Yahoo Finance

Mark Lammas

Thanks, Victor. We signed 630,000 square feet of new and renewal leases in the first quarter, our highest quarterly leasing activity since second quarter 2022. New leasing accounted for 66% of activity and included execution of our second lease with the City and County of San Francisco at 1,455 market for 232,000 square feet in 20-years.
Our GAAP rents increased 4.8% and cash rents decreased 13.6%. Excluding our large lease with the City and County at 1455 Market, a portion of which backfill space previously leased at peak market rents. Cash rents would have decreased 8.8%, roughly in line sequentially. Our first quarter trailing 12-month blended net effective rents were 4% higher year-over-year and only 7% lower than pre-pandemic net effective rents on new deals alone were up 22% year-over-year and only 4% below pre-pandemic on a trailing 12-month basis.
Our trailing 12-month blended lease term was up 96% year-over-year and 54% versus pre-pandemic. Even after removing our two roughly 20-year leases with the City and County of San Francisco, our trailing 12-month lease term was still up 16% year-over-year. Regarding TIs, we have seen no impact from tariffs to date. Our exposure to TI-related price increases should be minimal as most of our materials are US supplied or could be changed to a US supplier.
Furthermore, we have been extremely active with our Vacant Suite Prep program in recent years with most of the front and back of the house improvements behind us. Our in-service office properties were 76.5% leased as of the end of the first quarter compared to 78.9% at the end of the fourth quarter last year. 170 basis points of that change after accounting for square footage backfilled with a portion of the City and County lease is attributable to a significant known vacate at 1455 market that we have discussed for some time.
During the first quarter, unique tour activity at our assets meaningfully accelerated, up 18% to 1.7 million square feet. The average requirement size also increased by 18% to 13,000 square feet. A new post-pandemic high. Even after signing over 600,000 square feet, our leasing pipeline increased 5% to 2.1 million square feet with an average requirement size of 19,000 square feet.
This included 716,000 square feet of late-stage deals in leases or LOIs, a significant portion of which has subsequently been signed. We have 50% coverage, that is deals and leases, LOIs or proposals on our remaining 1 million square feet of 2025 expirations, 48% of which are in the second quarter alone. We have 76% coverage on our four remaining 2025 expirations over 50,000 square feet, which collectively totaled 397,000 square feet.
While our elevated expirations in the first half of the year have impacted occupancy, starting in the third quarter, we expect occupancy will begin to stabilize and grow thereafter. This is because from the third quarter 2025 through year-end 2026, we have only 225,000 square feet expiring on average each quarter which favorably compares to our average trailing four-quarter leasing activity of 530,000 square feet, 62% of which is comprised of new deals.
Turning to our studios. As Victor noted, our pipeline remains robust, and our team continues to capture an outsized share of production in the market. At present, 46 of our 53 film and TV stages or 88% of the related square footage are either leased or in contract compared to 35 stages or 69% of the related square footage last quarter.
Note for comparison purposes, we have adjusted our fourth quarter film and TV stage portfolio and associated square footage of leasing activity to exclude leases we terminated as part of broader Quixote cost-cutting initiatives. As examples of this strong activity, we are in contract on two longer-term multi-stage leases, one, a long-running soap opera and another a returning rider producer with multiple successful shows.
It is also worth highlighting that stages leased or in contract at Sunset Las Palmas since our last call are expected to bring occupancy at that asset to the highest level since early 2023. This strong activity is also reflected in the sequential improvement of our trailing 12-month studio lease percentages. In the first quarter, our in-service stages were 78.7% leased or 190 basis points higher on additional occupancy again at Sunset Las Palmas.
Quixote Park stages were 43.4% leased or 220 basis points higher after adjusting for the previously mentioned lease terminations due to increased occupancy at Cote North Valley as well as on our commercial stages at Quixote Park in West Hollywood. First quarter studio revenues were $33.2 million or $2.2 million lower, primarily due to lower Quixote studio ancillary and transportation revenues related to production pauses during the fires.
Studio expenses were up $3 million due to a $5.9 million termination fee and associated with certain cost reduction measures at Quixote. But for that one-time fee, our operating expenses would have decreased by $2.9 million, reflecting the benefit of completed cost reduction initiatives. To that point, since our February call, we have proactively terminated certain leases and negotiated rent reductions that bring our total run rate savings to $14.2 million on an annualized basis or $13.6 million at share.
We remain committed to achieving cost efficiencies to accelerate Quixote's return to profitability and look forward to providing updates on these ongoing efforts. Regarding development, Sunset Pier 94 Studios is on track for year-end delivery with exterior components nearing completion and interior construction well underway.
We expect no material impact from tariffs on cost for this project given that the vast majority of materials are already on site or paid for and in off-site US locations. We are in discussions with potential long-term tenants interested in one or more stages and are preparing to launch so by show leasing efforts this summer. Studio leasing has largely moved to a show-by-show model and typically occurs two to three months prior to lease commencement.
Given we are targeting first quarter 2026 for certificate of occupancy and productions must have certainty around space availability prior to committing primarily due to talent schedules, we would expect show-by-show leasing to begin in earnest in the fourth quarter of this year. Finally, regarding lease up of Washington 1000, we remain in discussions with multiple large tenants.
And during the first quarter, we saw an increase in tour activity from multi-floor tenants looking to upgrade their locations. The competitive landscape continues to improve with Class A direct and large block sublease space being cleared from the inventory. Bellevue has only a few remaining Class A options over 100,000 square feet.
Seattle's Class A sublease supply has been reduced from 2 million square feet to less than 300,000 square feet, none of which offer contiguous space of 100,000 square feet or greater. Washington 1000 is the only new construction alternative in Seattle and with no further supply coming online in the near and midterm, the project remains well positioned to capture large trophy class users.
And with that, I'll turn the call over to Harout.

