EXHIBIT 99.2
Douglas Emmett, Inc.
TABLE OF CONTENTS
This Supplemental Operating and Financial Data contains forward-looking statements 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. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements. You should not rely on forward-looking statements as predictions of future events. Forward-looking statements involve numerous risks and uncertainties that could significantly affect anticipated results in the future and, accordingly, such results may differ materially from those expressed in any forward-looking statement made by us. These risks and uncertainties include, but are not limited to: adverse economic and real estate developments in Southern California and Honolulu; decreased rental rates or increased tenant incentives and vacancy rates; defaults on, early terminations of, or non-renewal of leases by tenants; increased interest rates and operating costs; failure to generate sufficient cash flows to service our outstanding indebtedness; difficulties in identifying properties to acquire and completing acquisitions; failure to successfully operate acquired properties and operations; failure to maintain our status as a REIT under the Internal Revenue Code of 1986, as amended; possible adverse changes in rent control laws and regulations; environmental uncertainties; risks related to natural disasters; lack or insufficient amount of 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; the consequences of any future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K filed with the Securities and Exchange commission (SEC) on April 2, 2007.
Douglas Emmett, Inc.
CORPORATE DATA
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| Douglas Emmett, Inc. | | CORPORATE DATA as of March 31, 2007 |
COMPANY BACKGROUND
We are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and have a growing presence in Honolulu, Hawaii. Our presence in Los Angeles and Honolulu is the result of a consistent and focused strategy of identifying submarkets that are supply constrained, have high barriers to entry and exhibit strong economic characteristics such as population and job growth and a diverse economic base. In our office portfolio, we focus primarily on owning and acquiring a substantial share of top-tier office properties within submarkets located near high-end executive housing and key lifestyle amenities. In our multifamily portfolio, we focus primarily on owning and acquiring select properties at premier locations within these same submarkets.
Our office portfolio consists of 46 properties with approximately 11.6 million rentable square feet, and our multifamily portfolio consists of nine properties with a total of 2,868 units. As of March 31, 2007, our office portfolio was 95.2% leased, and our multifamily properties were 99.4% leased. Our office portfolio contributed approximately 84.8% of our annualized rent as of March 31, 2007, while our multifamily portfolio contributed approximately 15.2%. As of March 31, 2007, our Los Angeles County office and multifamily portfolio contributed approximately 90.9% of our annualized rent, and our Honolulu, Hawaii office and multifamily portfolio contributed approximately 9.1%.
Our properties are concentrated in nine premier Los Angeles County submarkets—Brentwood, Olympic Corridor, Century City, Santa Monica, Beverly Hills, Westwood, Sherman Oaks/Encino, Warner Center/Woodland Hills and Burbank—as well as in Honolulu, Hawaii.
This Supplemental Operating and Financial Data supplements the information provided in our reports filed with the SEC. Additional information about us and our properties is also available at our websitewww.douglasemmett. com.
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| Douglas Emmett, Inc. | | CORPORATE DATA as of March 31, 2007 |
| | | | |
Number of office properties owned. | | | 46 | |
Square feet owned (in thousands)(1) | | | 11,585 | |
Office leased rate as of March 31, 2007 | | | 95.2 | % |
Number of multifamily properties owned | | | 9 | |
Number of multifamily units owned | | | 2,868 | |
Multifamily leased rate as of March 31, 2007 | | | 99.4 | % |
Market capitalization (in thousands): | | | | |
Total debt(2) | | $ | 2,750,000 | |
Common equity capitalization(3) | | $ | 4,213,314 | |
Total market capitalization(3) | | $ | 6,963,314 | |
Debt/total market capitalization(3) | | | 39.5 | % |
