Douglas Emmett, Inc. Announces Second Quarter 2007 Results
Reports FFO of $0.29 per Diluted Share
SANTA MONICA, Calif., Aug. 7 /PRNewswire-FirstCall/ -- Douglas Emmett, Inc. (NYSE: DEI), a real estate investment trust (REIT) focused on owning and acquiring top-tier office properties and multifamily communities within targeted submarkets, today announced its second quarter financial results for the quarter ended June 30, 2007. Financial Results Funds From Operations (FFO) for the quarter ended, June 30, 2007 totaled $48.7 million, or $0.29 per diluted share. For the six months ended June 30, 2007, FFO totaled $95.1 million, or $0.57 per diluted share. The Company reported a net loss of $1.3 million, or approximately $0.01 per diluted share, for the quarter ended June 30, 2007 and a net loss of $4.5 million, or $0.04 per diluted share, for the six months ended June 30, 2007. Company Operations As of June 30, 2007, the Company's office portfolio was 95.7% leased compared to 95.2% as of March 31, 2007. The Company's office portfolio was 93.0% occupied as of June 30, 2007 compared to 93.8% occupied as of March 31, 2007. The occupied percentage represents the leased portion of the Company's office portfolio less those leases where the rent commencement date has yet to occur. During the second quarter, the Company signed 156 new and renewal leases, totaling approximately 570,405 square feet, resulting in overall positive net absorption of 51,945 square feet. The Company's multifamily portfolio was 99.5% leased at June 30, 2007. Acquisitions On May 11, 2007, the Company acquired a Class A office building located at 1801 Century Park West in Century City, California for a contract price of $32 million. The Company obtained the ground leasehold in the property and the option to acquire fee title to the land for a fixed price of $800,000. The building is approximately 50,000 rental square feet and is currently 100% leased through December 2019. Financing Activity During the second quarter, the Company increased its borrowings with Fannie Mae by $150 million. The annual interest rate on these incremental borrowings taking into account the applicable floating-to-fixed interest rate hedges is approximately 5.87%. The maturity dates of certain of the Company's Fannie Mae loan facilities were also extended. As a result, the maturity dates of the Company's Fannie Mae loan facilities now range from June 1, 2012 to June 1, 2017. Dividends During the quarter, the Company's Board of Directors approved a $0.175 per share quarterly cash dividend, which was payable on July 16, 2007 to shareholders of record as of June 29, 2007. On an annualized basis, the dividend represents a distribution of $0.70 per common share. Conference Call and Web Cast Information A conference call to discuss the Company's 2007 second quarter results is scheduled for Wednesday, August 8, 2007 at 2:00 p.m. Eastern Time, or 11:00 a.m. Pacific Time. Interested parties can access the live call via the Internet call by going to the Investor Relations section of the Company's Web site at http://www.douglasemmett.com or by dialing into the call at 800.240.5318 (domestic) or 303.262.2142 (international). A rebroadcast of the live call will be available via the web site for 90 days. A digital replay will be available through Wednesday, August 15, 2007 at 800.405.2236 (domestic) or 303.590.3000 (international) and using the passcode 11092783. Supplemental Information Supplemental financial information for the Company's first quarter financial results can be accessed on the Company's Web site under the investors section at http://www.douglasemmett.com. About Douglas Emmett, Inc. Douglas Emmett, Inc. (NYSE: DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in targeted submarkets in California and Hawaii. The Company's property portfolio currently consists of 47 office properties with approximately 11.6 million rentable square feet, nine multifamily properties with a total of 2,868 units, and interests in three land parcels. For more information on Douglas Emmett, please visit the Company's Web site at http://www.douglasemmett.com. Safe Harbor Statement Except for the historical facts, the statements in this press release regarding Douglas Emmett's business activities are forward-looking statements based on the beliefs of, assumptions made by, and information currently available to us about known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions 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, investors should use caution in relying on past forward-looking statements to anticipate future results or trends. For a discussion of some of the risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission. Mary Jensen, Vice President - Investor Relations 310.255.7751 or firstname.lastname@example.org --tables follow-- Douglas Emmett, Inc. Consolidated Balance Sheets (in thousands, except for share data) June 30, December 31, 2007 2006 (unaudited) Assets Investments in real estate: Land $817,249 $813,599 Buildings and improvements 4,893,677 4,863,955 Tenant improvements and leasing costs 432,998 411,063 6,143,924 6,088,617 Less: accumulated depreciation (134,135) (32,521) Net investment in real estate 6,009,789 6,056,096 Cash and cash equivalents 65,961 4,536 Tenant receivables, net 857 4,160 Deferred rent receivables 12,594 3,587 Interest rate contracts 142,639 76,915 Acquired lease intangible assets, net 29,042 34,137 Other assets 21,386 20,687 Total Assets $6,282,268 $6,200,118 Liabilities Secured notes payable $2,900,000 $2,760,000 Unamortized non-cash debt premium 27,497 29,702 Interest rate contracts 47,702 6,278 Accrued interest payable 12,735 12,701 Acquired lease intangible liabilities, net 238,617 263,649 Accounts payable and accrued expenses 38,330 39,035 Security deposits 29,839 28,670 Dividends payable 19,982 13,801 Total Liabilities 3,314,702 3,153,836 Minority interests 894,982 934,509 Stockholders' equity Common stock 1,142 1,150 Additional paid-in capital 2,144,556 2,144,600 Accumulated other comprehensive income 31,200 415 Accumulated deficit (104,314) (34,392) Total stockholders' equity 2,072,584 2,111,773 Total liabilities and stockholders' equity $6,282,268 $6,200,118 Douglas Emmett, Inc. Consolidated Statements of Income (unaudited and in thousands, except per share data) Three Months Ended June 30, 2007 Revenues Office rental: Rental revenues $92,884 Tenant recoveries 5,362 Parking and other income 11,098 Total office revenues 109,344 Multifamily rental: Rental revenues 16,879 Parking and other income 526 Total multifamily revenues 17,405 Total revenues 126,749 Operating Expenses Office expenses 31,124 Multifamily expenses 3,872 General and administrative expenses 5,120 Depreciation and amortization 50,494 Total operating expenses 90,610 Operating income 36,139 Interest and other income 372 Interest expense (38,313) Loss before minority interests (1,802) Minority interests 542 Net loss $(1,260) Net loss per common share - diluted $(0.01) Weighted average shares of common stock outstanding - diluted 114,862 FFO Reconciliation Three Months Ended June 30, 2007 Funds From Operations (FFO)(1): Net loss $(1,260) Depreciation and amortization of real estate assets 50,494 Minority interests (542) FFO $48,692 Weighted average common shares and units outstanding (in thousands) - diluted 165,709 FFO per share - diluted $0.29 (1) We calculate funds from operations before minority interest (FFO) in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss), computed in accordance with accounting principles generally accepted in the United States of America (GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. The Company uses FFO as a supplemental performance measure because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that results from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP. FFO per share - diluted is calculated by dividing FFO by the average number of fully diluted shares outstanding during the quarter ended June 30, 2007.
SOURCE Douglas Emmett, Inc.
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