Douglas Emmett (DEI) Q3 2024 earnings summary

Executive summary

• Owns 18 million sq ft of Class A office space and 4,476 apartment units in Los Angeles and Honolulu, with a dominant market share and focus on high-barrier markets.

• Q3 2024 revenues fell 1.8% year-over-year to $250.8M, mainly due to lower office occupancy, but net income attributable to common stockholders rose to $4.6M from a loss of $13.4M in Q3 2023.

• FFO for Q3 2024 was $86.0M ($0.43/share), down 3.8% year-over-year, while AFFO increased slightly to $68.8M.

• Leasing momentum drove positive net absorption of 90,000 sq ft and increased the office portfolio lease rate by 50 bps to 82%.

• Focus remains on leasing up the office portfolio, repositioning Studio Plaza, and redeveloping Barrington Plaza.

Financial highlights

• Q3 2024 total revenues were $250.8M, down from $255.4M year-over-year; net income was $4.6M, up from a loss of $13.4M.

• FFO was $86.0M ($0.43/share) vs. $89.4M ($0.45/share) prior year; AFFO was $68.8M, up slightly from $68.7M.

• Office segment revenues declined 3.7% year-over-year in Q3 due to lower occupancy; multifamily segment revenues increased 3.2% in Q3.

• Operating expenses decreased 10.9% in Q3, mainly due to lower depreciation and amortization.

• Dividend paid: $0.19/share for the quarter.

Outlook and guidance

• Raised 2024 net income per diluted share guidance to $0.10–$0.14 and FFO per fully diluted share guidance to $1.69–$1.73.

• Average office occupancy expected at 79–80%; residential portfolio to remain essentially fully leased.

• Same property Cash NOI growth revised to -3.0% to -1.5%.

• Guidance excludes impacts from future acquisitions, dispositions, financings, or insurance recoveries.

• Management expects to meet short-term liquidity needs through cash on hand and operations, with refinancing or extension of short-term debt maturities planned.