[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)

Group 1 - Peloton Interactive, Inc. is focusing on Diversity, Equity, and Inclusion (DEI) in its hiring practices, as evidenced by the employment of Ash Pryor as a rowing instructor over Olympic gold medalist Nick Mead [2][4][5] - The average earnings for Peloton instructors range from $100,000 to $500,000 annually, with top instructors potentially earning up to $1 million when including bonuses and endorsements [2][3] - Peloton's recent advertising strategy has shifted, moving away from exclusively featuring straight white males, as seen in their new campaign featuring NFL players JJ and TJ Watt [5][6] Group 2 - Peloton's shares surged nearly 28% following an earnings beat and the appointment of new CEO Peter Stern, who has a background with Ford Motor Company and was a co-founder of Apple Fitness+ [7] - Peter Stern has been a Peloton user since 2016, indicating a personal connection to the brand [7] - The company has seen significant trading activity, with options trades on Peloton stock yielding a 250% gain for some investors [10]

Core Viewpoint - Harley-Davidson has revised its full-year revenue forecast downward due to persistent inflation and weak demand following a consumer boycott that led to the abandonment of diversity, equity, and inclusion (DEI) programs [1][2]. Financial Performance - Sales in North America decreased by 10%, with global shipments expected to decline by 16% to 17%, compared to a previous forecast of a 7% to 10% decline [1]. - The company now projects annual retail sales to drop by 6% to 8%, a significant change from the earlier expectation of flat sales to an increase of 3% [1]. - Revenue from motorcycles and related products is anticipated to decrease by 14% to 16%, compared to a prior estimate of a decline of 5% to 9% [1]. Corporate Policy Changes - Harley-Davidson has renounced its DEI initiatives, stating that it has not operated a DEI function since April 2024 and does not have hiring quotas or supplier diversity spend goals [2][3]. - The company is reassessing employee training initiatives and sponsorships, focusing on its loyal customer base and the sport of motorcycling [3]. Market Reaction - Following the announcement of the revised forecast and policy changes, Harley-Davidson's shares fell over 3% but rebounded by about 2% the next trading day. The stock is down approximately 15% over the last month and 11% year-to-date [2].

Core Viewpoint - Douglas Emmett, Inc. has performed in line with the Vanguard Real Estate Index Fund ETF Shares in 2024, achieving a total return of approximately 12.7% compared to the benchmark's 12.3% gain, leading to a recommendation for a buy rating due to attractive valuations and potential benefits from monetary policy normalization [2][12]. Company Overview - Douglas Emmett is primarily an office REIT with a growing multifamily exposure, where as of June 30, 2024, offices accounted for 80% of total annual rent and multifamily for 20% [3]. - The REIT is focused on California (88% of annual rent) and Hawaii (12%) [3]. Operational Overview - In Q2 2024, Douglas Emmett reported a Funds From Operations (FFO) of $0.46 per share, a decrease of 4% year-over-year, influenced by office portfolio weakness and increased interest expenses [4]. - The leased rate for the office portfolio was 80%, down 2.9% year-over-year, while the multifamily portfolio was 99% leased, down 0.2% year-over-year [4]. Updated 2024 Guidance - The company narrowed its FFO outlook to $1.65-1.69 per share, with Q2 results benefiting from tax refunds, while utility expenses are expected to rise in Q3 [5]. - At the midpoint of $1.67 per share, the FFO multiple stands at 9.5x, which is considered attractive for a commercial REIT with significant multifamily exposure [5]. Debt Position - As of Q2 2024, Douglas Emmett had a net debt of $4.2 billion, representing 58% of its $7.3 billion enterprise value, which is relatively high for a commercial REIT [6]. - Floating rate debt constitutes 31% of total debt, positioning the REIT to benefit from potential Fed rate cuts, with estimated savings of up to $25 million from lower interest expenses [6]. Market-implied Cap Rate - The market-implied cap rate based on Q2 2024 NOI of $162.7 million suggests an attractive cap rate of 8.9% against the $7.3 billion enterprise value [8]. - Assuming a fair value cap rate of 6% for the multifamily portfolio, its value would be approximately $2 billion, leaving the office portfolio with a market-implied cap rate of 10% [8]. Valuation and Prospects - Douglas Emmett is attractively valued with an FFO multiple of 9.5x and a market-implied cap rate between 7% and 8.9% [10]. - The company’s capital structure is well-positioned to benefit from Fed rate cuts, although the near-term expiration of interest rate swaps may temporarily negate some benefits [10].