Harout Diramerian

Thanks, Mark. Our first quarter 2025 revenue was $198.5 million compared to $214 million in the first quarter of last year. The change is due to both asset sales and lower occupancy within our office portfolio. Our first quarter FFO, excluding specified items, was $12.9 million or $0.09 per diluted share compared to $24.2 million or $0.17 per diluted share a year ago.
Specified items for the first quarter totaled $0.07 per diluted share, consisting of onetime Quixote cost-cutting expenses of $0.05 per diluted share, a loss on early extinguishment of our Element LA debt of $0.01 per diluted share and a noncash derivative fair value adjustment of $0.00 per diluted share. By comparison, specified items for the first quarter of 2024 consist of transaction-related expenses of $0.01 per diluted share.
Excluding these specified items, the year-over-year change in FFO was mostly attributable to factors affecting revenue. Our first quarter same-store cash NOI was $93.2 million compared to $103.4 million in the first quarter last year, mostly due to lower office occupancy. Turning to our balance sheet. In the first quarter, we completed a CMBS financing for a portfolio of six office properties for $475 million and used the net proceeds to fully repay our $168 million loan secured by Element LA, with the remainder paying down amounts outstanding on our credit facility and for general corporate purposes.
After successfully hedging the entire financing shortly following the transaction, the loan now bears an all-in rate of 7.14% or 50 basis points below corresponding rates at the time of closing. As one of the largest office back CMBS transactions completed this year, this was a significant win for our team. As of the end of the first quarter, we had $838.5 million of liquidity, comprised of $86.5 million of unrestricted cash and cash equivalents and $702 million of undrawn capacity under the unsecured revolving credit facility.
We also had another $31.4 million at HCP's share of undrawn capacity under Sunset Pier 94 Studios construction loan. We have routinely discussed various paths to enhance our balance sheet and maturity schedules, including the repayment of our unsecured notes. Subsequent to the quarter, we tendered to repay all $465 million outstanding under our Series B, C and D private placement notes.
To date, we have repaid $254 million of this year's B notes and $50 million of the Series C notes with the balance to be repaid on or before May 9. We are also now in the process of refinancing our only other 2025 maturity from loans secured by [19,188] which is fully leased to a leading investment-grade tech tenant through 2030. Those conversations have been constructive as expected, and we look forward to providing additional updates.
Turning to outlook. For the second quarter, we expect FFO per diluted share to range from $0.03 to $0.07 per diluted share. Compared to the first quarter FFO of $0.09 per diluted share based on the midpoint of our second quarter guidance, we anticipate office NOI approximately of $0.05 lower due to the full impact of first quarter leasing expirations and, to a lesser extent, recent and pending asset sales.
We expect full quarter impact of higher interest expense from the six asset CMBS transaction of approximately $0.04, and lower office NOI and the higher interest expense will be partially offset by $0.03 of higher combined studio NOI and $0.02 of lower G&A expense. Regarding our full year guidance metrics, most amounts remain unchanged from those provided last quarter, with the only exceptions being an increase to our full year interest expense of $12 million stemming from the recent CMBS financing and decreased to our full year G&A expense of $3 million.
Our full year weighted average shares outstanding is also expected to be approximately $500,000 higher. Lastly, compared to our initial 2024 G&A guidance, our previously announced 2025 G&A guidance reflected a projected savings of approximately $10 million. We continue to implement further cost-cutting measures, resulting in the $3 million additional G&A reduction noted earlier.
Apart from 625 second, which was held for sale in the first quarter and the early repayment of the private placement notes, our outlook excludes the impact of any potential dispositions, acquisitions, financings and or capital markets activity.
Now, we will be happy to take your questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Seth Bergey, Citi.

