Douglas Emmett Inc Q4 FY2024 earnings call

• Acknowledged the impact of recent Los Angeles fires but noted no property damage, and the company is supporting recovery efforts.
• Highlighted progress on growth initiatives: purchased an office property and residential development site at Wilshire and Westwood Boulevards; began redevelopment of Studio Plaza office building in Burbank; Barrington Plaza residential property has a permit to begin construction.
• Formed a new joint venture for a 17-story office building and adjoining residential site in Westwood with an estimated $150 million to $200 million investment over 3-4 years; closed a $325 million loan for another joint venture.
• In 2024, signed 876 office leases totaling 3.8 million square feet, with Q4 signing 204 leases covering 796,000 square feet. Residential portfolio was 99.1% leased.

Office: In 2024, Douglas Emmett signed 876 office leases totaling a record 3.8 million square feet, with an average of 945,000 square feet per quarter. During Q4 2024, 204 office leases covering 796,000 square feet were signed, including 242,000 sq ft of new leases and 554,000 sq ft of renewal leases. New leasing demand from tenants over 10,000 square feet improved to pre-pandemic levels, and the overall value of new leases signed in Q4 increased by 4% with cash spreads down 7%. Leasing costs in Q4 were $5.46 per square foot per year, well below the benchmark for other office REITs. Residential: The residential portfolio remained essentially fully leased at 99.1% with good demand.

• 2025 net income per common share diluted is expected to be between negative $0.17 and negative $0.11.
• FFO per fully diluted share is expected to be between $1.42 and $1.48.
• Guidance does not include the impact of unconsummated deals or potential future property acquisitions/dispositions.

• Potential risks from known and unknown factors affecting future performance, as outlined in SEC filings.
• Impact of local political actions such as rent freezes, and regulations from CEQA and the Coastal Commission on development and leasing activities.

Q: Thoughts on local politicians proposing rent freezes and the impact of CEQA and Coastal Commission on redevelopment?

A: Jordan expressed hope rent freezes don't occur, and optimism that the governor's orders and city efforts will allow smoother redevelopment under CEQA and Coastal Commission.

Q: Leasing volume and its relation to occupancy guidance?

A: Jordan discussed that leasing showings are up, low roll this year, and there's a lag between leasing and occupancy, but optimistic about positive absorption in 2025.

Q: Details on the 10900 Wilshire acquisition cap rate?

A: Jordan mentioned going in at over a 10% cap rate for the combined office and residential project, expecting to end above 10% cap rate when completed.