0001364250false00013642502024-02-062024-02-06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 2024
Douglas Emmett, Inc.
(Exact name of registrant as specified in its charter)
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| Maryland | 001-33106 | 20-3073047 |
| (State or other jurisdiction of incorporation) | Commission file number | (I.R.S. Employer identification No.) |
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| 1299 Ocean Avenue, Suite 1000 | , | Santa Monica | , | California | 90401 |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (310) 255-7700
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
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| Title of Each Class | | Trading Symbol | | Name of Each Exchange on Which Registered |
| Common Stock, $0.01 par value per share | | DEI | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On February 6, 2024, Douglas Emmett, Inc. released its financial results for the quarter ended December 31, 2023 by posting to its website its Fourth Quarter 2023 Earnings Results and Operating Information package (attached as Exhibit 99.1). The information contained in this report on Form 8-K, including the attached Exhibits, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Douglas Emmett, Inc. under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits: The following exhibits are furnished with this Current Report on Form 8-K:
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| Exhibit Number | | Description |
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| 99.1 | | |
| 104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | DOUGLAS EMMETT, INC. |
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| Dated: | February 6, 2024 | By: | /s/ PETER D. SEYMOUR |
| | | Peter D. Seymour |
| | | Chief Financial Officer |
Executive Summary
We own and operate 18.0 million square feet of Class A office properties and 4,576 apartment units (excluding our residential development pipeline and the vacated Barrington Plaza units) in the premier coastal submarkets of Los Angeles and Honolulu.
Quarterly Results: For the quarter ended December 31, 2023 compared to the quarter ended December 31, 2022:
•Our revenues increased by 2.0% to $259.3 million, driven partly from higher multifamily revenues and a ground rent reset which resulted in a one-time payment of accumulated back rent of approximately $5.5 million recorded in Parking and Other Income.
•Our net income attributable to common stockholders decreased by 266.5% to a net loss of $40.5 million, or a net loss of $0.24 per diluted share, partially due to an impairment charge on our interest in an unconsolidated fund and accelerated depreciation.
•Our FFO decreased by 12.0% to $92.9 million, or $0.46 per fully diluted share, primarily as a result of higher interest expense, partially offset by higher multifamily revenue and the accumulated back ground rent.
•Our AFFO decreased by 8.1% to $74.6 million.
•Our same property Cash NOI decreased by 1.1% to $153.1 million, driven by comparison to a strong prior period that benefited from one-time tax refunds on our residential portfolio. Adjusting for those items, residential cash same property NOI growth would have been positive 3.3% and overall cash NOI growth would have been negative 0.6%.
Annual Results: For the year ended December 31, 2023 compared to the year ended December 31, 2022:
•Our revenues increased by 2.7% to $1.02 billion.
•Our net income attributable to common stockholders decreased by 144.0% to a net loss of $42.7 million, or a net loss of $0.26 per diluted share.
•Our FFO decreased by 10.1% to $377.3 million, or $1.86 per fully diluted share.
•Our AFFO decreased by 15.7% to $299.5 million.
•Our same property Cash NOI decreased by 0.8% to $603.6 million.
Leasing: For all of 2023, we signed 872 office leases totaling 3.2 million square feet for an average of 800,000 square feet per quarter. During the fourth quarter, we signed 202 office leases covering 710,000 square feet, including 243,000 square feet of new leases and 467,000 square feet of renewal leases. After quarter end, we signed a 250,000 square foot renewal in Beverly Hills, extending the term for ten years through 2037, which is not included in these results.
Comparing the office leases we signed during the fourth quarter to the expiring leases for the same space, straight-line rents increased by 4.3% and cash rents decreased by 6.1%. Our multifamily portfolio remains essentially fully leased at 98.5%.
Balance sheet: At quarter end, we had cash and cash equivalents of $523.1 million. We have strong cash flow after dividends, no corporate level debt, and almost half of our office properties remain unencumbered.
Dividends: On January 17, 2024, we paid a quarterly cash dividend of $0.19 per common share, or $0.76 per common share on an annualized basis.
Guidance: We expect our 2024 Net Income Per Common Share - Diluted to be between $0.04 and $0.10, and our FFO per fully diluted share to be between $1.64 and $1.70. Our assumptions for 2024 assume the expected move out of one large tenant in Burbank, modest leasing, the removal of Barrington Plaza from the rental market, and higher interest costs. Our guidance does not include the impact of future property acquisitions or dispositions, stock sales or repurchases, financings, property damage insurance recoveries, impairment charges or other possible capital markets activities. See page 22. NOTE: See the non-GAAP reconciliations for FFO & AFFO on page 8 and same property NOI on page 10. See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Table of Contents
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| COMPANY OVERVIEW |
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| FINANCIAL RESULTS |
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| PORTFOLIO DATA |
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| GUIDANCE |
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Forward Looking Statements (FLS)
This Fourth Quarter 2023 Earnings Results and Operating Information, which we refer to as our Earnings Package (EP), supplements the information provided in our reports filed with the Securities and Exchange Commission (SEC). It contains FLS within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to the expectations regarding the performance of our business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these FLS can be identified by the use of words such as “expect,” "potential,” “continue,” “may,” “will,” “should,” “could,” “seek,” “project,” “intend,” “plan,” “estimate,” "anticipate,” or the negative version of these words or other similar words which are predictions of or indicate future events or trends and which do not relate solely to historical matters. FLS presented in this EP, and those that we may make orally or in writing from time to time, are based on our beliefs and assumptions. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors, some of which are beyond our control or ability to predict, including, but not limited to: adverse economic, political or real estate developments affecting Southern California or Honolulu; a general downturn in the economy; decreased rental and occupancy rates or increased tenant incentives; reduced demand for office space, including as a result of remote work and flexible working arrangements that allow work from remote locations other than the employer’s office premises; defaults on, and early terminations and non-renewal of, leases by tenants; inflation; higher interest rates and operating costs; failure to generate sufficient cash flows to service our debt; difficulties in acquiring properties; failure to successfully operate properties; failure to maintain our REIT status; adverse changes in rent control laws and regulations; environmental uncertainties; risks related to natural disasters; fire and other property damage; lack of or insufficient insurance; inability to successfully expand into new markets or submarkets; risks associated with property development; conflicts of interest with our officers; reliance on key personnel; changes in real estate and zoning laws and increases in real property tax rates; possible terrorist attacks or wars; and other risks and uncertainties detailed in our Annual Report on Form 10-K for 2022, and other documents filed with the SEC. Although we believe that our assumptions underlying our FLS are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material. Accordingly, please use caution in relying on any FLS in this EP to anticipate future results or trends. This EP and all subsequent written and oral FLS attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our FLS.
Corporate Data
as of December 31, 2023
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| Office Portfolio | |
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| | Consolidated | | Total | |
| Properties | 68 | | | 70 | | |
| Rentable square feet (in thousands) | 17,595 | | 17,981 | |
| Leased rate | 83.3 | % | | 83.3 | % | |
| Occupancy rate | 80.9 | % | | 81.0 | % | |
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| Multifamily Portfolio(1) | |
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| | | | Total | |
| Properties | | | 14 | | |
| Units | | | 4,576 | |
| Leased rate | | | 98.5 | % | |
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| Market Capitalization (in thousands, except price per share) | |
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| Fully Diluted Shares outstanding as of December 31, 2023 | | 201,680 | | |
| Common stock closing price per share (NYSE:DEI) | | $ | 14.50 | | |
| Equity Capitalization | | $ | 2,924,354 | | |
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| Net Debt (in thousands) | |
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| | Consolidated | | Our Share | |
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| Debt principal(2) | $ | 5,570,040 | | | $ | 4,618,115 | | |
| Less: cash and cash equivalents and loan collateral deposits(3) | (536,521) | | | (414,337) | | |
| Net Debt | $ | 5,033,519 | | | $ | 4,203,778 | | |
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| Leverage Ratio (in thousands, except percentage) | |
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| Pro Forma Enterprise Value | | $ | 7,128,132 | | |
| Our Share of Net Debt to Pro Forma Enterprise Value | | 59 | % | |
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| AFFO Payout Ratio(4) | |
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| Three months ended December 31, 2023 | | 51.7 | % | |
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(1) Unit totals exclude units vacated as part of removing Barrington Plaza from the rental market. Leased rate excludes impact of Barrington Plaza.
