In Brief Axios reports that Meta is eliminating its biggest DEI efforts, effective immediately, including ones that focused on hiring a diverse workforce, training, and sourcing supplies from diverse-owned companies. Its DEI department will also be eliminated.  In a memo leaked to the outlet, Meta said it was making these changes because the “legal and policy landscape surrounding diversity, equity, and inclusion efforts in the United States is changing.”  Meta is not alone: Microsoft and Zoom have rolled ...

Meta is dropping many of its DEI initiatives, BI confirmed.The company sent a memo announcing the changes on Friday.Meta's VP of human resources said the legal and policy landscape in the US was changing.Meta is rolling back its DEI programs, Business Insider has learned.AD The company's vice president of human resources, Janelle Gale, announced the move on its internal communication platform, Workplace, on Friday, which was seen by BI."We will no longer have a team focused on DEI," Gale wrote in the memo. ...

A Costco board member has taken aim at companies rolling back diversity, equity and inclusion (DEI) policies, calling for businesses to “maximize” DEI instead as the wholesaler faces pressure to join the growing list of brands ditching the controversial practice.Jeff Raikes, co-founder of the Raikes Foundation and former CEO of the Bill & Melinda Gates Foundation, has served on Costco’s board of directors since 2008, according to Costco’s corporate website.Raikes and other board members have come under scru ...

Costco appears to be bucking the anti-DEI wave with its defense of its diversity initiatives.Data published last year suggests shareholders largely support diversity efforts.Costco's move challenges the perceived popularity of anti-DEI proposals.Costco's board didn't mince words when it came to supporting the company's stance on diversity, equity, and inclusion — a move that openly challenges the staying power of DEI critics ahead of a new presidential administration that has been critical of the measures.A ...

Core Viewpoint - Costco's board of directors is urging shareholders to vote against a proposal aimed at eliminating the company's diversity, equity, and inclusion (DEI) program, emphasizing that these efforts are integral to their success and ethical standards [1][3]. Summary by Sections Company Position on DEI - The board asserts that their DEI initiatives are essential for attracting and retaining employees, which is critical for the company's success, supported by a workforce of over 300,000 employees globally [1][3]. - Costco's DEI program has been rebranded to "People and Communities," but the board maintains that their commitment to diversity and inclusion remains strong despite external pressures [3][5]. Shareholder Proposal - The proposal from the National Center for Public Policy Research challenges the legality of Costco's DEI program, citing the Supreme Court's ruling in SFFA v. Harvard, which impacts corporate DEI initiatives [1][4]. - The foundation argues that Costco's DEI practices could lead to potential legal risks, claiming that a significant portion of its workforce could be victims of illegal discrimination based on race and sex [3][5]. Legal and Financial Implications - The board contends that the DEI practices are legally appropriate and that the proposal reflects a policy bias rather than a genuine concern for the company's risk management [3][5]. - The potential financial impact of lawsuits related to DEI practices could amount to tens of billions of dollars, according to the proposal, if even a fraction of affected employees were to file claims [3][5].

[Glossary](index=3&type=section&id=Glossary) This section provides a comprehensive list of abbreviations and definitions for key financial and operational terms used throughout the report - This section provides a comprehensive list of abbreviations and definitions for key terms used throughout the report, such as **FFO (Funds From Operations)**, **NOI (Net Operating Income)**, **Same Properties**, and **Leased Rate**, which are essential for understanding the company's financial and operational performance metrics[5](index=5&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) [Forward Looking Statements](index=7&type=section&id=Forward%20Looking%20Statements) This section outlines forward-looking statements, emphasizing that actual results may differ due to various economic and operational risks - The report contains forward-looking statements based on current beliefs and assumptions, which are subject to known and unknown risks and uncertainties. The company cautions investors that **actual results may differ materially from expectations**[10](index=10&type=chunk) - Key risk factors that could affect future results include **adverse economic conditions in Southern California or Honolulu**, **competition**, **decreasing rental rates**, **reduced demand for office space due to remote work**, **increases in interest rates and operating costs**, and **failure to maintain REIT status**[11](index=11&type=chunk) PART I. FINANCIAL INFORMATION [Financial Statements (unaudited)](index=8&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited consolidated financial statements for the nine months ended September 30, 2024, showing a net income of $15.1 million and total assets of $9.45 billion Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$9,451,764** | **$9,644,218** | | Investment in real estate, net | $8,618,766 | $8,753,184 | | Cash and cash equivalents | $544,227 | $523,082 | | **Total Liabilities** | **$5,794,250** | **$5,798,821** | | Secured notes payable, net | $5,513,086 | $5,543,171 | | **Total Equity** | **$3,657,514** | **$3,845,397** | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Total revenues | $741,499 | $761,209 | | Net income (loss) | $15,102 | $(19,932) | | Net income (loss) attributable to common stockholders | $24,405 | $(2,251) | | Net income (loss) per common share – basic and diluted | $0.14 | $(0.02) | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $334,590 | $332,209 | | Net cash used in investing activities | $(156,570) | $(180,373) | | Net cash (used in) provided by financing activities | $(156,947) | $105,557 | - As of September 30, 2024, the company's consolidated portfolio consisted of **68 office properties** (**17.6 million sq. ft.