EX-99.1 2 a2022q2epexhibit991.htm EX-99.1

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Executive Summary

We own and operate 18.1 million square feet of Class A office properties and 4,577 apartment units (excluding our residential development pipeline) in the premier coastal submarkets of Los Angeles and Honolulu.

Quarterly Results: For the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021:

•Our revenues increased by 9.8% to $247.0 million.

•Our net income attributable to common stockholders increased by 50.5% to $24.4 million, or $0.14 per diluted share.

•Our FFO increased by 9.0% to $105.2 million, or $0.51 per fully diluted share.

•Our AFFO increased by 15.0% to $89.6 million.

•Our same property Cash NOI increased by 5.1% to $151.4 million.

Leasing: During the second quarter, we signed 261 office leases covering approximately 1,030,000 square feet, including 355,000 square feet of new leases. With the expiration of commercial eviction moratoriums in our markets, we are finally able to replace non-paying tenants while still pursuing collection of their outstanding balances. During the second quarter, we recovered approximately 100,000 square feet from such tenants, and that turned our net absorption metric slightly negative. Our leased-to-occupied spread widened to 3.7%, as a result of the large amount of new leasing we did during the quarter. That number was also impacted by the permitting delays and on-site inspection delays that we have been experiencing during the pandemic. Nearly half of our current occupancy backlog is scheduled to move in during the third quarter. Comparing the office leases we signed during the second quarter to the expiring leases for the same space, straight-line rents increased by 3.5% and cash rents decreased by 7.4%. Our multifamily portfolio remains essentially fully leased at 99.6%, with average rent roll-up on new leases this quarter over 8% across our portfolio.

Development: Our office to residential conversion project at 1132 Bishop Place in downtown Honolulu and the Landmark Los Angeles residential project in Brentwood continue to progress nicely. Our residential portfolio has increased to 4,577 units with the addition of newly converted units at Bishop Place and the acquisition of 1221 Ocean Avenue in Santa Monica.

Dividends: On July 15, 2022, we paid a quarterly cash dividend of $0.28 per common share, or $1.12 on an annualized basis.

Guidance: We are narrowing our 2022 full year guidance for Net Income Per Common Share - Diluted to $0.54 to $0.58 and for FFO to $2.03 to $2.07 per fully diluted share. Our guidance does not include the impact of any future property acquisitions or dispositions, financings, property damage insurance recoveries, or other possible capital markets activities. See page 22.

NOTE: See the non-GAAP reconciliations for FFO & AFFO on page 8 and same property NOI on page 10.

See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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Table of Contents

COMPANY OVERVIEW
Corporate Data			3
Property Map			4
Board of Directors and Executive Officers			5
FINANCIAL RESULTS
Consolidated Balance Sheets			6
Consolidated Operating Results			7
Funds from Operations & Adjusted Funds From Operations			8
Same Property Statistics & Net Operating Income			9
Reconciliation of Same Property NOI to Net Income			10
Financial Data for JVs & Fund			11
Loans			12
PORTFOLIO DATA
Office Portfolio Summary			13
Office Percentage Leased and In-Place Rents			14
Office Lease Diversification			15
Largest Office Tenants			16
Office Industry Diversification			17
Office Lease Expirations			18
Office Lease Expirations – Next Four Quarters			19
Office Leasing Activity			20
Multifamily Portfolio Summary			21
GUIDANCE
2022 Guidance			22
Reconciliation of 2022 Non-GAAP Guidance			23
DEFINITIONS			24

Forward Looking Statements (FLS)

This Second Quarter 2022 Earnings Results and Operating Information, which we refer to as our Earnings Package (EP), supplements the information provided in our reports filed with the Securities and Exchange Commission (SEC).  It contains FLS within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and we claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to the expectations regarding the performance of our business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these FLS can be identified by the use of words such as “expect,” "potential,” “continue,” “may,” “will,” “should,” “could,” “seek,” “project,” “intend,” “plan,” “estimate,” "anticipate,” or the negative version of these words or other similar words. FLS presented in this EP, and those that we may make orally or in writing from time to time, are based on our beliefs and assumptions.  Our actual results will be affected by known and unknown risks, trends, uncertainties and factors, some of which are beyond our control or ability to predict, including, but not limited to: adverse developments related to the Coronavirus (COVID-19) global pandemic; adverse economic and real estate developments in Southern California and Honolulu; a general downturn in the economy; decreased rental and occupancy rates or increased tenant incentives; defaults on, and early terminations and non-renewal of, leases by tenants; higher interest rates and operating costs; failure to generate sufficient cash flows to service our debt; difficulties in acquiring properties; failure to successfully operate properties; failure to maintain our REIT status; adverse changes in rent control laws and regulations; environmental uncertainties; risks related to natural disasters; fire and other property damage, lack of or insufficient insurance; inability to successfully expand into new markets or submarkets; risks associated with property development; conflicts of interest with our officers; changes in real estate and zoning laws and increases in real property tax rates; possible future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K for 2021, and other documents filed with the SEC. Although we believe that our assumptions underlying our FLS 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 could be material.  Accordingly, please use caution in relying on any FLS in this EP to anticipate future results or trends. This EP and all subsequent written and oral FLS attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our FLS.

2

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						Company Overview

Corporate Data

as of June 30, 2022

			Office Portfolio
						Consolidated						Total
			Properties			69						71
			Rentable square feet (in thousands)			17,752						18,137
			Leased rate			87.5		%				87.5		%
			Occupancy rate			83.8		%				83.8		%
			Multifamily Portfolio
												Total
			Properties									13
			Units									4,577
			Leased rate(1)									99.6		%

			Market Capitalization (in thousands, except price per share)
			Fully Diluted Shares outstanding as of June 30, 2022						207,049
			Common stock closing price per share (NYSE:DEI)						$	22.38
			Equity Capitalization						$	4,633,764

			Net Debt (in thousands)
						Consolidated						Our Share
			Debt principal(2)			$	5,221,318					$	4,246,136
			Less: cash and cash equivalents(3)			(271,043)						(146,592)
			Net Debt			$	4,950,275					$	4,099,544

			Leverage Ratio (in thousands, except percentage)
			Pro Forma Enterprise Value						$	8,733,308
			Our Share of Net Debt to Pro Forma Enterprise Value						47		%

			AFFO Payout Ratio
			Three months ended June 30, 2022						64.9		%

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(1)     Both the numerator and denominator used in calculating the percentage of units leased do not include 80 units at one property which are temporarily unoccupied as a result of a fire.

(2)    See page 12 for a reconciliation of consolidated debt principal and our share of debt principal to consolidated debt on the balance sheet.

