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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