the tenants who have not paid rent, do you have any insight as to how many of those tenants are experiencing real financial distress versus how many are just opportunistically seeking rent relief?

Jordan L. Kaplan — President & Chief Executive Officer

You know considering — this is Jordan. And I’m sorry our voices sound so — don’t have their normal rich timbre, but we have five people in a 46-person conference room spread out in respect to social distancing and we probably would feel the microphone also needs to be six feet away. But anyway, when it comes to the office tenants and you know the office markets we’re in and you know our credit underwriting, well, I think we feel pretty good about our tenants’ ability to pay. It’s hard to go in. I mean, everyone is impacted by this. When it comes to our retail tenants, we actually have some large retail tenants that probably can pay, but you can understand why they’re not. And as you saw, the residential came in around 95%.

Jason Green — Evercore — Analyst

Got it. I guess just one more on capital allocation. You guys announced the approval of a share repurchase program in the quarter, but didn’t repurchase any shares when the stock hit the mid to low $20-level. I guess just what was the thinking behind not repurchasing shares when it got down to that level?

Jordan L. Kaplan — President & Chief Executive Officer

Well, we set up that program to make sure we had that flexibility, but at the same time, I don’t know then or even now whether we have the right kind of visibility to know what we’re facing, whether it’s months, years, whatever, to know exactly what we want to do. So the first stage of what we’ve been doing has been kind of organizing the company for starters to keep it protected and running right and run our buildings right, and keep our people employed, do all that stuff right. And then the second stage is to look for opportunities, and I think we’ve done a good job of the first step and we’re starting to evaluate the second step.

Operator

The next question comes from Craig Mailman at KeyBanc Capital Markets.

Craig Mailman — KeyBanc Capital Markets — Analyst

Hey, good afternoon, guys. I know it’s a little bit early in May here, but just curious what the early trends you guys are seeing if you’re on the same pace you were in April or if more people are maybe taking advantage of the moratoriums that are in place?

Jordan L. Kaplan — President & Chief Executive Officer

Well, we’re — right now, we’re tracking about the same as April. Although in terms of business days, it’s early to know where we’re really going to end up in May. And I think that we are seeing some tenants are starting to get the PPP. And I think we’ve also been pressuring some tenants saying, “You know, what you’re doing is not right.” And frankly, we’ve been talking to some of the cities and saying to them, “You’ve put together programs that are more punitive than any of the other gateway markets in the United States. It’s almost kind of — you’re almost asking the tenants to not pay with the way you’re providing a sort of free 12-month loan.” So with all of those things swirling around juxtaposed with the fact that now we’re in our second month of COVID and stay-in-place, it’s hard to know how we’ll really end up.

Craig Mailman — KeyBanc Capital Markets — Analyst

Okay. That’s helpful. And then the big themes of work-from-home and easing of densification are kind of the topics in the office space. I’m just curious you guys tend to skew smaller, just your thoughts on kind of how dense your tenants got versus maybe some of the larger tech firms? And whether this work-from-home could just cause some of your smaller tenants to just say, “You know what, I’ll just do my work out of house,” if it’s kind of a small company. Just kind of curious as you guys have kind of looked through that kind of thoughts here?

Jordan L. Kaplan — President & Chief Executive Officer

Well, okay, so the first part of your question, this is very hard to — I mean, I don’t frankly have — we don’t have a lot more information than you guys do. But I will say that, in terms of our market, generally our market, I do not think that our markets are built to the density that other gateway markets are built to, just right out of the gate.

So we’re still building out most people space. Our space for instance and many others is built to 200-feet plus in terms of the buildout. And when you get to very small — we’re at about 50,000 feet, but when you get to really small tenants, those numbers are even larger.

So, I’m not sure for a lot of these small tenants that we’ve evaluated our space. We have some areas we need to work on. I’m not sure that — they’re not in a relatively good position to come back even with no changes to the buildout of their space. But I think the densification that has been rolling — that kind of rolled through the last decade, whether it be New York or Boston or the big-tech floors up in San Francisco, I’m sure that they’re trying to figure out how to loosen that up. Now, it would just — that by itself, you go, “Wow, that could be a pretty good net positive for those markets.” But I don’t know if what that means is that they just say, “All right, we’ll keep this space, but we’re going to move another group to another area,” or I don’t know what happens there.

The second part of your question was whether our smaller tenants are going to choose to just stay home and work. I think for most of our tenants that — they’ve always been able to do that and they like having their offices, especially our whole play here is that we’re a very short commute from where they live. And I’ve literally been saying for decades these guys should all move out of their house and live their office space, because what they’re spending for these houses on an imputed per foot basis, the office space is a bargain and a half.

I think they like having their office. I think they like having somewhere to work. So, I don’t see the fact that people have been able to work from home causing them to say, “Wow, now I’m just going to work from home.” I’ve always felt like the fact — and when we talk to people even now, I think most people are saying, “I can’t wait to not be home 24/7. I want to get out of office. I want to go back to work.” And I know, they have the concerns about the virus and things being clean and safe and all the rest of it, but I think it’s human nature to want to be able to not be in one place all the time.

So I’ve always felt like as it’s been going on for probably two decades now what technology has done in terms of people being able to work from home is to expand the workforce and people that couldn’t come into an office and work or couldn’t — or for whatever they were doing, it was an efficiency thing that it allowed the workforce to be even larger and add more people to the workforce. I don’t think the part of the workforce that comes in the office, works with their colleagues use that as part of like the way their day runs. I don’t think that changes.

Craig Mailman — KeyBanc Capital Markets — Analyst

Great. Thanks.