Common stock data (NYSE:DEI): | | | | |
Range of closing prices(4) | | $ | 24.99-29.01 | |
Closing price at quarter end(5) | | $ | 25.53 | |
Common shares outstanding (in thousands)(5) | | | 115,006 | |
Operating partnership units outstanding (in thousands)(5) | | | 50,028 | |
Weighted average common shares and units outstanding (in thousands)—diluted(4) | | | 166,391 | |
| (1) | Includes a 30,000 square foot fitness center leased during the first quarter of 2007 currently under construction as a free standing building. This space is subject to BOMA remeasurement when the construction is complete. |
| (2) | Excludes non-cash loan premium as of March 31, 2007. |
| (3) | We calculate market capitalization by adding our total debt and total number of common shares and operating partnership units outstanding multiplied by the closing price of our stock at the end of the period. |
| (4) | For the quarter ended March 31, 2007. |
| (5) | As of March 30, 2007, the last trading day of the quarter. |
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| Douglas Emmett, Inc. | | INVESTOR INFORMATION |
| | | | | | | | | | |
| CORPORATE |
808 Wilshire Boulevard, Suite 200 Santa Monica, California 90401 (310) 255-7700 BOARD OF DIRECTORS |
| | | | | |
Dan A. Emmett | | Chairman of the Board, Douglas Emmett, Inc. | | Leslie E. Bider | | Former Chairman and Chief Executive Officer, Warner Chapel Music, Inc. and Private Investor | | Thomas E. O’Hern | | Executive Vice President, Chief Financial Officer and Treasurer, Macerich Company |
| | | | | |
Jordan L. Kaplan | | President and Chief Executive Officer, Douglas Emmett, Inc. | | Victor J. Coleman | | Former President and Chief Operating Officer, Arden Realty, Inc. and Managing Director, Hudson Capital, LLC. | | Dr. Andrea L. Rich | | Former President and Chief Executive Officer, Los Angeles Museum of Art, and Former Executive Vice Chancellor and Chief Operating Officer, University of California Los Angeles |
| | | | | |
Kenneth M. Panzer | | Chief Operating Officer, Douglas Emmett, Inc. | | Ghebre Selassie Mehreteab | | Chief Executive Officer, NHP Foundation | | William Wilson III | | Former Chairman, Cornerstone Properties, Inc., Managing Partner, Wilson Meany Sullivan, LLC |
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| EXECUTIVE AND SENIOR MANAGEMENT |
| | | | | |
Jordan L. Kaplan | | President and Chief Executive Officer | | Andres Gavinet | | Executive Vice President of Finance | | Barbara J. Orr | | Chief Administrative Officer |
| | | | | |
Kenneth M. Panzer | | Chief Operating Officer | | Gregory R. Hambly | | Chief Accounting Officer | | Allan B. Golad | | SVP, Property Management |
| | | | | |
William Kamer | | Chief Financial Officer | | | | | | Michael J. Means | | SVP, Commercial Leasing |
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| INVESTOR RELATIONS |
Investor Relations Contact: Mary C. Jensen, Vice President—Investor Relations (310) 255-7751 Email Contact: ir@douglasemmett.com Please visit our corporate website at: www.douglasemmett.com |
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CONSOLIDATED FINANCIAL RESULTS
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| Douglas Emmett, Inc. | | QUARTERLY OPERATING RESULTS For the three months ended March 31, 2007 (unaudited and in thousands, except per share data) |
| | | | |
Revenues: | | | | |
Office rental: | | | | |
Rental revenues | | $ | 91,612 | |
Tenant recoveries | | | 7,858 | |
Parking and other income | | | 11,100 | |
| | | | |
Total office revenues | | | 110,570 | |
Multifamily rental: | | | | |
Rental revenues | | | 16,514 | |
Parking and other income | | | 491 | |
| | | | |
Total multifamily revenues | | | 17,005 | |
| | | | |
Total revenues | | | 127,575 | |
| |
Operating Expenses: | | | | |
Office rental | | | 32,966 | |
Multifamily rental | | | 4,923 | |
General and administrative | | | 5,042 | |
Depreciation and amortization | | | 51,121 | |
| | | | |
Total operating expenses | | | 94,052 | |
| | | | |
Operating income | | | 33,523 | |
Interest and other income | | | 82 | |
Interest expense | | | (38,302 | ) |
| | | | |
Loss before minority interests | | | (4,697 | ) |
Minority interests(1) | | | 1,424 | |
| | | | |
Net loss | | $ | (3,273 | ) |
| | | | |
Net loss per common share—basic and diluted | | $ | (0.03 | ) |