**) and **14 multifamily properties** (**4,476 units**). The total portfolio, including an unconsolidated fund, comprised **70 office properties**[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, noting adverse impacts from inflation and higher interest rates, with FFO decreasing 3.8% YoY and Same Property NOI declining 6.1% YoY Portfolio Occupancy and Leased Rates (Total Portfolio) | Portfolio | Metric | September 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | :--- | | **Office** | Leased Rate | 82.0% | - | | | Occupancy Rate | 79.4% | 81.0% | | **Multifamily** | Leased Rate | 99.1% | - | | | Occupancy Rate | 97.4% | 96.7% | Funds From Operations (FFO) (in thousands) | Period | FFO | Change YoY | | :--- | :--- | :--- | | Three Months Ended Sep 30, 2024 | $86,015 | -3.8% | | Nine Months Ended Sep 30, 2024 | $268,145 | -5.7% | Same Property NOI Change YoY (Q3 2024 vs Q3 2023) | Segment | NOI Change YoY | | :--- | :--- | | Office | (7.7)% | | Multifamily | 2.1% | | **Total** | **(6.1)%** | - The company is converting a **25-story office tower in Honolulu** into **493 rental apartments**. As of September 30, 2024, **91% of the planned units have been delivered** and **98% of those delivered are leased**[122](index=122&type=chunk) - The Barrington Plaza Apartments property was removed from the rental market in Q2 2023 for a multi-year reconstruction, which **negatively impacted revenues and FFO**. A **significant majority of tenants had vacated by September 30, 2024**[124](index=124&type=chunk) - The company expects to meet short-term liquidity needs through **cash on hand ($544.2 million)** and operating cash flow. A **$400.0 million JV loan maturing in December 2024 is currently being refinanced**[163](index=163&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=57&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's primary market risk from interest rate fluctuations on its debt, with 23% being unhedged floating-rate debt - As of September 30, 2024, **23% of the company's consolidated borrowings were unhedged floating-rate debt**[174](index=174&type=chunk) - A **100 basis point increase in the benchmark interest rate** would increase annual interest expense on unhedged floating-rate borrowings by **$13.0 million**[174](index=174&type=chunk) - The company utilizes interest rate swaps and caps to mitigate risk. **62% of debt is fixed or swap-fixed**, and **15% is capped**. The **maximum potential annual interest expense increase on capped-rate debt is $15.8 million**[173](index=173&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal controls - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective as of September 30, 2024**[175](index=175&type=chunk) - **No changes in internal control over financial reporting occurred during the quarter** that have materially affected, or are reasonably likely to materially affect, internal controls[175](index=175&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=58&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material adverse legal proceedings, excluding ordinary routine litigation - The company is not currently a party to any legal proceedings that it believes would have a **materially adverse effect on its business**[177](index=177&type=chunk) [Risk Factors](index=58&type=section&id=Item%201A.%20Risk%20Factors) The company states no material changes to the risk factors disclosed in its 2023 Annual Report on Form 10-K - There are **no material changes from the risk factors disclosed in the 2023 Annual Report on Form 10-K**[178](index=178&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=58&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds for the period - **None**[178](index=178&type=chunk) [Defaults Upon Senior Securities](index=58&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **None**[178](index=178&type=chunk) [Mine Safety Disclosures](index=58&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[178](index=178&type=chunk) [Other Information](index=58&type=section&id=Item%205.%20Other%20Information) The company reports no other material information and no director or officer trading arrangement adoptions or terminations in Q3 2024 - During Q3 2024, **no director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement**[178](index=178&type=chunk) [Exhibits](index=59&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The exhibits include **CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act**, as well as **Inline XBRL data files**[180](index=180&type=chunk) [Signatures](index=60&type=section&id=SIGNATURES) The report was duly signed on November 8, 2024, by Jordan L. Kaplan, President and CEO, and Peter D. Seymour, CFO - The report was duly signed on **November 8, 2024**, by **Jordan L. Kaplan, President and CEO**, and **Peter D. Seymour, CFO**[183](index=183&type=chunk)

Douglas Emmett, Inc. (NYSE:DEI) Q3 2024 Earnings Conference Call November 5, 2024 2:00 PM ET Company Participants Stuart McElhinney - Vice President of Investor Relations Jordan Kaplan - President & Chief Executive Officer Kevin Crummy - Chief Investment Officer Peter Seymour - Chief Financial Officer Conference Call Participants Blaine Heck - Wells Fargo & Company Alexander Goldfarb - Piper Sandler Companies Michael Griffin - Citigroup Inc. Jeffrey Spector - Bank of America Steve Sakwa - Evercore Inc. Rich ...