Operator

Your next question comes from Jamie Feldman, Bank of America.

Jamie Feldman — Bank of America — Analyst

Thank you. So I guess just thinking about your liquidity position and I know you’re cutting back on some spending this year. Can you kind of — can you still just walk us through how you’re thinking about your spending needs this year and then to the extent you see dislocation in the market, how you think about potentially funding any investment opportunity? Or you feel like you’re not even ready for that at this point?

Jordan L. Kaplan — President & Chief Executive Officer

Well, I’m not sure how long the list of investment opportunities is at the moment. We aren’t seeing a lot come out. And by not a lot, I’m not — I’m saying pretty much almost nothing. Probably the opportunities in front of us on the capital market side is three groups. It’s refinancing, we are focused on that because rates as they go down, we just always aggressively chase them. And then you have — obviously, we put the stock buyback program in place, but I don’t think we’re ready to do that at th e moment at least.

And then you have the construction, the third-party construction, and we have chosen to continue our two large projects. We backed off on probably another $100 million of stuff that we can do during the year in terms of building repositionings, lobby rehabs, etc. to make sure that our cash position was very strong.

Jamie Feldman — Bank of America — Analyst

So I guess, how do you think about like sources and uses this year with kind of your revised capital plan?

Jordan L. Kaplan — President & Chief Executive Officer

Well, I think our income will be sufficient to fund our uses. If you’re asking me the simple question, do I think we’re sort of trapped in something where we’re forced to be a net borrower, I don’t think we are. And I don’t project that even with the fact that I think we ended up 12% off in April or something like that continuing, I think we’re in plenty good shape.

Jamie Feldman — Bank of America — Analyst

Okay. And I guess, similar with the distribution at the current level, cover everything?

Jordan L. Kaplan — President & Chief Executive Officer

Well, if you’re asking me does the distribution cover our income, I think we’re in fine shape. I think, the dividend, you’re talking about the public company dividend, right?

Jamie Feldman — Bank of America — Analyst

Yes.

Jordan L. Kaplan — President & Chief Executive Officer

Yes. So yes, I think we’re — no problem at all.

Jamie Feldman — Bank of America — Analyst

Okay. All right. And then as you — can you just talk about what the co-working companies are doing in your markets now? I mean have they been — I know you don’t have any, but are they paying rent? Are they — are you just — are you hearing that they’re crumbling, just any color from the ground?

Kevin A. Crummy — Chief Investment Officer

It’s kind of case — this is Kevin, Jamie. It’s kind of case by case. And speaking with my peers in the marketplace, some of the larger co-worker companies are paying and some of the other ones are asking for a little rent relief right now while people aren’t using their offices. But we don’t have very much exposure in West L.A., so it’s anecdotally throughout the market. And I know that the — we were just paying some landlords and not paying some other landlords just like across the country.

Jamie Feldman — Bank of America — Analyst

Okay. All right. Thanks, guys.

Operator

The next question is from Emmanuel Korchman at Citi.

Emmanuel Korchman — Citi — Analyst

Hey, everyone. If we think about the 90% collections in the office portfolio, is there any commonality, whether it be by industry or by size or by some other characteristic of the 10% that haven’t paid other than the fact that the municipalities have given them the right not to?

Jordan L. Kaplan — President & Chief Executive Officer

Frankly, if you — and I’ve kind of been on the road on this with the various city councils in the cities we’re working in, there is a shocking relationship between not paying and the rules surrounding the moratorium in the various cities to how well people pay or don’t pay. So I don’t want to call out any cities, and I think they’re working to fix this situation for us. But in the cities where blanket and there is literally no cost and long payback periods, we meaningfully — statistically meaningfully worse collections than the cities that had more restrictions, maybe you could still surge fees, but certainly the payback much shorter, so the benefit of kind of having an angry landlord wasn’t as much there, than better pay rates. That’s the one thing you can see in that last group that really stands out.

Emmanuel Korchman — Citi — Analyst

Thanks. And then in terms of your new leasing, it looks like the leasing costs were elevated. I don’t know if that had to do with mix and the base rents in that pool were higher, or if it just had to do with spaces, but could you give us some color as to why those — the new leasing costs specifically seeing higher than recent trends?

Peter D. Seymour — Chief Financial Officer

Yeah, I mean, look, I think — this is Peter. There’s the overall rate ends up much lower, right? So we had a much lower on the renewal side. And then the new leasing, we did a small number of deals and a couple of them were at slightly higher cost, but it doesn’t look like it’s indicative of any kind of trend. And as a percentage of rent, the rent that we’re giving is the combined blended rent. So when you take that — when you take new leasing just over the new leasing rents, it’s pretty much in line with what we’ve seen in the past.

Emmanuel Korchman — Citi — Analyst

Thanks, everyone.

Operator

Alexander — our next question comes from Alexander Goldfarb with Piper Sandler.

Alexander Goldfarb — Piper Sandler — Analyst

Hey, good morning, out there.

Jordan L. Kaplan — President & Chief Executive Officer

Hi, Alex. Good morning.

Alexander Goldfarb — Piper Sandler — Analyst

Hey. You guys are pretty brave to all be in the same room together.

Jordan L. Kaplan — President & Chief Executive Officer

Such a huge conference room, it’s almost absurd.

Alexander Goldfarb — Piper Sandler — Analyst

Now everyone is realizing that their homes are not big enough. Two questions. First, can you just talk a little bit about Hawaii? It sounds like the state overall has been fine COVID-wise and that hopefully can start to reopen. But clearly, it’s going to be a while before tourism returns.