(3)    Our share of cash and cash equivalents is calculated starting with our consolidated cash and cash equivalents of $271.0 million, then deducting the other owners' share of our JVs' cash and cash equivalents of $128.9 million and then adding our share of our unconsolidated Fund's cash and cash equivalents of $4.5 million.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Company Overview

Property Map

as of June 30, 2022

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						Company Overview

Board of Directors and Executive Officers

as of June 30, 2022

BOARD OF DIRECTORS

__________________________________________________________________________________________________________________________________

Dan A. Emmett			Our Executive Chairman of the Board
Jordan L. Kaplan			Our Chief Executive Officer and President
Kenneth M. Panzer			Our Chief Operating Officer
Leslie E. Bider			Retired Executive and Investor
Dorene C. Dominguez			Chairwoman and CEO of Vanir Group of Companies
Dr. David T. Feinberg			President and Chief Executive Officer, Cerner Corporation
Ray C. Leonard			President, Sugar Ray Leonard Foundation
Virginia A. McFerran			Technology and Data Science Advisor
Thomas E. O’Hern			Chief Executive Officer, Macerich
William E. Simon, Jr.			Partner Emeritus, Simon Quick Advisors
Shirley Wang			Founder and CEO, Plastpro Inc.

EXECUTIVE OFFICERS

__________________________________________________________________________________________________________________________________

Dan A. Emmett			Chairman of the Board
Jordan L. Kaplan			Chief Executive Officer and President
Kenneth M. Panzer			Chief Operating Officer
Peter D. Seymour			Chief Financial Officer
Kevin A. Crummy			Chief Investment Officer

CORPORATE OFFICE

1299 Ocean Avenue, Suite 1000, Santa Monica, California 90401

Phone: (310) 255-7700

For more information, please visit our website at www.douglasemmett.com or contact:

Stuart McElhinney, Vice President, Investor Relations

(310) 255-7751

smcelhinney@douglasemmett.com

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						Financial Results

Consolidated Balance Sheets

(Unaudited; In thousands)

			June 30, 2022						December 31, 2021
Assets
Investment in real estate, gross			$	12,228,172					$	11,819,077
Less: accumulated depreciation and amortization			(3,171,544)						(3,028,645)
Investment in real estate, net			9,056,628						8,790,432
Ground lease right-of-use asset			7,459						7,464
Cash and cash equivalents			271,043						335,905
Tenant receivables			9,987						13,127
Deferred rent receivables			115,949						115,148
Acquired lease intangible assets, net			3,816						4,168
Interest rate contract assets			178,921						15,473
Investment in unconsolidated Fund			47,955						46,594
Other assets			14,802						25,721
Total assets			$	9,706,560					$	9,354,032
Liabilities
Secured notes payable and revolving credit facility, net			$	5,188,902					$	5,012,076
Ground lease liability			10,853						10,860
Interest payable, accounts payable and deferred revenue			130,450						145,460
Security deposits			59,216						55,285
Acquired lease intangible liabilities, net			38,192						24,710
Interest rate contract liabilities			766						69,930
Dividends payable			49,230						49,158
Total liabilities			5,477,609						5,367,479
Equity
Douglas Emmett, Inc. stockholders' equity:
Common stock			1,758						1,755
Additional paid-in capital			3,492,864						3,488,886
Accumulated other comprehensive income (loss)			124,770						(38,774)
Accumulated deficit			(1,084,346)						(1,035,798)
Total Douglas Emmett, Inc. stockholders' equity			2,535,046						2,416,069
Noncontrolling interests			1,693,905						1,570,484
Total equity			4,228,951						3,986,553
Total liabilities and equity			$	9,706,560					$	9,354,032

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Financial Results

Consolidated Operating Results

(Unaudited; in thousands, except per share data)

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Revenues
Office rental
Rental revenues and tenant recoveries(1)			$	180,097					$	173,757					$	360,524					$	341,936
Parking and other income			25,580						18,169						48,293						36,633
Total office revenues			205,677						191,926						408,817						378,569
Multifamily rental
Rental revenues			37,950						27,972						69,178						55,055
Parking and other income			3,343						5,108						7,857						7,677
Total multifamily revenues			41,293						33,080						77,035						62,732
Total revenues			246,970						225,006						485,852						441,301
Operating Expenses
Office expenses			69,979						63,541						137,353						125,719
Multifamily expenses			11,895						9,251						22,068						18,562
General and administrative expenses			11,661						9,558						22,901						19,129
Depreciation and amortization			93,947						93,900						183,312						186,697
Total operating expenses			187,482						176,250						365,634						350,107
Other income			474						1,329						841						1,680
Other expenses			(179)						(454)						(362)						(617)
Income from unconsolidated Fund			318						286						565						453
Interest expense			(36,264)						(35,935)						(71,166)						(71,140)
Net income			23,837						13,982						50,096						21,570
Net loss (income) attributable to noncontrolling interests			537						2,215						(208)						6,228
Net income attributable to common stockholders			$	24,374					$	16,197					$	49,888					$	27,798
Net income per common share - basic and diluted			$	0.14					$	0.09					$	0.28					$	0.16
Dividends declared per common share			$	0.28					$	0.28					$	0.56					$	0.56
Weighted average shares of common stock outstanding - basic and diluted			175,784						175,471						175,720						175,468

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(1)Rental revenues and tenant recoveries include tenant recoveries for the following periods:

•$12.5 million for each of the three month periods ended June 30, 2022 and 2021, and

•$27.7 million and $21.5 million for the six months ended June 30, 2022 and 2021, respectively.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Financial Results

Funds From Operations & Adjusted Funds From Operations(1)

(Unaudited; in thousands, except per share data)

The table below presents a reconciliation of Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) to Net income attributable to common stockholders:

			Three Months Ended June 30,												Six Months Ended June 30,
			2022						2021						2022						2021
Funds From Operations (FFO)
Net income attributable to common stockholders			$	24,374					$	16,197					$	49,888					$	27,798
Depreciation and amortization of real estate assets			93,947						93,900						183,312						186,697
Net (loss) income attributable to noncontrolling interests			(537)						(2,215)						208						(6,228)
Adjustments attributable to unconsolidated Fund(2)			702						692						1,396						1,400
Adjustments attributable to consolidated JVs(2)			(13,262)						(12,061)						(25,817)						(23,217)
FFO			$	105,224					$	96,513					$	208,987					$	186,450
Adjusted Funds From Operations (AFFO)
FFO			$	105,224					$	96,513					$	208,987					$	186,450
Straight-line rent			(912)						(259)						(801)						(894)
Net accretion of acquired above- and below-market leases			(2,910)						(2,391)						(4,707)						(5,505)
Loan costs, loan premium amortization and swap amortization			1,494						1,764						3,008						3,356
Recurring capital expenditures, tenant improvements and capitalized leasing expenses(3)			(21,514)						(24,339)						(38,309)						(41,240)
Non-cash compensation expense			5,444						4,595						11,077						9,485
Adjustments attributable to unconsolidated Fund(2)			(261)						(137)						(579)						(319)
Adjustments attributable to consolidated JVs(2)			3,042						2,141						5,023						4,819
AFFO			$	89,607					$	77,887					$	183,699					$	156,152
Weighted average shares of common stock outstanding - diluted			175,784						175,471						175,720						175,468
Weighted average units in our operating partnership outstanding			31,329						30,624						31,386						30,557
Weighted average fully diluted shares outstanding			207,113						206,095						207,106						206,025
Net income per common share - basic and diluted			$	0.14					$	0.09					$	0.28					$	0.16
FFO per share - fully diluted			$	0.51					$	0.47					$	1.01					$	0.90
Dividends paid per share(4)			$	0.28					$	0.28					$	0.56					$	0.56

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(1)Presents the FFO and AFFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership, including our share of our consolidated JVs and our unconsolidated Fund.