Molson Coors is the latest addition to a growing list of companies reversing their diversity, equity and inclusion policies. In an internal memo sent Wednesday and obtained by CNBC, Molson Coors executives said the company will be getting rid of supplier diversity quotas, adding that they can be "complicated and influenced by factors outside of [the company's] control." But the brewer has said that it will continue to make sure its suppliers are representative of the company's diverse consumer base. "We are ...

Core Viewpoint - Brown-Forman Corp., the maker of Jack Daniel's whisky, is retracting its diversity, equity, and inclusion (DEI) initiatives due to social media pressure and the threat of a boycott led by activist Robby Starbuck [1][2][3]. Group 1: Company Actions - Brown-Forman will cease linking bonuses and pay to DEI progress, end participation in LGBTQ-friendly workplace rankings, and abandon plans for a more diverse supplier base [3]. - Previously, 10% of executives' short-term compensation was tied to DEI goals, as noted in the 2023 annual report [3]. - The company initiated its DEI goals in 2019 but has now decided to adjust its approach in response to changing business and legal environments [4]. Group 2: Market Reaction - Following the announcement, Brown-Forman shares experienced a slight dip of less than 1% [4]. Group 3: Industry Trends - Major firms, particularly those with a strong customer base in conservative regions, are increasingly retracting DEI policies under pressure from activists [2][6]. - The shift in corporate policies reflects a broader trend where companies are responding to consumer sentiment, with only 38% of Americans supporting corporate stances on current events [7]. - Companies like Tesla, Home Depot, Wayfair, and Walmart have also been phasing out DEI leadership goals due to consumer backlash [6]. Group 4: Public Perception - There is a growing perception that DEI initiatives may lead to unfairness in hiring and promotions, with some employees feeling overlooked based on ethnicity or sexuality [10][11]. - The backlash against DEI policies is illustrated by the experiences of companies like Target and Bud Light, which faced significant financial losses following their social justice initiatives [9][10].

Douglas Emmett, Inc. (NYSE:DEI) Q2 2024 Earnings Conference Call August 9, 2024 2:00 PM ET Company Participants Stuart McElhinney - Vice President of Investor Relations Jordan Kaplan - President and Chief Executive Officer Kevin Crummy - Chief Investment Officer Peter Seymour - Chief Financial Officer Conference Call Participants Blaine Heck - Wells Fargo Alexander Goldfarb - Piper Sandler Michael Griffin - Citi Steve Sakwa - Evercore ISI John Kim - BMO Capital Markets Upal Rana - KeyBanc Capital Markets Pe ...

United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2024 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission file number: 001-33106 Douglas Emmett, Inc. (Exact name of registrant as specified in its charter) Maryland 20-3073047 (State or other jurisdict ...

For the quarter ended June 2024, Douglas Emmett (DEI) reported revenue of $245.78 million, down 3% over the same period last year. EPS came in at $0.46, compared to -$0.04 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $246.45 million, representing a surprise of -0.27%. The company delivered an EPS surprise of +6.98%, with the consensus EPS estimate being $0.43. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and ...

Douglas Emmett (DEI) came out with quarterly funds from operations (FFO) of $0.46 per share, beating the Zacks Consensus Estimate of $0.43 per share. This compares to FFO of $0.48 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 6.98%. 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 $0.45, delivering a surprise of 4.65%. Over the last four quar ...