So your products out there, the apartments, the office, what are you guys seeing? And is your view that tourism absolutely has to return before you can see benefits in your properties? Or you think the local economy is sufficient enough for you guys to continue the building conversions and pushing rents and all that good stuff?

Jordan L. Kaplan — President & Chief Executive Officer

Well, I’ll tell you. First of all, if there is a group that I think has worked hard and done a good job what I’ve seen happen in Hawaii, they’ve really jumped on it. They did well with COVID. I thought the city, city-state, county leaders, whatever that group is, they’re all kind of mashed together, did a really nice job. They have four local banks there. They got because we — for the stuff we do in Hawaii, we use local banks, we’ve had conversations with them. They were really aggressive.

Literally midnight, the first round of PPP, they made sure they got all the local companies covered and got a good chunk of money out to all of them. You saw really good engagement out of mayor and others in terms of walking the line to what’s open, not open, construction. So in terms of management, I really — maybe it’s because they’re all like a big family there, they all know each other, but I give them a really high grade.

So I’m hoping that — and they’re super-focused on recovery and protecting their economy. Now they, for sure, have a problem of being a very tourist-dependent economy. They have construction. They have a huge chunk of military there. They have other stuff, but tourism is a big deal. Now, I know that they are working as hard as any hotel company or any airline to go how do we solve this and how do we make people feel comfortable coming back when the time is right.

On the other side of the coin, when you talk about Douglas Emmett and our residential — our residential projects are going — our construction is going there, and our occupancy is fine and our pay rate fine, all good.

On our office projects there, interestingly, we went into Hawaii originally now, it was two decades ago, with the thought that a run-up in tourism and facing Asia would be very good for that economy and then now would flow through to the office product. And that was what we do, office and residential, so that’s what we did.

Hawaii is where we learned that tourism, for sure, to the plus side. As tourism kept running up, we did not see it roll through the office product. So, we saw tourism — when we went into Hawaii, I think the tourism was like $4 million to $5 million. And last year, probably $9 million, $10 million. So you would have said, “Wow, you called it right,” but that did not drive much in terms of the office product. I’m not sure that, that decline will drive much in the way of the office product.

But overall, having a strong economy is going to be important. And I think more than any of the other places where we operate, they are just collectively growing as a team to make sure that Hawaii, that doesn’t suffer too much. So we’ve been very happy about that.

Alexander Goldfarb — Piper Sandler — Analyst

Okay. And then the second question, Jordan. When you have the discussions with your local California politicians and they do the eviction moratoriums, I’m sure in their wisdom, they also put in place a real estate tax moratorium, so it offsets and doesn’t put the landlord in the middle position.

So when you raise that point — well, because California is very logical and understands how math works. So when you raise that point — when you raise that point to the politicians, do they understand that? I mean I know that Gavin was facing that the payment a few weeks ago, but do they understand the ramifications and your ability to — maybe not Douggie [Phonetic] directly, but landlords in general to withhold taxes if they’re not being paid because of government mandates?

Jordan L. Kaplan — President & Chief Executive Officer

Well, I didn’t use quite the level of sarcasm that you used since I’m trying to get them to do something for me. But I did point out that essentially, when these — the impact of these moratoriums what it’s been is to essentially — is to shift us — shift the, if it exists, the borrowing responsibility to us versus a tenant, and I don’t know why that would be a fair shift.

Now to be fair to their point, they are worried about mostly — so most of these ordinances were designed, first of all, by non-real estate people that were — all they were thinking about was residential. And they literally, when you talk to them they’re like, “Oh, yeah, office.” I don’t think they were really targeting office. What they were targeting was residential and then when you talk about, they go, well, we don’t want our ret — to treat our local retailers to go away because it’s part of the fabric and culture of the area, right? We don’t want a bunch of empty storefronts. And I would say, across the board, when you sit and talk to them about that and you talk about it like, “Look, you were really trying to protect housing, no evictions on housing, you were really trying to protect your local retailers.” They have been very open-minded about making a change for the rest.

The problem is they’re just inundated with problems, right, not to mention that their budgets are just destroyed now. So getting their attention, which we’ve been able to get and getting the city attorneys to change and redraft these emergency ordinances, it’s just a time-intensive process. And we’re going through that with them. But they have not been — they haven’t been that tough on this thing. When we explained it to them and we said, “Look, I think you’re trying to include,” they go, “Okay, commercial. Well, who are you saying we are covering or not.” I say, “Well, I think you’re trying to cover people who collect sales tax on a majority of their revenue, I don’t think you’re trying to cover hedge funds in my office building.” And like, “Oh, yeah, you’re right, there is a difference between it.” That’s the first time they even started splitting retail from office. They’re — a lot of these things only have commercial. It doesn’t say retail or office. So they’re sort of accepting that. I think they’re going to make the right changes in that, but it’s taken just a tiny bit. I think of — when these things got put in place like at the beginning of April, and here we are a month later, and we’ve gotten meetings with them, with the top, with the mayors, council members, and they’re working on it. So that’s been very good.

Alexander Goldfarb — Piper Sandler — Analyst

Right. But they understand that you can’t be the middleman or a lender of last resort. Like if you suffer inflows on the top, obviously, it’s going to — you shouldn’t be expected to pay out at the bottom. They understand that, right?

Jordan L. Kaplan — President & Chief Executive Officer

They haven’t understood that because we’re still paying all our city business taxes and fees. But as I said, I’m not putting it to them like that because I want — we’re trying to achieve this goal of getting commercial released.

Alexander Goldfarb — Piper Sandler — Analyst

Got it. Okay, listen, thank you, Jordan.