(2)Adjusts for the portion of each other listed adjustment item on our share of the results of our unconsolidated Fund and for each other listed adjustment item that is attributed to the noncontrolling interests in our consolidated JVs.

(3)Under the GAAP lease accounting rules, we expense non-incremental leasing expenses (leasing expenses not directly related to the signing of a lease) and capitalize incremental leasing expenses. Since non-incremental leasing expenses are included in the calculation of net income attributable to common stockholders and FFO, the capitalized leasing expenses adjustment to AFFO only includes incremental leasing expenses.

(4)Reflects dividends paid within the respective periods.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Financial Results

Same Property Statistics & Net Operating Income (NOI)(1)

(Unaudited; in thousands, except statistics)

						As of June 30,
						2022						2021
			Office Statistics
			Number of properties			67						67
			Rentable square feet (in thousands)			17,561						17,557
			Ending % leased			87.4		%				87.2		%
			Ending % occupied			83.7		%				84.8		%
			Quarterly average % occupied			84.1		%				85.5		%
			Multifamily Statistics
			Number of properties			10						10
			Number of units			3,449						3,449
			Ending % leased			99.6		%				99.3		%

						Three Months Ended June 30,												% Favorable
						2022						2021						(Unfavorable)
			Net Operating Income (NOI)
			Office revenues			$	203,019					$	190,590					6.5		%
			Office expenses			(68,827)						(61,677)						(11.6)		%
			Office NOI			134,192						128,913						4.1		%
			Multifamily revenues			28,503						25,658						11.1		%
			Multifamily expenses			(8,726)						(7,805)						(11.8)		%
			Multifamily NOI			19,777						17,853						10.8		%
			Total NOI			$	153,969					$	146,766					4.9		%
			Cash Net Operating Income (NOI)
			Office cash revenues			$	200,473					$	187,917					6.7		%
			Office cash expenses			(68,827)						(61,677)						(11.6)		%
			Office cash NOI			131,646						126,240						4.3		%
			Multifamily cash revenues			28,501						25,660						11.1		%
			Multifamily cash expenses			(8,726)						(7,805)						(11.8)		%
			Multifamily cash NOI			19,775						17,855						10.8		%
			Total Cash NOI			$	151,421					$	144,095					5.1		%

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(1) The amounts presented include 100% (not our pro-rata share). See page 10 for a reconciliation of these non-GAAP measures to net income attributable to common stockholders.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Financial Results

Reconciliation of Same Property NOI to Net Income

(Unaudited and in thousands)

			Three Months Ended June 30,
			2022						2021
Same property office cash revenues			$	200,473					$	187,917
Non-cash adjustments per definition of NOI			2,546						2,673
Same property office revenues			203,019						190,590
Same property office expenses			(68,827)						(61,677)
Office NOI			134,192						128,913
Same property multifamily cash revenues			28,501						25,660
Non-cash adjustments per definition of NOI			2						(2)
Same property multifamily revenues			28,503						25,658
Same property multifamily expenses			(8,726)						(7,805)
Multifamily NOI			19,777						17,853
Same Property NOI			153,969						146,766
Non-comparable office revenues			2,658						1,336
Non-comparable office expenses			(1,152)						(1,864)
Non-comparable multifamily revenues			12,790						7,422
Non-comparable multifamily expenses			(3,169)						(1,446)
NOI			165,096						152,214
General and administrative expenses			(11,661)						(9,558)
Depreciation and amortization			(93,947)						(93,900)
Other income			474						1,329
Other expenses			(179)						(454)
Income from unconsolidated Fund			318						286
Interest expense			(36,264)						(35,935)
Net income			23,837						13,982
Net loss attributable to noncontrolling interests			537						2,215
Net income attributable to common stockholders			$	24,374					$	16,197

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Financial Results

Financial Data for JVs & Fund

(Unaudited, in thousands)

			Three Months Ended June 30, 2022
			Wholly-Owned Properties						Consolidated JVs(1)						Unconsolidated Fund(2)
Revenues			$	184,401					$	62,569					$	4,636
Office and multifamily operating expenses			$	59,732					$	22,142					$	1,547
Straight-line rent			$	(264)					$	1,176					$	137
Above/below-market lease revenue			$	333					$	2,577					$	—
Cash NOI attributable to outside interests(3)			$	—					$	18,701					$	1,714
Our share of cash NOI(4)			$	124,600					$	17,973					$	1,238
			Six Months Ended June 30, 2022
			Wholly-Owned Properties						Consolidated JVs(1)						Unconsolidated Fund(2)
Revenues			$	365,514					$	120,338					$	9,033
Office and multifamily operating expenses			$	116,756					$	42,665					$	3,068
Straight-line rent			$	(677)					$	1,478					$	126
Above/below-market lease revenue			$	759					$	3,948					$	—
Cash NOI attributable to outside interests(3)			$	—					$	36,929					$	3,384
Our share of cash NOI(4)			$	248,676					$	35,318					$	2,455

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(1)    Represents stand-alone financial data (with property management fees excluded from operating expenses as a consolidating entry) for four consolidated JVs that we manage. One of the JVs was created in the second quarter of 2022 to purchase a residential property on April 26, 2022. The results of the acquired property are included from the acquisition date. We own a weighted average interest of approximately 46% (based on square footage) in the four JVs, which owned a combined sixteen Class A office properties totaling 4.2 million square feet and two residential properties with 470 apartments in our submarkets. We are entitled to (i) distributions based on invested capital, (ii) fees for property management and other services, (iii) reimbursement of certain acquisition-related expenses and certain other costs and (iv) additional distributions based on Cash NOI.