For the quarter ended September 2024, Douglas Emmett (DEI) reported revenue of $250.75 million, down 1.8% over the same period last year. EPS came in at $0.43, compared to -$0.08 in the year-ago quarter.The reported revenue represents a surprise of +2.44% over the Zacks Consensus Estimate of $244.78 million. With the consensus EPS estimate being $0.41, the EPS surprise was +4.88%.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall Street expectations to dete ...

Douglas Emmett (DEI) came out with quarterly funds from operations (FFO) of $0.43 per share, beating the Zacks Consensus Estimate of $0.41 per share. This compares to FFO of $0.45 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 4.88%. A quarter ago, it was expected that this real estate investment trust would post FFO of $0.43 per share when it actually produced FFO of $0.46, delivering a surprise of 6.98%.Over the last four quarte ...

[Executive Summary](index=1&type=section&id=Executive%20Summary) [Summary of Q3 2024 Results](index=1&type=section&id=Summary%20of%20Q3%202024%20Results) The company experienced a slight revenue decrease but a significant increase in net income for Q3 2024, with FFO declining and AFFO remaining stable - **The company owns and operates 18.0 million square feet** of Class A office properties and **4,476 apartment units** in premier coastal submarkets of Los Angeles and Honolulu[1](index=1&type=chunk) Key Financial Metrics for Q3 2024 | Metric | Q3 2024 | Q3 2023 | Change | | :----- | :------ | :------ | :----- | | Revenues | $250.8 million | N/A | -1.8% | | Net Income (loss) attributable to common stockholders | $4.6 million | N/A | +134.6% | | Net Income per diluted share | $0.03 | N/A | N/A | | FFO | $86.0 million | N/A | -3.8% | | FFO per fully diluted share | $0.43 | N/A | N/A | | AFFO | $68.8 million | N/A | +0.2% | | Same property Cash NOI | $139.4 million | N/A | -5.7% | [Leasing Highlights](index=2&type=section&id=Leasing%20Highlights) Q3 2024 saw positive office absorption and a high volume of leases, increasing the portfolio leased rate, while multifamily occupancy remained strong - **Approximately 90,000 square feet of positive absorption in Q3 drove a 50 basis point increase in the portfolio leased rate to 82%**[2](index=2&type=chunk) - **Signed 236 office leases covering 1,003,000 square feet**, including **353,000 square feet** of new leases and **650,000 square feet** of renewal leases[2](index=2&type=chunk) - Comparing signed office leases to expiring leases for the same space, **straight-line rents increased by 0.4%**, while **cash rents decreased by 11.2%**. The **multifamily portfolio remains essentially fully leased at 99.1%**[3](index=3&type=chunk) [Balance Sheet & Dividends](index=2&type=section&id=Balance%20Sheet%20%26%20Dividends) The company maintained a strong cash position and paid a consistent quarterly dividend in Q3 2024 - **Cash and cash equivalents totaled $544.2 million** at quarter end[4](index=4&type=chunk) - A **quarterly cash dividend of $0.19 per common share ($0.76 annualized) was paid** on October 16, 2024[4](index=4&type=chunk) [2024 Guidance Update](index=2&type=section&id=2024%20Guidance%20Update) Based on strong Q3 performance, the company has raised its 2024 guidance for net income and FFO per fully diluted share - **Increased guidance for Net Income Per Common Share - Diluted to be between $0.10 and $0.14**[5](index=5&type=chunk) - **Increased guidance for FFO per fully diluted share to be between $1.69 and $1.73 per share**[5](index=5&type=chunk) [COMPANY OVERVIEW](index=3&type=section&id=COMPANY%20OVERVIEW) [Corporate Data](index=4&type=section&id=Corporate%20Data) As of Q3 2024, the company's portfolio includes 68 office properties and 14 multifamily properties, with a market capitalization of $3.56 billion and net debt of $4.98 billion Consolidated Portfolio Overview as of September 30, 2024 | Metric | Office Portfolio (Consolidated) | Multifamily Portfolio | Total | | :----- | :------------------------------ | :-------------------- | :---- | | Properties | 68 | 14 | 70 | | Rentable square feet (in thousands) | 17,595 | N/A | 17,981 | | Leased rate | 82.0% | 99.1% | 82.0% | | Occupancy rate | 79.4% | N/A | 79.4% | Corporate Financial Data as of September 30, 2024 | Metric | Amount | | :----- | :----- | | Fully Diluted Shares outstanding as of September 30, 2024 | 202,435 | | Common stock closing price per share (NYSE:DEI) | $17.57 | | Equity