Jordan L. Kaplan — President & Chief Executive Officer

All right, thanks.

Operator

The next question is from John Kim at BMO.

Frank Lee — BMO Capital Markets — Analyst

This is Frank Lee on with John. First question I have is do you have a sense of what percentage of your multifamily rents are currently delinquent? And can you walk us through your plans on addressing any of this?

Jordan L. Kaplan — President & Chief Executive Officer

Well, yes. So unhappily, that 5% that didn’t pay, and maybe this is just now, but I think it’s a little more than now. It seemed to be highly concentrated with tenants that pay to be in some of the nicest spaces in our buildings on the beach with rents that are very high and certainly they’re renting that space because they have a lot of net worth, and they wanted a view looking out at the beach and walking out on the sand. And so that when I was looking at that listing, and I actually just took the list and ranked it by rent, like, by rent. And I feel like if we, just for collecting from the people that paid over, I think it was $4,000, you would collect like a ton of that money. And if someone’s paying $4,000 for their apartment, they probably can afford to pay. But those rules are set in stone. Those people just have been told flat they don’t have to pay. I’ve told the cities — they don’t want to hear about apartments by the way, but I told them you realize that the tenants that feel they’re the most financially sophisticated seem to be the ones taking the most use of these ordinances, not the — your normal run of the mill person is like, “Yeah, I don’t want to have my rent pile up on me. I got to live here.” And they’re just paying the rent. So it’s the ones that kind of feel like, “Yeah, no problem. I’ll pick up the extra money, and I’ll pay it later.” They seem to be the ones that are making up a lot of that missed money. But that will play out.

Frank Lee — BMO Capital Markets — Analyst

And then what’s your expectation to recoup that 5% of kind of lost rent from those tenants?

Jordan L. Kaplan — President & Chief Executive Officer

Well, it’s hard to predict now. We haven’t even — we’re trying to get the collection rate higher each month, and then we’ll go back. And as I’ve said, we have — we’re pretty good at our underwriting when we lease space. We never — in the last recession, we never had defaults. Now, you’re talking about defaults here, not the city’s allowing them not to pay, but then later they pay, real defaults. I don’t think our defaults ever really got over 2%. I don’t think they did. They might have gotten to 3%, but I don’t think they even really got above 2%.

Now, what happened to us in a recession is we did have vacancy and maybe rents go down, but we are really good on the default front. So if you say, defaults on those numbers, I would expect them to be low, but the time to collect seems to be stretched.

Frank Lee — BMO Capital Markets — Analyst

Okay. And then second question I have is if I look at your top tenant list, did all the tenants pay April rent? I’m just curious, particularly on the lease with Equinox?

Jordan L. Kaplan — President & Chief Executive Officer

We’re — you know what, we’re not — we never really like talking about tenants, and we don’t really like calling out individual tenants, and so we’re not going to start today.

Frank Lee — BMO Capital Markets — Analyst

Okay, thank you.

Operator

The next question comes from Dave Rodgers at Baird.

Dave Rodgers — Baird — Analyst

Hey, guys. Just I guess with your smaller tenants and much faster roll, the shorter lease term that you generally have versus office, I mean what are those discussions like today for the next kind of three to five months? I mean typically, I think larger deals would be done, but I think you guys do it a little bit more just-in-time. So can you give us a little bit of color on how those discussions are going and what you’d expect here in the near-term on some of those near-term rolls?

Jordan L. Kaplan — President & Chief Executive Officer

Yeah. I’ll give you what little I know, maybe Stuart knows more. But smaller guys will usually feel like a lot of pressure to get their stuff done about five months ahead of when their lease is coming up. So in terms of having data for you on where the world is on renewals right now being a month into this, I can’t say that we have a lot of data on that because there’s not many people wait until the last day that they had to renew, right? So there is not a lot of data — leasing is going. We’re doing leases. Go ahead, you can fill in on this?

Kevin A. Crummy — Chief Investment Officer

Yes. No, I think that’s fair. I think that a lot of people are just delaying their decisions at this point, but we’re still getting a decent amount of leasing done. It definitely slowed way down, starting to pick up. I mean we’re seeing volume, we’re seeing calls, all that stuff coming back again after shutting down almost completely for a while. And like I said in my remarks, we’re pretty well set up with virtual tours, and we’re getting — just trying to get the brokers’ community and the tenant community used to this world. And the brokers are definitely hungry to do deals.

They’re not making money when they’re not doing deals. So we’re seeing them start to come back. I think, like Jordan said, mostly we’re seeing our tenants kind of delay their decisions for a little while, but most of our tenants tend to go maybe six months before their end of the lease is our average when they’re making their renewal decision.

Dave Rodgers — Baird — Analyst

And then I guess maybe just on the rate side, Jordan, it wasn’t long ago we were talking about pushing rate and having tenants really pushing back and complaining and personal phone calls to you, etc. As you kind of think about this next phase in terms of where rents are on leases and where you feel comfortable pushing those or pulling those, how are those discussions going? And what’s the expectation near-term that you think about?

Jordan L. Kaplan — President & Chief Executive Officer

God, we haven’t had any rate discussions. I have had no rate discussions. I don’t think we — to what, no, I don’t think we’ve raised rates and I don’t think we’ve lowered rates and I think we’re doing deals. I mean there’s like there’s a measure of just like social sensitivity or something.

I’d be a little nervous to raise rates. Even if the market stays very tight, I’d probably have a little breather for a little while. There’s just a lot of tension out there in the world so you don’t — certainly you don’t want to do anything that could ever be viewed as aggressive or predatory or taking advantage and I think we’re going to be equally alert and aware. We operate in small — obviously L.A. is not a small community, but the various markets we’re in, we’re certainly in a period right now where it’s good to have more friends than just kind put of a wall around.