Seth Bergey

I just wondered if you could comment a little bit on the cash rent spreads that you kind of achieved in the quarter. Were those kind of in line with expectations? And then -- and any color you can provide on concessions and kind of how those are trending?

Mark Lammas

No, this is Mark. In line, for sure, you heard on our prepared remarks the impact of the City deal at 1455, adjusted for that, we would have been negative 8.8 as opposed to the 13, 16 you see in the supplemental. So it had a fairly sizable impact. That's really the mark against 90 plus thousand square feet of expiring Uber and some square footage with BFA, which were -- the Uber space, especially was peak market rents from last cycle.
So yes, in line with our expectations. I would say maybe the easiest way to appreciate how overall these economics are holding up. Our net effectives are holding up quite well. We mentioned in the prepared remarks that year-over-year, on a trailing 12-month basis, net effectives are higher year-over-year 4% and only 7% lower than trailing 12 pre-pandemic net effectives.
And I would -- you could -- we could dissect that a number of different ways. I would just say the overall picture as it relates to rents and lease economics that they have continued to hold up extremely well especially by comparison to pre-pandemic amount.

Arthur Suazo

Yes. And if I could put a finer point on that, Seth. On a per square foot per year basis, were down TLS commissions were down about almost $1, call it $0.97 per annum. .

Seth Bergey

That's helpful. And I guess just on the recent news with tariffs, kind of are you seeing that impact the studio business? Or any change in kind of behaviors from tenants if there are tariffs implemented on foreign funds?

Victor Coleman

Well, first of all, I think on a global basis, it's still early to tell what's the impact on tariffs. And as they keep moving around, as a company, we're acutely aware of the downside, which obviously could be recession or even maybe worse stagulation. And as a result, we're preparing ourselves for the negative or the positive flip side on that and watching to see what tenants are signing versus not.
And on a global basis, we really have seen no impact of loss of tenants or interest level in any assets up and on the West Coast. In terms of the tariff news on the federal level, from the studio side for good or for bad, it's an awareness that I think we're very happy that it's got to the federal level. As you well know, the state is proposed at the $750 million tax credit that is implemented hopefully by July 1. And it's on track to being approved.
So that now enhanced with either a tariff or some form of federal support for the studio industry only makes it, I think, a more heightened aware aspect of the need for additional support, and we feel that it will be a positive at the end of the day. And it may come in the form of a federal relief fund on tax overall to benefit production in the United States, which we would welcome greatly.

