Douglas Emmett Q1 2025 Earnings Report

Douglas Emmett EPS Results

• Actual EPS: $0.40
• Consensus EPS: $0.39
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.45

Douglas Emmett Revenue Results

• Actual Revenue: $251.54 million
• Expected Revenue: $246.49 million
• Beat/Miss: Beat by +$5.05 million
• YoY Revenue Growth: +2.90%

Douglas Emmett Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 2:00PM ET

Douglas Emmett (NYSE:DEI) (DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in the premier coastal submarkets of Los Angeles and Honolulu. Douglas Emmett focuses on owning and acquiring a substantial share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.

Douglas Emmett Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's Quarterly Earnings Call. Today's call is being recorded. At this time, all the participants are in a listen only mode. After management's prepared remarks, you will receive instructions for participating in the question and answer session.

[Operator]

I will now turn the conference over to Stuart McKelney, Vice President of Investor Relations for Douglas Amich. Please go ahead.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

Thank you. Joining us today on the call are Jordan Kaplan, our President and CEO Kevin Crummey, our CIO and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next ninety days. You can also find our earnings package at the Investor Relations section of our website. You can find reconciliations of non GAAP financial measures discussed during today's call in the earnings package.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

During the course of this call, we will make forward looking statements. These forward looking statements are based on the beliefs of, assumptions made by and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will prove to be incorrect. Therefore, our actual future results can be expected to differ from our expectations and those differences may be material.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website. When we reach the question and answer portion, in consideration of others, please limit yourself to one question and one follow-up. I will now turn the call over to Jordan.

[Jordan Kaplan, President and CEO at Douglas Emmett]

Good morning and thank you for joining us. Leasing during the first quarter of twenty twenty five was quite successful. We achieved positive absorption across our total office portfolio. We signed over 300,000 square feet of new leases. New leasing to tenants over 10,000 square feet was well above our historical averages.

[Jordan Kaplan, President and CEO at Douglas Emmett]

Our Class A office portfolio has maintained stable in place and asking rental rates despite this higher vacancy market. And as we convert Studio Plaza to a multi tenant office building, our leasing there is well above expectations. In addition, looking ahead, I am encouraged by our below average office expirations in 2025 and 2026. Our multifamily portfolio enjoys very full occupancy and robust revenue growth. This reflects the appeal of our high end residential communities and the affluence of our coastal submarkets, where the need for quality housing only seems to accelerate.

[Jordan Kaplan, President and CEO at Douglas Emmett]

We are working on four solid avenues for restoring and then exceeding our pre pandemic FFO with good progress on all four fronts: leasing up our existing office portfolio redeveloping our seven twelve unit Barrington Plaza residential property, converting our Studio Plaza office building to multi tenant use and acquiring additional office and residential properties. Of course, higher interest rates remain a drag on income. As we roll through refinancing our existing debt portfolio, I suspect that our cost of debt will increase between 102 basis points from the 3% average we enjoyed before COVID. My hope is that the higher cost of debt is matched with rental income growth as the economy recovers and the market reflects the slowdown in new development. At present, our office leasing pipeline remains healthy and our multifamily demand continues to be strong, but we are keeping a weather eye towards the broader economic landscape.

[Jordan Kaplan, President and CEO at Douglas Emmett]

Recent volatility in national policies affecting the public markets could pose even greater challenges if they lead to a slowdown in office leasing or worse, tip the economy into a recession. Whatever happens, our operating platform is built to weather storms. Our conservative financing strategy, diversified tenant base and focus on the best supply constrained markets gives us a strong foundation to manage through periods of turbulence. With that, I'll turn the call over to Kevin to discuss our investment activities.

[Kevin Crummy, CIO at Douglas Emmett]

Thanks, Jordan, and good morning, everyone. We are making good progress toward developing the new residential building at our recently acquired property in Westwood. We still expect that JV's total investment to be approximately 150,000,000 to $200,000,000 over a three year to four year period, including the cost of acquisition, construction of the new residential building and upgrades to the existing tower. As Jordan indicated, our Barrington Plaza residential redevelopment, including installing new FireLife safety equipment is on track. In addition, the lease up and repositioning of Studio Plaza into a multi tenant office building has surpassed expectations.

