Douglas Emmett(DEI) - 2025 Q2 - Quarterly Results

Executive Summary Provides an overview of Q2 2025 financial and operational performance, including key acquisitions, leasing, and guidance updates Executive Summary Overview Q2 2025 results show impact of 10900 Wilshire acquisition and JV consolidation, with positive multifamily NOI growth and narrowed 2025 FFO guidance - The company's portfolio is located in premier coastal submarkets of Los Angeles and Honolulu, comprising 17.5 million square feet of Class A office properties and 4,410 apartment units in its In-Service Portfolio, with additional development projects[4] Q2 2025 Financial Highlights | (In millions, except per share data) | Q2 2025 | Q2 2024 | | :--------------------------------- | :------ | :------ | | Revenues | $252 | $246 | | Net (loss) income attributable to common stockholders | $(6) | $11 | | FFO per fully diluted share | $0.37 | $0.46 | | AFFO | $54 | $74 | | Same Property Cash NOI | $151 | $152 | - During Q2 2025, 973,000 square feet of office space was leased, including over 300,000 square feet of new leases, achieving positive absorption across the Total Portfolio for three of the last four quarters. Straight-line rents increased by 2.4%, while cash rents decreased by 13.3% for signed office leases[6] - The multifamily portfolio maintained a 99.3% leased rate with strong demand and same property cash NOI growth exceeding 10%[6] - A significant office-to-residential conversion is planned for 10900 Wilshire, transforming a 247,000 square foot office tower into a 320-unit apartment community with estimated total project costs of $200 million to $250 million[7] - The company refinanced a $200 million office loan, securing a new non-recourse, interest-only term loan with a fixed rate of 5.6% through 2030, maturing in August 2032[8] - A quarterly cash dividend of $0.19 per common share ($0.76 annualized) was paid on July 15, 2025[9] 2025 Guidance Update | Metric | Guidance Range | | :-------------------------------- | :------------- | | Net Income Per Common Share - Diluted | $0.07 to $0.11 | | FFO per fully diluted share | $1.43 to $1.47 | Company Overview Presents corporate data, portfolio composition, and leadership structure as of June 30, 2025 Corporate Data Corporate data details portfolio composition, leasing statistics, market capitalization, and net debt as of June 30, 2025 Portfolio Composition (as of June 30, 2025) | | In-Service Portfolio | Development Portfolio | Total | | :-------------------- | :------------------- | :-------------------- | :---- | | Office Properties | 69 | 1 | 70 | | Office Rentable Square Feet | 17,526,068 | 456,205 | 17,982,273 | | Multifamily Properties | 13 | 2 | 15 | | Multifamily Units | 4,410 | 1,032 | 5,442 | In-Service Portfolio Leasing Statistics | Metric | Value | | :-------------------------- | :------ | | Office Portfolio Leased Rate | 80.7 % | | Office Portfolio Occupancy Rate | 78.0 % | | Multifamily Portfolio Leased Rate | 99.3 % | Market Capitalization and Net Debt (as of June 30, 2025) | Metric | Value (in thousands, except per share) | | :------------------------------------ | :----------------------------------- | | Fully Diluted Shares outstanding | 204,022 | | Common stock closing price per share | $15.04 | | Equity Capitalization | $3,068,493 | | Consolidated Net Debt | $5,151,129 | | Our Share of Net Debt | $4,253,246 | | Our Share of Net Debt to Pro Forma Enterprise Value | 58 % | - The AFFO Payout Ratio for the three months ended June 30, 2025, was 71.5%[20] Property Map Property map visually represents company's property locations, primarily in Los Angeles and Honolulu Board of Directors and Executive Officers Lists Board of Directors and Executive Officers as of June 30, 2025, detailing key leadership roles - The Board of Directors includes Jordan L. Kaplan (Chairman, CEO, President), Kenneth M. Panzer (COO), Leslie