Operator

John Kim, BMO.

John Kim

Can you just discuss the paydown of the private placement notes only the Series B is due this year? And presumably, you're using the revolver to prepay this and the remaining $211 million that's outstanding. If that's the case, how do you plan to adjust the revolver going forward?

Harout Diramerian

John, it's Harout. Thank you for asking the question. So you're right. We are using the revolver. I think we stated earlier when we did the CMBS, it was to address maturities in 2025. This was just a two-step process. And once you pay down the Series B notes, you only have a little bit of prior placements left, which have more restricted covenants. And it kind of clears the path of our unsecured through set 2027 without the revolver.
And we are in constant discussions. I think we've stated in the past that we have a very good relationship with our lead line bankers, and we see that instrument as an evergreen instrument. We're going to continue to have it beyond 2026. And once we get closer to that maturity, we will extend that one in due course.

John Kim

Okay. And then your guidance of $125 million to $150 million of asset sales for the remainder of the year seems a little light I realize you're not selling your best assets and 625 Seconds sold for a pretty big discount to book value as a result of that. But -- is this realistically what you're going to sell? And how many assets does that contemplate?

Victor Coleman

John, we don't identify the assets until they're under contract. So I can just say we're going to be consistent in that process. The range that was quoted on the prepared remarks is three assets. They are assets that are noncore to the portfolio and similar to what we've sold in the past. I would say that's a conservative number. We've been approached and looking at evaluating potentially other assets, but those are the three that we're working on right now.

John Kim

Okay. But so something like Sunset Waltham Cross, I know that's already being repositioned. Is that part of this guidance? Or is it something that may be sold this year in a subsequent year?

Victor Coleman

As I said, we're not going to talk about assets until they're under contract.

Operator

Connor Mitchell, Piper Sandler.

Connor Mitchell

I guess just following along that line of thinking. I'm just curious how your thought process and how the team has discussed maybe adding some additional asset sales or thinking of different properties that might kind of fall is that bucket? Or on a different path, maybe you've removed some potential sales. And just kind of wondering how the team has thought about the whole process since you kind of put this plan into motion and how the environment has changed throughout.

Victor Coleman

Well, I think we'll be very consistent as to the number. I mean, last quarter, I think it was -- we said it was $150 million to $200 million of dispositions. We're saying it's roughly around $100 million to $150 million now because we've already sold $95 million of disposition. So it's consistent with what our plan has been. As I said in prior comments, we're not looking to sell for assets in the portfolio.
We're looking to sell assets that are noncore, and we think that they're executional and they don't have any type of material impact on FFO. And so that's the direction we're going in. In terms of the market change, the assets that we're looking at selling right now is pretty much consistent with what we sold in the past. I mean, its users, it's high net worth, it's small investment funds.
And the demand for these type of assets for those type of buyers has been pretty constant. There's not a tremendous amount of product in the marketplace in our markets. of any quality assets. And so these fit into the marketplace and the demand ratio is where people are looking right now.

Connor Mitchell

Okay. I appreciate that color. And then, Mark, you gave a lot of pretty good information on some of the expirations coming due with '25 and then the coverage associated with that. I think it was 50% covered for the remaining expirations during the year. I'm just wondering if you could give us any more color on maybe how we should think about occupancy.
And the cadence throughout the remainder of the year along with some of the information on the coverage, expirations and then the leasing pipeline and the late stages of some of those deals you discussed?