| | | | |
Weighted average shares of common stock outstanding—basic and diluted | | | 115,006 | |
| | | | |
| (1) | Represents the portion of results attributable to ownership interests in our operating partnership through OP units. |
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| Douglas Emmett, Inc. | | BALANCE SHEETS (unaudited and in thousands) |
| | | | | | | | |
| | | March 31, 2007 | | | December 31, 2006 | |
Assets | | | | | | | | |
Investment in real estate: | | | | | | | | |
Land | | $ | 813,599 | | | $ | 813,599 | |
Building and improvements | | | 4,865,897 | | | | 4,863,955 | |
Tenant improvements and leasing costs | | | 419,350 | | | | 411,063 | |
| | | | | | | | |
| | | 6,098,846 | | | | 6,088,617 | |
Less: accumulated depreciation | | | (83,638 | ) | | | (32,521 | ) |
| | | | | | | | |
Net investment in real estate | | | 6,015,208 | | | | 6,056,096 | |
Cash and cash equivalents | | | 3,850 | | | | 4,536 | |
Tenant receivables | | | 3,915 | | | | 4,160 | |
Deferred rent receivables | | | 8,092 | | | | 3,587 | |
Interest rate contracts | | | 71,274 | | | | 76,915 | |
Acquired above-market lease intangibles, net | | | 31,413 | | | | 34,137 | |
Other assets | | | 20,089 | | | | 20,687 | |
| | | | | | | | |
Total assets | | $ | 6,153,841 | | | $ | 6,200,118 | |
| | | | | | | | |
Liabilities | | | | | | | | |
Secured notes payable | | $ | 2,750,000 | | | $ | 2,760,000 | |
Unamortized non-cash debt premium | | | 28,607 | | | | 29,702 | |
Interest rate contracts | | | 16,200 | | | | 6,278 | |
Accrued interest payable | | | 12,614 | | | | 12,701 | |
Acquired below-market lease intangibles, net | | | 251,062 | | | | 263,649 | |
Accounts payable and accrued expenses | | | 41,894 | | | | 39,035 | |
Security deposits | | | 29,176 | | | | 28,670 | |
Dividends payable | | | 20,126 | | | | 13,801 | |
| | | | | | | | |
Total liabilities | | | 3,149,679 | | | | 3,153,836 | |
Minority interest(1) | | | 927,685 | | | | 934,509 | |
Stockholders’ Equity | | | | | | | | |
Common stock | | | 1,150 | | | | 1,150 | |
Additional paid-in capital | | | 2,144,591 | | | | 2,144,600 | |
Accumulated other comprehensive (loss) income | | | (11,473 | ) | | | 415 | |
Accumulated deficit | | | (57,791 | ) | | | (34,392 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 2,076,477 | | | | 2,111,773 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 6,153,841 | | | $ | 6,200,118 | |
| | | | | | | | |
| (1) | Represents the ownership interest of our OP unit holders in our operating partnership, excluding DEI. |
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| Douglas Emmett, Inc. | | FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS For the three months ended March 31, 2007 (unaudited and in thousands, except per share data) |
| | | | |
Funds From Operations (FFO)(1): | | | | |
Net loss | | $ | (3,273 | ) |
Depreciation and amortization assets of real estate | | | 51,118 | |
Minority interests | | | (1,424 | ) |
| | | | |
FFO | | $ | 46,421 | |
| | | | |
Adjusted Funds From Operations (AFFO)(2): | | | | |
FFO | | $ | 46,421 | |
Straight-line rent adjustment | | | (4,505 | ) |
Amortization of acquired above and below market leases | | | (9,863 | ) |
Amortization of interest rate contracts and loan premium | | | 2,474 | |
Amortization of prepaid financing | | | 249 | |
Recurring capital expenditures, tenant improvements and commissions leasing | | | (5,929 | ) |
Non-cash compensation expense | | | 626 | |
| | | | |
AFFO | | $ | 29,473 | |
| | | | |
Weighted average common shares outstanding (in thousands)—diluted for the quarter ended March 31,2007 | | | 166,391 | |
FFO per share—diluted | | $ | 0.28 | |
Dividends per share declared | | $ | 0.175 | |
AFFO payout ratio | | $ | 97.99 | % |
| (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. |
| (2) | Adjusted Funds From Operations (AFFO) is a non-GAAP financial measure we believe is a useful supplemental measure of our performance. We compute AFFO by adding to FFO the non-cash compensation expense, amortization of prepaid financing costs and straight-line rents, and then subtracting recurring capital expenditures, tenant improvements and leasing commissions. AFFO is not intended to represent cash flow for the period, and it only provides an additional perspective on our ability to fund cash needs and make distributions to shareholders by adjusting the effect of the non-cash items included in FFO, as well as recurring capital expenditures and leasing costs. We believe that net income is the most directly comparable GAAP financial measure to AFFO. We also believe that AFFO provides useful information to the investment community about the Company’s financial position as compared to other REIT’s since AFFO is a widely reported measure used by other REIT’s. However, other REIT’s may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REIT’s. |