(2) See page 12 for a reconciliation of consolidated debt principal and our share of debt principal to consolidated debt on the balance sheet. (3) The consolidated balance of $536.5 million includes our consolidated cash and cash equivalents of $523.1 million and a loan collateral deposit of $13.4 million deposited with a lender. Our share is calculated by starting with the consolidated balance of $536.5 million, then deducting the other owners' share of our JVs' cash and cash equivalents of $132.5 million and then adding our share of our unconsolidated Fund's cash and cash equivalents of $10.3 million. See note 4 to the debt table on page 12 regarding the loan collateral deposit. (4) Payout ratio based on $0.19 cent dividend payable to shareholders of record as of December 29, 2023.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Property Map
as of December 31, 2023
Board of Directors and Executive Officers
as of December 31, 2023
BOARD OF DIRECTORS
__________________________________________________________________________________________________________________________________
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| Dan A. Emmett | Our Chairman of the Board |
| Jordan L. Kaplan | Our Chief Executive Officer and President |
| Kenneth M. Panzer | Our Chief Operating Officer |
| Leslie E. Bider | Retired Executive and Investor |
| Dorene C. Dominguez | Chairwoman and CEO of Vanir Group of Companies |
| Dr. David T. Feinberg | Chairman, Oracle Health |
| Ray C. Leonard | President, Sugar Ray Leonard Foundation |
| Virginia A. McFerran | Technology and Data Science Advisor |
| Thomas E. O’Hern | Chief Executive Officer, Macerich |
| William E. Simon, Jr. | Partner Emeritus, Simon Quick Advisors |
| Shirley Wang | Founder and CEO, Plastpro Inc. |
EXECUTIVE OFFICERS
__________________________________________________________________________________________________________________________________
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| Jordan L. Kaplan | Chief Executive Officer and President |
| Kenneth M. Panzer | Chief Operating Officer |
| Peter D. Seymour | Chief Financial Officer |
| Kevin A. Crummy | Chief Investment Officer |
| Michele L. Aronson | Executive Vice President, General Counsel and Secretary |
CORPORATE OFFICE
1299 Ocean Avenue, Suite 1000, Santa Monica, California 90401
Phone: (310) 255-7700
For more information, please visit our website at www.douglasemmett.com or contact:
Stuart McElhinney, Vice President, Investor Relations
(310) 255-7751
smcelhinney@douglasemmett.com
Consolidated Balance Sheets
(Unaudited; In thousands)
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| | December 31, 2023 | | December 31, 2022 |
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| Assets | | | |
| Investment in real estate, gross | $ | 12,405,814 | | | $ | 12,292,973 | |
| Less: accumulated depreciation and amortization | (3,652,630) | | | (3,299,365) | |
| Investment in real estate, net | 8,753,184 | | | 8,993,608 | |
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| Ground lease right-of-use asset | 7,447 | | | 7,455 | |
| Cash and cash equivalents | 523,082 | | | 268,837 | |
| Tenant receivables | 6,096 | | | 6,879 | |
| Deferred rent receivables | 115,321 | | | 114,980 | |
| Acquired lease intangible assets, net | 2,971 | | | 3,536 | |
| Interest rate contract assets | 170,880 | | | 270,234 | |
| Investment in unconsolidated Fund | 15,977 | | | 47,976 | |
| Other assets | 49,260 | | | 33,941 | |
| Total assets | $ | 9,644,218 | | | $ | 9,747,446 | |
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| Liabilities | | | |
| Secured notes payable, net | $ | 5,543,171 | | | $ | 5,191,893 | |
| Ground lease liability | 10,836 | | | 10,848 | |
| Interest payable, accounts payable and deferred revenue | 131,237 | | | 140,925 | |
| Security deposits | 61,958 | | | 61,429 | |
| Acquired lease intangible liabilities, net | 19,838 | | | 31,364 | |
| Interest rate contract liabilities | — | | | 1,790 | |
| Dividends payable | 31,781 | | | 33,414 | |
| Total liabilities | 5,798,821 | | | 5,471,663 | |
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| Equity | | | |
| Douglas Emmett, Inc. stockholders' equity: | | | |
| Common stock | 1,672 | | | 1,758 | |
| Additional paid-in capital | 3,392,955 | | | 3,493,307 | |
| Accumulated other comprehensive income | 115,917 | | | 187,063 | |
| Accumulated deficit | (1,290,682) | | | (1,119,714) | |
| Total Douglas Emmett, Inc. stockholders' equity | 2,219,862 | | | 2,562,414 | |
| Noncontrolling interests | 1,625,535 | | | 1,713,369 | |
| Total equity | 3,845,397 | | | 4,275,783 | |
| Total liabilities and equity | $ | 9,644,218 | | | $ | 9,747,446 | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Consolidated Operating Results
(Unaudited; In thousands, except per share data)
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| | Three Months Ended December 31, | | Year Ended December 31, |
| 2023 | | 2022 | | 2023 | | 2022 |
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| Revenues | | | | | | | |
| Office rental | | | | | | | |
Rental revenues and tenant recoveries(1) | $ | 179,499 | | | $ | 181,596 | | | $ | 714,742 | | | $ | 724,131 | |
| Parking and other income | 32,832 | | | 26,233 | | | 115,203 | | | 100,442 | |
| Total office revenues | 212,331 | | | 207,829 | | | 829,945 | | | 824,573 | |
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| Multifamily rental | | | | | | | |
| Rental revenues | 43,170 | | | 42,079 | | | 174,296 | | | 152,314 | |
| Parking and other income | 3,778 | | | 4,229 | | | 16,247 | | | 16,765 | |
| Total multifamily revenues | 46,948 | | | 46,308 | | | 190,543 | | | 169,079 | |
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| Total revenues | 259,279 | | | 254,137 | | | 1,020,488 | | | 993,652 | |
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| Operating Expenses | | | | | | | |
| Office expenses | 74,049 | | | 72,516 | | | 294,310 | | | 284,522 | |
| Multifamily expenses | 16,853 | | | 13,570 | | | 67,323 | | | 49,299 | |
| General and administrative expenses | 14,538 | | | 11,232 | | | 49,236 | | | 45,405 | |
| Depreciation and amortization | 123,178 | | | 93,210 | | | 459,949 | | | 372,798 | |
| Total operating expenses | 228,618 | | | 190,528 | | | 870,818 | | | 752,024 | |
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| Other income | 7,072 | | | 2,097 | | | 19,633 | | | 4,587 | |
| Other expenses | (212) | | | (153) | | | (1,032) | | | (714) | |
(Loss) income from unconsolidated Fund(2) | (35,820) | | | 303 | | | (34,643) | | | 1,224 | |
| Interest expense | (57,609) | | | (40,625) | | | (209,468) | | | (150,185) | |
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| Net (loss) income | (55,908) | | | 25,231 | | | (75,840) | | | 96,540 | |
| Net loss (income) attributable to noncontrolling interests | 15,453 | | | (929) | | | 33,134 | | | 605 | |
| Net (loss) income attributable to common stockholders | $ | (40,455) | | | $ | 24,302 | | | $ | (42,706) | | | $ | 97,145 | |
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| Net (loss) income per common share - basic and diluted | $ | (0.24) | | | $ | 0.14 | | | $ | (0.26) | | | $ | 0.55 | |
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| Dividends declared per common share | $ | 0.19 | | | $ | 0.19 | | | $ | 0.76 | | | $ | 1.03 | |
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| Weighted average shares of common stock outstanding - basic and diluted | 166,758 | | 175,799 | | 169,597 | | 175,756 |
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(1)Rental revenues and tenant recoveries include tenant recoveries for the following periods:
•$17.9 million and $14.0 million for the three months ended December 31, 2023 and 2022, and
•$61.6 million and $58.2 million for the year ended December 31, 2023 and 2022, respectively.