Dave Rodgers — Baird — Analyst

Okay. And then maybe a last one if I just could on the parking. You mentioned parking revenue, how much of that could be at risk or isn’t part of or baked into some of the leases on a number basis?

Peter D. Seymour — Chief Financial Officer

Yes, it’s Peter. I mean, we’re probably at this point — but it’s hard to say how it’s going to go — we’re probably getting about half the parking income that we normally have. But as I said that’s on a very short time period and really hard to see where it’s headed in the next couple of months. And especially as things start to reopen, just don’t know which way it’s going to go.

Jordan L. Kaplan — President & Chief Executive Officer

Well, I think they’re going to — when things reopen, I think they’re going to drive, they’re not going to take a bus. I mean they will want their parking spaces back. I suspect parking becomes a very short-term phenomenon of people being told to stay home.

Dave Rodgers — Baird — Analyst

Yeah, I think that makes sense. All right. Thank you.

Operator

The next question comes from Rick Anderson at SMBC.

Rick Anderson — SMBC — Analyst

Hey, I’ll take that question even further. I think there should be a parking REIT in the aftermath of all this because everyone is going to be driving all around the country in my opinion.

Jordan L. Kaplan — President & Chief Executive Officer

That might be right.

Rick Anderson — SMBC — Analyst

It hasn’t come up yet, but not to pile on the regulatory silliness of California, but Prop 13, do you agree with Victor and Hudson that’s on the back burners for now for at least a while?

Jordan L. Kaplan — President & Chief Executive Officer

I don’t think back burner is the right term. Look, it’s going to be on the ballot. [Speech Overlap] I think that it is — I think that we are doing a lot of work to fight it. I think it’s a bad idea. And I think — and it’s polling quite poorly.

For me, it’s not just going to be beating it. I mean we want to really beat it so that we don’t have to face it again. I mean, it shows up at times from groups that are not really stakeholders in our markets to be perfectly frank and they are looking to raise money for their own purposes.

And you don’t see the state or any of the rest of them saying we think this is a good idea. And so we want to make it clear of not just beating it, but beating it enough so no one wants to waste their money or our money in the future to having to deal with that again. But I still feel if what Victor said was that he feels confident that we will beat it. I think that’s reasonable. I feel pretty confident that we’ll beat it and because it’s polling so poorly.

And Californians, in general, not just for that which is much harder to justify, but even some things for schools and otherwise have just been saying enough is enough when it comes to taxes, they’re just done. And that’s unfortunate because we’ve put some taxes on for very odd and special things during the heyday because maybe some special purpose group talked people into it. And now they’re going to really need that money for the general state budget. And so I think there’s going to be some shifting there but we’ll see what happens. Okay. Given that you have — you’re known for small tenants in terms of lease size and all that, do you feel like there is any incremental vulnerabilities to your business just in terms of small companies and perhaps less financial wherewithal in this environment that they may perhaps be more exposed to, god forbid, closing down business or that kind of thing? Or is that just not in the conversation right now? Well, I don’t think the fact that they’re small or large plays the role that you’re indicating in the impact of the economy on them, their capitalization or them closing down their business. Frankly, most of what I’m reading is large companies closing down their businesses, not a lot of these smaller ones that are throughout our portfolio. I think that it’s fair — I think it’s — I think there, they have an easier time controlling their expenses and they actually — when you look at the capital backing them as it relates percentage-wise and all other ways to their rent obligation or all of their costs in running their companies, I think it’s actually more capital backing that than some of these larger companies that we know are all over the country that have been running at literally like losing money every year and borrowing to support that. So I don’t think the economy, like, if you would have gone back to the last recession, that we’ll call it the financial and east [Phonetic] recession, the bank recession that was hard on a lot of our companies because not because if they weren’t in a good position, but sort of the banks stopped lending and doing stuff with all those guys. And that was just hard to them. It was hard for new formation, but this thing doesn’t seem to be that kind of recession. So, I don’t think they will be hit in that way. And I think that if you just look at the industries that they’re in, tech, entertainment, and medical research and it’s a lot of them, I actually think that money is going to come, more money into that, into those areas. So I’m not as worried with the small tenants. And as I said, even the financial recession, the one that really like banks and liquidity squeeze that happened in what ’07, ’08, ’09 whenever you want take it, we never really experienced more than 2% default. So from that perspective, I feel like we did probably better than a lot of places. And by the way, our rent — because we go into these things without new supply overhang, we don’t see the same decline in rents. We have a chart that’s on our website that shows that in the last recession, the lowest point of rents for our company in the last recession was still 10% above the previous peak. And that cannot be said for any of the other gateway markets, except Washington D.C., which in the last recession did feel the impact but in all the other markets.

Rick Anderson — SMBC — Analyst

Okay, great. Thanks very much.

Operator

The next question is from Peter Abramowitz at Jefferies.

Peter Abramowitz — Jefferies — Analyst

Thank you. I just want to ask you about the multifamily portfolio specifically. You’ve had two straight quarters of negative same-store revenue growth. So just in comparison I guess to some of the apartment tiers that are in the 2% to 3% top-line growth range, anything specific that’s going on to your portfolio that might be a drag there?

