Douglas Emmett (DEI) Q2 2024 earnings summary

Executive summary

• Operating metrics are at or above pre-pandemic levels, with strong rental rates, high retention, minimal concessions, and low tenant defaults.

• Net income attributable to common stockholders was $10.9 million for Q2 2024, up from a loss of $7.3 million in Q2 2023, driven by prior period accelerated depreciation.

• Portfolio includes 68–70 office properties (17.6–18.0M sq ft) and 14 multifamily properties (4,483 units) in Los Angeles and Honolulu, with dominant market share in key submarkets.

• Annual revenues are approximately $1 billion, supported by a diversified tenant base and premium multifamily assets.

• Operating results were negatively impacted by inflation, higher interest rates, and the removal of Barrington Plaza from service.

Financial highlights

• Q2 2024 revenues were $245.8 million, down 3% year-over-year, mainly due to Barrington Plaza vacancy and lower office occupancy.

• FFO for Q2 2024 was $92.1 million ($0.46/share), down 4.5% year-over-year; AFFO was $74.2 million, down 0.8%.

• Operating expenses decreased 14.3% to $190.1 million in Q2, mainly due to lower property taxes and repairs.

• Dividend paid was $0.19 per share for Q2 2024 ($0.76 annualized), with a 5.7% yield.

• Cash and cash equivalents at June 30, 2024 were $561.1 million.

Outlook and guidance

• 2024 FFO per fully diluted share guidance narrowed to $1.65–$1.69; net income per diluted share guidance narrowed to $0.05–$0.09.

• Guidance excludes impacts from future acquisitions, dispositions, financings, and other capital market activities.

• Assumes average office occupancy of 78–81% and essentially full residential leasing.

• Guidance factors in seasonal utility cost increases, Warner Bros. move-out, and higher interest expense.

• Same property Cash NOI growth expected between -4.0% and -2.5% for 2024.