(2) (Loss) income from unconsolidated Fund for the three months and year ended December 31, 2023 includes a $36.2 million impairment charge related to our investment in our unconsolidated Fund.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Funds From Operations & Adjusted Funds From Operations(1)
(Unaudited; in thousands, except per share data)
The table below presents a reconciliation of Net (loss) income attributable to common stockholders to Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO):
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| | Three Months Ended December 31, | | Year Ended December 31, |
| | 2023 | | 2022 | | 2023 | | 2022 |
| Funds From Operations (FFO) | | | | | | | |
Net (loss) income attributable to common stockholders(2) | $ | (40,455) | | | $ | 24,302 | | | $ | (42,706) | | | $ | 97,145 | |
| Depreciation and amortization of real estate assets | 123,178 | | | 93,210 | | | 459,949 | | | 372,798 | |
| Net (loss) income attributable to noncontrolling interests | (15,453) | | | 929 | | | (33,134) | | | (605) | |
Adjustments attributable to unconsolidated Fund(2)(3) | 36,962 | | | 736 | | | 39,194 | | | 2,848 | |
Adjustments attributable to consolidated JVs(3) | (11,366) | | | (13,640) | | | (46,012) | | | (52,503) | |
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| FFO | $ | 92,866 | | | $ | 105,537 | | | $ | 377,291 | | | $ | 419,683 | |
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| Adjusted Funds From Operations (AFFO) | | | | | | | |
| FFO | $ | 92,866 | | | $ | 105,537 | | | $ | 377,291 | | | $ | 419,683 | |
| Straight-line rent | 1,665 | | | 1,049 | | | (342) | | | 169 | |
| Net accretion of acquired above- and below-market leases | (2,805) | | | (3,205) | | | (10,961) | | | (11,255) | |
| Loan costs, loan premium amortization and swap amortization | 2,381 | | | 1,921 | | | 8,840 | | | 6,846 | |
Recurring capital expenditures, tenant improvements and capitalized leasing expenses(4) | (28,008) | | | (33,133) | | | (113,084) | | | (92,862) | |
| Non-cash compensation expense | 4,256 | | | 4,553 | | | 19,844 | | | 21,025 | |
Adjustments attributable to unconsolidated Fund(3) | (125) | | | (303) | | | (524) | | | (1,090) | |
Adjustments attributable to consolidated JVs(3) | 4,348 | | | 4,740 | | | 18,477 | | | 12,732 | |
| AFFO | $ | 74,578 | | | $ | 81,159 | | | $ | 299,541 | | | $ | 355,248 | |
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| Weighted average shares of common stock outstanding - diluted | 166,758 | | | 175,799 | | | 169,597 | | | 175,756 | |
| Weighted average units in our operating partnership outstanding | 33,344 | | | 31,383 | | | 33,164 | | | 31,375 | |
| Weighted average fully diluted shares outstanding | 200,102 | | | 207,182 | | | 202,761 | | | 207,131 | |
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| Net (loss) income per common share - basic and diluted | $ | (0.24) | | | $ | 0.14 | | | $ | (0.26) | | | $ | 0.55 | |
| FFO per share - fully diluted | $ | 0.46 | | | $ | 0.51 | | | $ | 1.86 | | | $ | 2.03 | |
Dividends paid per share(5) | $ | 0.19 | | | $ | 0.28 | | | $ | 0.76 | | | $ | 1.12 | |
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(1)Presents the FFO and AFFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership, including our share of our consolidated JVs and our unconsolidated Fund.
(2)Our net (loss) income attributable to common stockholders for the three months and year ended December 31, 2023 includes a $36.2 million impairment charge related to our investment in our unconsolidated Fund. Adjustments attributable to our unconsolidated Fund include an adjustment to exclude the respective impairment loss. We excluded this impairment charge from our calculation of FFO because the impairment charge relates directly to the real estate held by the Fund.
(3)Adjusts for the portion of each other listed adjustment item on our share of the results of our unconsolidated Fund and for each other listed adjustment item that is attributed to the noncontrolling interests in our consolidated JVs.
(4)Under the GAAP lease accounting rules, we expense non-incremental leasing expenses (leasing expenses not directly related to the signing of a lease) and capitalize incremental leasing expenses. Since non-incremental leasing expenses are included in the calculation of net (loss) income attributable to common stockholders and FFO, the capitalized leasing expenses adjustment to AFFO only includes incremental leasing expenses.
(5)Reflects dividends paid within the respective periods.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Same Property Statistics & Net Operating Income (NOI)(1)
(Unaudited; in thousands, except statistics)
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| | As of December 31, | |
| | 2023 | | 2022 | |
| Office Statistics | | | | |
| Number of properties | 67 | | | 67 | | |
| Rentable square feet (in thousands) | 17,561 | | | 17,561 | | |
| Ending % leased | 83.3 | % | | 87.0 | % | |
| Ending % occupied | 80.9 | % | | 83.7 | % | |
| Quarterly average % occupied | 81.3 | % | | 83.7 | % | |
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| Multifamily Statistics | | | | |
| Number of properties | 10 | | | 10 | | |
| Number of units | 3,449 | | | 3,449 | | |
| Ending % leased | 98.8 | % | | 99.4 | % | |
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| | Three Months Ended December 31, | | % Favorable | |
| | 2023 | | 2022 | | (Unfavorable) | |
| Net Operating Income (NOI) | | | | | | |
| Office revenues | $ | 205,623 | | | $ | 205,458 | | | 0.1 | % | |
| Office expenses | (73,894) | | | (71,465) | | | (3.4) | % | |
| Office NOI | 131,729 | | | 133,993 | | | (1.7) | % | |
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| Multifamily revenues | 30,379 | | | 29,472 | | | 3.1 | % | |
| Multifamily expenses(2) | (9,293) | | | (8,349) | | | (11.3) | % | |
| Multifamily NOI | 21,086 | | | 21,123 | | | (0.2) | % | |
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| Total NOI(2) | $ | 152,815 | | | $ | 155,116 | | | (1.5) | % | |
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| Cash Net Operating Income (NOI) | | | | | | |
| Office cash revenues | $ | 205,937 | | | $ | 205,084 | | | 0.4 | % | |
| Office cash expenses | (73,894) | | | (71,465) | | | (3.4) | % | |
| Office cash NOI | 132,043 | | | 133,619 | | | (1.2) | % | |
| | | | | | | |
| Multifamily cash revenues | 30,370 | | | 29,476 | | | 3.0 | % | |
| Multifamily cash expenses(2) | (9,293) | | | (8,349) | | | (11.3) | % | |
| Multifamily cash NOI | 21,077 | | | 21,127 | | | (0.2) | % | |
| | | | | | | |
| Total Cash NOI(2) | $ | 153,120 | | | $ | 154,746 | | | (1.1) | % | |
| | | | | | | |
_________________________________________________
(1) The amounts presented include 100% (not our pro-rata share). See page 10 for a reconciliation of net (loss) income attributable to common stockholders to these non-GAAP measures. (2) The 2022 multifamily expenses included favorable one-time property tax adjustments. Eliminating this impact would have resulted in Multifamily NOI growth of 3.4% and Multifamily cash NOI growth of 3.3% and Total NOI growth of (1.0)% and Total Cash NOI growth of (0.6)%.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Same Property NOI Reconciliation
(Unaudited and in thousands)
The tables below present a reconciliation of Net (loss) income attributable to common stockholders to Same Property NOI:
| | | | | | | | | | | |
| | Three Months Ended December 31, |
| | 2023 | | 2022 |
| | | |
| Net (loss) income attributable to common stockholders | $ | (40,455) | | | $ | 24,302 | |
| Net (loss) income attributable to noncontrolling interests | (15,453) | | | 929 | |
| Net (loss) income | (55,908) | | | 25,231 | |
| General and administrative expenses | 14,538 | | | 11,232 | |
| Depreciation and amortization | 123,178 | | | 93,210 | |
| Other income | (7,072) | | | (2,097) | |
| Other expenses | 212 | | | 153 | |
| Loss (income) from unconsolidated Fund | 35,820 | | | (303) | |
| Interest expense | 57,609 | | | 40,625 | |
| | | |
| | | |
| | | |
| NOI | $ | 168,377 | | | $ | 168,051 | |
| | | |
| Same Property NOI by Segment | | | |
| | | |
| Same property office cash revenues | $ | 205,937 | | | $ | 205,084 | |
| Non-cash adjustments per definition of NOI | (314) | | | 374 | |
| Same property office revenues | 205,623 | | | 205,458 | |
| | | |
| Same property office cash expenses | (73,894) | | | (71,465) | |
| | | |
| | | |
| | | |
| Same Property Office NOI | 131,729 | | | 133,993 | |
| | | |
| Same property multifamily cash revenues | 30,370 | | | 29,476 | |
| Non-cash adjustments per definition of NOI | 9 | | | (4) | |
| Same property multifamily revenues | 30,379 | | | 29,472 | |
| | | |
| Same property multifamily cash expenses | (9,293) | | | (8,349) | |
| | | |
| | | |
| | | |
| Same Property Multifamily NOI | 21,086 | | | 21,123 | |
| | | |
| Same Property NOI | 152,815 | | | 155,116 | |
| Non-comparable office revenues | 6,708 | | | 2,371 | |
| Non-comparable office expenses | (155) | | | (1,051) | |
| Non-comparable multifamily revenues | 16,569 | | | 16,836 | |
| Non-comparable multifamily expenses | (7,560) | | | (5,221) | |
| NOI | $ | 168,377 | | | $ | 168,051 | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Data for JVs & Fund
(Unaudited, in thousands)
| | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, 2023 |
| | | | | |
| Wholly-Owned Properties | | Consolidated JVs(1) | | Unconsolidated Fund(2) |
| | | | | |
| Revenues | $ | 195,801 | | | $ | 63,478 | | | $ | 4,949 | |
| Office and multifamily operating expenses | $ | 67,226 | | | $ | 23,676 | | | $ | 1,696 | |
| Straight-line rent | $ | (1,452) | | | $ | (213) | | | $ | (107) | |
| Above/below-market lease revenue | $ | 233 | | | $ | 2,572 | | | $ | — | |
Cash NOI attributable to outside interests(3) | $ | — | | | $ | 18,816 | | | $ | 1,985 | |
Our share of cash NOI(4) | $ | 129,794 | | | $ | 18,627 | | | $ | 1,375 | |
| | | | | |
| Year Ended December 31, 2023 |
| | | | | |
| Wholly-Owned Properties | | Consolidated JVs(1) | | Unconsolidated Fund(2) |
| | | | | |
| Revenues | $ | 767,463 | | | $ | 253,025 | | | $ | 19,878 | |
| Office and multifamily operating expenses | $ | 266,530 | | | $ | 95,103 | | | $ | 6,686 | |
| Straight-line rent | $ | (2,966) | | | $ | 3,308 | | | $ | 445 | |
| Above/below-market lease revenue | $ | 1,000 | | | $ | 9,961 | | | $ | — | |
Cash NOI attributable to outside interests(3) | $ | — | | | $ | 72,594 | | | $ | 7,478 | |
Our share of cash NOI(4) | $ | 502,899 | | | $ | 72,059 | | | $ | 5,269 | |
______________________________________________________
(1) Represents stand-alone financial data (with property management fees excluded from operating expenses as a consolidating entry) for four consolidated JVs that we manage. We own a weighted average interest of approximately 46% (based on square footage) in the four JVs, which owned a combined sixteen Class A office properties totaling 4.2 million square feet and two residential properties with 470 apartments in our submarkets. We are entitled to (i) distributions based on invested capital, (ii) fees for property management and other services, (iii) reimbursement of certain acquisition-related expenses and certain other costs and (iv) additional distributions based on Cash NOI.
