Douglas Emmett, Inc. Announces Second Quarter 2007 Results

Reports FFO of $0.29 per Diluted Share

Aug 07, 2007, 01:00 ET from Douglas Emmett, Inc.

    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,
     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.
     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.
     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 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
     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
     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
     Mary Jensen, Vice President - Investor Relations
     310.255.7751 or
                               --tables follow--
                              Douglas Emmett, Inc.
                          Consolidated Balance Sheets
                     (in thousands, except for share data)
                                                       June 30,   December 31,
                                                         2007        2006
     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
       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
       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,

SOURCE Douglas Emmett, Inc.