Capitalization | $3,556,790 | | Consolidated Debt principal (in thousands) | $5,535,368 | | Less: cash and cash equivalents and loan collateral deposits | ($558,148) | | Net Debt (Consolidated) | $4,977,220 | | Our Share of Net Debt | $4,185,618 | | Pro Forma Enterprise Value | $7,742,408 | | Our Share of Net Debt to Pro Forma Enterprise Value | 54% | | AFFO Payout Ratio (Three months ended September 30, 2024) | 56.0% | [Property Map](index=5&type=section&id=Property%20Map) The company's property map highlights its concentration in Los Angeles and Honolulu, featuring both office and residential assets - The company's Los Angeles portfolio includes **52 office properties** and **10 residential properties** across the Westside and Valley regions[16](index=16&type=chunk) - In Honolulu, the company operates **2 office properties** and **4 residential properties**[16](index=16&type=chunk) [Board of Directors and Executive Officers](index=5&type=section&id=Board%20of%20Directors%20and%20Executive%20Officers) The company is led by a ten-member Board of Directors and a five-member Executive Officer team, including CEO Jordan L. Kaplan - The **Board of Directors consists of 10 members**, including Chairman Dan A. Emmett and CEO Jordan L. Kaplan[18](index=18&type=chunk) - The **Executive Officers team includes Jordan L. Kaplan (CEO and President), Kenneth M. Panzer (COO), Peter D. Seymour (CFO), Kevin A. Crummy (CIO), and Michele L. Aronson (EVP, General Counsel and Secretary)**[19](index=19&type=chunk) [FINANCIAL RESULTS](index=6&type=section&id=FINANCIAL%20RESULTS) [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2024, total assets decreased by 2.0% to $9.45 billion, while total equity decreased by 4.9% to $3.66 billion Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2024 | Dec 31, 2023 | Change | | :----- | :----------- | :----------- | :----- | | Total Assets | $9,451,764 | $9,644,218 | -2.0% | | Investment in real estate, net | $8,618,766 | $8,753,184 | -1.5% | | Cash and cash equivalents | $544,227 | $523,082 | +4.0% | | Total Liabilities | $5,794,250 | $5,798,821 | -0.1% | | Secured notes payable, net | $5,513,086 | $5,543,171 | -0.5% | | Total Equity | $3,657,514 | $3,845,397 | -4.9% | [Consolidated Operating Results](index=7&type=section&id=Consolidated%20Operating%20Results) For Q3 2024, total revenues decreased by 1.8%, but net income attributable to common stockholders significantly improved to $4.6 million from a prior-year loss Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Change (YoY) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change (YoY) | | :----- | :------------------------------ | :------------------------------ | :----------- | :----------------------------- | :----------------------------- | :----------- | | Total revenues | $250,753 | $255,409 | -1.8% | $741,499 | $761,209 | -2.6% | | Total operating expenses | $202,055 | $226,735 | -10.9% | $582,553 | $642,200 | -9.2% | | Net income (loss) attributable to common stockholders | $4,618 | ($13,362) | +134.6% | $24,405 | ($2,251) | N/A | | Net income (loss) per common share - basic and diluted | $0.03 | ($0.08) | N/A | $0.14 | ($0.02) | N/A | | Dividends declared per common share | $0.19 | $0.19 | 0.0% | $0.57 | $0.57 | 0.0% | [Funds From Operations & Adjusted Funds From Operations](index=8&type=section&id=Funds%20From%20Operations%20%26%20Adjusted%20Funds%20From%20Operations) For Q3 2024, FFO decreased by 3.8% to $86.0 million, while AFFO saw a slight increase of 0.2% to $68.8 million Funds From Operations and Adjusted Funds From Operations (in thousands) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Change (YoY) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | Change (YoY) | | :----- | :------------------------------ | :------------------------------ | :----------- | :----------------------------- | :----------------------------- | :----------- | | FFO | $86,015 | $89,381 | -3.8% | $268,145 | $284,425 | -5.8% | | FFO per share - fully diluted | $0.43 | $0.45 | -4.4% | $1.33 | $1.40 | -5.0% | | AFFO | $68,843 | $68,706 | +0.2% | $217,794 | $224,963 | -3.2% | [Same Property Statistics & Net Operating Income (NOI)](index=10&type=section&id=Same%20Property%20Statistics%20%26%20Net%20Operating%20Income%20(NOI)) Same property office metrics showed decreased leased and occupied rates, while multifamily rates increased, with mixed NOI performance across segments Same Property Office Statistics | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | Number of properties | 66 | 66 | 0 | | Rentable square feet (in thousands) | 17,105 | 17,105 | 0 | | Ending % leased | 81.5% | 83.3% | -1.8 pp | | Ending % occupied | 78.8% | 81.3% | -2.5 pp | | Quarterly average % occupied | 79.1% | 81.8% | -2.7 pp | Same Property Multifamily Statistics | Metric | 2024 | 2023 | Change | | :----- | :--- | :--- | :----- | | Number of properties | 11 | 11 | 0 | | Number of units | 3,569 | 3,569 | 0 | | Ending % leased | 99.2% | 98.8% | +0.4 pp | Same Property Net Operating Income (NOI) (in thousands) | Metric | 2024 | 2023 | % Favorable (Unfavorable) | | :----- | :--- | :--- | :------------------------ | | Office NOI | $118,110 | $127,904 | (7.7)% | | Multifamily NOI | $24,507 | $24,013 | 2.1% | | Total NOI | $142,617 | $151,917 | (6.1)% | | Office Cash NOI | $115,792 | $125,202 | (7.5)% | | Multifamily Cash NOI | $23,561 | $22,617 | 4.2% | | Total Cash NOI | $139,353 | $147,819 | (5.7)% | [Same Property NOI Reconciliation](index=11&type=section&id=Same%20Property%20NOI%20Reconciliation) The reconciliation details adjustments from net income to Same Property NOI, clarifying property-level operating performance by isolating it from corporate overhead and non-cash items - **Net income (loss) attributable to common stockholders is reconciled to NOI by adjusting for noncontrolling interests, general and administrative expenses, depreciation and amortization, other income/expenses, income from unconsolidated Fund, and interest expense**[27](index=27&type=chunk) - **Same Property NOI is derived by further adjusting for non-comparable office and multifamily revenues and expenses, and non-cash adjustments related to the definition of NOI**[28](index=28&type=chunk) [Financial Data for JVs & Fund](index=12&type=section&id=Financial%20Data%20for%20JVs%20%26%20Fund) The company manages four consolidated Joint Ventures and one unconsolidated Fund, contributing significantly to overall Cash NOI - The company manages four consolidated JVs, owning a **weighted average interest of approximately 46%**, which hold **16 office properties (4.2 million sq ft)** and **2 residential properties (470 apartments)**[30](index=30&type=chunk) - The **company's ownership interest in one unconsolidated Fund increased to 74% in February 2024**; the Fund owns **two Class A office properties (0.4 million sq ft)**[30](index=30&type=chunk) Our Share of Cash NOI from Wholly-Owned Properties, JVs, and Fund | Segment | Three Months Ended Sep 30, 2024 (in thousands) | Nine Months Ended Sep 30, 2024 (in thousands) | | :------ | :--------------------------------------------- | :-------------------------------------------- | | Wholly-Owned Properties | $114,635 | $353,474 | | Consolidated JVs | $18,599 | $57,569 | | Unconsolidated Fund | $2,361 | $6,999 | [Loans](index=12&type=section&id=Loans) As of September 30, 2024, the company reported a total consolidated loan principal balance of $5.54 billion, with a weighted average fixed interest rate of 2.68% for fixed-rate loans - **Total consolidated loans principal balance is $5,535,368 thousand**, with **'Our Share'** being **$4,521,618 thousand**[31](index=31&type=chunk) - The unconsolidated Fund has a loan principal of **$115,000 thousand**, with **'Our Share'** being **$85,080 thousand**[31](index=31&type=chunk) - During September 2024, the **company paid down $34.0 million on a loan** to meet a minimum financial threshold for an extension option[31](index=31&type=chunk) Fixed Interest Rate Consolidated Loans (in billions) | Metric | Value | | :----- | :---- | | Principal balance (in billions) | $3.43 | | Weighted average remaining life (including extension options) | 3.4 years | | Weighted average remaining fixed interest period | 1.2 years | | Weighted average annual interest rate | 2.68% | [PORTFOLIO DATA](index=13&type=section&id=PORTFOLIO%20DATA) [Office Portfolio Summary](index=14&type=section&id=Office%20Portfolio%20Summary) As of Q3 2024, the office portfolio comprises 70 properties with 17.98 million rentable square feet, 82.0% leased, primarily concentrated in Westside and Valley regions Office Portfolio Summary by Region as of September 30, 2024 | Region | Number of Office Properties | Our Rentable Square Feet | Our Market Share | Our Percent Leased | Annualized Rent | Annualized Rent Per Leased Square Foot | | :----- | :-------------------------- | :----------------------- | :--------------- | :----------------- | :-------------- | :------------------------------------- | | Westside | 52 | 9,999,051 | 35.1% | 81.4% | $443,470,745 | $57.37 | | Valley | 16 | 6,790,777 | 44.3% | 81.2% | $194,125,342 | $36.26 | | Honolulu | 2 | 1,190,835 | 22.3% | 92.0% | $37,155,117 | $36.11 | | Total / Weighted Average | 70 | 17,980,663 | 37.7% | 82.0% | $674,751,204 | $47.81 | Table Data | Period | Amount | | :----- | :----- | | Three months ended September 30, 2024 | $0.07 | | Nine months ended September 30, 2024 | $0.16 | [Office Lease Diversification](index=15&type=section&id=Office%20Lease%20Diversification) The office portfolio demonstrates strong lease diversification with a median tenant size of 2,400 square feet, ensuring a balanced distribution of rentable area and annualized rent - The **median office lease size is 2,400 square feet**, with an **average of 5,300 square feet** across **2,661 office leases**[36](index=36&type=chunk)[37](index=37&type=chunk) Office Lease Diversification by Square Footage | Square Feet Under Lease | Number of Leases | Percent of Leases | Rentable Square Feet | Percent of Rentable Square Feet | Annualized Rent | Percent of Annualized Rent | | :---------------------- | :--------------- | :---------------- | :------------------- | :------------------------------ | :-------------- | :------------------------- | | 2,500 or less | 1,354 | 50.9% | 1,953,576 | 13.8% | $87,017,833 | 12.9% | | 2,501-10,000 | 994 | 37.4% | 4,849,175 | 34.5% | $223,599,782 | 33.2% | | 10,001-20,000 | 202 | 7.5% | 2,782,313 | 19.6% | $132,332,305 | 19.5% | | 20,001-40,000 | 82 | 3.1% | 2,249,608 | 15.9% | $106,740,289 | 15.8% | | 40,001-100,000 | 27 | 1.0% | 1,573,091 | 11.2% | $80,588,169 | 12.0% | | Greater than 100,000 | 2 | 0.1% | 703,973 | 5.0% | $44,472,826 | 6.6% | | Total | 2,661 | 100.0% | 14,111,736 | 100.0% | $674,751,204 | 100.0% | [Largest Office Tenants](index=16&type=section&id=Largest%20Office%20Tenants) The top six largest office tenants collectively account for 7.6% of rentable square feet and 12.5% of annualized rent, with Warner Bros. Discovery being the largest Largest Office Tenants by Annualized Rent | Tenant | Total Leased Square Feet | Percent of Rentable Square Feet | Annualized Rent | Percent of Annualized Rent | | :----- | :----------------------- | :------------------------------ | :-------------- | :------------------------- | | Warner Bros. Discovery | 456,205 | 2.5% | $27,787,941 | 4.1% | | William Morris Endeavor | 247,768 | 1.4% | $16,684,885 | 2.5% | | UCLA | 200,854 | 1.1% | $11,814,159 | 1.7% | | Morgan Stanley | 144,688 | 0.8% | $10,999,565 | 1.6% | | Equinox Fitness | 185,236 | 1.0% | $10,589,285 | 1.6% | | NKSFB | 135,066 | 0.8% | $6,756,412 | 1.0% | | Total | 1,369,817 | 7.6% | $84,632,247 | 12.5% | - **Warner Bros. Discovery's lease for 456,205 square feet expired on September 30, 2024**[39](index=39&type=chunk) [Office Industry Diversification](index=17&type=section&id=Office%20Industry%20Diversification) The office portfolio exhibits broad industry diversification, with Legal, Financial Services, and Entertainment sectors representing the largest portions of annualized rent Office Industry Diversification by Annualized Rent | Industry | Number of Leases | Annualized Rent as a Percent of Total | | :------- | :--------------- | :------------------------------------ | | Legal | 570 | 18.7% | | Financial Services | 359 | 15.2% | | Entertainment | 138 | 13.8% | | Real Estate | 312 | 12.6% | | Health Services | 395 | 9.5% | | Accounting & Consulting | 293 | 8.7% | | Retail | 156 | 5.1% | | Technology | 92 | 4.8% | | Insurance | 88 | 3.0% | | Educational Services | 42 | 2.7% | | Public Administration | 71 | 2.4% | | Manufacturing & Distribution | 58 | 1.4% | | Advertising | 34 | 1.0% | | Other | 53 | 1.1% | | Total | 2,661 | 100.0% | [Office Lease Expirations](index=18&type=section&id=Office%20Lease%20Expirations) The office portfolio has a staggered lease expiration schedule, with 13.3% of rentable square feet expiring in 2025 and 12.7% in 2026 Office Lease Expirations by Year | Year of Lease Expiration | Number of Leases | Rentable Square Feet | Expiring Square Feet as a Percent of Total | Annualized Rent at September 30, 2024 | Annualized Rent as a Percent of Total | | :----------------------- | :--------------- | :------------------- | :----------------------------------------- | :------------------------------------ | :------------------------------------ | | 2024 | 120 | 413,842 | 2.3% | $17,321,911 | 2.6% | | 2025 | 623 | 2,387,341 | 13.3% | $113,211,791 | 16.8% | | 2026 | 524 | 2,284,594 | 12.7% | $105,403,039 | 15.6% | | 2027 | 430 | 2,038,230 | 11.3% | $96,689,285 | 14.3% | | 2028 | 308 | 1,545,485 | 8.6% | $73,066,555 | 10.8% | | 2029 | 225 | 1,249,465 | 6.9% | $56,198,500 | 8.3% | | 2030 | 114 | 1,041,493 | 5.8% | $53,645,918 | 8.0% | | 2031 | 84 | 578,343 | 3.2% | $28,068,169 | 4.2% | | 2032 | 47 | 467,830 | 2.6% | $21,704,740 | 3.2% | | 2033 | 50 | 354,678 | 2.0% | $18,016,788 | 2.7% | | Thereafter | 60 | 998,785 | 5.6% | $52,095,106 | 7.7% | | Subtotal/weighted average | 2,661 | 14,111,736 | 78.5% | $674,751,204 | 100.0% | [Office Lease Expirations – Next Four Quarters](index=19&type=section&id=Office%20Lease%20Expirations%20%E2%80%93%20Next%20Four%20Quarters) Over the next twelve months, 1,941,320 square feet, representing 10.7% of the portfolio, are set to expire, with the largest portion in Q3 2025 Office Lease Expirations for the Next Twelve Months | Metric | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Next Twelve Months | | :----- | :------ | :------ | :------ | :------ | :----------------- | | Expiring Square Feet | 413,842 | 364,453 | 507,885 | 655,140 | 1,941,320 | | Percentage of Portfolio | 2.3% | 2.0% | 2.8% | 3.6% | 10.7% | | Expiring Rent per Square Foot | $42.03 | $43.85 | $47.52 | $52.00 | $47.17 | [Office Leasing Activity](index=20&type=section&id=Office%20Leasing%20Activity) Q3 2024 saw positive net office absorption of 0.50%, with 1,003,091 square feet leased, though cash rents decreased by 11.2% compared to expiring rates - **Net absorption during Q3 2024 was 0.50%**[47](index=47&type=chunk) Office Leasing Activity by Lease Type | Lease Type | Number of Leases | Rentable Square Feet | Weighted Average Lease Term (months) | | :--------- | :--------------- | :------------------- | :----------------------------------- | | New leases | 92 | 353,235 | 55 | | Renewal leases | 144 | 649,856 | 59 | | All leases | 236 | 1,003,091 | 57 | Office Lease Rent Changes (YoY) | Metric | Expiring Rate | New/Renewal Rate | Percentage Change | | :----- | :------------ | :--------------- | :---------------- | | Cash Rent | $48.99 | $43.50 | (11.2)% | | Straight-line Rent | $44.53 | $44.69 | 0.4% | Office Lease Transaction Costs | Lease Type | Lease Transaction Costs per SF | Lease Transaction Costs per Annum | | :--------- | :----------------------------- | :-------------------------------- | | New leases | $29.14 | $6.57 | | Renewal leases | $24.14 | $6.09 | | All leases | $25.86 | $6.27 | [Multifamily Portfolio Summary](index=21&type=section&id=Multifamily%20Portfolio%20Summary) As of Q3 2024, the multifamily portfolio consists of 14 properties and 4,476 units, with a 99.1% leased rate, primarily in Honolulu and Los Angeles Multifamily Portfolio Summary by Region as of September 30, 2024 | Region | Number of Properties | Number of Units | Units as a Percent of Total | Percent Leased | Annualized Rent | Monthly Rent Per Leased Unit | | :----- | :------------------- | :-------------- | :-------------------------- | :------------- | :-------------- | :--------------------------- | | Santa Monica | 3 | 940 | 21% | 99.1% | $50,419,296 | $4,518 | | West Los Angeles | 7 | 1,049 | 23% | 98.1% | $54,350,928 | $4,808 | | Honolulu | 4 | 2,487 | 56% | 99.4% | $69,137,436 | $2,336 | | Total / Weighted Average | 14 | 4,476 | 100% | 99.1% | $173,907,660 | $3,341 | Multifamily Recurring Capital Expenditures per Unit | Period | Amount | | :----- | :----- | | Three months ended September 30, 2024 | $198 | | Nine months ended September 30, 2024 | $573 | [GUIDANCE](index=22&type=section&id=GUIDANCE) [2024 Guidance](index=22&type=section&id=2024%20Guidance) The company has updated its 2024 guidance, narrowing office occupancy and revising Same Property Cash NOI Growth, while raising net income and FFO per share projections 2024 Guidance for Per Share Metrics | Metric | Per Share | | :----- | :-------- | | Net income per common share - diluted | $0.10 to $0.14 | | FFO per share - fully diluted | $1.69 to $1.73 | 2024 Guidance Assumptions | Metric | Assumption Range | Compared to Prior Assumption | | :----- | :--------------- | :--------------------------- | | Average Office Occupancy | 79% to 80% | Narrowed | | Residential Leased Rate | Essentially fully leased | Unchanged | | Same Property Cash NOI Growth | -3.0% to -1.5% | Revised | | Above/Below Market