(2) Represents stand-alone financial data (with property management fees excluded from operating expenses as a consolidating entry) for one unconsolidated Fund that we manage. We owned an interest of approximately 34% in the Fund during the periods presented. We purchased an additional 20% interest on December 31, 2023 which increased our ownership in the Fund to 54%. The Fund owns two Class A office properties totaling 0.4 million square feet in our submarkets. We are entitled to (i) priority distributions, (ii) distributions based on invested capital, (iii) a carried interest if the investors’ distributions exceed a hurdle rate, (iv) fees for property management and other services and (v) reimbursement of certain costs.
(3) Represents the share of Cash NOI allocable under the applicable agreements to interests other than our Fully Diluted Shares.
(4) Represents the share of Cash NOI allocable to our Fully Diluted Shares.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans
(As of December 31 2023, unaudited) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | Maturity Date(1) | | Principal Balance
(In Thousands) | | Our Share(2) (In Thousands) | | Effective Rate(3) | | Swap Maturity Date | |
| | | | | | | | | | | |
| Consolidated Wholly-Owned Subsidiaries | |
| | | | | | | | | | | |
| | 3/3/2025 | | $ | 335,000 | | | $ | 335,000 | | | SOFR + 1.41% | | N/A | |
| | 4/1/2025 | | 102,400 | | | 102,400 | | | SOFR + 1.36% | | N/A | |
| | 8/15/2026 | | 415,000 | | | 415,000 | | | 3.07% | | 8/1/2025 | |
| | 9/19/2026 | | 400,000 | | | 400,000 | | | 2.44% | | 9/1/2024 | |
| | 9/26/2026 | | 200,000 | | | 200,000 | | | 2.36% | | 10/1/2024 | |
| | 11/1/2026 | | 400,000 | | | 400,000 | | | 2.31% | | 10/1/2024 | |
| | 6/1/2027 | (4) | 550,000 | | | 550,000 | | | SOFR + 1.48% | | N/A | |
| | 5/18/2028 | | 300,000 | | | 300,000 | | | 2.21% | | 6/1/2026 | |
| | 1/1/2029 | | 300,000 | | | 300,000 | | | 2.66% | | 1/1/2027 | |
| | 6/1/2029 | | 255,000 | | | 255,000 | | | 3.26% | | 6/1/2027 | |
| | 6/1/2029 | | 125,000 | | | 125,000 | | | 3.25% | | 6/1/2027 | |
| | 8/1/2033 | | 350,000 | | | 350,000 | | | SOFR + 1.37% | | N/A | |
| | 6/1/2038 | (5) | 27,640 | | | 27,640 | | | 4.55% | | N/A | |
| | Subtotal | | 3,760,040 | | | 3,760,040 | | | | | | |
| Consolidated JVs | |
| | 12/19/2024 | | 400,000 | | | 80,000 | | | SOFR + 1.40% | | N/A | |
| | 5/15/2027 | | 450,000 | | | 400,500 | | | 2.26% | | 4/1/2025 | |
| | 8/19/2028 | | 625,000 | | | 187,500 | | | 2.12% | | 6/1/2025 | |
| | 4/26/2029 | (6) | 175,000 | | | 96,250 | | | 3.90% | | 5/1/2026 | |
| | 6/1/2029 | | 160,000 | | | 32,000 | | | 3.25% | | 7/1/2027 | |
| Total Consolidated Loans | (7) | $ | 5,570,040 | | | $ | 4,556,290 | | | | | | |
| | | | | | | | | | | |
| Unconsolidated Fund | |
| | 9/14/2028 | | $ | 115,000 | | | $ | 61,824 | | | 2.19% | | 10/1/2026 | |
| Total Loans | | | | $ | 4,618,114 | | | | | | |
| | | | | | | | | | | |
Except as noted below, our loans: (i) are non-recourse, (ii) are secured by separate collateral pools consisting of one or more properties, (iii) require interest-only monthly payments with the outstanding principal due at maturity, and (iv) contain certain financial covenants which could require us to deposit excess cash flow with the lender under certain circumstances unless we (at our option) either provide a guarantee or additional collateral or pay down the loan within certain parameters set forth in the loan documents. Certain loans with maturity date extension options require us to meet minimum financial thresholds in order to exercise those extension options.
(1)Maturity dates include the effect of extension options.
(2)"Our Share" is calculated by multiplying the principal balance by our share of the borrowing entity's equity, and is used to calculate the non-GAAP measure "Our Share of Net Debt" - see Corporate Data on page 3. (3)Effective rate as of December 31, 2023. Includes the effect of interest rate swaps and excludes the effect of prepaid loan costs.
(4)The loan is secured by four residential properties. For the portion secured by Barrington Plaza, in connection with the removal of that property from the rental market, we deposited $13.3 million of cash into an interest-bearing collateral account with the lender. The lender will return the deposit at the earlier of August 2026 or when the loan is paid in full. The lender is treating the loan as a construction loan and we signed a construction completion guarantee.
(5)The loan requires monthly payments of principal and interest based upon a 30-year principal amortization schedule.
(6)A portion of this loan is guaranteed.
(7)Our consolidated debt on the balance sheet (see page 6) of $5.54 billion is calculated by adding $3.1 million of unamortized loan premium and deducting $30.0 million of unamortized deferred loan costs from our total consolidated loans of $5.57 billion. | | | | | | | | | | | |
| | | |
| Statistics for consolidated loans with interest fixed under the terms of the loan or a swap | |
| | | |
| Principal balance (in billions) | $3.83 | |
| Weighted average remaining life (including extension options) | 4.0 years | |
| Weighted average remaining fixed interest period | 1.9 years | |
| Weighted average annual interest rate | 2.65% | |
| | | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Portfolio Summary
Total Office Portfolio as of December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| Region | | Number of Properties | | Our Rentable Square Feet | | Region Rentable Square Feet(1) | | Our Average Market Share(2) | |
| | | | | | | | | | |
| Los Angeles | | | | | | | | | |
| Westside(3) | | 52 | | | 9,999,051 | | | 40,401,665 | | 34.4 | % | |
| Valley | | 16 | | | 6,790,777 | | | 22,485,019 | | 44.4 | | |
| Honolulu(3) | | 2 | | | 1,190,835 | | | 5,267,268 | | 22.6 | | |
| Total / Average | | 70 | | | 17,980,663 | | | 68,153,952 | | 37.4 | % | |
| | | | | | | | | | |
_________________________________________________
(1) The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2023 fourth quarter CBRE Marketview report for our submarkets in that region.