E. Bider, Dorene C. Dominguez, Virginia A. McFerran, Thomas E. O'Hern, William E. Simon, Jr., and Shirley Wang[23] - Key Executive Officers are Jordan L. Kaplan (Chairman, CEO, President), Kenneth M. Panzer (COO), Peter D. Seymour (CFO), Kevin A. Crummy (CIO), and Michele L. Aronson (EVP, General Counsel and Secretary)[24] Financial Results Details the company's consolidated financial performance, including balance sheets, operating results, FFO, NOI, and loan data Consolidated Balance Sheets Consolidated balance sheets as of June 30, 2025, show increased real estate investment and secured notes, with decreased total equity Consolidated Balance Sheet Highlights (In thousands) | Metric | June 30, 2025 | December 31, 2024 | Change | | :-------------------------------- | :------------ | :---------------- | :----- | | Investment in real estate, net | $8,793,399 | $8,578,627 | +$214,772 | | Cash and cash equivalents | $426,889 | $444,623 | -$17,734 | | Total assets | $9,433,532 | $9,403,700 | +$29,832 | | Secured notes payable, net | $5,562,721 | $5,498,022 | +$64,699 | | Total liabilities | $5,842,104 | $5,745,460 | +$96,644 | | Total Douglas Emmett, Inc. stockholders' equity | $1,999,161 | $2,058,649 | -$59,488 | | Total equity | $3,591,428 | $3,658,240 | -$66,812 | Consolidated Operating Results Q2 2025 operating results show increased revenues but a net loss, while six-month results improved due to JV consolidation gain Consolidated Operating Results (Three Months Ended June 30, In thousands, except per share data) | Metric | 2025 | 2024 | Change | | :---------------------------------------- | :----- | :----- | :----- | | Total revenues | $252,434 | $245,777 | +$6,657 | | Total operating expenses | $206,789 | $190,088 | +$16,701 | | Net (loss) income attributable to common stockholders | $(5,835) | $10,878 | -$16,713 | | Net (loss) income per common share - basic and diluted | $(0.04) | $0.06 | -$0.10 | | Dividends declared per common share | $0.19 | $0.19 | Unchanged | Consolidated Operating Results (Six Months Ended June 30, In thousands, except per share data) | Metric | 2025 | 2024 | Change | | :---------------------------------------- | :----- | :----- | :----- | | Total revenues | $503,969 | $490,746 | +$13,223 | | Total operating expenses | $405,697 | $380,498 | +$25,199 | | Net (loss) income attributable to common stockholders | $33,965 | $19,787 | +$14,178 | | Net (loss) income per common share - basic and diluted | $0.20 | $0.11 | +$0.09 | | Dividends declared per common share | $0.38 | $0.38 | Unchanged | - A gain from consolidation of a joint venture contributed $47.2 million to net income for the six months ended June 30, 2025[29] Funds From Operations & Adjusted Funds From Operations FFO and AFFO decreased for Q2 and YTD June 30, 2025, despite JV consolidation, as reconciled from net income FFO & AFFO (Three Months Ended June 30, In thousands, except per share data) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net (loss) income attributable to common stockholders | $(5,835) | $10,878 | -$16,713 | | FFO | $74,575 | $92,074 | -$17,499 | | AFFO | $54,471 | $74,235 | -$19,764 | | FFO per share - fully diluted | $0.37 | $0.46 | -$0.09 | FFO & AFFO (Six Months Ended June 30, In thousands, except per share data) | Metric | 2025 | 2024 | Change | | :-------------------------------- | :------- | :------- | :------- | | Net (loss) income attributable to common stockholders | $33,965 | $19,787 | +$14,178 | | FFO | $155,535 | $182,130 | -$26,595 | | AFFO | $116,817 | $148,951 | -$32,134 | | FFO per share - fully diluted | $0.76 | $0.90 | -$0.14 | - On January 1, 2025, the company commenced consolidating a joint venture that was previously unconsolidated, which owns two Class A office properties[31] Same Property Statistics & Net Operating Income (NOI) Same property statistics and NOI for Q2 2025 show slight total NOI decrease, driven