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| Douglas Emmett, Inc. | | DEBT BALANCES as of March 31, 2007 (unaudited and in thousands) |
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Type of Debt | | Principal
Balance | | Fixed/Floating
Rate | | Hedged
Annual
Interest
Rate(1) | | | Maturity
Date | | Swap
Maturity
Date |
Variable Rate Swapped to Fixed Rate: | | | | | | | | | | | | |
Modified Term Loan(2)(3) | | $ | 2,300,000 | | LIBOR + 0.85% | | 5.13 | % | | 09/01/12 | | 08/01/10-
08/01/12 |
Fannie Mae Loan(4) | | | 153,000 | | DMBS + 0.60% | | 4.70 | | | 12/22/11 | | 08/01/11 |
Fannie Mae Loan(4) | | | 140,000 | | DMBS + 0.60% | | 4.70 | | | 12/22/11 | | 08/01/11 |
Fannie Mae Loan(4) | | | 75,000 | | DMBS + 0.76% | | 4.86 | | | 02/01/15 | | 08/01/11 |
Fannie Mae Loan(4) | | | 82,000 | | LIBOR + 0.62% | | 5.62 | | | 02/01/16 | | 03/01/12 |
| | | | | | | | | | | | |
Subtotal | | | 2,750,000 | | | | | | | | | |
Unamortized Loan Premium(5) | | | 28,607 | | | | | | | | | |
| | | | | | | | | | | | |
Total | | $ | 2,778,607 | | | | | | | | | |
| | | | | | | | | | | | |
| (1) | Includes the effect of interest rate contracts, where applicable, and a one-month LIBOR rate of 5.32% as of March 31, 2007. Based on actual/360-day basis and excludes amortization of loan fees and unused fees on credit line. |
| (2) | Secured by the following properties and combined in seven separate cross collateralized pools: Studio Plaza, Gateway Los Angeles, Bundy/Olympic, Brentwood Executive Plaza, Palisades Promenade, 12400 Wilshire, First Federal Square, 11777 San Vicente, Landmark II, Sherman Oaks Galleria, Second Street Plaza, Olympic Center, MB Plaza, Valley Office Plaza, Coral Plaza, Westside Towers, Valley Executive Tower, Encino Terrace, Westwood Place, Century Park Plaza, Lincoln/Wilshire, 100 Wilshire, Encino Gateway, Encino Plaza, 1901 Avenue of the Stars, Columbus Center, Warner Center Towers, Beverly Hills Medical Center, Harbor Court, Bishop Place, Brentwood Court, Brentwood Medical Plaza, Brentwood San Vicente Medical, San Vicente Plaza, and Owensmouth. Requires monthly payments of interest only, with outstanding principal due upon maturity. |
| (3) | Includes $1.11 billion swapped to 4.89% until August 1, 2010; $545.0 million swapped to 5.75% until December 1, 2010; $322.5 million swapped to 4.98% until August 1, 2011; and $322.5 million swapped to 5.02% until August 1, 2012. |
| (4) | Secured by the following properties and combined in four separate cross collateralized pools: Barrington Plaza, Pacific Plaza, 555 Barrington, The Shores, Moanalua Hillside Apartments and Villas at Royal Kunia. Fannie Mae Discount Mortgage-Backed Security (DMBS) generally tracks 90-day LIBOR. |
| (5) | Represents non-cash mark-to-market adjustment on variable rate debt associated with office properties. |
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| Douglas Emmett, Inc. | | DEBT MATURITIES as of March 31, 2007 (unaudited and in thousands) |
| | | | | | | | | | | | | | | | | | | | | | |
Property | | 2007 | | 2008 | | | 2009 | | 2010 | | 2011 | | Thereafter | | Total |
Variable Rate Swapped to Fixed Rate: | | | | | | | | | | | | | | | | | | | | | | |
Modified Term Loan | | $ | — | | $ | — | | | $ | — | | $ | — | | $ | — | | $ | 2,300,000 | | $ | 2,300,000 |
Fannie Mae Loan | | | — | | | — | | | | — | | | — | | | 153,000 | | | — | | | 153,000 |
Fannie Mae Loan | | | — | | | — | | | | — | | | — | | | 140,000 | | | — | | | 140,000 |
Fannie Mae Loan | | | — | | | — | | | | — | | | — | | | — | | | 75,000 | | | 75,000 |
Fannie Mae Loan | | | — | | | — | | | | — | | | — | | | — | | | 82,000 | | | 82,000 |
| | | | | | | | | | | | | | | | | | | | | | |
Total | | $ | — | | $ | — | | | $ | — | | $ | — | | $ | 293,000 | | $ | 2,457,000 | | $ | 2,750,000 |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Fixed and Floating Rate Debt | | | | | | | | | | | | | | | |