(2) Our market share is calculated by dividing our Rentable Square Feet by the applicable Region's Rentable Square Feet, weighted in the case of averages based on the square feet of exposure in our total portfolio to each submarket as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| Region | | Submarket | | Number of Properties | | Our Rentable Square Feet | | Our Market Share(2) | |
| | | | | | | | | | |
| Westside | | Brentwood | | 15 | | | 2,085,745 | | | 60.3 | % | |
| | Westwood | | 7 | | | 2,191,711 | | | 43.6 | | |
| | Olympic Corridor | | 5 | | | 1,142,885 | | | 28.1 | | |
| | Beverly Hills(3) | | 11 | | | 2,196,067 | | | 27.6 | | |
| | Santa Monica | | 11 | | | 1,425,374 | | | 14.3 | | |
| | Century City | | 3 | | | 957,269 | | | 9.0 | | |
| Valley | | Sherman Oaks/Encino | | 12 | | | 3,488,995 | | | 55.1 | | |
| | Warner Center/Woodland Hills | | 3 | | | 2,845,577 | | | 37.4 | | |
| | Burbank | | 1 | | | 456,205 | | | 5.3 | | |
| Honolulu | | Honolulu(3) | | 2 | | | 1,190,835 | | | 22.6 | | |
| | | Total / Weighted Average | | 70 | | | 17,980,663 | | | 37.4 | % | |
| | | | | | | | | | |
_______________________________________________
(3) In calculating market share, we adjusted the rentable square footage by: (i) removing a 218,000 square foot property located just outside the Beverly Hills city limits from both the numerator and the denominator, and (ii) removing 77,000 rentable square feet for an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the submarket.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Percentage Leased and In-Place Rents
Total Office Portfolio as of December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| Region(1) | | Percent Leased | | Annualized Rent(2) | | Annualized Rent Per Leased Square Foot(2) | | Monthly Rent Per Leased Square Foot(2) | |
| | | | | | | | | | |
| Los Angeles | | | | | | | | | |
| Westside | | 82.1 | % | | $ | 449,123,019 | | | $ | 57.01 | | | $ | 4.75 | | |
| Valley | | 83.8 | | | 197,159,698 | | | 36.04 | | | 3.00 | | |
| Honolulu | | 90.4 | | | 37,069,247 | | | 35.93 | | | 2.99 | | |
| Total / Weighted Average | | 83.3 | % | | $ | 683,351,964 | | | $ | 47.52 | | | $ | 3.96 | | |
| | | | | | | | | | |
_______________________________________________________________
(1)Regional data reflects the following underlying submarket data:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| Region | | Submarket | | Percent Leased | | | | | | Monthly Rent Per Leased Square Foot(2) | |
| | | | | | | | | | | | |
| Westside | | Beverly Hills | | 85.7 | % | | | | | | $ | 4.92 | | |
| | Brentwood | | 79.9 | | | | | | | 4.01 | | |
| | Century City | | 86.3 | | | | | | | 4.69 | | |
| | Olympic Corridor | | 76.1 | | | | | | | 3.33 | | |
| | Santa Monica | | 81.2 | | | | | | | 6.95 | | |
| | Westwood | | 82.6 | | | | | | | 4.54 | | |
| Valley | | Burbank | | 100.0 | | | | | | | 5.01 | | |
| | Sherman Oaks/Encino | | 87.1 | | | | | | | 3.01 | | |
| | Warner Center/Woodland Hills | | 77.1 | | | | | | | 2.57 | | |
| Honolulu | | Honolulu | | 90.4 | | | | | | | 2.99 | | |
| | | Weighted Average | | 83.3 | % | | | | | | $ | 3.96 | | |
| | | | | | | | | | | | |
(2) Does not include signed leases not yet commenced, which are included in percent leased but excluded from annualized rent.
| | | | | | | | | | | |
| | | |
| Recurring Office Capital Expenditures per Rentable Square Foot | | |
| Three months ended December 31, 2023 | $ | 0.06 | | |
| Year ended December 31, 2023 | $ | 0.22 | | |
| | | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Lease Diversification
Total Office Portfolio as of December 31, 2023
| | | | | | | | | | | | | | | | | |
| | | | | |
| Portfolio Tenant Size | |
| | Median | | Average | |
| | | | | |
| Square feet | 2,500 | | 5,300 | |
| | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | Office Leases | | Rentable Square Feet | | Annualized Rent | |
| Square Feet Under Lease | | Number | | Percent | | Amount | | Percent | | Amount | | Percent | |
| | | | | | | | | | | | | | |
| 2,500 or less | | 1,356 | | | 50.3 | % | | 1,956,517 | | | 13.6 | % | | $ | 86,409,633 | | | 12.6 | % | |
| 2,501-10,000 | | 1,019 | | | 37.8 | | | 4,951,267 | | | 34.4 | | | 227,624,126 | | | 33.3 | | |
| 10,001-20,000 | | 209 | | | 7.8 | | | 2,879,834 | | | 20.0 | | | 138,727,510 | | | 20.3 | | |
| 20,001-40,000 | | 81 | | | 3.0 | | | 2,206,570 | | | 15.4 | | | 101,150,861 | | | 14.8 | | |
| 40,001-100,000 | | 29 | | | 1.0 | | | 1,682,300 | | | 11.7 | | | 85,820,710 | | | 12.6 | | |
| Greater than 100,000 | | 2 | | | 0.1 | | | 703,824 | | | 4.9 | | | 43,619,124 | | | 6.4 | | |
| Total for all leases | | 2,696 | | | 100.0 | % | | 14,380,312 | | | 100.0 | % | | $ | 683,351,964 | | | 100.0 | % | |
| | |
| | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Largest Office Tenants
Total Office Portfolio as of December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Tenants paying 1% or more of our aggregate Annualized Rent: | |
| | |
| Tenant | | Number of Leases | | Number of Properties | | Lease Expiration(1) | | Total Leased Square Feet | | Percent of Rentable Square Feet | | Annualized Rent | | Percent of Annualized Rent | |
| | | | | | | | | | | | | | | | |
| Warner Bros. Discovery(2) | | 1 | | 1 | | 2024 | | 456,205 | | 2.5 | % | | $ | 27,435,217 | | | 4.0 | % | |
| William Morris Endeavor(3) | | 2 | | 1 | | 2027 | | 247,768 | | | 1.4 | | | 16,189,523 | | | 2.4 | | |
| UCLA(4) | | 18 | | 10 | | 2023-2033 | | 247,183 | | 1.4 | | | 13,482,083 | | | 2.0 | | |
| Morgan Stanley(5) | | 5 | | 5 | | 2025-2028 | | 144,688 | | | 0.8 | | | 10,661,157 | | | 1.5 | | |
| Equinox Fitness(6) | | 6 | | 5 | | 2029-2038 | | 185,236 | | 1.0 | | | 10,407,103 | | | 1.5 | | |
| Total | | 32 | | 22 | | | | 1,281,080 | | 7.1 | % | | $ | 78,175,083 | | | 11.4 | % | |
| | | | | | | | | | | | | | | | |
______________________________________________________
(1) Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
(2) Square footage (rounded) expires as follows: 456,000 square feet in 2024.
(3) Table reflects lease terms as of 12/31/2023. Subsequent to quarter end, the lease term was extended through 2037. Tenant has the option to terminate 248,000 square feet in 2033.
(4) Square footage (rounded) expires as follows: 1 lease totaling 1,000 square feet in 2023; 3 leases totaling 37,000 square feet in 2024; 4 leases totaling 89,000 square feet in 2025; 5 leases totaling 32,000 square feet in 2026; 1 lease totaling 51,000 square feet in 2027; 1 lease totaling 8,000 square feet in 2028; 1 lease totaling 15,000 square feet in 2029; and 2 leases totaling 14,000 square feet in 2033. Tenant has options to terminate 51,000 square feet in 2025.
(5) Square footage (rounded) expires as follows: 26,000 square feet in 2025; 88,000 square feet in 2027 and 30,000 square feet in 2028.