(2)    Represents stand-alone financial data (with property management fees excluded from operating expenses as a consolidating entry) for one unconsolidated Fund that we manage. We own an interest of approximately 34% in the Fund, which owns two Class A office properties totaling 0.4 million square feet in our submarkets. We are entitled to (i) priority distributions, (ii) distributions based on invested capital, (iii) a carried interest if the investors’ distributions exceed a hurdle rate, (iv) fees for property management and other services and (v) reimbursement of certain costs.  

(3)    Represents the share of Cash NOI allocable under the applicable agreements to interests other than our Fully Diluted Shares.

(4)    Represents the share of Cash NOI allocable to our Fully Diluted Shares.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Financial Results

			Loans (As of June 30 2022, unaudited)
			Maturity Date(1)						Principal Balance (In Thousands)						Our Share(2) (In Thousands)						Effective Rate(3)						Swap Maturity Date
			Consolidated Wholly-Owned Subsidiaries
			3/3/2025						$	335,000					$	335,000					3.84%						3/1/2023
			4/1/2025						102,400						102,400						2.76%						3/1/2023
			8/15/2026						415,000						415,000						3.07%						8/1/2025
			9/19/2026						400,000						400,000						2.44%						9/1/2024
			9/26/2026						200,000						200,000						2.36%						10/1/2024
			11/1/2026						400,000						400,000						2.31%						10/1/2024
			6/1/2027			(4)			550,000						550,000						LIBOR + 1.37%						N/A
			5/18/2028						300,000						300,000						2.21%						6/1/2026
			1/1/2029						300,000						300,000						2.66%						1/1/2027
			6/1/2029						255,000						255,000						3.26%						6/1/2027
			6/1/2029						125,000						125,000						3.25%						6/1/2027
			6/1/2038			(5)			28,918						28,918						4.55%						N/A
			8/21/2023			(6)			—						—						LIBOR + 1.15%						N/A
			Subtotal						3,411,318						3,411,318
			Consolidated JVs
			12/19/2024						400,000						80,000						3.47%						1/1/2023
			5/15/2027			(7)			450,000						400,500						3.04%						4/1/2025
			8/19/2028						625,000						187,500						2.12%						6/1/2025
			4/26/2029			(8)			175,000						96,250						3.90%						5/1/2026
			6/1/2029						160,000						32,000						3.25%						7/1/2027
			Total Consolidated Loans			(9)			$	5,221,318					$	4,207,568
			Unconsolidated Fund
			9/14/2028						$	115,000					$	38,568					2.19%						10/1/2026
			Total Loans												$	4,246,136

-------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Except as noted below, our loans and revolving credit facility: (i) are non-recourse, (ii) are secured by separate collateral pools consisting of one or more properties, (iii) require interest-only monthly payments with the outstanding principal due at maturity, and (iv) contain certain financial covenants which could require us to deposit excess cash flow with the lender under certain circumstances unless we (at our option) either provide a guarantee or additional collateral or pay down the loan within certain parameters set forth in the loan documents.  Certain loans with maturity date extension options require us to meet minimum financial thresholds in order to exercise those extension options.

(1)Maturity dates include the effect of extension options.

(2)"Our Share" is calculated by multiplying the principal balance by our share of the borrowing entity's equity, and is used to calculate the non-GAAP measure "Our Share of Net Debt" - see Corporate Data on page 3.

(3)Effective rate as of June 30, 2022. Includes the effect of interest rate swaps and excludes the effect of prepaid loan costs.

(4)Swaps expired on June 1, 2022.

(5)Requires monthly payments of principal and interest. Principal amortization is based upon a 30-year amortization schedule.

(6)$400.0 million revolving credit facility. The unused commitment fees range from 0.10% to 0.15%.

(7)Effective rate will decrease to 2.26% on July 1, 2022 when new swaps replace existing swaps that will expire.

(8)We closed this loan during the second quarter of 2022.

(9)Our consolidated debt on the balance sheet (see page 6) of $5.19 billion is calculated by adding $3.8 million of unamortized loan premium and deducting $36.2 million of unamortized deferred loan costs from our total consolidated loans of $5.22 billion.

			Statistics for consolidated loans with interest fixed under the terms of the loan or a swap
			Principal balance (in billions)			$4.67
			Weighted average remaining life (including extension options)			5.0 years
			Weighted average remaining fixed interest period			2.9 years
			Weighted average annual interest rate			2.89%

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Portfolio Summary

Total Office Portfolio as of June 30, 2022

			Region						Number of Properties						Our Rentable Square Feet						Region Rentable Square Feet(1)						Our Average Market Share(2)
			Los Angeles
			Westside(3)						52						9,998,784						39,485,810						35.3		%
			Valley						16						6,790,777						21,673,763						43.7
			Honolulu(3)						3						1,347,762						5,172,327						26.1
			Total / Average						71						18,137,323						66,331,900						37.8		%

_________________________________________________

(1)    The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2022 second quarter CBRE Marketview report for our submarkets in that region.

(2)    Our market share is calculated by dividing our Rentable Square Feet by the applicable Region's Rentable Square Feet, weighted in the case of averages based on the square feet of exposure in our total portfolio to each submarket as follows:

			Region						Submarket						Number of Properties						Our Rentable Square Feet						Our Market Share(2)
			Westside						Brentwood						15						2,085,745						60.3		%
									Westwood						7						2,191,444						43.6
									Olympic Corridor						5						1,142,885						34.6
									Beverly Hills(3)						11						2,196,067						27.8
									Santa Monica						11						1,425,374						14.4
									Century City						3						957,269						9.0
			Valley						Sherman Oaks/Encino						12						3,488,995						53.8
									Warner Center/Woodland Hills						3						2,845,577						37.5
									Burbank						1						456,205						6.0
			Honolulu						Honolulu(3)						3						1,347,762						26.1
									Total / Weighted Average						71						18,137,323						37.8		%

_______________________________________________

(3)    In calculating market share, we adjusted the rentable square footage by (i) removing approximately 336,000 rentable square feet of vacant space at an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the submarket and (ii) removing a 218,000 square foot property located just outside the Beverly Hills city limits from both the numerator and the denominator.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Percentage Leased and In-Place Rents

Total Office Portfolio as of June 30, 2022

			Region(1)						Percent Leased						Annualized Rent(2)						Annualized Rent Per Leased Square Foot(2)						Monthly Rent Per Leased Square Foot(2)
			Los Angeles
			Westside						88.0		%				$	459,739,540					$	56.00					$	4.67
			Valley						85.7						201,883,640						36.16						3.01
			Honolulu						93.2						39,538,444						34.46						2.87
			Total / Weighted Average						87.5		%				$	701,161,624					$	46.93					$	3.91

_______________________________________________________________

(1)Regional data reflects the following underlying submarket data:

			Region						Submarket						Percent Leased																		Monthly Rent Per Leased Square Foot(2)
			Westside						Beverly Hills						94.5		%																$	4.68
									Brentwood						82.1																		4.00
									Century City						91.7																		4.45
									Olympic Corridor						81.5																		3.39
									Santa Monica						92.0																		6.88
									Westwood						86.2																		4.47
			Valley						Burbank						100.0																		4.68
									Sherman Oaks/Encino						86.7																		3.10
									Warner Center/Woodland Hills						82.1																		2.57
			Honolulu						Honolulu						93.2																		2.87
									Weighted Average						87.5		%																$	3.91

(2)    Does not include signed leases not yet commenced, which are included in percent leased but excluded from annualized rent.

