Douglas Emmett, Inc. Announces Third Quarter 2007 Results

Reports FFO of $0.29 per Diluted Share

Nov 06, 2007, 00:00 ET from Douglas Emmett, Inc.

    SANTA MONICA, Calif., Nov. 6 /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 third quarter financial results
 for the quarter ended September 30, 2007.
     Financial Results
     Funds From Operations (FFO) for the quarter ended September 30, 2007
 totaled $46.6 million, or $0.29 per diluted share. For the nine months
 ended September 30, 2007, FFO totaled $141.7 million, or $0.86 per diluted
 share. The Company reported a net loss of $2.8 million, or approximately
 $0.03 per diluted share, for the quarter ended September 30, 2007 and a net
 loss of $7.3 million, or $0.06 per diluted share, for the nine months ended
 September 30, 2007.
     Company Operations
     As of September 30, 2007, the Company's office portfolio was 95.7%
 leased, which was consistent with the prior quarter. Occupancy for the
 Company's office portfolio was 93.9% as of September 30, 2007 compared to
 93.0% occupied as of June 30, 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 third quarter, the
 Company signed 109 new and renewal leases, totaling approximately 326,038
 square feet. The Company's multifamily portfolio was 99.3% leased at
 September 30, 2007.
     Subsequent to the end of the third quarter, on October 31, 2007 the
 Company acquired Cornerstone Plaza, an 8-story, Class A office building
 comprised of approximately 174,000 square feet, for a contract price of $84
 million, or approximately $484 per square foot. This acquisition increases
 the Company's assets within its Olympic Corridor submarket to 5 office
 buildings, totaling approximately 1.1 million rentable square feet. The
 building is located at 1990 South Bundy Drive in West Los Angeles,
     Financing Activity
     Recently, the Company increased the availability under its secured
 revolving credit facility to $370 million from $250 million. If the amount
 outstanding is $262.5 million or less, the credit facility bears interest
 at LIBOR plus 70 basis points or, at the Company's option, the Federal
 Funds Rate plus 95 basis points. If the outstanding amount exceeds $262.5
 million, the credit facility bears interest at LIBOR plus 80 basis points
 or, at the Company's option, the Federal Funds Rate plus 105 basis points.
     Share Repurchases
     During the third quarter, the Company repurchased approximately 4.3
 million share equivalents in private transactions for a total consideration
 of approximately $105 million. Year-to-date, the Company has repurchased a
 total of 6.4 million share equivalents totaling $154.4 million, which
 represents an average price of approximately $24.26 per share.
     During the quarter, the Company's Board of Directors approved a $0.175
 per share quarterly cash dividend, which was paid on October 15, 2007 to
 shareholders of record as of September 28, 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 third quarter results
 is scheduled for Wednesday, November 7, 2007 at 2:00 p.m. Eastern Time,
 11:00 a.m. Pacific Time. Interested parties can access the live call via
 the Internet by going to the Investor Relations section of the Company's
 Web site at or by dialing into the call at
 800.240.2134 (domestic) or 303.262.2143 (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, November 14, 2007 at
 800.405.2236 (domestic) or 303.590.3000 (international) and using the
 passcode 11098798.
     Supplemental Information
     Supplemental financial information for the Company's third quarter
 financial results can be accessed on the Company's Web site under the
 Investor Relations 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 properties are concentrated in ten premier submarkets
 -- Brentwood, Olympic Corridor, Century City, Santa Monica, Beverly Hills,
 Westwood, Sherman Oaks/Encino, Warner Center/Woodland Hills and Burbank and
 Honolulu, Hawaii. The Company focuses on owning and acquiring a substantial
 share of top-tier office properties and premier multifamily communities in
 neighborhoods that possess significant supply constraints, high-end
 executive housing and key lifestyle amenities. 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 forward-looking statements to
 anticipate future results or trends. For a discussion of some of the risks
 and uncertainties that 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
                              Douglas Emmett, Inc.
                          Consolidated Balance Sheets
                     (in thousands, except for share data)
                                                  September 30,    December 31,
                                                       2007           2006
     Investments in real estate:
       Land                                          $817,249       $813,599
       Buildings and improvements                   4,898,278      4,863,955
       Tenant improvements and leasing costs          442,426        411,063
                                                    6,157,953      6,088,617
       Less: accumulated depreciation                (184,765)       (32,521)
          Net investment in real estate             5,973,188      6,056,096
       Cash and cash equivalents                        2,049          4,536