(6) Square footage (rounded) expires as follows: 34,000 square feet in 2029; 46,000 square feet in 2035; 31,000 square feet in 2037 and 74,000 square feet in 2038.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Industry Diversification
Total Office Portfolio as of December 31, 2023
Percentage of Annualized Rent by Tenant Industry
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| Industry | | Number of Leases | | Annualized Rent as a Percent of Total | |
| | | | | | |
| Legal | | 576 | | | 18.2 | % | |
| Financial Services | | 364 | | | 15.5 | | |
| Entertainment | | 150 | | | 14.1 | | |
| Real Estate | | 315 | | | 12.7 | | |
| Health Services | | 387 | | | 9.2 | | |
| Accounting & Consulting | | 298 | | | 8.9 | | |
| Retail | | 154 | | | 4.9 | | |
| Technology | | 101 | | | 4.9 | | |
| Insurance | | 91 | | | 3.2 | | |
| Educational Services | | 46 | | | 2.8 | | |
| Public Administration | | 73 | | | 2.3 | | |
| Manufacturing & Distribution | | 53 | | | 1.2 | | |
| Advertising | | 33 | | | 1.0 | | |
| Other | | 45 | | | 1.1 | | |
| Total | | 2,686 | | | 100.0 | % | |
| | | | | | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Lease Expirations
Total Office Portfolio as of December 31, 2023
(1) Average of the percentage of leases expiring at December 31, 2020, 2021, and 2022 with the same remaining duration as the leases for the labeled year had at December 31, 2023. Acquisitions are included in the comparable average commencing in the quarter after the acquisition.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Year of Lease Expiration | | Number of Leases | | Rentable Square Feet | | Expiring Square Feet as a Percent of Total | | Annualized Rent at December 31, 2023 | | Annualized Rent as a Percent of Total | | Annualized Rent Per Leased Square Foot(1) | | Annualized Rent Per Leased Square Foot at Expiration(2) | |
| | | | | | | | | | | | | | | | |
| Short Term Leases | | 92 | | | 305,460 | | | 1.7 | % | | $ | 12,085,729 | | | 1.8 | % | | $ | 39.57 | | | $ | 39.45 | | |
| 2024 | | 594 | | | 2,864,277 | | | 15.9 | | | 137,113,780 | | | 20.1 | | | 47.87 | | | 47.42 | | |
| 2025 | | 578 | | | 2,482,316 | | | 13.8 | | | 116,721,428 | | | 17.1 | | | 47.02 | | | 49.11 | | |
| 2026 | | 465 | | | 2,157,587 | | | 12.0 | | | 98,549,202 | | | 14.4 | | | 45.68 | | | 49.55 | | |
| 2027 | | 314 | | | 2,004,294 | | | 11.2 | | | 101,142,084 | | | 14.8 | | | 50.46 | | | 56.37 | | |
| 2028 | | 270 | | | 1,452,991 | | | 8.1 | | | 67,433,092 | | | 9.9 | | | 46.41 | | | 53.31 | | |
| 2029 | | 137 | | | 847,123 | | | 4.7 | | | 40,414,711 | | | 5.9 | | | 47.71 | | | 54.71 | | |
| 2030 | | 76 | | | 714,311 | | | 4.0 | | | 35,791,173 | | | 5.2 | | | 50.11 | | | 61.09 | | |
| 2031 | | 57 | | | 405,546 | | | 2.2 | | | 19,316,010 | | | 2.8 | | | 47.63 | | | 59.90 | | |
| 2032 | | 33 | | | 321,974 | | | 1.8 | | | 16,063,724 | | | 2.4 | | | 49.89 | | | 64.81 | | |
| 2033 | | 52 | | | 348,144 | | | 1.9 | | | 17,324,494 | | | 2.5 | | | 49.76 | | | 68.47 | | |
| Thereafter | | 28 | | | 476,289 | | | 2.7 | | | 21,396,537 | | | 3.1 | | | 44.92 | | | 63.09 | | |
| Subtotal/weighted average | | 2,696 | | | 14,380,312 | | | 80.0 | % | | $ | 683,351,964 | | | 100.0 | % | | $ | 47.52 | | | $ | 52.58 | | |
| Signed leases not commenced | | 417,287 | | | 2.3 | | | | | | | | | | |
| Available | | 3,002,047 | | | 16.7 | | | | | | | | | | |
| Building management use | | 106,908 | | | 0.6 | | | | | | | | | | |
| BOMA adjustment(3) | | | | 74,109 | | | 0.4 | | | | | | | | | | |
| Total/weighted average | | 2,696 | | | 17,980,663 | | | 100.0 | % | | $ | 683,351,964 | | | 100.0 | % | | $ | 47.52 | | | $ | 52.58 | | |
| | | | | | | | | | | | | | | | |
___________________________________________________
(1)Represents annualized rent at December 31, 2023 divided by leased square feet.
(2)Represents annualized rent at expiration divided by leased square feet.
(3)Represents the square footage adjustments for leases that do not reflect BOMA remeasurement.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Lease Expirations - Next Four Quarters
Total Office Portfolio as of December 31, 2023
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | Q1 2024 | | Q2 2024 | | Q3 2024 | | Q4 2024 | |
| | | | | | | | | | |
| Los Angeles | | | | | | | | | |
| Westside | | 200,875 | | 365,744 | | 314,796 | | 463,266 | |
| Valley | | 130,285 | | 237,908 | | 688,362 | | 316,914 | |
| Honolulu | | 23,683 | | 13,672 | | 50,941 | | 57,831 | |
| Expiring Square Feet(1) | | 354,843 | | 617,324 | | 1,054,099 | | 838,011 | |
| | | | | | | | | | |
| Percentage of Portfolio | | 2.0 | % | | 3.4 | % | | 5.9 | % | | 4.7 | % | |
| | | | | | | | | | |
| Los Angeles | | | | | | | | | |
| Westside | | $53.38 | | $54.50 | | $48.90 | | $56.24 | |
| Valley | | $37.76 | | $32.67 | | $51.45 | | $33.12 | |
| Honolulu | | $29.10 | | $33.45 | | $37.22 | | $35.98 | |
| Expiring Rent per Square Foot(2) | | $46.03 | | $45.62 | | $50.00 | | $46.10 | |
| | | | | | | | | | |
________________________________________________________
(1)Includes leases with an expiration date in the applicable period where the space had not been re-leased as of December 31, 2023, other than 305,460 square feet of Short-Term Leases.
(2)Fluctuations in this number primarily reflect the mix of buildings/submarkets involved, as well as the varying terms and square footage of the individual leases expiring. As a result, the data in this table should only be extrapolated with caution. While the following table sets forth data for our underlying submarkets, that data is even more influenced by such issues:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | |
| | | | | Next Four Quarters | |
| | | | | | | | |
| Region | | Submarket | | Expiring SF | | Expiring Rent per SF | |
| | | | | | | | |
| Westside | | Beverly Hills | | 223,662 | | | $61.71 | |
| | Brentwood | | 317,488 | | | $48.89 | |
| | Century City | | 262,955 | | | $57.42 | |
| | Olympic Corridor | | 161,033 | | | $43.77 | |
| | Santa Monica | | 117,548 | | | $52.82 | |
| | Westwood | | 261,995 | | | $55.06 | |
| Valley | | Sherman Oaks/Encino | | 373,080 | | | $38.71 | |
| | Warner Center/Woodland Hills | | 544,184 | | | $30.74 | |
| | Burbank | | 456,205 | | | $60.14 | |
| Honolulu | | Honolulu | | 146,127 | | | $35.06 | |
| | | | | | | | |
| | | | | | | | |
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Office Leasing Activity
Total Office Portfolio during the Three Months ended December 31, 2023
| | | | | | | | | | | |
| | | |
| Net Absorption During Quarter | (0.49)% | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Office Leases Signed During Quarter | Number of Leases | | Rentable Square Feet | | Weighted Average Lease Term (months)1 | |
| | | | | | | |
| New leases | 73 | | 243,247 | | | 53 | |
| Renewal leases | 129 | | 467,101 | | | 57 | |
| All leases | 202 | | 710,348 | | | 55 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| Change in Rental Rates for Office Leases Executed during the Quarter(1) | |
| | | | | | | |
| | Expiring Rate(1) | | New/Renewal Rate(1) | | Percentage Change | |
| | | | | | | |
| Cash Rent | $43.87 | | $41.18 | | (6.1)% | |
| Straight-line Rent | $40.14 | | $41.86 | | 4.3% | |
| | | | | | | |
| | | | | | | | | | | | | | | | | |
| | | | | |
| Average Office Lease Transaction Costs | |
| | | | | |
| | Lease Transaction Costs per SF | | Lease Transaction Costs per Annum | |
| | | | | |
| New leases signed during the quarter | $23.54 | | $6.11 | |
| Renewal leases signed during the quarter | $19.81 | | $5.72 | |
| All leases signed during the quarter | $21.04 | | $5.86 | |
| | | | | |
________________________________________________________________
(1)Change in rental rate and average renewal lease term exclude leases with a term of twelve months or less. Change in rental rate represents the average annual initial stabilized cash and straight-line rents per square foot on new and renewed leases signed during the quarter compared to the prior leases for the same space. Change in rental rate metrics exclude leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated at the landlord's request, leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe the base rent reflects other off-market inducements to the tenant, and other non-comparable leases.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Multifamily Portfolio Summary
as of December 31, 2023
Annualized Rent by Submarket
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| Submarket | | Number of Properties | | Number of Units | | Units as a Percent of Total | |
| | | | | | | | |
| Los Angeles | | | | | | | |
| Santa Monica | | 3 | | | 940 | | | 21 | % | |
| West Los Angeles(1) | | 7 | | | 1,151 | | | 25 | % | |
| Honolulu | | 4 | | | 2,485 | | | 54 | % | |
| Total | | 14 | | | 4,576 | | | 100 | % | |
| | | | | | | | |
| Submarket | | Percent Leased | | Annualized Rent(2) | | Monthly Rent Per Leased Unit | |
| | | | | | | | |
| Los Angeles | | | | | | | |
| Santa Monica | | 98.2 | % | | $ | 48,562,584 | | | $ | 4,394 | | |
| West Los Angeles(3) | | 97.4 | % | | 52,768,992 | | | 4,754 | | |
| Honolulu | | 99.1 | % | | 67,367,508 | | | 2,286 | | |
| Total / Weighted Average | | 98.5 | % | | $ | 168,699,084 | | | $ | 3,268 | | |
| | | | | | | | |
| | | | | | | | | | | |
| | | |
| Recurring Multifamily Capital Expenditures per Unit (2) | | |
| | | |
| Three months ended December 31, 2023 | $ | 195 | | |
| Year ended December 31, 2023 | $ | 747 | | |
| | | |
________________________________________________________________
(1) Excludes units vacated as part of removing Barrington Plaza from the rental market.