			Recurring Office Capital Expenditures per Rentable Square Foot
			Three months ended June 30, 2022			$	0.08
			Six months ended June 30, 2022			$	0.15

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Lease Diversification

Total Office Portfolio as of June 30, 2022

Portfolio Tenant Size

Median

Average

Square feet

2,500

5,500

									Office Leases												Rentable Square Feet												Annualized Rent
			Square Feet Under Lease						Number						Percent						Amount						Percent						Amount						Percent
			2,500 or less						1,358						49.8		%				1,947,668						13.0		%				$	85,305,207					12.2		%
			2,501-10,000						1,029						37.8						4,978,933						33.3						228,553,692						32.6
			10,001-20,000						209						7.7						2,929,990						19.6						133,857,920						19.1
			20,001-40,000						92						3.4						2,487,553						16.7						119,150,670						17.0
			40,001-100,000						29						1.1						1,684,309						11.3						87,132,504						12.4
			Greater than 100,000						4						0.2						911,375						6.1						47,161,631						6.7
			Total for all leases						2,721						100.0		%				14,939,828						100.0		%				$	701,161,624					100.0		%

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Largest Office Tenants

Total Office Portfolio as of June 30, 2022

			Tenants paying 1% or more of our aggregate Annualized Rent:
			Tenant						Number of Leases						Number of Properties						Lease Expiration(1)						Total Leased Square Feet						Percent of Rentable Square Feet						Annualized Rent						Percent of Annualized Rent
			Warner Bros. Discovery(2)						4						3						2023-2024						483,412						2.7		%				$	26,645,835					3.8		%
			UCLA(3)						24						10						2022-2027						290,840						1.6						15,655,730						2.2
			William Morris Endeavor(4)						3						1						2022-2027						216,375						1.2						13,356,456						1.9
			Morgan Stanley(5)						5						5						2023-2027						142,020						0.8						10,187,318						1.5
			Equinox Fitness(6)						6						5						2029-2038						185,236						1.0						9,805,769						1.4
			Macerich(7)						2						1						2023-2028						82,368						0.5						7,501,247						1.1
			Total						44						25												1,400,251						7.8		%				$	83,152,355					11.9		%

______________________________________________________

(1)    Expiration dates are per lease (expiration dates do not reflect storage and similar leases).

(2)    Square footage (rounded) expires as follows: 27,000 square feet in 2023; and 456,000 square feet in 2024.

(3)    Square footage (rounded) expires as follows: 4 leases totaling 42,000 square feet in 2022; 6 leases totaling 47,000 square feet in 2023; 2 leases totaling 11,000 square feet in 2024; 4 leases totaling 89,000 square feet in 2025; 5 leases totaling 32,000 square feet in 2026; and 3 leases totaling 71,000 square feet in 2027. Tenant has options to terminate 15,000 square feet in 2023; and 51,000 square feet in 2025.

(4)    Square footage (rounded) expires as follows: 1,000 square feet in 2022; and 209,000 square feet in 2027.

(5)    Square footage (rounded) expires as follows: 30,000 square feet in 2023; 26,000 square feet in 2025; and 86,000 square feet in 2027. Tenant has options to terminate 32,000 square feet in 2024.

(6)    Square footage (rounded) expires as follows: 34,000 square feet in 2029; 46,000 square feet in 2035, 31,000 square feet in 2037, and 74,000 square feet in 2038.

(7)    Square footage (rounded) expires as follows: 27,000 square feet in 2023, and 55,000 square feet in 2028.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Industry Diversification

Total Office Portfolio as of June 30, 2022

Percentage of Annualized Rent by Tenant Industry

			Industry						Number of Leases						Annualized Rent as a Percent of Total
			Legal						573						18.3		%
			Financial Services						367						15.6
			Entertainment						170						14.1
			Real Estate						315						12.6
			Accounting & Consulting						295						9.4
			Health Services						368						8.3
			Retail						166						4.9
			Technology						92						4.1
			Insurance						93						3.8
			Educational Services						50						2.8
			Public Administration						87						2.6
			Other						55						1.3
			Manufacturing & Distribution						51						1.2
			Advertising						39						1.0
			Total						2,721						100.0		%

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Lease Expirations

Total Office Portfolio as of June 30, 2022

(1)    Average of the percentage of leases expiring at June 30, 2019, 2020, and 2021 with the same remaining duration as the leases for the labeled year had at June 30, 2022. Acquisitions are included in the comparable average commencing in the quarter after the acquisition.

			Year of Lease Expiration						Number of Leases						Rentable Square Feet						Expiring Square Feet as a Percent of Total						Annualized Rent at June 30, 2022						Annualized Rent as a Percent of Total						Annualized Rent Per Leased Square Foot(1)						Annualized Rent Per Leased Square Foot at Expiration(2)
			Short Term Leases						76						301,758						1.7		%				$	12,005,347					1.7		%				$	39.78					$	39.87
			2022						275						1,102,393						6.1						47,945,966						6.8						43.49						43.61
			2023						673						2,870,204						15.8						130,947,842						18.7						45.62						46.89
			2024						504						2,854,561						15.7						133,718,394						19.1						46.84						49.90
			2025						417						2,117,170						11.7						98,132,861						14.0						46.35						50.61
			2026						282						1,599,335						8.8						74,608,482						10.6						46.65						52.86
			2027						230						1,780,930						9.8						87,024,229						12.4						48.86						57.28
			2028						96						661,724						3.7						35,187,899						5.0						53.18						62.12
			2029						51						381,437						2.1						18,555,438						2.7						48.65						60.25
			2030						36						421,857						2.3						21,788,400						3.1						51.65						65.82
			2031						39						324,075						1.8						16,741,762						2.4						51.66						66.76
			Thereafter						42						524,384						2.9						24,505,004						3.5						46.73						64.21
			Subtotal/weighted average						2,721						14,939,828						82.4		%				$	701,161,624					100.0		%				$	46.93					$	52.08
			Signed leases not commenced												677,505						3.7
			Available												2,266,856						12.5
			Building management use												126,418						0.7
			BOMA adjustment(3)												126,716						0.7
			Total/weighted average						2,721						18,137,323						100.0		%				$	701,161,624					100.0		%				$	46.93					$	52.08

___________________________________________________

(1)Represents annualized rent at June 30, 2022 divided by leased square feet.