Net Revenue | $6 to $10 million | Unchanged | | Straight-line Revenue | $2 to $5 million | Unchanged | | G & A Expenses | $46 to $50 million | Revised | | Interest Expense | $225 to $235 million | Unchanged | | Weighted average fully diluted shares outstanding | 202.0 million | Unchanged | [Reconciliation of 2024 Non-GAAP Guidance](index=23&type=section&id=Reconciliation%20of%202024%20Non-GAAP%20Guidance) The reconciliation illustrates adjustments from net income to FFO, projecting FFO between $341.4 million and $349.5 million for 2024 Reconciliation of 2024 Net Income to FFO (in millions) | Metric | Low | High | | :----- | :-- | :--- | | Net income attributable to common stockholders | $17.4 | $24.1 | | Adjustments for depreciation and amortization of real estate assets | $395.0 | $385.0 | | Adjustments for noncontrolling interests, consolidated JVs and unconsolidated Fund | ($71.0) | ($59.6) | | FFO | $341.4 | $349.5 | 2024 Per Share Guidance Reconciliation | Metric | Low | High | | :----- | :-- | :--- | | Net income per common share - diluted | $0.10 | $0.14 | | FFO per share - fully diluted | $1.69 | $1.73 | [DEFINITIONS](index=23&type=section&id=DEFINITIONS) [Adjusted Funds From Operations (AFFO)](index=23&type=section&id=Adjusted%20Funds%20From%20Operations%20(AFFO)) AFFO is a non-GAAP measure derived from FFO by adjusting for non-cash items and subtracting recurring capital expenditures, providing a clearer view of distributable cash flow - **AFFO is calculated** from FFO by eliminating the impact of straight-line rent, amortization/accretion of acquired leases, loan costs, non-cash compensation expense, and subtracting recurring capital expenditures, tenant improvements, and capitalized leasing expenses[61](index=61&type=chunk) [Annualized Rent](index=24&type=section&id=Annualized%20Rent) Annualized Rent represents the annualized cash base rent from commenced leases, including expense reimbursements for triple net office properties, used to assess tenant demand - **Annualized Rent** represents annualized cash base rent (excluding tenant reimbursements, parking, and other revenue) under leases commenced as of the reporting date and expiring thereafter[63](index=63&type=chunk) - For triple net office properties, **annualized rent includes expense reimbursements and estimates of normal building expenses paid by tenants**[63](index=63&type=chunk) [Funds From Operations (FFO)](index=25&type=section&id=Funds%20From%20Operations%20(FFO)) FFO is a non-GAAP financial measure calculated according to NAREIT standards, adjusting net income by excluding real estate gains/losses, depreciation, and impairment write-downs - **FFO is calculated** in accordance with NAREIT standards by excluding gains (or losses) on sales of investments in real estate, real estate depreciation and amortization, and impairment write-downs from net income (loss)[69](index=69&type=chunk) [Net Operating Income (NOI)](index=26&type=section&id=Net%20Operating%20Income%20(NOI)) NOI is a non-GAAP measure representing property revenue less operating expenses, excluding corporate overhead and non-property specific items, with Cash NOI further excluding non-cash rent adjustments - **NOI is calculated** as revenue less operating expenses attributable to the properties, excluding general and administrative expenses, depreciation and amortization, other income/expenses, income from unconsolidated Fund, interest expense, and noncontrolling interests[76](index=76&type=chunk) - **Cash NOI is calculated** by further excluding straight-line rent and the amortization/accretion of acquired above/below market leases from NOI[76](index=76&type=chunk) [Same Property NOI](index=27&type=section&id=Same%20Property%20NOI) Same Property NOI includes only properties consistently owned and operated across comparable periods, facilitating a clearer comparison of operating results by removing non-comparable assets - **Same Property NOI includes** properties owned and operated by the company during both periods being compared, excluding those acquired, sold, undergoing major repositioning, impacted by development, or suffering significant casualty loss[82](index=82&type=chunk) - For 2024, **same properties exclude** a Honolulu office property affected by development, a Los Angeles residential property removed from the rental market due to fire, a new residential property, and a single tenant office property planned for repositioning[82](index=82&type=chunk)