(2) The multifamily portfolio also includes 83,018 square feet and annualized rent of $2,992,297 consisting of ancillary retail space at three properties and remaining office space at a building undergoing conversion from office to residential, which are not included in this table.
(3) Excludes impact of Barrington Plaza.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
2024 Guidance(1)
| | | | | |
| Metric | Per Share |
| Net income per common share - diluted | $0.04 to $0.10 |
| FFO per share - fully diluted | $1.64 to $1.70 |
Assumptions
| | | | | | | |
| Metric | Assumption Range | | |
Average Office Occupancy | 78% to 81% | | |
Residential Leased Rate | Essentially fully leased | | |
Same Property Cash NOI Growth | -4.0% to -2.5% | | |
Above/Below Market Net Revenue | $6 to $10 million | | |
Straight-line Revenue | -$3 to $0 million | | |
G & A Expenses | $48 to $52 million | | |
Interest Expense | $218 to $228 million | | |
| Weighted average fully diluted shares outstanding | 202.0 million | | |
________________________________________________________________
(1) All of our assumptions include 100% of our consolidated JVs share, not our pro rata share. Except as disclosed, our guidance does not include the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges or other possible capital markets activities.
The guidance and representative assumptions on this page are forward looking statements, subject to the safe harbor contained at the beginning of this Earnings Package, and reflect our views of current and future market conditions. Ranges represent a set of likely assumptions, but actual results could fall outside the ranges presented. Only a few of our assumptions underlying our guidance are disclosed above, and our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying our guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material. See page 23 for a reconciliation of our Non-GAAP guidance.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Reconciliation of 2024 Non-GAAP Guidance(1)
(Unaudited; in millions, except per share amounts)
Reconciliation of our guided Net income per common share - diluted to FFO per share - fully diluted:
| | | | | | | | | | | |
| Reconciliation of net income attributable to common stockholders to FFO | Low | | High |
|
| Net income attributable to common stockholders | $ | 7.4 | | | $ | 17.4 | |
| Adjustments for depreciation and amortization of real estate assets | 395.0 | | | 385.0 | |
| Adjustments for noncontrolling interests, consolidated JVs and unconsolidated Fund | (71.1) | | | (59.0) | |
| FFO | $ | 331.3 | | | $ | 343.4 | |
|
| Weighted average fully diluted shares outstanding | High | | Low |
| |
| Weighted average shares of common stock outstanding - diluted | 167.2 | | 167.2 |
| Weighted average units in our operating partnership outstanding | 34.8 | | 34.8 |
| Weighted average fully diluted shares outstanding | 202.0 | | 202.0 |
|
| Per share | Low | | High |
|
| Net income per common share - diluted | $ | 0.04 | | | $ | 0.10 | |
| FFO per share - fully diluted | $ | 1.64 | | | $ | 1.70 | |
_____________________________________________
(1) Our guidance does not include the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, if any, or other possible capital markets activities or impairment charges. The reconciliation should be used as an example only, with the numbers presented only as representative assumptions. Ranges represent a set of likely assumptions, but actual results could fall outside the ranges presented.
All assumptions are forward looking statements, subject to the safe harbor contained at the beginning of this Earnings Package, and reflect our views of current and future market conditions. Our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying the guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Adjusted Funds From Operations (AFFO): We calculate AFFO from FFO by (i) eliminating the impact on FFO of straight-line rent; amortization/accretion of acquired above/below market leases; loan costs such as amortization/accretion of loan premiums/discounts; amortization and hedge ineffectiveness of interest rate contracts; amortization/expense of loan costs; non-cash compensation expense, and (ii) subtracting recurring capital expenditures, tenant improvements and capitalized leasing expenses (including adjusting for the effect of such items attributable to our consolidated JVs and our unconsolidated Fund, but not for noncontrolling interests included in our calculation of fully diluted equity). Recurring capital expenditures, tenant improvements and leasing expenses are those required to maintain current revenues once a property has been stabilized, generally excluding those for acquired buildings being stabilized, newly developed space and upgrades to improve revenues or operating expenses or significantly change the use of the space, as well as those resulting from casualty damage or bringing the property into compliance with governmental requirements. We report AFFO because it is a widely reported measure of the performance of equity Real Estate Investments Trusts (REITs), and is also used by some investors to compare our performance with other REITs. However, the National Association of Real Estate Investment Trusts (NAREIT) has not defined AFFO, and other REITs may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to the AFFO of other REITs. AFFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. AFFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
AFFO Payout Ratio: Represents dividends announced divided by the AFFO for that period. We report AFFO Payout Ratio because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to compare our performance with other REITs.
Annualized Rent: Represents annualized cash base rent (i.e. excludes tenant reimbursements, parking and other revenue) before abatement under leases commenced as of the reporting date and expiring after the reporting date (does not include 417,287 square feet with respect to signed leases not yet commenced at December 31, 2023). For our triple net office properties (in Honolulu and one single tenant building in Los Angeles), annualized rent is calculated for triple net leases by adding expense reimbursements and estimates of normal building expenses paid by tenants to base rent. Annualized Rent does not include lost rent recovered from insurance and rent for building management use. Annualized Rent includes rent for our corporate headquarters in Santa Monica. We report Annualized Rent because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine tenant demand and to compare our performance and value with other REITs. We use Annualized Rent to manage and monitor the performance of our office and multifamily portfolios.
Average Office Occupancy: Calculated by averaging the Occupancy Rates on the last day of the current and prior quarter and, for reporting periods longer than a quarter, by averaging the Occupancy Rates for all the quarters in the respective reported period.
Consolidated Portfolio: Includes all of the properties included in our consolidated results, including our consolidated JVs. At December 31, 2023, we own 100% of our consolidated portfolio, except for sixteen office properties totaling 4.2 million square feet and two residential properties with 470 apartments, which we own through four consolidated JVs and in which we own a weighted average interest of approximately 46% based on square footage.
Consolidated Net Debt: Represents our consolidated debt, net of cash and cash equivalents and loan collateral deposited with lenders, and before adding unamortized loan premium and deducting unamortized deferred loan costs. Cash and cash equivalents and loan collateral deposited with lenders are subtracted because they could be used to reduce the debt obligations, and unamortized loan premium and deferred loan costs are not adjusted for because they do not require cash settlement. Consolidated Net Debt is a non-GAAP financial measure for which we believe that consolidated debt is the most directly comparable GAAP financial measure. We report Consolidated Net Debt because some investors use it to evaluate and compare our leverage and financial position with that of other REITs. A limitation associated with using Consolidated Net Debt is that it subtracts cash and cash equivalents and loan collateral deposited with lenders and may therefore imply that there is less debt than the most comparable GAAP financial measure indicates.
Equity Capitalization: Represents our Fully Diluted Shares multiplied by the closing price of our common stock on the New York Stock Exchange as of December 29, 2023.
Fully Diluted Shares: Calculated according to the treasury stock method, based on our diluted outstanding stock and units in our Operating Partnership.
Fund: At December 31, 2023, we owned an interest of approximately 54% in Douglas Emmett Partnership X, LP (Partnership X). The Fund owns two office properties totaling 0.4 million square feet. During 2022 and 2023, we owned an interest of approximately 34% in Partnership X. We purchased an additional 20% interest on December 31, 2023.
Funds From Operations (FFO): We calculate FFO in accordance with the standards established by NAREIT by excluding gains (or losses) on sales of investments in real estate, gains (or losses) from changes in control of investments in real estate, real estate depreciation and amortization (other than amortization of right-of-use assets for which we are the lessee and amortization of deferred loan costs), impairment write-downs of real estate and impairment write-downs of our investment in our unconsolidated Fund from our net income (loss) (including adjusting for the effect of such items attributable to our consolidated JVs and our unconsolidated Fund, but not for noncontrolling interests included in our calculation of fully diluted equity). We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding impacts from changes in the value of our real estate, and to compare our performance with other REITs. FFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. FFO has limitations as a measure of our performance because it excludes depreciation and amortization of real estate, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements and leasing expenses necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Other REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to the FFO of other REITs.
GAAP: Refers to accounting principles generally accepted in the United States.
Joint Ventures (JVs): At December 31, 2023, we owned a weighted average interest of approximately 46% based on square footage in four consolidated JVs. The JVs owned sixteen office properties totaling 4.2 million square feet and two residential properties with 470 apartments. One of the JVs was created in the second quarter of 2022 to purchase a residential property on April 26, 2022. The results of the acquired property are included in our consolidated results from the acquisition date.