       Tenant receivables, net                            794          4,160
       Deferred rent receivables, net                  16,669          3,587
       Interest rate contracts                         76,156         76,915
       Acquired above-market lease intangible
        assets, net                                    26,936         34,137
       Other assets                                    26,531         20,687
          Total Assets                             $6,122,323     $6,200,118
       Secured notes payable                       $2,939,100     $2,760,000
       Unamortized non-cash debt premium               26,371         29,702
       Interest rate contracts                         49,725          6,278
       Accrued interest payable                        12,611         12,701
       Accounts payable and accrued expenses           51,903         39,035
       Acquired below-market lease
        intangibles, net                              226,513        263,649
       Security deposits                               30,566         28,670
       Dividends payable                               19,221         13,801
          Total Liabilities                         3,356,010      3,153,836
       Minority interests                             857,407        934,509
     Stockholders' equity
       Common stock                                     1,098          1,150
       Additional paid-in capital                   2,144,786      2,144,600
       Accumulated other comprehensive income         (33,903)           415
       Accumulated deficit                           (203,075)       (34,392)
          Total stockholders' equity                1,908,906      2,111,773
          Total liabilities and stockholders'
           equity                                  $6,122,323     $6,200,118
                              Douglas Emmett, Inc.
                       Consolidated Statements of Income
              (unaudited and in thousands, except per share data)
                                                   Three Months    Nine Months
                                                      Ended          Ended
                                                   September 30,  September 30,
                                                       2007           2007
       Office rental:
          Rental revenues                             $94,592       $279,088
          Tenant recoveries                             6,704         19,924
          Parking and other income                     12,137         34,335
       Total office revenues                          113,433        333,347
       Multifamily rental:
          Rental revenues                              16,994         50,387
          Parking and other income                        505          1,522
       Total multifamily revenues                      17,499         51,909
       Total revenues                                 130,932        385,256
     Operating Expenses
       Office expenses                                 32,817         96,907
       Multifamily expenses                             4,332         13,127
       General and administrative                       5,862         16,024
       Depreciation and amortization                   50,629        152,244
       Total operating expenses                        93,640        278,302
     Operating income                                  37,292        106,954
       Interest and other income                          205            659
       Interest expense                               (41,504)      (118,119)
     Loss before minority interests                    (4,007)       (10,506)
       Minority interests                               1,222          3,188
     Net loss                                         $(2,785)       $(7,318)
     Net loss per common share - diluted               $(0.03)        $(0.06)
     Weighted average shares of common stock
      outstanding - diluted                           110,956        113,593
                               FFO Reconciliation
                                                   Three Months    Nine Months
                                                      Ended          Ended
                                                   September 30,  September 30,
                                                       2007           2007
     Funds From Operations (FFO)(1):
     Net loss                                         $(2,785)       $(7,318)
       Depreciation and amortization of real
        estate assets                                  50,629        152,241
       Minority interests                              (1,222)        (3,188)
     FFO                                              $46,622       $141,735
     Weighted average share equivalents outstanding
      (in thousands) - diluted                        160,625        164,230
     FFO per share - diluted                            $0.29          $0.86
     (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.  Management 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 the FFO by the average
         number of fully diluted share equivalents outstanding during the
         quarter and nine months ended September 30, 2007.

SOURCE Douglas Emmett, Inc.