Debt | | Amount | | Weighted Average Interest Rate(1) | | | Weighted Average Maturity (in years) | | | | | | | | |
Fixed | | $ | 2,750,000 | | | 5.09 | % | | | 5.51 | | | | | | | | | | | | |
Floating(2) | | | — | | | — | | | | — | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total | | | 2,750,000 | | | 5.09 | % | | $ | 5.51 | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| (1) | Includes the effect of interest rate contracts, where applicable, and a one-month LIBOR rate of 5.32% as of March 31, 2007. Based on actual/360-day basis and excludes amortization of loan fees and unused fees on credit line. |
| (2) | Represents our senior secured revolving credit facility, which is secured by nine properties, matures on October 30, 2009 and has two one-year extension options available. |
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PORTFOLIO DATA
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| Douglas Emmett, Inc. | | OFFICE PORTFOLIO SUMMARY as of March 31, 2007 |
| | | | | | | |
Submarket | | Number of
Properties | | Rentable
Square Feet(1) | | Percent of
Total | |
West Los Angeles | | | | | | | |
Brentwood | | 13 | | 1,390,627 | | 12 | % |
Olympic Corridor | | 4 | | 922,414 | | 8 | |
Century City | | 2 | | 866,123 | | 8 | |
Santa Monica | | 7 | | 860,198 | | 7 | |
Beverly Hills | | 4 | | 571,873 | | 5 | |
Westwood | | 2 | | 396,806 | | 3 | |
San Fernando Valley | �� | | | | | | |
Sherman Oaks/Encino | | 9 | | 2,879,078 | | 25 | |
Warner Center/Woodland Hills | | 2 | | 2,597,823 | | 22 | |
Tri-Cities | | | | | | | |
Burbank | | 1 | | 420,949 | | 4 | |
Honolulu | | 2 | | 678,940 | | 6 | |
| | | | | | | |
Total | | 46 | | 11,584,831 | | 100 | % |
| | | | | | | |
| (1) | Based on BOMA 1996 remeasurement. Total consists of 10,890,977 leased square feet (includes 167,663 square feet with respect to signed leases not commenced), 554,696 available square feet, 66,680 building management use square feet, and 72,478 square feet of BOMA 1996 adjustment on leased space. |
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| Douglas Emmett, Inc. | | OFFICE PORTFOLIO OCCUPANCY AND IN-PLACE RENTS as of March 31, 2007 |
| | | | | | | | | |
Submarket | | Percent
Leased(1) | | | Annualized
Rent(2) | | Annualized
Rent Per
Leased
Square Foot(3) |
West Los Angeles | | | | | | | | | |
Brentwood | | 96.5 | % | | $ | 45,638,201 | | $ | 34.48 |
Olympic Corridor | | 96.0 | | | | 24,245,206 | | | 28.05 |
Century City | | 95.6 | | | | 26,940,042 | | | 33.51 |
Santa Monica(4) | | 98.9 | | | | 37,637,135 | | | 44.54 |
Beverly Hills | | 99.0 | | | | 21,593,882 | | | 38.57 |
Westwood | | 96.2 | | | | 12,720,257 | | | 33.73 |
San Fernando Valley | | | | | | | | | |
Sherman Oaks/Encino | | 96.5 | | | | 77,085,344 | | | 28.49 |
Warner Center/Woodland Hills | | 91.4 | | | | 60,229,801 | | | 26.88 |
Tri-Cities | | | | | | | | | |
Burbank | | 100.0 | | | | 13,360,921 | | | 31.74 |
Honolulu | | 88.6 | | | | 17,867,105 | | | 30.71 |
| | | | | | | | | |
Total | | 95.2 | % | | $ | 337,317,894 | | $ | 31.46 |
| | | | | | | | | |
Recurring Capital Expenditures | | | | | | | | | |
—Office (per rentable square foot) for the three months ended March 31, 2007 | | | | | | | | $ | 0.06 |
| | | | | | | | | |
| (1) | Includes 167,663 square feet with respect to signed leases not yet commenced. |
| (2) | Represents annualized monthly cash rent under leases commenced as of March 31, 2007. The amount reflects total cash rent before abatements. For our Burbank and Honolulu office properties, annualized rent is converted from triple net to gross by adding expense reimbursements to base rent. |
| (3) | Represents annualized rent divided by leased square feet (excluding 167,663 square feet with respect to signed leases not commenced) as set forth in note (1) above for the total. |
| (4) | Includes $1,108,103 of annualized rent attributable to our corporate headquarters at our Lincoln/Wilshire property. |
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| Douglas Emmett, Inc. | | MULTIFAMILY PORTFOLIO SUMMARY as of March 31, 2007 |
| | | | | | | | | | |
Submarket | | Number of
Properties | | | Number of
Units | | Percent of
Total | |
West Los Angeles | | | | | | | | | | |
Brentwood | | 5 | | | | 950 | | | 33 | % |
Santa Monica | | 2 | | | | 820 | | | 29 | |