Lease Transaction Costs: Represents the weighted average of tenant improvements and leasing commissions for leases signed by us during the quarter, excluding leases substantially negotiated by the seller in the case of acquired properties and leases for tenants relocated from space being taken out of service. We report Lease Transaction Costs because it is a widely reported measure of the performance of equity REITs, and is used by some investors to determine our cash needs and to compare our performance with other REITs. We use Lease Transaction Costs to manage and monitor the performance of our office and multifamily portfolios.
Leased Rate: The percentage leased as of December 31, 2023. Management space is considered leased. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating the Leased Rate. For newly developed buildings going through initial lease up, units are included in both the numerator and denominator as they are leased. We report Leased Rates because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Leased Rate to manage and monitor the performance of our office and multifamily portfolios.
Net Absorption: Represents the change in percentage leased between the last day of the current and prior quarter, excluding a property undergoing conversion from office to residential use, as well as properties acquired or sold during the current quarter. The calculation also excludes the impact of building remeasurement. We report Net Absorption because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Net Absorption to manage and monitor the performance of our office portfolio.
Net Income (Loss) Per Common Share - Diluted: We calculate Net Income (Loss) Per Common Share - Diluted in accordance with GAAP by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common shares and dilutive instruments outstanding during the period using the treasury stock method. We account for unvested Long Term Incentive Plan Unit awards that contain non-forfeitable rights to dividends as participating securities and include these securities in the computation using the two-class method.
Net Operating Income (NOI): We calculate NOI as revenue less operating expenses attributable to the properties that we own and operate. We present two forms of NOI:
•NOI: is calculated by excluding the following from our net income (loss): general and administrative expenses, depreciation and amortization expense, other income, other expenses, income (loss) from unconsolidated Fund, interest expense, gains (losses) on sales of investments in real estate and net income (loss) attributable to noncontrolling interests.
•Cash NOI: is calculated by excluding from NOI our straight-line rent and the amortization/accretion of acquired above/below market leases.
We report NOI because it is a widely recognized measure of the performance of equity REITs, and is used by some investors to identify trends in occupancy rates, rental rates and operating costs and to compare our operating performance with that of other REITs. NOI is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. NOI has limitations as a measure of our performance because it excludes depreciation and amortization expense, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements and leasing expenses necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. NOI should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Other REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to the NOI of other REITs.
Occupancy Rate: We calculate Occupancy Rate by excluding signed leases not yet commenced from the Leased Rate. Management space is considered occupied. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating the Occupancy Rate. For newly developed buildings going through initial lease up, units are included in both the numerator and denominator as they are occupied. We report Occupancy Rate because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Occupancy Rate to manage and monitor the performance of our office and multifamily portfolios.
Operating Partnership: Douglas Emmett Properties, LP
Our Share of Net Debt: We calculate Our Share of Net Debt by: (i) multiplying the principal balance of our consolidated loans and our unconsolidated Fund's loan by our equity interest in the relevant borrower, (ii) subtracting the product of cash and cash equivalents multiplied by our equity interest in the entity that owns the cash or cash equivalents, and (iii) subtracting the product of loan collateral deposited with lenders multiplied by our equity interest in the entity that deposited the collateral with the lender. We subtract cash and cash equivalents and loan collateral deposited with lenders because they could be used to reduce the debt obligations, and do not add unamortized loan premium or subtract unamortized deferred loan costs because they do not require cash settlement. Our Share of Net Debt is a non-GAAP financial measure for which we believe that consolidated debt is the most directly comparable GAAP financial measure. We report Our Share of Net Debt because some investors use it to evaluate and compare our leverage and financial position with that of other REITs.
Pro Forma Enterprise Value: We calculate Pro Forma Enterprise Value by adding Equity Capitalization to Our Share of Net Debt. Pro Forma Enterprise Value is a non-GAAP financial measure for which we believe that consolidated total equity and liabilities is the most directly comparable GAAP financial measure. We report Pro Forma Enterprise Value because some investors use it to evaluate and compare our financial position with that of other REITs.
Recurring Capital Expenditures: Building improvements required to maintain revenues once a property has been stabilized, and excludes capital expenditures for (i) acquired buildings being stabilized, (ii) newly developed space, (iii) upgrades to improve revenues or operating expenses or significantly change the use of the space, (iv) casualty damage and (v) bringing the property into compliance with governmental or lender requirements. We report Recurring Capital Expenditures because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine our cash flow requirements and to compare our performance with other REITs. We use Recurring Capital Expenditures to manage and monitor the performance of our office and multifamily portfolios.
Rental Rate: We report Rental Rate because it is a widely reported measure of the performance of equity REITs, and is used by some investors to compare our performance with other REITs. We use Rental Rate to manage and monitor the performance of our office and multifamily portfolios. We present two forms of Rental Rates:
•Cash Rental Rate: is calculated by dividing the rent paid by the Rentable Square Feet.
•Straight-Line Rental Rate: is calculated by dividing the average rent over the lease term by the Rentable Square Feet.
Rentable Square Feet: Based on the Building Owners and Managers Association (BOMA) measurement. At December 31, 2023, total consists of 14,797,599 leased square feet (including 417,287 square feet with respect to signed leases not commenced), 3,002,047 available square feet, 106,908 building management use square feet and 74,109 square feet of BOMA adjustment on leased space. We report Rentable Square Feet because it is a widely reported measure of the performance and value of equity REITs, and is also used by some investors to compare our performance and value with other REITs. We use Rentable Square Feet to manage and monitor the performance of our office portfolio.
Same Property NOI: To facilitate a comparison of NOI between reported periods, we report NOI for a subset of our properties referred to as our “same properties,” which are properties that have been owned and operated by us during both periods being compared. We exclude from our same property subset properties that during the comparable periods were: (i) acquired, (ii) sold, held for sale, contributed or otherwise removed from our consolidated financial statements, or (iii) that underwent a major repositioning project, were impacted by development activity, or suffered significant casualty loss that we believed significantly affected the properties' operating results. We also exclude rent received from ground leases. Our Same Property NOI is not adjusted for noncontrolling interests in properties which are not wholly owned.
Our same properties for 2023 include all of our Consolidated Portfolio properties, other than: (1) a 493,000 square foot office property in Honolulu affected by development activity, (2) a residential property with 712 apartments and approximately 34,000 square feet of retail space in Los Angeles which we are removing from the residential rental market following a fire in January 2020, (3) a new residential property with 376 apartments in West Los Angeles that we placed into service in 2022, and (4) a residential property with 120 units that we acquired in April 2022.
Our same properties for 2024 include all of our Consolidated Portfolio properties, other than: (1) a 493,000 square foot office property in Honolulu affected by development activity, (2) a residential property with 712 apartments and approximately 34,000 square feet of retail space in Los Angeles which we are removing from the residential rental market following a fire in January 2020, (3) a new residential property with 376 apartments in West Los Angeles that we placed into service in 2022, and (4) a 456,000 square foot single tenant office property in Los Angeles that we plan to reposition when the tenant's lease expires in 2024.
We report Same Property NOI because it is a widely reported measure of the performance and value of equity REITs, and it is used by some investors to: (i) analyze our operating results excluding the impact of properties not being operated on a consistent basis, and (ii) to compare our performance and value with other REITs. We use Same Property NOI to manage and monitor the performance of our office portfolio.
Short Term Leases: Represents leases that expired on or before the reporting date or had a term of less than one year, including hold over tenancies, month to month leases and other short term occupancies.
Total Portfolio: At December 31, 2023, our Total Portfolio included our Consolidated Portfolio and two office properties totaling 0.4 million square feet owned by one unconsolidated Fund in which we owned approximately 54%.
"We" and "our" refers to Douglas Emmett, Inc., our Operating Partnership and its subsidiaries, as well as our consolidated JVs and our unconsolidated Fund.
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Cover Page
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Feb. 06, 2024 |
| Cover [Abstract] |
|
| Document Type |
8-K
|
| Document Period End Date |
Feb. 06, 2024
|
| Entity Registrant Name |
Douglas Emmett, Inc.
|
| Entity Central Index Key |
0001364250
|
| Amendment Flag |
false
|
| Entity Incorporation, State or Country Code |
MD
|
| Entity File Number |
001-33106
|
| Entity Tax Identification Number |
20-3073047
|
| Entity Address, Address Line One |
1299 Ocean Avenue, Suite 1000
|
| Entity Address, City or Town |
Santa Monica
|
| Entity Address, State or Province |
CA
|
| Entity Address, Postal Zip Code |
90401
|
| City Area Code |
310
|
| Local Phone Number |
255-7700
|
| Written Communications |
false
|
| Soliciting Material |
false
|
| Pre-commencement Tender Offer |
false
|
| Pre-commencement Issuer Tender Offer |
false
|
| Title of 12(b) Security |
Common Stock, $0.01 par value per share
|
| Trading Symbol |
DEI
|
| Security Exchange Name |
NYSE
|
| Entity Emerging Growth Company |
false
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