August 17, 2006
Mail Stop 4561
William Kamer
Chief Financial Officer
Douglas Emmett, Inc.
808 Wilshire Blvd., Suite 200
Santa Monica, CA 90401
Re: Douglas Emmett, Inc.
First Amendment to Registration Statement on Form S-11
Filed August 4, 2006
File No. 333-135082
Dear Mr. Kamer:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
General
1. We note your response to prior comment 1. It appears that your
formation transactions provide contributors with relative
interests
in your company (through the issuance of REIT shares or
convertible
OP units). However, the precise number of units or shares to be
issued to contributors (and thus the percentage interest in the
company to be retained by the contributors) will not be determined
until the time the offering is priced. In addition, the value of
the
contributors` interest also has not been fixed, other than to
provide
that it shall not be less than $1 billion. Because you have not
sufficiently fixed a material term of the private placement, it
appears that the formation transactions were not completed before
you
filed the registration statement. Accordingly, you may not rely
on
Rule 152 to avoid integration. Please provide us with an
alternative
analysis explaining why the formation transactions should not be
integrated with this offering. If integration is warranted,
please
tell us why the transactions do not constitute a roll-up within
the
meaning of Item 901 of Regulation S-K. In addition, please
provide
us with your analysis of any contingent liability that may arise
as a
result of integration.
2. We note your response to prior comment 53. Please provide us
with
a copy of the underwriting agreement prior to filing it as an
exhibit
to this registration statement.
Summary, page 1
Structure and Formation of Our Company, page 8
3. We note your response to prior comment 7. Please disclose on
page
9 when the payments will be made by your predecessors, the form of
payment, and how much you expect to receive.
Conflicts of Interest, page 15
4. Please discuss conflicts related to the control your
predecessors
exercised over the formation transactions and the lack of third-
party
appraisals of the properties to be acquired.
Dividend Policy, page 45
5. Please disclose what part of the initial distribution you
expect
to represent a return of capital.
MD&A, page 56
Historical Investment Performance..., page 61
6. Please tell us how IRR accounts for distributions in excess of
distributable cash, if at all. Also, in note (4), please explain
why
certain payments were excluded from net distributions to the
general
partner.
Liquidity and Capital Resources, page 76
7. We note your response to prior comment 33. Please revise to
quantify the amounts of debt incurred in each period to fund
excess
distributions and indicate whether this debt is still outstanding.
Douglas Emmett, Inc. and Subsidiaries
Pro Forma Consolidated Financial Statements, page F-4
1. Within the second full paragraph on page F-4, you refer to
$66.0
million in contributions to DERA by the predecessor principals.
We
note that the DERA financial statements disclose contributions of
$60
million. Please reconcile these two amounts or otherwise advise
us,
as appropriate.
Adjustments to the Pro Forma Consolidated Balance Sheet
2. We note your response to prior comment 56 and your conclusion
that
where there is no change in ownership as a result of an exchange
transaction (and therefore no economic substance to the
transaction)
that historical cost accounting treatment is appropriate. Please
expand your disclosure in Note E to indicate why you believe the
acquisition of DECO and PLE by DERA lacks economic substance and
indicate that this is why you are accounting for these
acquisitions
at historical cost. In addition, please tell us how you concluded
that some of the transactions could be treated as nonsubstantive
when
there is not mirrored ownership for all combining entities.
3. We note your response to prior comment 56. Please amend your
pro-
forma financial statements and the notes thereto, accordingly, to
apply the guidance under SFAS 141 and EITF 02-5 to all acquired
non-
controlling interests regardless of whether they are affiliates if
that is the appropriate accounting. Specifically identify the
acquisition interest(s) which you have accounted for as a
reorganization of entities under common control in Note B on page
F-
9. Please revise note D, as appropriate, as indicated in your
response to prior comment 56.
Adjustments to the Pro Forma Consolidated Statements of Operations
4. We note your response to prior comment 58 but still require
further clarification. Please supplementally explain to us why
the
amounts of the Pro Forma adjustments in Note (BB) for the six-
month
period ended June 30, 2006 don`t represent approximately one-half
of
the amounts of the adjustments made to the full year ended
December
31, 2005. For example, we note the adjustment to depreciation
expense was $81,785,000 for the year ended December 31, 2005. Why
is
the adjustment for the six-month period ended June 30, 2006 only
$32,407,000 when we would have anticipated that it would have been
approximately one-half of the annual amount?
5. With respect to Note (EE) and the March 2006 acquisition of the
Villas at Royal Kunia, please explain why the adjustment for
depreciation expense for the six months ended June 30, 2006 is
only
$526,000 when the annual adjustment for the year ended December
31,
2005 was $5,021,000.
As appropriate, please amend your registration statement in
response to our comments. You may wish to provide us with marked
copies of the amendment to expedite our review. Please furnish a
cover letter with your amendments that keys your responses to our
comments and provides any requested information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
You may contact Howard Efron at 202-551-3439 or Steve
Jacobs,
Accounting Branch Chief, at 202-551-3403 if you have questions
regarding comments on the financial statements and related
matters.
Please contact me at 202-551-3780 with any other questions.
Sincerely,
Elaine Wolff
Branch Chief
cc: Gregg A. Noel (via facsimile)
William Kamer
Douglas Emmett, Inc.
August 17, 2006
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