by office, offset by strong multifamily growth Same Property Statistics (as of June 30) | Metric | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Office Ending % leased | 80.8 % | 81.0 % | | Office Ending % occupied | 78.1 % | 79.4 % | | Multifamily Ending % leased | 99.3 % | 99.0 % | Net Operating Income (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Favorable (Unfavorable) | | :------------------ | :----- | :----- | :------------------------ | | Office NOI | $119,420 | $125,647 | (5.0)% | | Multifamily NOI | $33,140 | $30,463 | 8.8 % | | Total NOI | $152,560 | $156,110 | (2.3)% | Cash Net Operating Income (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | % Favorable (Unfavorable) | | :------------------ | :----- | :----- | :------------------------ | | Office Cash NOI | $118,109 | $122,930 | (3.9)% | | Multifamily Cash NOI | $32,496 | $29,323 | 10.8 % | | Total Cash NOI | $150,605 | $152,253 | (1.1)% | Same Property NOI Reconciliation Reconciles Net (loss) income to NOI and Same Property NOI for Q2 2025 and 2024, detailing non-GAAP adjustments NOI and Same Property NOI Reconciliation (Three Months Ended June 30, In thousands) | Metric | 2025 | 2024 | | :---------------------------------------- | :----- | :----- | | Net (loss) income attributable to common stockholders | $(5,835) | $10,878 | | NOI | $159,645 | $162,669 | | Same Property NOI | $152,560 | $156,110 | | Same Property Office NOI | $119,420 | $125,647 | | Same Property Multifamily NOI | $33,140 | $30,463 | Financial Data for Wholly-Owned Properties and Consolidated JVs Presents Q2 and YTD June 30, 2025, financial data for wholly-owned properties and consolidated JVs, including revenues and cash NOI Q2 2025 Financial Data (In thousands) | Metric | Wholly-Owned Properties | Consolidated JVs | | :-------------------------------- | :---------------------- | :--------------- | | Revenues | $181,904 | $70,530 | | Office and multifamily operating expenses | $66,831 | $25,958 | | Our share of cash NOI | $113,417 | $21,413 | Six Months Ended June 30, 2025 Financial Data (In thousands) | Metric | Wholly-Owned Properties | Consolidated JVs | | :-------------------------------- | :---------------------- | :--------------- | | Revenues | $362,939 | $141,030 | | Office and multifamily operating expenses | $131,847 | $50,550 | | Our share of cash NOI | $226,846 | $43,478 | - The company owns a weighted average interest of approximately 47% in six consolidated JVs, which collectively own eighteen Class A office properties (4.6 million sq ft) and three residential properties (790 apartments)[44] Loans Details consolidated loans as of June 30, 2025, including fixed-interest loan statistics and a comprehensive list for wholly-owned and JVs Consolidated Loans with Fixed Interest Statistics | Metric | Value | | :------------------------------------------ | :------ | | Principal balance (in billions) | $2.72 | | Weighted average remaining life (including extension options) | 3.7 years | | Weighted average remaining fixed interest period | 2.3 years | | Weighted average annual interest rate | 3.78% | Total Consolidated Loans (as of June 30, 2025, In thousands) | Loan Type | Principal Balance | Our Share | | :------------------------------------ | :---------------- | :---------- | | Consolidated Wholly-Owned Subsidiary Loans | $3,750,606 | $3,750,606 | | Consolidated JV Loans | $1,841,750 | $790,055 | | Total Consolidated Loans | $5,592,356 | $4,573,161 | - Most loans are non-recourse, secured by separate collateral pools, and require interest-only monthly payments with principal due at maturity[45] - In May 2025, one of the joint ventures made a $70.0 million loan principal payment to extend a term loan for up to two years[47] Portfolio Data Summarizes the in-service office and multifamily portfolios, including leasing activity, tenant diversification, and development projects Office