Mark Lammas

Yes. I'll give a little bit of response to that. And then can unpack some of the further details on it. But our occupancy expectations remain on track for what our expectations were in the last phone call. Heading into the end of the fourth quarter, heading into the new year, we knew we had a considerable amount of square footage expiring in the first quarter.
Still a significant amount of the second less than the first, but still a relatively high amount, and then it was going to significantly taper off in terms of expirations in the back half and beyond. And on account of that, even though the pipeline was quite significant, and art and team managed to get 630 over the line, which is obviously a monster quarter.
We still had a lot of expirations, so even that 630. And so the occupancy you're seeing or the lease percentage you're seeing at the end of the first quarter is right in track, actually slightly better than what our own model expectations were. We believe that could be the bottom. There's a very good chance it could be the bottom in terms of lease and occupied percentage.
And that starting as early as the end of the second quarter, Certainly, by the time we get to the end of the third quarter, we expect to see sequential improvements on lease and occupied percentage. And we expect that trend, given how low expirations are all the way into '26 and beyond, we expect that general trend should continue for some time.

Arthur Suazo

Connor, it's Arthur. And Mark talked about in his prepared remarks, our pipeline obviously grew 5% to almost 2.2 million square feet. This is after the 630,000 square feet that we transacted. What gives us confidence going forward isn't just that this number appears out of nowhere. It's the leading indicator, which is tours.
And the tours grew by 18% to 1.7 million square feet. Not only did the number increase, but the average tour size increase, which tells us that kind of single floor multi-floor deals are out in the market in a bigger way -- in a larger way that they have been in the past. So that gives us the confidence with the pipeline.
Of the 2.2 million square feet that we have currently, we also mentioned that 700 -- just over 700,000 square feet or late-stage LOI or in leases that we feel very -- we feel extremely confident about closing certainly in the next couple of quarters. In addition to just the deals and proposals that have really come out since the quarter ended. So all those things said, we continue to refill the pipeline and continue to transact at a high level going forward.

Operator

Tom Catherwood, BTIG.

Tom Catherwood

I want to go back to the comment you just made on large block leasing. And obviously, you got the big deal done with the City, San Francisco at 1455 Market. But can you walk us through activity on other large block vacancies, maybe specifically Hill7, Met Park North, 1160 and Wilshire and kind of any other kind of real material ones.

Arthur Suazo

Yes. I mean I'll start with your leadoff Hill7, HBO vacating, they're actually downsizing into Discovery space in Bellevue, but we have that 112,000 square feet, and we have 58,000 square feet in negotiations right now. So we have great coverage on that. At 505, as you know, our floor plates are about 40,000 to 45,000 square feet, non-divisible. We have -- we are in negotiations for about 145,000 square feet on that, and we're very close.
And 11601, we have -- we currently have about 60,000 square feet in negotiations, 40,000 square feet of which are in leases about ready to sign. So -- and close to 95% leased in 11601. Sorry, my math got tongue-tied with my math. I was so excited. .

Tom Catherwood

I'm sorry. What was that number on 11,601?

Arthur Suazo

11,061 we're very close to getting to about 95% leased very shortly.

Tom Catherwood

Okay. Got it. And then maybe for the debt on the Hollywood media portfolio, I get that it doesn't come due until next August, but given uncertainty, the market is likely assuming the worst. What in your view is the actual downside risk for the studio refinancing? And with higher California tax credits and Victor, which you mentioned potential federal relief is selling your stake one of the options under active consideration?

Victor Coleman

Well, listen, I don't know what the potential risk is given the fact that it's fully leased in the terms of the office side at 775,000 square feet until '31 or '32. And the occupancy in the sound stages with the exception of two, are also master leased for a long period of time. The option of selling is not on the table at this time from our standpoint. It really hasn't come across for consideration.
I do think that we've mentioned this before, we and our JV partner own the bottom tranche and a piece of the next tranche of the debt, that could be converted to equity, and that takes care of any downside potential of -- if there was some form of additional capital needed to get financing done in that asset. It's already in place in the form of debt that we can convert to equity.
So I think we're very comfortable that the market will adhere to us refinancing that. And make no mistake, I mean, we are in the market having conversations as we speak. We're not waiting until the end for us to look at our options. So we're evaluating them now. And to date, we've had some very good interest for our existing lenders and new lenders are coming to the table.

