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Douglas Emmett, Inc. Announces Third Quarter 2007 Results
Reports FFO of $0.29 per Diluted Share
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.
Acquisitions
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,
California.
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.
Dividends
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 www.douglasemmett.com 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 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 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
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 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
Commission.
Douglas Emmett, Inc.
Consolidated Balance Sheets
(in thousands, except for share data)
September 30, December 31,
2007 2006
(unaudited)
Assets
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
Liabilities
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
Revenues
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.
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