Portfolio Summary Detailed summary of in-service office portfolio as of June 30, 2025, by region, including property counts, square feet, and rent metrics In-Service Office Portfolio by Region (as of June 30, 2025) | 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 | 10,000,661 | 35.2 % | 80.5 % | $439,975,021 | $57.34 | | Valley | 15 | 6,334,572 | 47.1 % | 78.9 % | $164,619,503 | $34.29 | | Honolulu | 2 | 1,190,835 | 22.4 % | 92.2 % | $38,889,848 | $37.12 | | Total / Weighted Average | 69 | 17,526,068 | 38.6 % | 80.7 % | $643,484,372 | $47.59 | Recurring Office Capital Expenditures per Rentable Square Foot | Period | Cost per SF | | :-------------------------- | :---------- | | Three months ended June 30, 2025 | $0.06 | | Six months ended June 30, 2025 | $0.07 | Office Lease Diversification Analyzes in-service office portfolio lease diversification by tenant size as of June 30, 2025, detailing distribution of leases and rent Office Lease Diversification by Tenant Size (as of June 30, 2025) | Square Feet Under Lease | Number of Leases | Percent | Rentable Square Feet | Percent | Annualized Rent | Percent | | :---------------------- | :--------------- | :------ | :------------------- | :------ | :-------------- | :------ | | 2,500 or less | 1,348 | 50.8 % | 1,947,970 | 14.4 % | $86,254,821 | 13.4 % | | 2,501-10,000 | 1,006 | 37.9 | 4,926,729 | 36.4 | $226,920,846 | 35.2 | | 10,001-20,000 | 195 | 7.3 | 2,698,972 | 20.0 | $129,183,050 | 20.1 | | 20,001-40,000 | 78 | 2.9 | 2,090,198 | 15.5 | $100,403,716 | 15.6 | | 40,001-100,000 | 28 | 1.1 | 1,601,805 | 11.9 | $83,414,292 | 13.0 | | Greater than 100,000 | 1 | — | 255,884 | 1.8 | $17,307,647 | 2.7 | | Total for all leases | 2,656 | 100.0 % | 13,521,558 | 100.0 % | $643,484,372 | 100.0 % | - The median office tenant size is 2,500 square feet, and the average is 5,100 square feet[58] Largest Office Tenants Identifies largest office tenants (1%+ of Annualized Rent) in the in-service portfolio as of June 30, 2025, detailing their contributions Largest Office Tenants (Tenants paying 1% or more of aggregate Annualized Rent) | Tenant | Number of Leases | Number of Properties | Total Leased Square Feet | Percent of Annualized Rent | | :-------------------- | :--------------- | :------------------- | :----------------------- | :------------------------- | | William Morris Endeavor | 1 | 1 | 255,884 | 2.7 % | | UCLA | 14 | 8 | 195,028 | 1.8 % | | Morgan Stanley | 5 | 5 | 145,062 | 1.7 % | | Equinox Fitness | 6 | 5 | 185,236 | 1.7 % | | NKSFB | 2 | 2 | 135,066 | 1.0 % | | Total | 28 | 21 | 916,276 | 8.9 % | Office Industry Diversification Illustrates in-service office portfolio's annualized rent diversification by tenant industry as of June 30, 2025, with Legal, Financial Services, and Real Estate leading Annualized Rent by Tenant Industry (as of June 30, 2025) | Industry | Number of Leases | Annualized Rent as a Percent of Total | | :-------------------------- | :--------------- | :---------------------------------- | | Legal | 572 | 19.6 % | | Financial Services | 365 | 16.4 | | Real Estate | 317 | 13.4 | | Health Services | 395 | 9.9 | | Entertainment | 130 | 9.7 | | Accounting & Consulting | 297 | 8.8 | | Retail | 161 | 5.8 | | Technology | 92 | 5.0 | | Insurance | 86 | 3.0 | | Public Administration | 71 | 2.7 | | Educational Services | 37 | 2.7 | | Manufacturing & Distribution | 48 | 1.3 | | Advertising | 31 | 0.9 | | Other | 54 | 0.8 | | Total | 2,656 | 100.0 % | Office Lease Expirations Schedule of in-service office lease expirations as of June 30, 2025, detailing leases, square feet, and annualized rent expiring annually Office Lease Expirations by Year (as of June 30, 2025) | Year of Lease Expiration | Number of Leases | Rentable Square Feet | Annualized Rent at June 30, 2025 | Annualized Rent Per Leased Square Foot at Expiration | | :----------------------- | :--------------- | :------------------- | :------------------------------- | :------------------------------------------------- | | Short Term Leases | 67 | 255,409 | $9,453,444 | $37.03 | | 2025 | 236 | 914,386 | $43,433,719 | $47.85 | | 2026 | 605 | 2,385,813 | $107,803,386 | $46.50 | | 2027 | 505 | 2,222,202 | $106,473,164 | $51.02 | | 2028 | 439 | 1,877,754 | $86,431,788 | $50.58 | | 2029 | 262 | 1,435,315 | $64,712,526 | $50.38 | | 2030 | 215 | 1,339,545 | $65,376,023 | $55.61 | | 2031 | 115 | 773,059 | $37,297,205 | $55.68 | | 2032 | 61 | 560,109 | $26,953,031 | $58.20 | | 2033 | 54 | 398,484 | $20,734,546 | $67.39 | | 2034 | 35 | 307,885 | $14,668,382 | $63.97 | | Thereafter | 62 | 1,051,597 | $60,147,158 | $78.96 | | Subtotal/weighted average | 2,656 | 13,521,558 | $643,484,372 | $53.58 | - Total leased square feet represent 77.2% of the total rentable square feet, with an additional 465,181 square feet (2.6%) from signed leases not yet commenced[72] Office Lease Expirations – Next Four Quarters Focused view of in-service office lease expirations for the next four quarters (Q3 2025-Q2 2026), by region, including square feet and rent Office Lease Expirations - Next Four Quarters (as of June 30, 2025) | Quarter | Expiring Square Feet | Percentage of Portfolio | Expiring Rent per Square Foot | | :-------- | :------------------- | :---------------------- | :---------------------------- | | Q3 2025 | 350,318 | 2.0 % | $49.78 | | Q4 2025 | 564,068 | 3.2 % | $46.65 | | Q1 2026 | 612,011 | 3.5 % | $47.04 | | Q2 2026 | 617,154 | 3.5 % | $47.70 | | Next Twelve Months | 2,143,551 | 12.2 % | $47.58 | - The next twelve months (Q3 2025 - Q2 2026) show 2,143,551 square feet of office leases expiring, representing 12.2% of the portfolio[77] Office Leasing Activity Reports Q2 2025 office leasing activity, detailing new/renewal leases, square feet, lease terms, rental rate changes, and transaction costs Office Leases Signed (Three Months ended June 30, 2025) | Office Leases Signed During Quarter | Number of Leases | Rentable Square Feet | Weighted Average Lease Term (months) | | :---------------------------------- | :--------------- | :------------------- | :----------------------------------- | | New leases | 86 | 275,197 | 56 | | Renewal leases | 154 | 669,115 | 63 | | All leases | 240 | 944,312 | 60 | Change in Rental Rates for Office Leases Executed during Q2 2025 | Rate Type | Expiring Rate | New/Renewal Rate | Percentage Change | | :------------------ | :------------ | :--------------- | :---------------- | | Cash Rent | $49.99 | $43.32 | (13.3)% | | Straight-line Rent | $44.57 | $45.62 | 2.4% | Average Office Lease Transaction Costs (per SF) | Lease Type | Lease Transaction Costs per SF | | :-------------------------------- | :----------------------------- | | New leases signed during the quarter | $34.52 | | Renewal leases signed during the quarter | $21.79 | | All leases signed during the quarter | $25.51 | Multifamily Portfolio Summary Overview of in-service multifamily portfolio as of June 30, 2025, by region, detailing properties, units, leased rates, and rent metrics In-Service Multifamily Portfolio by Region (as of June 30, 2025) | Region | Number of Properties | Number of Units | Percent Leased | Annualized Rent | Monthly Rent Per Leased Unit | | :--------------- | :------------------- | :-------------- | :------------- | :-------------- | :--------------------------- | | Santa Monica | 3 | 940 | 99.6 % | $51,508,212 | $4,591 | | West Los Angeles | 6 | 964 | 98.5 % | $55,764,732 | $4,907 | | Honolulu | 4 | 2,506 | 99.5 % | $71,389,908 | $2,392 | | Total / Weighted Average | 13 | 4,410 | 99.3 % | $178,662,852 | $3,408 | Recurring Multifamily Capital Expenditures per Unit | Period | Cost per Unit | | :-------------------------- | :------------ | | Three months ended June 30, 2025 | $222 | | Six months ended June 30, 2025 | $386 | Development Portfolio Summary Outlines key