Harout Diramerian

Yes, that's right. I think the other thing just to add is that maybe in the last year or so, we have some vacancy on Sunset Las Palmas, as Victor and Mark indicated, we've kind of showed an occupancy, which helps the NOI on that asset and therefore makes it even more refinance able at least making the refinancing easier.

Tom Catherwood

Okay. But let me just clarify, Victor, it sounds like your comment is -- if there is a paydown required, you don't expect it to be more than the B piece that is held by you and your partner. Is that what you were saying?

Victor Coleman

What we're seeing is that we have -- we're expecting no pay down. That's what we're going to the market with. Who knows what happens at the end of the day? But we have that as a fallback already in place as opposed to bringing new equity into the deal.

Mark Lammas

Yes. Just to put a finer point on it, the debt that Bacon & Hudson on collectively would in and of itself costed to 15% margin. So even if some are margins in store were way, we've already addressed what would be the lion's share of that.

Harout Diramerian

Yes. And maybe to give an example, we're in the market and have them right now, that requires no margin. So obviously, the media data is further away and obviously a different setup. But the point being is that we have a long time to go and either it could be a larger margining or no remarketing. It's kind of early to early to know right now.

Operator

Young Ku, Wells Fargo.

Yong Kuo Ku

Just wanted to touch upon your debt covenants a little bit. It looks like your NOI to interest expense coverage fell a little bit quarter-over-quarter. I was just wondering if you can provide some color on what we should be expecting for the rest of the year given that there are so many parts.

Sorry, what was the last part? No, I think we've like I'm a broken record at this point. We continue to be covenant compliance. We expect to be covenant compliant. We project out every quarter. And just like this quarter, our expectations were exceeded in terms of our coverage, meaning we came in better than our underlying expectations. So I think we expect to do the same in the future quarters.

Yong Kuo Ku

And are you able to kind of renegotiate some of the covenant minimums by any chance with the lenders?

Mark Lammas

We just did. I mean we recently completed a second amendment at the end of last year that improved both the ratios themselves but also underlying definitions that work through those ratios. So.

So those are for the credit facility. The bonds we have not attempted to, and I think those have more room in them.

Yong Kuo Ku

Got it. Okay. And then just turning to 2026, you guys talked about just a lease expiration for the whole year, about 800,000 square feet. Can you kind of provide some color on how -- whether you have -- there are some potential move-outs that you're potentially you have to look at? Or how do you feel about the retention for 2016 or it's kind of early.

Arthur Suazo

Yes. I mean you hit the nail on the head with a low expiration year, but there's really three large -- three large tenants that we're tracking in that market. Wild Godsall a three-floor tenant towers ashore. three-floor tenants. We're renewing them in two floors, so 50 colored, call it 53,000 square feet of the75.
At Med Park North, we have 24-hour fitness, which is 45,000 square feet, and we're working on a renewal to keep them there as well. And then the last one is at 875 Howard pivotal software, they're in 80,000 square feet, and they're already out of the market, so we're currently marketing the space. So those are the large three, but -- and the rest of those are smaller tenants that we'll be discussing over the next kind of six to nine months.

Yong Kuo Ku

Got it. Great. And then just one last. I think you guys talked about a couple of production leads that you guys are looking at on the studio side. Can you comment on the size of those you plan to change?

Victor Coleman

Well, the two we are talking about are executed or -- and we'll make formal announcements once they start filming. But both are two stages with support space and mill space. And one is, as Mark mentioned, is a three-plus year term with options and the other is existing production company that we've done multiple deals with.
So it just shows the stickiness that we're seeing some of the support coming back from -- yes, it's -- majority is show by show, but we've, I think, beat in the market in terms of these outsized longer-term leases.