Honolulu | | 2 | | | | 1,098 | | | 38 | |
| | | | | | | | | | |
Total | | 9 | | | | 2,868 | | | 100 | % |
| | | | | | | | | | |
| | | |
Submarket | | Percent
Leased | | | Annualized
Rent(1) | | Monthly
Rent Per
Leased Unit | |
West Los Angeles | | | | | | | | | | |
Brentwood | | 99.7 | % | | $ | 23,068,554 | | $ | 2,030 | |
Santa Monica(2) | | 99.6 | | | | 18,960,804 | | | 1,934 | |
Honolulu | | 99.1 | | | | 18,206,172 | | | 1,394 | |
| | | | | | | | | | |
Total | | 99.4 | % | | $ | 60,235,530 | | $ | 1,760 | |
| | | | | | | | | | |
Recurring Capital Expenditures | | | | | | | | | | |
—Multifamily (per unit) for the three months ended March 31, 2007 | | | | | | | | $ | 80 | |
| | | | | | | | | | |
| (1) | Represents March 31, 2007 multifamily rental income annualized. |
| (2) | Excludes 10,013 square feet of ancillary retail space, which generated $280,011 of annualized rent as of March 31, 2007. |
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| Douglas Emmett, Inc. | | TENANT DIVERSIFICATION (Greater than 1% of Annualized Rent) as of March 31, 2007 |
| | | | | | | | | | | | | | | | | |
| | | Number
of
Leases | | Number
of
Properties | | Lease
Expiration(1) | | Total
Leased
Square
Feet | | Percent
of
Rentable
Square
Feet | | | Annualized
Rent(2) | | Percent of
Annualized
Rent | |
Time Warner(3) | | 4 | | 4 | | 2008-2019 | | 642,845 | | 5.5 | % | | $ | 20,865,388 | | 6.2 | % |
AIG SunAmerica | | 1 | | 1 | | 2013 | | 182,010 | | 1.6 | | | | 5,192,084 | | 1.5 | |
The Endeavor Agency, LLC | | 1 | | 1 | | 2019 | | 102,241 | | 0.9 | | | | 4,046,794 | | 1.2 | |
Blue Shield of California | | 1 | | 1 | | 2009 | | 135,106 | | 1.2 | | | | 3,939,691 | | 1.2 | |
Metrocities Mortgage, LLC | | 4 | | 2 | | 2010-2015 | | 138,040 | | 1.2 | | | | 3,823,832 | | 1.1 | |
Rubin Postaer & Associates | | 1 | | 1 | | 2007 | | 80,766 | | 0.7 | | | | 3,628,851 | | 1.1 | |
Pacific Theatres Exhibition Corp(4) | | 1 | | 1 | | 2016 | | 88,300 | | 0.7 | | | | 3,567,320 | | 1.1 | |
| | | | | | | | | | | | | | | | | |
Total | | 13 | | 11 | | | | 1,369,308 | | 11.8 | % | | $ | 45,063,960 | | 13.4 | % |
| | | | | | | | | | | | | | | | | |
| (1) | Expiration dates are per leases and do not assume exercise of renewal, extension or termination options. For tenants with multiple leases, expirations are shown as a range. |
| (2) | Represents annualized monthly cash rent under leases commenced as of March 31, 2007. The amount reflects total cash rent before abatements. For our Burbank and Honolulu office properties, annualized rent is converted from triple net to gross by adding expense reimbursements to base rent. |
| (3) | Includes a 10,000 square foot lease expiring in October 2008, a 62,000 square foot lease expiring in June 2010, a 150,000 square foot lease expiring in April 2016, and a 420,000 square foot lease expiring in September 2019. |
| (4) | Annualized rent excludes rent determined as a percentage of sales. |
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| | |
| Douglas Emmett, Inc. | | INDUSTRY DIVERSIFICATION as of March 31, 2007 |
| | | | | |
Industry | | Number
of
Leases | | Annualized Rent
as a Percent of Total | |
Financial Services | | 299 | | 17.9 | % |
Legal | | 296 | | 15.1 | |
Entertainment | | 108 | | 11.6 | |
Other | | 283 | | 9.8 | |
Real Estate | | 167 | | 9.8 | |
Health Services | | 266 | | 8.5 | |
Insurance | | 73 | | 6.8 | |
Retail | | 142 | | 6.6 | |
Accounting | | 119 | | 6.6 | |
Advertising | | 55 | | 4.2 | |
Technology | | 60 | | 3.1 | |
| | | | | |
Total | | 1,868 | | 100.0 | % |
| | | | | |
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| | |
| Douglas Emmett, Inc. | | LEASE DISTRIBUTION as of March 31, 2007 |
| | | | | | | | | | | | | | | | |
Square Feet Under Lease | | Number
of
Leases | | Leases
as a
Percent
of Total | | | Rentable
Square
Feet(1) | | Square
Feet as
a Percent
of Total | | | Annualized
Rent(2) | | Annualized
Rent as a Percent
of Total | |
2,500 or less | | 943 | | 50.5 | % | | 1,263,475 | | 10.9 | % | | $ | 40,676,635 | | 12.1 | % |
2,501-10,000 | | 690 | | 36.9 | | | 3,335,164 | | 28.8 | | | | 103,543,416 | | 30.7 | |
10,001-20,000 | | 154 | | 8.2 | | | 2,142,260 | | 18.5 | | | | 66,877,040 | | 19.8 | |
20,001-40,000 | | 52 | | 2.8 | | | 1,448,625 | | 12.5 | | | | 45,301,183 | | 13.4 | |
40,001-100,000 | | 22 | | 1.2 | | | 1,288,020 | | 11.1 | | | | 43,359,623 | | 12.9 | |