development projects: Landmark Residences, Studio Plaza conversion, and 10900 Wilshire office-to-residential, detailing scope and costs - The Landmark Residences in Brentwood, California, is undergoing a phased redevelopment of three towers into a 712-unit apartment community, with an estimated cost of approximately $400 million[92] - Studio Plaza in Burbank, California, a 456,000 square foot office property, is being redeveloped into a multi-tenant building at an estimated cost of $75 million to $100 million, with the first new tenant already in occupancy[95] - At 10900 Wilshire in Westwood, California, plans are underway to convert the existing 247,000 square foot office building into a 320-unit apartment community, integrated with a new residential building, with total project costs estimated between $200 million and $250 million[97][98] Guidance Outlines the company's 2025 financial guidance, including per-share metrics and key underlying assumptions 2025 Guidance Updated 2025 financial guidance includes narrowed ranges for Net income and FFO per share, with largely unchanged underlying assumptions 2025 Financial Guidance | Metric | Per Share | | :-------------------------------- | :-------------- | | Net income per common share - diluted | $0.07 to $0.11 | | FFO per share - fully diluted | $1.43 to $1.47 | Key 2025 Guidance Assumptions (Unchanged) | Metric | Assumption Range | | :-------------------------------- | :--------------- | | Average Office Occupancy | 78% to 80% | | Residential Leased Rate | Essentially fully leased | | Same Property Cash NOI | -2.5% to -0.5% | | General and Administrative Expenses | $46 to $50 million | | Interest Expense | $260 to $270 million | | Weighted average fully diluted shares outstanding | 204.0 million | - The guidance excludes 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[103] Reconciliation of 2025 Non-GAAP Guidance Reconciles 2025 Net income per common share to FFO per share, detailing adjustments for depreciation, amortization, noncontrolling interests, and JV consolidation Reconciliation of Net Income to FFO (2025 Guidance, In millions, except per share amounts) | Reconciliation of net income attributable to common stockholders to FFO | Low | High | | :----------------------------------------------------- | :---- | :--- | | Net income attributable to common stockholders | $12.4 | $19.1 | | Adjustments for depreciation and amortization of real estate assets | $405.0 | $395.0 | | Adjustments for noncontrolling interests and consolidated JVs | $(78.5) | $(67.0) | | Adjustment for gain from consolidation of JV | $(47.2) | $(47.2) | | FFO | $291.7 | $299.9 | Per Share Guidance (2025) | Per share | Low | High | | :-------------------------------- | :---- | :--- | | Net income per common share - diluted | $0.07 | $0.11 | | FFO per share - fully diluted | $1.43 | $1.47 | - The weighted average fully diluted shares outstanding for 2025 guidance is 204.0 million[106] Definitions Clarifies key financial and operational terms used throughout the report, including non-GAAP measures Key Financial and Operational Definitions Provides detailed definitions for key financial and operational terms, including non-GAAP measures and portfolio metrics, clarifying their calculation - Definitions are provided for Adjusted Funds From Operations (AFFO), Annualized Rent, Consolidated Net Debt, Development Portfolio, Equity Capitalization, Fully Diluted Shares, Funds From Operations (FFO), In-Service Portfolio, Joint Ventures (JVs), Lease Transaction Costs, Leased Rate, Net Absorption, Net Income (Loss) Per Common Share - Diluted, Net Operating Income (NOI), Occupancy Rate, Our Share, Pro Forma Enterprise Value, Recurring Capital Expenditures, Rental Rate, Rentable Square Feet, Same Property NOI, and Short Term Leases[110][112][114][115][116][118][119][120][121][122][123][124][126][127][128][129][130][131][132][135]