(2)Represents annualized rent at expiration divided by leased square feet.

(3)Represents the square footage adjustments for leases that do not reflect BOMA remeasurement.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Lease Expirations - Next Four Quarters

Total Office Portfolio as of June 30, 2022

									Q3 2022						Q4 2022						Q1 2023						Q2 2023
			Los Angeles
			Westside						233,160						396,120						433,759						402,489
			Valley						115,503						275,384						150,151						265,637
			Honolulu						13,559						68,667						71,000						41,235
			Expiring Square Feet(1)						362,222						740,171						654,910						709,361
			Percentage of Portfolio						2.0		%				4.1		%				3.6		%				3.9		%
			Los Angeles
			Westside						$46.19						$53.05						$54.26						$62.19
			Valley						$34.05						$33.91						$34.44						$36.17
			Honolulu						$36.30						$36.74						$35.78						$31.20
			Expiring Rent per Square Foot(2)						$41.94						$44.42						$47.71						$50.65

________________________________________________________

(1)Includes leases with an expiration date in the applicable period where the space had not been re-leased as of June 30, 2022, other than 301,758 square feet of Short-Term Leases.

(2)Fluctuations in this number primarily reflect the mix of buildings/submarkets involved, as well as the varying terms and square footage of the individual leases expiring. As a result, the data in this table should only be extrapolated with caution. While the following table sets forth data for our underlying submarkets, that data is even more influenced by such issues:

															Next Four Quarters
			Region						Submarket						Expiring SF						Expiring Rent per SF
			Westside						Beverly Hills						325,024						$51.05
									Brentwood						338,910						$50.06
									Century City						144,636						$52.81
									Olympic Corridor						165,703						$44.24
									Santa Monica						221,130						$82.01
									Westwood						270,125						$50.68
			Valley						Sherman Oaks/Encino						448,407						$37.45
									Warner Center/Woodland Hills						358,268						$31.42
			Honolulu						Honolulu						194,461						$35.19

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Office Leasing Activity

Total Office Portfolio during the Three Months ended June 30, 2022

			Net Absorption During Quarter			(0.22)%

			Office Leases Signed During Quarter			Number of Leases						Rentable Square Feet						Weighted Average Lease Term (months)1
			New leases			94						355,462						72
			Renewal leases			167						674,613						53
			All leases			261						1,030,075						61

			Change in Rental Rates for Office Leases Executed during the Quarter(1)
						Expiring Rate(1)						New/Renewal Rate(1)						Percentage Change
			Cash Rent			$47.88						$44.33						(7.4)%
			Straight-line Rent			$43.49						$45.03						3.5%

			Average Office Lease Transaction Costs
						Lease Transaction Costs per SF						Lease Transaction Costs per Annum
			New leases signed during the quarter			$42.60						$7.14
			Renewal leases signed during the quarter			$14.15						$4.43
			All leases signed during the quarter			$23.97						$5.78

________________________________________________________________

(1)Change in rental rate and average renewal lease term exclude leases with a term of twelve months or less. Change in rental rate represents the average annual initial stabilized cash and straight-line rents per square foot on new and renewed leases signed during the quarter compared to the prior leases for the same space. Change in rental rate metrics exclude leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated at the landlord's request, leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe the base rent reflects other off-market inducements to the tenant, and other non-comparable leases.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Portfolio Data

Multifamily Portfolio Summary

as of June 30, 2022

Annualized Rent by Submarket

			Submarket						Number of Properties						Number of Units						Units as a Percent of Total
			Los Angeles
			Santa Monica						3						940						21		%
			West Los Angeles						6						1,300						28
			Honolulu						4						2,337						51
			Total						13						4,577						100		%
			Submarket						Percent Leased						Annualized Rent(1)						Monthly Rent Per Leased Unit
			Los Angeles
			Santa Monica						98.9		%				$	47,042,040					$	4,224
			West Los Angeles(2)						99.9						44,916,192						3,078
			Honolulu						99.7						57,472,560						2,060
			Total / Weighted Average						99.6		%				$	149,430,792					$	2,786

			Recurring Multifamily Capital Expenditures per Unit (2)
			Three months ended June 30, 2022			$	176
			Six months ended June 30, 2022			$	301

________________________________________________________________

(1)    The multifamily portfolio also includes 10,495 square feet of ancillary retail space generating annualized rent of $441,796, which is not included in multifamily annualized rent.

(2)    80 units at one property, which are temporarily unoccupied as a result of a fire, are omitted from the calculation of Percent Leased. These units, as well as insurance recoveries for lost rent, are also omitted from the calculation of Annualized Rent. Unit turn costs from this property are excluded from Recurring Multifamily Capital Expenditures per Unit calculation.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Guidance

2022 Guidance

Metric			Per Share
Net income per common share - diluted			$0.54 to $0.58
FFO per share - fully diluted			$2.03 to $2.07

Assumptions

Metric			Assumption Range			Compared to Prior Assumption
Average Office Occupancy			84% to 86%			Unchanged
Residential Leased Rate			Essentially fully leased			Unchanged
Same Property Cash NOI Growth			4.5% to 5.5%			Unchanged
Above/Below Market Net Revenue			$8 to $12 million			Unchanged
Straight-line Revenue			$1 to $3 million			Unchanged
G&A			$42 to $46 million			Unchanged
Interest Expense			$152 to $155 million			Unchanged
Weighted average fully diluted shares outstanding			207 million			Unchanged

___________________________________________

All of our assumptions include 100% of our consolidated JVs share, not our pro rata share. Except as disclosed, our guidance does not include the impact of future property acquisitions or dispositions, financings, property damage insurance recoveries or other possible capital markets activities or impairment charges. It is also subject to the changing impacts of the COVID-19 pandemic and general economic conditions.