Peter D. Seymour — Chief Financial Officer

Yeah, it’s Peter. I don’t think there’s any specific trend. We’ve been running at really high well over 99% for a whole bunch of our quarters. And they’re small numbers in the same-store, so it’s super sensitive, 1% I think is in 19 or 20 units. So a little blip and it draws that number down. But at 97.5% leased, it’s still an incredibly high lease rate. But early to say whether there’s — what the long-term impacts of this whole pandemic are going to be but it’s certainly going into the end of the quarter, we didn’t see any specific trends.

Peter Abramowitz — Jefferies — Analyst

Got you. Is the lease rate going down, say, a couple of hundred basis points in the quarter, was that at all pandemic related in March the beginning? Because I think the building with the fire was excluded from that if I read correctly.

Peter D. Seymour — Chief Financial Officer

We’re not seeing any of that. We’re not seeing that as a driving force.

Peter Abramowitz — Jefferies — Analyst

Okay. Thank you.

Operator

The next question comes from Daniel Ismail at Green Street Advisers.

Daniel Ismail — Green Street Advisers — Analyst

Great, thank you. Just following up on a previous question about parking revenue, I don’t think I heard a percentage of revenues that comes from parking. Are you able to provide that?

Peter D. Seymour — Chief Financial Officer

We don’t break that out separately. I did say that it’s — we’ve probably collected about half of what we normally do.

Daniel Ismail — Green Street Advisers — Analyst

Okay. But is that like low single digits, like sub-5% or somewhere higher than that?

Jordan L. Kaplan — President & Chief Executive Officer

Danny, parking and other is a line item on our income statement. So take that line item and cut it about in about half.

Daniel Ismail — Green Street Advisers — Analyst

All right. So the majority of that is in parking and not other sources of ancillary income.

Jordan L. Kaplan — President & Chief Executive Officer

Yes. The majority of parking and other is parking.

Daniel Ismail — Green Street Advisers — Analyst

Okay. And then, Jordan, given those — you mentioned the restrictions on evictions, are you able to utilize security deposits and letters of credits to make up some of the shortfall in nonpayment?

Jordan L. Kaplan — President & Chief Executive Officer

We really haven’t been doing that. I think that if we can — I think we can write that last group if I get these changes in the cities. And not — in the end, of course, look, there’s nothing — maybe something we should have said earlier on the call, we have not forgiven any rent, okay? We haven’t forgiven any rent for anybody. So this is all — none of these collections are a function of, “Well, we made a deal with them and we forgave some rent.”

And I hope that when all said and done, and I’m not going to say we’re never going to forgive any rent, but if we forgive rent, it will be in exchange for some other terms in the lease or some other improvement in the lease or term or whatever the case may be. So I don’t think pulling security deposits and starting to sort of unravel a lease going kind of Devcon form. I just don’t think it’s the right idea right now. We’re just not there right now.

I think if we get these moratoriums worked out to be less penalizing, I think a lot of these people are just going, “I’ll pay now.” I think it’s equivalent of you don’t owe your 2019 taxes until July. So now how many people paid their taxes in April, because the federal government is hurting? I don’t think very many and that’s what we’re dealing with. It doesn’t make them bad or good, they’re just — they got presented with something and they took it. So we aren’t prevented from doing what you said, but I don’t think we’re really doing it.

Daniel Ismail — Green Street Advisers — Analyst

All right. Make sense. Thanks, Jordan.

Operator

The next question comes from Tayo Okusanya at Mizuho.

Tayo Okusanya — Mizuho — Analyst

Yes. Good afternoon, everyone. A couple of questions from me. The first one, the Barrington Plaza, the apartment complex, could you tell us what the latest is with that in regards to refurbishing the apartments that unfortunately did burn down and kind of what the status is with some of these pending class action lawsuits?

Jordan L. Kaplan — President & Chief Executive Officer

Let’s see. So, in terms of the litigation, I mean we’re not going to discuss litigation, but as we’ve told you, we’re insured that is unfortunately in the world that we’re in, people have a hard time not trying to take advantage of disasters. Put that to the side. If you say what’s happening with the building, we’re deep in the process of redoing the floors, getting the plans approved, and working I think quite well with the city, who — which the city does not have a — we wanted to sprinkler the buildings. We wanted a sprinkler on after the first fire. And the city does not have an ordinance that kind of shakes hands properly with the Fair Housing Department that allows you to go in and actually retrofit and sprinkler a high-rise residential building.

And we’ve gone to them and said, “Look, we know you want us to have them. We know we want to do it.” And they have been really good about saying, “Yeah, we’re just going to try and figure out a way to get you there.” And so I’m pretty confident now that we’re not only going to be redoing those floors, getting them done, but I think the city is really kind of in a great way come on our team to say, “We’re going to make provisions or a way even though it’s not in our code at the moment where you’re going to get to sprinkler these buildings.” So we’re feeling good about that.

Tayo Okusanya — Mizuho — Analyst

Got you, that’s helpful. And then I just wanted to go back to Frank’s question around tenants, he did ask about Equinox. But I’m curious what you’re hearing from Morgan Stanley, given some of the vocal comments the CEO did make on their earnings call about needing less office space going forward, because more of the employees will be working from home?

Jordan L. Kaplan — President & Chief Executive Officer

Okay. And what’s — a quick — I mean I’ve already said — wait, who made this comment?

Kevin A. Crummy — Chief Investment Officer

Morgan Stanley CEO.

Tayo Okusanya — Mizuho — Analyst

The CEO of Morgan Stanley.

Jordan L. Kaplan — President & Chief Executive Officer

Okay. And he thinks more people are going to be working from home?

Tayo Okusanya — Mizuho — Analyst

That’s what he said on their earnings call that they would be looking at having — taking less office space going forward, because of that.

