Douglas Emmett(DEI) - 2025 Q2 - Quarterly Report

Glossary and Defined Terms This section defines key abbreviations and terms for consistent understanding of the financial and operational context - The report defines numerous abbreviations and terms, such as AOCI, FFO, REIT, Annualized Rent, and Occupancy Rate, to ensure consistent understanding of financial and operational context[9][10][11] Forward Looking Statements Forward-looking statements are subject to various risks and uncertainties, potentially causing actual outcomes to differ materially - The report contains forward-looking statements based on beliefs and assumptions, subject to known and unknown risks, trends, uncertainties, and factors beyond the company's control, with actual outcomes potentially differing materially from expectations[12] - Key risks include adverse economic, political, or real estate developments; competition; decreasing rental rates or increasing vacancy rates; reduced demand for office space due to remote work; tenant defaults; increases in interest rates, operating, and construction costs; insufficient cash flows; difficulties in raising capital; inability to liquidate investments; adverse changes to rent control laws; environmental uncertainties; natural disasters; property damage; insufficient insurance; inability to expand into new markets or successfully operate acquired properties; risks associated with JVs; conflicts of interest; changes in zoning laws; adverse litigation results; non-compliance with laws; potential terrorist attacks or cyber attacks; adverse changes to accounting or tax laws; and weaknesses in internal controls[14] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and equity, with notes on accounting policies, investments, debt, and segment performance Consolidated Balance Sheets This section provides a snapshot of the company's financial position at specific dates, detailing assets, liabilities, and equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (YoY) | | :--------------------------------- | :----------------------------- | :------------------------------- | :----------- | | Investment in real estate, net | $8,793,399 | $8,578,627 | +2.5% | | Cash and cash equivalents | $426,889 | $444,623 | -4.0% | | Total Assets | $9,433,532 | $9,403,700 | +0.3% | | Secured notes payable, net | $5,562,721 | $5,498,022 | +1.2% | | Total Liabilities | $5,842,104 | $5,745,460 | +1.7% | | Total Equity | $3,591,428 | $3,658,240 | -1.8% | Consolidated Statements of Operations This section details the company's revenues, expenses, and net income or loss over specific periods | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :----------- | | Total revenues | $503,969 | $490,746 | +2.7% | | Total operating expenses | $405,697 | $380,498 | +6.6% | | Interest expense | $(125,413) | $(110,287) | -13.7% | | Net (loss) income | $29,516 | $15,362 | +92.1% | | Net (loss) income attributable to common stockholders | $33,965 | $19,787 | +71.6% | | Net (loss) income per common share – basic and diluted | $0.20 | $0.11 | +81.8% | Consolidated Statements of Comprehensive (Loss) Income This section presents the company's comprehensive income or loss, including net income and other comprehensive income items | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :----------- | | Net (loss) income | $29,516 | $15,362 | +92.1% | | Other comprehensive loss: cash flow hedges | $(50,368) | $(22,630) | -122.6% | | Comprehensive loss | $(20,852) | $(7,268) | -186.9% | | Comprehensive (loss) income attributable to common stockholders | $3,990 | $4,497 | -11.4% | Consolidated Statements of Equity This section outlines changes in the company's equity over time, including net income, dividends, and other adjustments | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :----------- | | Total Equity - Beginning balance | $3,658,240 | $3,845,397 | -4.9% | | Net (loss) income | $29,516 | $15,362 | +92.1% | | Cash flow hedge adjustments | $(50,368) | $(22,630) | -122.6% | | Dividends | $(63,630) | $(63,606) | -0.04% | | Total Equity - Ending balance | $3,591,428 | $3,762,995 | -4.5% | | Dividends declared per common share | $0.38 | $0.38 | 0% | Consolidated Statements of Cash Flows This section summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Metric (Six Months Ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :------------------ | :------------------ | :------------------ | | Net cash provided by operating activities | $213,927 | $230,888 | -7.3% | | Net cash used in investing activities | $(105,175) | $(110,230) | +4.6% | | Net cash used in financing activities | $(126,486) | $(82,674) | -53.0% | | (Decrease) increase in cash and cash equivalents and restricted cash | $(17,734) | $37,984 | -146.7% | | Cash and cash equivalents and restricted cash - ending balance | $426,918 | $561,167 | -23.9% | Notes to Consolidated Financial Statements This section provides detailed explanations and additional information supporting the consolidated financial statements Overview This section provides a brief introduction to Douglas Emmett, Inc., its business focus, and portfolio composition - Douglas Emmett, Inc. is a fully integrated REIT specializing in high-quality office and multifamily properties in Los Angeles County, California, and Honolulu, Hawaii[35] - As of June 30, 2025, the Total Portfolio included an 18.0 million square foot office portfolio, 5,442 multifamily apartment units, and fee interests in two ground lease parcels[36] - The company consolidates its Operating Partnership and six JVs, including Partnership X, which was consolidated on January 1, 2025, after becoming a Variable Interest Entity (VIE) where the company is the primary beneficiary[39] Summary of Significant Accounting Policies This section outlines the key accounting principles and methods used in preparing the financial statements - No changes have been made to the significant accounting policies disclosed in the 2024 Annual Report on Form 10-K[42] - Rental revenues, tenant recoveries, and certain parking revenues are accounted for on a combined basis in accordance with Topic 842, with tenant recoveries increasing to $25.1 million for the six months ended June 30, 2025, from $20.5 million in the prior year[44] - The company has elected to be taxed as a REIT, generally exempting it from corporate-level income tax on qualifying earnings, but earnings from Taxable REIT Subsidiaries (TRS) are subject to corporate income tax[49] Investment in Real Estate This section details the composition and changes in the company's real estate investments | (In thousands) | June 30, 2025 | December 31, 2024 | | :--------------- | :------------ | :---------------- | | Land | $1,199,291 | $1,185,977 | | Buildings and improvements | $10,448,766