Greater than 100,000 | | 7 | | 0.4 | | | 1,245,770 | | 10.8 | | | | 37,559,997 | | 11.1 | |
| | | | | | | | | | | | | | | | |
Subtotal | | 1,868 | | 100.0 | % | | 10,723,314 | | 92.6 | % | | | 337,317,894 | | 100.0 | % |
Available | | — | | — | | | 554,696 | | 4.8 | | | | — | | — | |
BOMA Adjustment(3) | | — | | — | | | 72,478 | | 0.6 | | | | — | | — | |
Building Management Use | | — | | — | | | 66,680 | | 0.6 | | | | — | | — | |
Signed leases not commenced | | — | | — | | | 167,663 | | 1.4 | | | | — | | — | |
| | | | | | | | | | | | | | | | |
Total | | 1,868 | | 100.0 | % | | 11,584,831 | | 100.0 | % | | $ | 337,317,894 | | 100.0 | % |
| | | | | | | | | | | | | | | | |
| (1) | Based on BOMA 1996 remeasurement. Total consists of 10,890,977 leased square feet (includes 167,663 square feet with respect to signed leases not commenced 554,696 available square feet, 66,680 building management use square feet, and 72,478 square feet of BOMA 1996 adjustment on leased space. |
| (2) | Represents annualized monthly cash base rent (i.e., excludes tenant reimbursements, parking and other revenue) under leases commenced as of March 31, 2007. The amount reflects total cash rent before abatements. For our Burbank and Honolulu office properties, annualized rent is converted from triple net to gross by adding expense reimbursements to base rent. |
| (3) | Represents square footage adjustments for leases that do not reflect BOMA 1996 remeasurement. |
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| | |
| Douglas Emmett, Inc. | | LEASE EXPIRATIONS as of March 31, 2007 |
| | | | | | | | | | | | | | | | | | | |
Year of Lease Expiration | | Number
of
Leases
Expiring | | Rentable
Square
Feet(1) | | Expiring
Square
Feet as a
Percent
of Total | | | Annualized
Rent(2) | | Annualized
Rent as a
Percent of Total | | | Annualized
Rent Per Leased
Square
Foot(3) | | Annualized
Rent Per
Leased
Square Foot at
Expiration(4) |
Available | | — | | 554,696 | | 4.8 | % | | $ | — | | — | % | | $ | — | | $ | — |
2007 | | 319 | | 1,087,940 | | 9.4 | | | | 36,026,851 | | 10.7 | | | | 33.11 | | | 33.14 |
2008 | | 389 | | 1,575,200 | | 13.6 | | | | 47,968,178 | | 14.2 | | | | 30.45 | | | 31.30 |
2009 | | 346 | | 1,515,482 | | 13.1 | | | | 47,377,000 | | 14.0 | | | | 31.26 | | | 32.93 |
2010 | | 275 | | 1,429,766 | | 12.3 | | | | 46,785,455 | | 13.9 | | | | 32.72 | | | 35.52 |
2011 | | 264 | | 1,379,973 | | 11.9 | | | | 43,987,272 | | 13.0 | | | | 31.88 | | | 35.80 |
2012 | | 105 | | 749,107 | | 6.5 | | | | 22,479,305 | | 6.7 | | | | 30.01 | | | 34.58 |
2013 | | 62 | | 714,920 | | 6.2 | | | | 22,135,169 | | 6.6 | | | | 30.96 | | | 36.22 |
2014 | | 40 | | 479,711 | | 4.1 | | | | 13,831,353 | | 4.1 | | | | 28.83 | | | 35.30 |
2015 | | 28 | | 397,670 | | 3.4 | | | | 11,491,269 | | 3.4 | | | | 28.90 | | | 35.81 |
2016 | | 28 | | 587,334 | | 5.1 | | | | 18,877,484 | | 5.6 | | | | 32.14 | | | 39.83 |
Thereafter | | 12 | | 806,211 | | 7.0 | | | | 26,358,558 | | 7.8 | | | | 32.69 | | | 42.60 |
BOMA Adjustment(5) | | — | | 72,478 | | 0.6 | | | | — | | — | | | | — | | | — |
Building Management Use | | — | | 66,680 | | 0.6 | | | | — | | — | | | | — | | | — |
Signed leases not commenced | | — | | 167,663 | | 1.4 | | | | — | | — | | | | — | | | — |
| | | | | | | | | | | | | | | | | | | |
Total/Weighted Average | | 1,868 | | 11,584,831 | | 100.0 | % | | $ | 337,317,894 | | 100.0 | % | | $ | 31.46 | | $ | 35.08 |
| | | | | | | | | | | | | | | | | | | |
| (1) | Based on BOMA 1996 remeasurement. Total consists of 10,890,977 leased square feet (includes 167,663 square feet with respect to signed leases not commenced) 554,696 available square feet, 66,680 building management use square feet, and 72,478 square feet of BOMA 1996 adjustment on leased space. |
| (2) | Represents annualized monthly cash rent under leases commenced as of March 31, 2007. The amount reflects total cash rent before abatements. For our Burbank and Honolulu office properties, annualized rent is converted from triple net to gross by adding expense reimbursements to base rent. |
| (3) | Represents annualized base rent (i.e., excludes tenant reimbursements, parking and other revenue) divided by leased square feet. |
| (4) | Represents annualized base rent (i.e., excludes tenant reimbursements, parking and other revenue) at expiration divided by leased square feet. |