The guidance and representative assumptions on this page are forward looking statements, subject to the safe harbor contained at the beginning of this Earnings Package, and reflect our views of current and future market conditions. Ranges represent a set of likely assumptions, but actual results could fall outside the ranges presented. Only a few of our assumptions underlying our guidance are disclosed above, and our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying our guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect.  As a result, our actual future results can be expected to differ from our expectations, and those differences could be material. See page 23 for a reconciliation of our Non-GAAP guidance.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Guidance

Reconciliation of 2022 Non-GAAP Guidance(1)

(Unaudited; in millions, except per share amounts)

Reconciliation of our guided Net income per common share - diluted to FFO per share - fully diluted:

Reconciliation of net income attributable to common stockholders to FFO			Low						High
Net income attributable to common stockholders			$	94.9					$	101.9
Adjustments for depreciation and amortization of real estate assets			380.0						370.0
Adjustments for noncontrolling interests, consolidated JVs and unconsolidated Fund			(54.5)						(43.2)
FFO			$	420.4					$	428.7
Weighted average fully diluted shares outstanding			High						Low
Weighted average shares of common stock outstanding - diluted			175.7						175.7
Weighted average units in our operating partnership outstanding			31.4						31.4
Weighted average fully diluted shares outstanding			207.1						207.1
Per share			Low						High
Net income per common share - diluted			$	0.54					$	0.58
FFO per share - fully diluted			$	2.03					$	2.07

_____________________________________________

(1) Our guidance does not include the impact of future property acquisitions or dispositions, financings, property damage insurance recoveries, if any, or other possible capital markets activities or impairment charges. The reconciliation should be used as an example only, with the numbers presented only as representative assumptions. Ranges represent a set of likely assumptions, but actual results could fall outside the ranges presented. All assumptions are forward looking statements, subject to the safe harbor contained at the beginning of this Earnings Package, and reflect our views of current and future market conditions. Our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying the guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect.  As a result, our actual future results can be expected to differ from our expectations, and those differences could be material.

NOTE:  See the "Definitions" section for definitions of certain terms used in this Earnings Package.

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						Definitions

Adjusted Funds From Operations (AFFO):  We calculate AFFO from FFO by (i) eliminating the impact on FFO of straight-line rent; amortization/accretion of acquired above/below market leases; loan costs such as amortization/accretion of loan premiums/discounts; amortization and hedge ineffectiveness of interest rate contracts; amortization/expense of loan costs; non-cash compensation expense, and (ii) subtracting recurring capital expenditures, tenant improvements and capitalized leasing expenses (including adjusting for the effect of such items attributable to our consolidated JVs and our unconsolidated Fund, but not for noncontrolling interests included in our calculation of fully diluted equity). Recurring capital expenditures, tenant improvements and leasing expenses are those required to maintain current revenues once a property has been stabilized, generally excluding those for acquired buildings being stabilized, newly developed space and upgrades to improve revenues or operating expenses or significantly change the use of the space, as well as those resulting from casualty damage or bringing the property into compliance with governmental requirements. We report AFFO because it is a widely reported measure of the performance of equity Real Estate Investments Trusts (REITs), and is also used by some investors to compare our performance with other REITs.  However, the National Association of Real Estate Investment Trusts (NAREIT) has not defined AFFO, and other REITs may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to the AFFO of other REITs. AFFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. AFFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

AFFO Payout Ratio: Represents dividends paid within each period divided by the AFFO for that period. We report AFFO Payout Ratio because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to compare our performance with other REITs.

Annualized Rent:  Represents annualized cash base rent (i.e. excludes tenant reimbursements, parking and other revenue) before abatements under leases commenced as of the reporting date and expiring after the reporting date (does not include 677,505 square feet with respect to signed leases not yet commenced at June 30, 2022).  For our triple net office properties (in Honolulu and one single tenant building in Los Angeles), annualized rent is calculated for triple net leases by adding expense reimbursements and estimates of normal building expenses paid by tenants to base rent. Annualized Rent does not include lost rent recovered from insurance and rent for building management use. Annualized Rent includes rent for our corporate headquarters in Santa Monica. We report Annualized Rent because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine tenant demand and to compare our performance and value with other REITs. We use Annualized Rent to manage and monitor the performance of our office and multifamily portfolios.

Average Office Occupancy: Calculated by averaging the Occupancy Rates on the last day of the current and prior quarter and, for reporting periods longer than a quarter, by averaging the Occupancy Rates for all the quarters in the respective reported period.

Consolidated Portfolio: Includes all of the properties included in our consolidated results, including our consolidated JVs. At June 30, 2022, we own 100% of our consolidated portfolio, except for sixteen office properties totaling 4.2 million square feet and two residential properties with 470 apartments, which we own through four consolidated JVs and in which we own a weighted average interest of approximately 46% based on square footage.

Consolidated Net Debt: Represents our consolidated debt, net of cash and cash equivalents, and before adding unamortized loan premium and deducting unamortized deferred loan costs. Cash and cash equivalents are subtracted because they could be used to reduce the debt obligations and unamortized loan premium and deferred loan costs are not adjusted for because they do not require cash settlement. Consolidated Net Debt is a non-GAAP financial measure for which we believe that consolidated debt is the most directly comparable GAAP financial measure. We report Consolidated Net Debt because some investors use it to evaluate and compare our leverage and financial position with that of other REITs. A limitation associated with using Consolidated Net Debt is that it subtracts cash and cash equivalents and may therefore imply that there is less debt than the most comparable GAAP financial measure indicates.

Equity Capitalization: Represents our Fully Diluted Shares multiplied by the closing price of our common stock on the New York Stock Exchange as of June 30, 2022.

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						Definitions

Fully Diluted Shares:  Calculated according to the treasury stock method, based on our diluted outstanding stock and units in our Operating Partnership.

Fund: At June 30, 2022, we owned an interest of approximately 34% in Douglas Emmett Partnership X, LP (Partnership X). The Fund owns two office properties totaling 0.4 million square feet.

Funds From Operations (FFO):  We calculate FFO in accordance with the standards established by NAREIT by excluding gains (or losses) on sales of investments in real estate, gains (or losses) from changes in control of investments in real estate, real estate depreciation and amortization (other than amortization of right-of-use assets for which we are the lessee and amortization of deferred loan costs), and impairment write-downs of real estate from our net income (loss) (including adjusting for the effect of such items attributable to our consolidated JVs and our unconsolidated Fund, but not for noncontrolling interests included in our calculation of fully diluted equity). We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding impacts from changes in the value of our real estate, and to compare our performance with other REITs. FFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. FFO has limitations as a measure of our performance because it excludes depreciation and amortization of real estate, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements and leasing expenses necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Other REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to the FFO of other REITs.

   

GAAP: Refers to accounting principles generally accepted in the United States.

Joint Ventures (JVs): At June 30, 2022, we owned a weighted average interest of approximately 46% based on square footage in four consolidated JVs. The JVs owned sixteen office properties totaling 4.2 million square feet and two residential properties with 470 apartments. One of the JVs was created in the second quarter of 2022 to purchase a residential property on April 26, 2022. The results of the acquired property are included in our consolidated results from the acquisition date.

Lease Transaction Costs: Represents the weighted average of tenant improvements and leasing commissions for leases signed by us during the quarter, excluding leases substantially negotiated by the seller in the case of acquired properties and leases for tenants relocated from space being taken out of service. We report Lease Transaction Costs because it is a widely reported measure of the performance of equity REITs, and is used by some investors to determine our cash needs and to compare our performance with other REITs. We use Lease Transaction Costs to manage and monitor the performance of our office and multifamily portfolios.