Jordan L. Kaplan — President & Chief Executive Officer

Okay. I mean, I don’t know what those big investment banks will end up doing. They already — they’re kind of a prime group that’s worked the hardest to get down to 150 feet per person, 140 feet per person. I mean, we’re there when we’re at New York there visiting and we go out on to those big trading floors and it’s certainly packed in at a level that we haven’t seen before.

I can’t imagine that he is going to have so many people working from home that he’s going to achieve, for the people working, social distancing and actually also reduce their space and create that kind of proper environment, but maybe he figured out how to do that, I don’t know.

But I do think that, for the people that are in that position, I don’t think they have any choice, but to keep people working from home for a lot longer than other companies. Because I don’t think, just practically speaking, I don’t know how they bring — I mean even going every other seat, I think they have a tough time being six feet apart. So I mean that’s going to be an outlet for them for a long time.

If you say to me human nature, I’ve watched people, I’ve watched technology come and everyone said, “Oh, technology, no one’s coming into the office.” Actually office space filled up more because individuals became more productive and more people were coming into offices and working with computers there. And then, people got to a point where they said, “All right, I think we’re going to expand and expand the workforce and have people work from home and let a lot of people work from home.” And then even the technology companies said, “You know what we’ve just found out, we’re not in love with people working from home, we want teams together.” And then you saw a shift pattern where they said, “Nope. We’re going to pack them into our space, because we want people to even casually run across each other so that they can have creative conversations and collaborate and all the rest.” So there was sort of a complete revolt towards working from home.

And now in the situation we’re in, people are saying, “Hey, what about working from home?” I think when all said and done, they’re going to end up figuring out that first of all, when people are working in the office, they don’t want to be in a position where they’re almost forced to be in a collaborative conversation all the time. They want their own space. And I also think they’re going to find out that, that space needs to be more than 20 square feet, right? And I think that they’ll find out that there are a lot of people that can work from home in an out-of-way to make them more productive. But if you’re saying, human nature is that — people are going to say, I prefer to work from home or companies are going to now switch back and go, “Okay, we changed our mind again and now we now like people working from home.” I never saw that as a long-term trend. And I still don’t think it will be a long-term trend.

Tayo Okusanya — Mizuho — Analyst

That’s helpful. One more if you could indulge me, just around the office parking other income line item in 1Q, just kind of given some of the discussions you talked about your parking trends, that line item was actually up $3 million in 1Q ’20 versus 4Q ’19. Could you talk a little bit about that delta and what caused that big increase?

Jordan L. Kaplan — President & Chief Executive Officer

I don’t know that answer. I see, Peter is starting to try to look around at his papers.

Peter D. Seymour — Chief Financial Officer

I think there were some true-ups there from prior quarters. I mean, quarter-to-quarter you get variability there. But there’s nothing.

Jordan L. Kaplan — President & Chief Executive Officer

Nothing stands out. We didn’t prepare for the question, Tayo.

Tayo Okusanya — Mizuho — Analyst

So, it was just some accounting true-ups in 1Q ’20 on that, that’s kind of it?

Peter D. Seymour — Chief Financial Officer

Yeah, and the other factor you do have to remember, we consolidated one of our JVs —

Tayo Okusanya — Mizuho — Analyst

One of the JVs in [Speech Overlap]

Peter D. Seymour — Chief Financial Officer

Actually, the — partway through the fourth quarter so that will contribute.

Tayo Okusanya — Mizuho — Analyst

All right. Thank you. Have a good weekend.

Jordan L. Kaplan — President & Chief Executive Officer

You too.

Operator

The next question is from Emmanuel Korchman at Citi.

Michael Bilerman — Citi — Analyst

Hey, it’s Michael Bilerman.

Jordan L. Kaplan — President & Chief Executive Officer

Hey, Michael.

Michael Bilerman — Citi — Analyst

Where is — where did April occupancy end up at the end of the month?

Jordan L. Kaplan — President & Chief Executive Officer

Where did which occupancy?

Michael Bilerman — Citi — Analyst

The April occupancy, office.

Jordan L. Kaplan — President & Chief Executive Officer

Oh, I don’t think we’re publishing month-to-month occupancy. And frankly, I don’t know.

Michael Bilerman — Citi — Analyst

I mean, was it — you had negative net absorption in the first quarter which because of your short lease duration, you’re running call it 120 basis points of expirations every month, right? And so and you are — Ken, runs a leasing machine. I think you guys do like two, three leases a day historically, right, whether they’re renewals or new leases, just given the tenant size and the number of leases you have, the spaces. And so I’m just trying to get a sense of what occurred during April, so that we understand the sort of the cadence of the occupancy declines as the shelter-in-place orders still are there? Just in terms of how low — at what point will that low point settle in?

Jordan L. Kaplan — President & Chief Executive Officer

Yes, I don’t — well, what creates occupancy declines and literally, I do not know the exact answer to your question. But if you look at what creates occupancy decline, I don’t think any of that could have happened in April. I don’t think — obviously, it’s impossible to default in our markets. I didn’t hear about — if you’re saying a person’s — right in that month of April, the person’s lease came up and they moved out and we lost it, I don’t think really anyone was moving.

I don’t think anything — no one was coming, no one was going no one was doing anything. I don’t think even if we had the exact information of April, I don’t think it would give you any indication of a trend line until you see people kind of — the world start going again and people start making affirmative decisions about things, because nobody is doing anything. I wouldn’t be surprised that occupancy April 1 and occupancy April 30 is the same number. But I don’t think that’s a trend. I just don’t think anyone has been able to do anything for the last month.