| (5) | Represents square footage adjustments for leases that do not reflect BOMA 1996 remeasurement. |
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| | |
| Douglas Emmett, Inc. | | QUARTERLY LEASE EXPIRATIONS — NEXT FOUR QUARTERS as of March 31, 2007 |
| | | | | | | | | | | | | | |
Submarket | | | | Q2 2007 | | Q3 2007 | | Q4 2007 | | Q1 2008 |
West Los Angeles | | | | | | | | | | | | | | |
Brentwood | | Expiring SF | | | 77,786 | | | 61,376 | | | 31,285 | | | 23,625 |
| | Rent per SF(1) | | $ | 36.15 | | $ | 34.45 | | $ | 33.42 | | $ | 31.09 |
Olympic Corridor | | Expiring SF | | | 46,552 | | | 33,525 | | | 87,626 | | | 56,803 |
| | Rent per SF(1) | | $ | 33.29 | | $ | 28.77 | | $ | 33.05 | | $ | 28.51 |
Century City | | Expiring SF | | | 18,346 | | | 14,640 | | | 3,379 | | | 17,600 |
| | Rent per SF(1) | | $ | 43.33 | | $ | 32.72 | | $ | 37.14 | | $ | 39.26 |
Santa Monica | | Expiring SF | | | 82,958 | | | 16,445 | | | 11,174 | | | 28,621 |
| | Rent per SF(1) | | $ | 45.08 | | $ | 47.05 | | $ | 48.42 | | $ | 44.03 |
Beverly Hills | | Expiring SF | | | 31,766 | | | 13,701 | | | 8,620 | | | 3,619 |
| | Rent per SF(1) | | $ | 38.04 | | $ | 38.16 | | $ | 39.90 | | $ | 27.55 |
Westwood | | Expiring SF | | | 27,190 | | | 13,273 | | | 6,938 | | | 5,680 |
| | Rent per SF(1) | | $ | 38.34 | | $ | 37.07 | | $ | 40.26 | | $ | 35.59 |
San Fernando Valley | | | | | | | | | | | | | | |
Sherman Oaks/ | | Expiring SF | | | 98,613 | | | 52,733 | | | 90,998 | | | 55,535 |
Encino | | Rent per SF(1) | | $ | 28.20 | | $ | 28.21 | | $ | 29.93 | | | 26.83 |
Warner Center/ | | Expiring SF | | | 75,259 | | | 87,242 | | | 31,763 | | | 76,178 |
Woodland Hills | | Rent per SF(1) | | $ | 26.96 | | $ | 28.90 | | $ | 26.59 | | | 24.41 |
Tri-Cities | | | | | | | | | | | | | | |
Burbank | | Expiring SF | | | — | | | — | | | — | | | — |
| | Rent per SF(1) | | $ | — | | $ | — | | $ | — | | $ | — |
Honolulu | | Expiring SF | | | 14,612 | | | 37,924 | | | 12,216 | | | 7,885 |
| | Rent per SF(1) | | $ | 31.30 | | $ | 28.10 | | $ | 34.33 | | $ | 28.94 |
Total | | Expiring SF | | | 473,082 | | | 330,859 | | | 283,999 | | | 275,546 |
| | Rent per SF(1) | | $ | 34.70 | | $ | 31.50 | | $ | 32.46 | | $ | 29.70 |
| (1) | Represents annualized base rent (i.e., excludes tenant reimbursements, parking and other revenue) per leased square foot at expiration. The amount reflects total cash rent before abatements. For our Burbank and Honolulu office properties, annualized rent is converted from triple net to gross by adding expense reimbursements to base rent. |
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| | |
| Douglas Emmett, Inc. | | OFFICE PORTFOLIO LEASING ACTIVITY For the three months ended March 31, 2007 |
| | | | | | | |
Gross New Leasing Activity | | | | | | | |
Rentable square feet | | | | | | 219,729 | |
Number of leases | | | | | | 58 | |
| | |
Gross Renewal Leasing Activity | | | | | | | |
Rentable square feet | | | | | | 218,628 | |
Number of leases | | | | | | 58 | |
| | |
Net Absorption | | | | | | | |
Leased rentable square feet(1) | | | | | | 136,127 | |
| | |
Cash Rent Growth(2) | | | | | | | |
Expiring Rate | | | | | $ | 30.29 | |
New/Renewal Rate | | | | | $ | 34.74 | |
Increase | | | | | | 14.7 | % |
| | |
Straight-Line Rent Growth(3) | | | | | | | |
Expiring Rate | | | | | $ | 28.57 | |
New/Renewal Rate | | | | | $ | 37.44 | |
Increase | | | | | | 31.0 | % |
| | |
Weighted Average Lease Terms | | | | | | | |
New (in months) | | | | | | 68 | |
Renewal (in months) | | | | | | 59 | |
| | |
Tenant Improvement and Leasing
Commissions (per rentable square foot) | | Total Lease
Transaction
Costs | | Annual Lease
Transaction
Costs | |
New leases | | $ | 27.32 | | $ | 4.80 | |
Renewal leases | | $ | 13.33 | | $ | 2.73 | |
Blended | | $ | 20.34 | | $ | 3.77 | |
| (1) | Includes a 30,000 square foot fitness center leased during the first quarter of 2007 currently under construction as a free standing building. This space is subject to BOMA remeasurement when the construction is complete. |
| (2) | Represents the difference between initial stabilized cash rents on new and renewal leases as compared to the expiring cash rents on the same space. |
| (3) | Represents a comparison between straight-line rent on expiring space and the straight-line rent for new leases on the same space. |
20