Leased Rate: The percentage leased as of June 30, 2022. Management space is considered leased. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating percentage leased. We report Leased Rates because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Leased Rate to manage and monitor the performance of our office and multifamily portfolios.

Net Absorption: Represents the change in percentage leased between the last day of the current and prior quarter, excluding a property undergoing conversion from office to residential use, as well as properties acquired or sold during the current quarter. The calculation also excludes the impact of building remeasurement. We report Net Absorption because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Net Absorption to manage and monitor the performance of our office portfolio.

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						Definitions

Net Income Per Common Share - Diluted: We calculate Net Income Per Common Share - Diluted in accordance with GAAP by dividing the net income attributable to common stockholders for the period by the weighted average number of common shares and dilutive instruments outstanding during the period using the treasury stock method. We account for unvested Long Term Incentive Plan Unit awards that contain non-forfeitable rights to dividends as participating securities and include these securities in the computation using the two-class method.

Net Operating Income (NOI):  We calculate NOI as revenue less operating expenses attributable to the properties that we own and operate. We present two forms of NOI:

•NOI: is calculated by excluding the following from our net income (loss): general and administrative expenses, depreciation and amortization expense, other income, other expenses, income from unconsolidated Fund, interest expense, gains (losses) on sales of investments in real estate and net income attributable to noncontrolling interests.

•Cash NOI: is calculated by excluding from NOI our straight-line rent and the amortization/accretion of acquired above/below market leases.

We report NOI because it is a widely recognized measure of the performance of equity REITs, and is used by some investors to identify trends in occupancy rates, rental rates and operating costs and to compare our operating performance with that of other REITs.  NOI is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure.  NOI has limitations as a measure of our performance because it excludes depreciation and amortization expense, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements and leasing expenses necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. NOI should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Other REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to the NOI of other REITs.

Occupancy Rate:  We calculate the Occupancy Rate by excluding signed leases not yet commenced from the Leased Rate. Management space is considered occupied. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating the Occupancy Rate. We report Occupancy Rate because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Occupancy Rate to manage and monitor the performance of our office and multifamily portfolios.

Operating Partnership: Douglas Emmett Properties, LP

Our Share of Net Debt: We calculate Our Share of Net Debt by multiplying the principal balance of our consolidated loans and our unconsolidated Fund's loan by our equity interest in the relevant borrower, and subtracting the product of cash and cash equivalents multiplied by our equity interest in the entity that owns the cash or cash equivalent. We subtract cash and cash equivalents because they could be used to reduce the debt obligations, and do not add unamortized loan premium or subtract unamortized deferred loan costs because they do not require cash settlement. Our Share of Net Debt is a non-GAAP financial measure for which we believe that consolidated debt is the most directly comparable GAAP financial measure. We report Our Share of Net Debt because some investors use it to evaluate and compare our leverage and financial position with that of other REITs.

Pro Forma Enterprise Value: We calculate Pro Forma Enterprise Value by adding Equity Capitalization to Our Share of Net Debt. Pro Forma Enterprise Value is a non-GAAP financial measure for which we believe that consolidated total equity and liabilities is the most directly comparable GAAP financial measure. We report Pro Forma Enterprise Value because some investors use it to evaluate and compare our financial position with that of other REITs.

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						Definitions

Recurring Capital Expenditures:  Building improvements required to maintain revenues once a property has been stabilized, and excludes capital expenditures for (i) acquired buildings being stabilized, (ii) newly developed space, (iii) upgrades to improve revenues or operating expenses or significantly change the use of the space, (iv) casualty damage and (v) bringing the property into compliance with governmental or lender requirements. We report Recurring Capital Expenditures because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine our cash flow requirements and to compare our performance with other REITs. We use Recurring Capital Expenditures to manage and monitor the performance of our office and multifamily portfolios.

Rental Rate: We report Rental Rate because it is a widely reported measure of the performance of equity REITs, and is used by some investors to compare our performance with other REITs. We use Rental Rate to manage and monitor the performance of our office and multifamily portfolios. We present two forms of Rental Rates:

•Cash Rental Rate: is calculated by dividing the rent paid by the Rentable Square Feet.

•Straight-Line Rental Rate: is calculated by dividing the average rent over the lease term by the Rentable Square Feet.

Rentable Square Feet:  Based on the Building Owners and Managers Association (BOMA) measurement.  At June 30, 2022, total consists of 15,617,333 leased square feet (including 677,505 square feet with respect to signed leases not commenced), 2,266,856 available square feet, 126,418 building management use square feet and 126,716 square feet of BOMA adjustment on leased space. We report Rentable Square Feet because it is a widely reported measure of the performance and value of equity REITs, and is also used by some investors to compare our performance and value with other REITs. We use Rentable Square Feet to manage and monitor the performance of our office portfolio.

Same Property NOI:  To facilitate a comparison of NOI between reported periods, we report NOI for a subset of our properties referred to as our “same properties,” which are properties that have been owned and operated by us during both periods being compared.  We exclude from our same property subset properties that during the comparable periods were: (i) acquired, (ii) sold, held for sale, contributed or otherwise removed from our consolidated financial statements, or (iii) that underwent a major repositioning project, were impacted by development activity, or suffered significant casualty loss that we believed significantly affected the properties' operating results. We also exclude rent received from ground leases. Our Same Property NOI is not adjusted for noncontrolling interests in properties which are not wholly owned.

Our same properties for 2022 include all of our Consolidated Portfolio properties, other than: (1) a 493,000 square foot office property in Honolulu affected by development activity, (2) a residential property with 712 apartments and approximately 34,000 square feet of retail space in Los Angeles partially affected by fire damage, (3) a new residential property with 376 apartments in Los Angeles that we commenced placing into service in the second quarter of 2022, and (4) a residential property with 120 units that we acquired in the second quarter of 2022.

We report Same Property NOI because it is a widely reported measure of the performance and value of equity REITs, and it is used by some investors to: (i) analyze our operating results excluding the impact of properties not being operated on a consistent basis, and (ii) to compare our performance and value with other REITs. We use Same Property NOI to manage and monitor the performance of our office portfolio.

Short Term Leases:  Represents leases that expired on or before the reporting date or had a term of less than one year, including hold over tenancies, month to month leases and other short term occupancies.

Total Portfolio: At June 30, 2022, our Total Portfolio included our Consolidated Portfolio plus two office properties totaling 0.4 million square feet owned by one unconsolidated Fund in which we owned approximately 34%.

"We" and "our" refers to Douglas Emmett, Inc., our Operating Partnership and its subsidiaries, as well as our consolidated JVs and our unconsolidated Fund.

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