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Q3 2021 Earnings Package

11/02/2021 | 03:38pm EST

Executive Summary

We own and operate 18.2 million square feet of Class A office properties and 4,355 apartment units (excluding our residential development pipeline) in the premier coastal submarkets of Los Angeles and Honolulu.

Quarterly Results: For the three months ended September 30, 2021 compared to the three months ended September 30, 2020:

  • Our revenues increased by 9.8% to $238.2 million.
  • Our net income attributable to common stockholders increased by 380.8% to $18.1 million.
  • Our FFO increased by 19.0% to $98.5 million, or $0.48 per fully diluted share.
  • Our AFFO increased by 26.6% to $87.6 million.
  • Our same property Cash NOI increased by 13.5% to $150.4 million.

Compared to the second quarter of 2021, our FFO per share increased by 1 cent, primarily due to stronger rent collections, greater tenant recoveries, increased parking revenues, higher office occupancy and better multifamily occupancy and rents. This was partly offset by higher expenses, including fees and interest expense associated with new loans and increased seasonal utilities.

Leasing: During the third quarter, we signed 242 office leases covering approximately 819,000 square feet. Our leased rate increased by 30 basis points to 87.6%, and our occupancy rate increased by 20 basis points to 85.0%. Comparing the office leases we signed during the third quarter to the expiring leases for the same space, straight- line rents increased by 3.9% and cash rents decreased by 6.1%. Our multifamily portfolio remains essentially fully leased at 99.3%, with rents rising in all our submarkets.

Our results reflect recovering submarkets, where average vaccination rates now exceed 85% for people 12 and over, and COVID rates are among the lowest in the nation. Increased tenant confidence has raised our office utilization to approximately 70% in Los Angeles and to over 80% in Honolulu. However, we still face headwinds from our local governments' lease enforcement moratoriums.

Balance Sheet: During the third quarter, we extended our maturities and lowered our interest rates by closing two secured, non-recourse,interest-only term loans totaling $740 million with an average effective interest rate of 2.13% per annum:

  • A $625.0 million loan secured by four properties of one of our consolidated JVs, which matures in August 2028 and bears interest at LIBOR + 1.35% (effectively fixed at 2.12% until June 2025 with interest swaps).
  • A $115.0 million loan secured by two properties of our unconsolidated Fund, which matures in September 2028 and bears interest at LIBOR + 1.35% (effectively fixed at 2.19% until October 2026 with interest swaps).

After paying off the loans being refinanced, we generated an additional $55 million in working capital. Our overall portfolio weighted average interest rate is fixed at only 2.94% and we have no term debt maturities before 2024. We also have significant financing capacity, as 46% of our office properties are currently unencumbered.

Development: We remain very pleased with the progress of our two multifamily development projects, where we continue to lease units as quickly as they are built. We are already pre-leasing units at our 376 unit Brentwood Residential tower, where we expect to begin delivering units before year-end. At 1132 Bishop, our downtown Honolulu office to residential conversion, we have completed and leased approximately 40% of our planned 493 units and continue to convert floors as office tenants vacate.

Dividends: On October 15, 2021, we paid a quarterly cash dividend of $0.28 per common share, or $1.12 on an annualized basis.

Guidance: We expect fourth quarter net income per common share diluted to be between $0.09 and $0.11 and FFO per share to be between $0.47 and $0.49. Our guidance does not include the impact of any future property acquisitions or dispositions, financings, property damage recoveries, or other possible capital markets activities.

NOTE: See the non-GAAP reconciliations for FFO & AFFO on page 8and same property NOI on page 10. See the "Definitions" section for definitions of certain terms used in this Earnings Package.


Go to Table of Contents

Table of Contents


Corporate Data


Property Map


Board of Directors and Executive Officers



Consolidated Balance Sheets


Consolidated Operating Results


Funds from Operations & Adjusted Funds From Operations


Same Property Statistics & Net Operating Income


Reconciliation of Same Property NOI to Net Income


Financial Data for JVs & Fund





Office Portfolio Summary


Office Percentage Leased and In-Place Rents


Office Lease Diversification


Largest Office Tenants


Office Industry Diversification


Office Lease Expirations


Office Lease Expirations - Next Four Quarters


Office Leasing Activity


Multifamily Portfolio Summary


Multifamily Development Projects


Reconciliation of Fourth Quarter 2021 Non-GAAP Guidance




Forward Looking Statements (FLS)

This Third Quarter 2021 Earnings Results and Operating Information, which we refer to as our Earnings Package (EP), supplements the information provided in our reports filed with the Securities and Exchange Commission (SEC). It contains FLS within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to the expectations regarding the performance of our business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these FLS can be identified by the use of words such as "expect," "potential," "continue," "may," "will," "should," "could," "seeks," "projects," "intends," "plans," "estimates," "anticipates," or the negative version of these words or other comparable words. FLS presented in this EP, and those that we may make orally or in writing from time to time, are based on our beliefs and assumptions. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors, some of which are beyond our control or ability to predict, including, but not limited to: adverse developments related to the Coronavirus (COVID-19) global pandemic; adverse economic and real estate developments in Southern California and Honolulu; a general downturn in the economy; decreased rental rates or increased tenant incentives and vacancy rates; defaults on, and early terminations and non-renewal of, leases by tenants; increased interest rates and operating costs; failure to generate sufficient cash flows to service our debt; difficulties in acquiring properties; failure to successfully operate properties; failure to maintain our status as a REIT; possible adverse changes in rent control laws and regulations; environmental uncertainties; risks related to natural disasters; fire and other property damage, lack of or insufficient insurance; inability to successfully expand into new markets or submarkets; risks associated with property development; conflicts of interest with our officers; changes in real estate and zoning laws and increases in real property tax rates; possible future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K for 2020, and other documents filed with the SEC. Although we believe that our assumptions underlying our forward looking statements are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, please use caution in relying on any FLS in this EP to anticipate future results or trends. This EP and all subsequent written and oral FLS attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our FLS.


Company Overview

Corporate Data

as of September 30, 2021

Office Portfolio






Rentable square feet (in thousands)



Leased rate

87.6 %

87.6 %

Occupancy rate

85.1 %

85.0 %

Multifamily Portfolio






Leased rate(1)

99.3 %

Market Capitalization (in thousands, except price per share)

Fully Diluted Shares outstanding as of September 30, 2021


Common stock closing price per share (NYSE:DEI)



Equity Capitalization



Net Debt (in thousands)


Our Share

Debt principal(2)





Less: cash and cash equivalents(3)



Net Debt





Leverage Ratio (in thousands, except percentage)

Pro Forma Enterprise Value

$ 10,427,488

Our Share of Net Debt to Pro Forma Enterprise Value

37 %

AFFO Payout Ratio

Three months ended September 30, 2021

66.0 %


  1. Both the numerator and denominator used in calculating the percentage of units leased do not include 82 units at one property which are temporarily unoccupied as a result of a fire.
  2. See page 12for a reconciliation of consolidated debt principal and our share of debt principal to consolidated debt on the balance sheet.
  3. Our share of cash and cash equivalents is calculated starting with our consolidated cash and cash equivalents of $350.5 million, then deducting the other owners' share of our JVs' cash and cash equivalents of $113.8 million and then adding our share of our unconsolidated Fund's cash and cash equivalents of $4.6 million.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.


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Company Overview

Property Map

as of September 30, 2021


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Douglas Emmett Inc. published this content on 02 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2021 20:35:12 UTC.

© Publicnow 2021
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