Yong Kuo Ku

Okay. But you can't really comment on the size yet?

Victor Coleman

Well, I'd said, there are both two stages would support staff. We don't talk about square footage and the likes of that. Each show is two states.

Operator

Peter Abramowitz, Jefferies

Peter Abramowitz

Yes. It looks like in the FFO reconciliation here, you added back some of the expenses related to cost-cutting initiatives at Quixote. I guess could you just kind of dig into what those expenses were sort of the efforts that you're making to cut expenses in Quixote and then what you incurred in the quarter as the cost of doing that?

Mark Lammas

Yes. The costs are largely early lease termination costs. In some instances, there are stages. So last year, we exited three states in New Orleans, for example. We've since exited some stages that were underutilized here in Los Angeles. So that's a fairly healthy amount of the overall cost-cutting initiatives. I'll get to the aggregate number in a minute.
We've also -- we were able to eliminate some obsolete parts of our transportation fleet that enabled us to exit out of parking areas for those -- that part of the transportation fleet. And then there's head count and other things correlating to that downsizing that also contributes to the overall cost savings. So in aggregate, Bob, to date, we've been able to cut about $14 million in costs.
We think pro-forma to last year's results that should improve NOI on the order of about $9-ish million on a run rate basis. And so in terms of just looking ahead relative to those cost cutting initiatives, we think at current show count levels say, 90-ish , we were at 92 last year. We think that negative $19 million of NOI, cash NOI would pro forma have been more like a negative 10.
But I think maybe the best takeaway is we -- our view was to get back to breakeven in Quixote, we thought show counts needed to be somewhere close to 100. We still show positive NOI somewhere on the order of $8 million to $9 million of positive NOI at 100. But based on those costs, we think now we can get to breakeven at closer to 95 shows. So we've sort of -- by doing the cuts, we've been able to lower the bar, if you will, to getting that business back to breakeven.

Peter Abramowitz

Okay. That's helpful. So I guess then just one other question to follow up on that. So you had -- it looks like non-same-store studio expenses were about $29.5 million in the quarter. Presumably, that's almost entirely Quixote. I guess, what is sort of the run rate going forward after either quarterly or annually after those expense reductions.

Harout Diramerian

I think if you just take out the $5.9 million that we highlight, and I think you can see that on page sorry real quick. The studio page 20. We kind of have it laid out there, you cut down the five, you're back to $23.5 million, I think, roughly, right? $29.1 million less $5.9 million roughly. So that gets you to a potential nor right we still have some other work that we're working on. So from the perspective of what we've disclosed, that's the number to use.

Mark Lammas

Yes. Well, maybe. I mean I would just -- once you adjust for those one-time expenses, your NOI for the Quixote business goes to $7.5 million. Average show count for the first quarter within the low 80s. So again, getting back to the commentary about show count, if we think we get to 90 that number should be annualized more like a negative 10-ish million.
If we get to 95, we should be at breakeven. And if we get to 100, we should be at somewhere approaching $10 million, maybe a touch $5 million to $10 million of positive NOI.

Peter Abramowitz

Got it. And then I guess just one more while we're on the topic of expenses. It looks like you lowered the G&A guide. Just wondering if you could comment on what you're doing there and what drove that.

Harout Diramerian

So in the theme of cost cutting and we're continuing the cost cut, I think we've commented last quarter and last year. And we're just cost-initiative and just lower payroll-related costs is what we're doing.

Operator

There are no further questions at this time. I'd like to turn the call back to Victor Coleman, CEO and Chairman, for closing remarks.

Victor Coleman

Thanks, everybody, for participating in this quarter's call. We look forward to speaking to you all soon again. Goodbye.

Operator

Thank you all for joining today's call. You can disconnect your lines.