Michael Bilerman — Citi — Analyst

But I guess what happened to all the leases that expired? You probably had like 50 or 60 leases expire during the month of April? Were all those renewed at —

Jordan L. Kaplan — President & Chief Executive Officer

Well, no, because that’s what I was explaining earlier at one of the earlier questions. What I said was these guys, nobody goes and renews or doesn’t renew on the month of expiration. I mean, I said five months and then Stuart corrected me to say, it’s actually the average for these guys is six months or not even the average, the short end. So, people — six months ago, those renewals happened. Now you go, well, people that are six months on from now, how come they’re not feeling pressure to do their renewals? Probably are, but they’re not doing anything or they did their renewal.

Michael Bilerman — Citi — Analyst

Right. And what are you doing from just bringing your — in terms of reopening and bringing people back into the office? I think about the larger landlords who have very large tenants are working hand-in-hand and providing those services to be able to bringing employees back into the office in a social distanced way, right? And they’ll go up to maybe get to 50%. I would assume with a much smaller tenant base, when you’re dealing with an average lease average tenant size of about 5,000 square feet. I guess, what do you need to do in those spaces to get those people back in and the cost of doing that just from a sanitation and just opening your building perspective?

Jordan L. Kaplan — President & Chief Executive Officer

So, within the suites, we’re doing our cleaning as we always have. And outside in the common areas of the buildings, we are putting together programs to bring people in, limit the number of people going through the elevators, requiring mask, I mean, we’re putting all those programs together and starting to get ready to just [Indecipherable] them out. Actually, there’s a meeting about it, another meeting about it today.

I think that — I don’t think that we have similar problems, not the same problems as these huge markets with gigantic buildings, like, whether it be in New York or Boston or San Francisco. I mean, the timing of people arriving is a little more varied here. And we don’t have those colossal crunches to the elevators. I mean, we have some other opportunities so — to lighten things up but we’re looking at all of them.

And we’re putting all those programs in to try and make people feel safe about coming back to work. Now, if you say in the people — in offices, how many people — how many are they bringing back? I mean that’s the choice of the tenant, not us. All we are doing is creating good accommodations and notifications and cleaning and all the rest of that stuff for people coming in through the building and the lobbies and the elevators.

Michael Bilerman — Citi — Analyst

How do you think sort of the Warner Center market fits into all of this and in a post-pandemic world, the better or worse for it?

Jordan L. Kaplan — President & Chief Executive Officer

I think the short-term post-pandemic world is bad for all businesses, because the economy is slowing down. And at the end of the day, the economy is the motor that drives everything. And so I don’t think you could say Warner Center separate from Santa Monica separate from Beverly Hills, L.A. New York, Boston, you name it. I don’t think anybody is going to escape these impacts. So everything would only be on a relevant basis. And I don’t know that Warner Center will be any more or less impacted than what we would expect out of the industries that are driving the L.A. economy. But if you say is the L.A. economy going to be hit, Hawaii’s economy going to be hit, yeah, and all the others. I just think everyone is going to be hit.

Michael Bilerman — Citi — Analyst

All right. I just know it’s been a challenge for a while just in terms of getting that occupancy up. And I’m trying to think about how the industry trends and where it’s located, how that evolves post all of this?

Jordan L. Kaplan — President & Chief Executive Officer

Well, yeah. I mean, we’re — I mean, we’re going to try and give up as little occupancy as we can. But of course, nothing is free because then that would translate into rate. But if you say, “Wow, I mean you were going to blow and then now this hit. Now what’s next?” Okay. I know what’s next is not going to blow. I mean, we’ve got to like put the hat on in keeping the buildings full and let the economy recover.

Michael Bilerman — Citi — Analyst

Right. Just lastly on the deferrals, how long will those drag on? Is it entirely dependent on shelter-in-place? Or are there other variables in those deferrals?

Jordan L. Kaplan — President & Chief Executive Officer

Most of these cities have either said April and May or April, May, and June. So they’ve like named the months that have the deferrals.

Now, if we’re successful, we will get a good part of what we have on our portfolio free of that. But every major market has a moratorium on evictions and then that moratorium comes with four different components. And depending on what those components are depends on how punitive or how much it’s encouraging a tenant, whether they need it or not, to take a free loan. And that is who’s covered, whether late fees or interest can be charged, whether significant documentation is needed, and how many — whether they’ve even said, how many months past the crisis the deferral goes. And what we’ve seen in most of these markets is they all have, well, say, two of those components. Maybe they all have — maybe they have, “Okay, everyone is covered and you can’t charge late fees.” But maybe then they say, “But you have to provide very good documentation. And if you don’t, then you don’t get the benefit of this.”

And by the way, once the emergency is over, it’s between you and the landlord, because now the rent is due the next day, okay. So you could choose two of the four things and you probably have not created a bad situation where people are trying to get a free loan. We’re in markets where all four of those things exist, not very big need for documentation, just impacted by COVID, very long payout periods, everybody is covered and no fees. Okay. That’s a recipe for disaster and that’s what we’re facing. Now, we’re trying to get that changed. So we’ll see with the change how long — if they change it and they go, “Whoa, we didn’t mean to include office.” Well, now we don’t have that problem anymore.

Michael Bilerman — Citi — Analyst

Okay. Stay safe, guys.

Jordan L. Kaplan — President & Chief Executive Officer

Thanks. Okay.

Operator

At this time, we show no further questions. Would you like to make any closing remarks?

Jordan L. Kaplan — President & Chief Executive Officer

Yes. Thank you all for joining us. And we hope that very soon in the future we’re able to meet you again in person.

Operator

[Operator Closing Remarks]