[Kevin Crummy, CIO at Douglas Emmett]

During the quarter, we closed a non recourse interest only $127,200,000 loan secured by one of our residential properties that will mature in April 2030. The interest rate is fixed at 4.99% per annum. We use part of the proceeds to pay off $102,400,000 loan. We also refinanced a $335,000,000 secured office loan with a non recourse interest only loan at an effective fixed interest rate of 4.57% that will mature in March 2032. With that, I will turn the call over to Stuart.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

Thanks, Kevin. Good morning, everyone. During the first quarter, we signed just under 800,000 square feet in our total portfolio, including over 300,000 square feet of new leases. We also had our best quarter in more than two years for new leases over 10,000 square feet. The overall value of new leases we signed in the quarter increased by 0.9% with cash spreads down 12.6% as larger tenants skew the averages and make it hard to beat the contractual three percent to 4% annual rent bumps in our existing leases.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

As we sign more leases over 10,000 square feet, we expect to see an increase in leasing costs and a widening of our lease to occupied spread. However, even with more large leases and a higher proportion of new leases last quarter, our average leasing costs of only $6.17 per square foot per year remains well below the average for office reach in our benchmark group. Our residential portfolio remained essentially fully leased at 99.1% with strong demand. With that, I'll turn the call over to Peter to discuss our results.

[Peter Seymour, CFO at Douglas Emmett]

Thanks, Stuart. Good morning, everyone. Compared to the first quarter of twenty twenty four, revenue increased by 2.7%. FFO decreased to $0.40 per share and AFFO decreased to $62,300,000 and same property cash NOI was essentially flat. Our results this quarter reflect the acquisition of 10900 Wilshire as well as the January 1 consolidation of a previously unconsolidated joint venture, which owns two Class A office properties totaling 400,000 square feet.

[Peter Seymour, CFO at Douglas Emmett]

At approximately 4.5% of revenue, our G and A remains low relative to our benchmark group. Turning to guidance. We expect our 2025 net income per common share diluted to be between $07 and $0.13 and we continue to expect our FFO per fully diluted share to be between $1.42 and $1.48 For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges or other possible capital markets activities. I will now turn the call over to the operator so we can take your questions.

[Operator]

Thank you. We will now begin the question and answer session. Our first question comes from Steve Sakwa from Evercore ISI. Please go ahead.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Yes, thanks. Good morning out there. Jordan, I was just wondering if you could provide a little bit more color detail on kind of the leasing and the larger tenants that you mentioned, the over 10,000 feet. I suspect that maybe your smaller tenants are maybe less impacted by sort of all the tariff uncertainty. But just I'm just curious like the pace of leasing that maybe you saw throughout the quarter.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

And did you see any real change between January, February, March on the smalls and the larger tenants?

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

Steve, it's Stuart. So pleased to see the new leasing increase this quarter. We had good demand kind of across all the industries. The over 10,000 guys also really strong last quarter, which is great to see diverse industries in that set as well. So we saw legal, we saw real estate, fitness, all those guys coming in.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

So I'd say the core portfolio is still performing really nicely and these last three quarters in a row that we've seen improvement over 10,000 square feet.

[Jordan Kaplan, President and CEO at Douglas Emmett]

They got us kind of up to the positive territory, made a big Remember, we were saying to you, we need to get positive absorption and we need these guys to come back and they're getting us there.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Okay. Thanks. And then, obviously, your apartment portfolio did far better than we had thought. I know you added two assets into the same store pool this quarter. But could you just maybe speak to kind of the pricing trends that you're seeing in multifamily?

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

And how much of the NOI growth was driven by rent growth versus say occupancy gain and I guess what are your expectations for rent growth moving forward on the multifamily assets?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Yes. So one thing to be super clear on is we have not changed our asking rents from the time before the fire to now, which is being frankly closely monitored by the state and you can check and we haven't changed our asking rents. We are although we have people that are moving and of course they might have been at a lower rent and now it's the asking rent of before the fire and now. So that's obviously making a difference and we're very full. And when I say very full, I'll say that probably in my career, I've had a few times of people call, I want to get a unit here and there, but in general, nothing like now.

[Jordan Kaplan, President and CEO at Douglas Emmett]

I get a call a week or almost every couple of days from people saying, I need to get into your LMLA Building, I need to get into Shores, I need to get into Champaign, you got can you find me a unit, etcetera. And I'm like, I'm pretty on the list. I mean, so it's very full.

[Jordan Kaplan, President and CEO at Douglas Emmett]

That answer your

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

I was just curious like, well, I guess you're saying that with restrictions you can't actually push rent. So maybe this is just a function of below market leases moving up to market rent at this point, but the I guess the SOEs stay in place through the end of this year?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Well, you can move rents 10%. We're probably being a little more cautious, but we're big and we want to be clear of where we stand. And so, as I said, I mean, we literally have not changed our asking rents from before to after. Now, you probably were facing before, no fire, no nothing. You're looking at a pretty big roll up.

[Jordan Kaplan, President and CEO at Douglas Emmett]

The market has been was very strong and strengthening before the fire. So, I'm not sure that you can attribute the fire to a lot of this. You can probably just and maybe there's even more coming. I don't know that answer. But I know this, we probably were moving our asking rents in a pretty good way up until the fire.

[Jordan Kaplan, President and CEO at Douglas Emmett]

We stopped at that point. But we're getting those rents and we're very full.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

And Steve, I'll add the two buildings that came into the same store were 1132 Bishop in Hawaii and Landmark LA in Brentwood, both of which are performing really well. So having those in there helps.

[Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI]

Got it. Thanks. That's it for me.

[Operator]

Thank you. Your next question comes from Nick Yulico from Scotiabank. Please go ahead.

[Nicholas Yulico, Managing Director at Scotiabank]

Thanks. Hi, everyone. So in terms of the debt refinancing that got done in the quarter, the $335,000,000 secured office loan, looks like there was an extension on that. Can you just talk a little bit more about the rate that you got? It seemed pretty good for an office loan and how we should think about being able to get sort of a similar rate for other debt office debt that you're dealing with maturing over the next year?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Well, I'm glad you like the rate. I got to tell you something. Those loans are very hard to get, very hard. I mean and going out and refining the asset portfolio has been really a rough run. We're getting it done.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And thankfully, we have great relationships and that's probably helping us a lot. And I'm glad you like the rate. I thought it was pretty good. I wasn't getting knocked over by it. But in general, I tried to say in my prepared remarks that looking at what's going on because we're working on debt.

[Jordan Kaplan, President and CEO at Douglas Emmett]

We start with stuff that's two years away and we're working on a lot of stuff right now. It's one of the big agenda items around here. I kind of starting to see a little bit of light at the end and I tried to give you guys that information and said, we ran for a long time at about a 3% average in terms of our debt. And I think now we're going to be 100 basis to 200 basis points up on that. And I think we're kind of coming out in that range.

[Jordan Kaplan, President and CEO at Douglas Emmett]

I mean, we'll see. We have more to do, but we're coming out in that range.

[Nicholas Yulico, Managing Director at Scotiabank]

All right. That's helpful. Thanks. And then second question is just on the absorption comment, which I know that that applied to the total portfolio. If we look at the in service portfolio actually sequentially, the leased rate was down a bit, occupancy was down a bit.

[Nicholas Yulico, Managing Director at Scotiabank]

So is the message here that new leasing volume still needs to pick up a little bit more in order to show absorption in the in service pool? And I also wasn't sure if there was any like early termination of space issue you were dealing with in the quarter that may have affected those numbers? Thanks.

[Jordan Kaplan, President and CEO at Douglas Emmett]

No, there wasn't anything like that. And I think that I think you're kind of right. I mean, we have our in service portfolio, which shows the occupancy of the in service portfolio. But then at the same time, we're saying, hey, but the great news is we have positive absorption because we're taking credit for the stuff that's not in the in service portfolio, which is true. And but I will tell you, it each these are tiny moves getting to positive and negative on these things.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And I'm not going to tell you going forward what's going to happen. I have concerns about the economy. You heard that in my prepared remarks. But at this moment, we're feeling pretty good and we're doing a lot of leasing and across in service, out of service and all the rest. So we're feeling pretty good about what's going on.

[Nicholas Yulico, Managing Director at Scotiabank]

All right. Thanks, Jordan.

[Operator]

Thank you. Your next question comes from Connor Michel from Piper Sandler. Please go ahead.

[Connor Mitchell, Equity Research Analyst at Piper Sandler Companies]

Hey, thanks for taking my question. I guess first, Jordan, you mentioned some of the macro uncertainty and tariff turmoil. Have you guys seen any like tenant fallout or leasing deals kind of fallout from import or export related businesses?

[Jordan Kaplan, President and CEO at Douglas Emmett]

So far, so good. And I really tried to say that right in the prepared remarks by saying, look, we already know this affecting the stock market. Stock market is jumping around like a cat. But have we seen it roll to our tenants and impact our tenants? Not yet.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And then even worse, which is obviously a fear is, does this roll into some version of stagflation or just recession? And like I said, we're watching for it, but haven't seen it.

[Connor Mitchell, Equity Research Analyst at Piper Sandler Companies]

Okay. I appreciate the color on that. And then on the acquisition of Westwood and then the related developments, did you guys mention any timing on the start of that development?

[Jordan Kaplan, President and CEO at Douglas Emmett]

We are already working on plans. We're going. It's so I hope that the timing is that we get the building built in the next three to four years completed, three hopefully. We are going. It's by right entitlements and in our business plan of buying it, it was to build it.

[Connor Mitchell, Equity Research Analyst at Piper Sandler Companies]

Okay, great. Thank you.

[Operator]

Thank you. Your next question comes from Rich Anderson from SMBC Nikko. Please go ahead.

[Richard Anderson, Managing Director - Equity Research at Wedbush Securities]

No, Wedbush. But anyway, so in terms of your comment around absorption, it sounds like leasing velocity exceeded your expectations. But would you say that the cash releasing spread underperformed your expectations the down 12%, which so together net to sort of in line performance on a dollar basis. Is that the right way to think about it? Or do I have that wrong?

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

Hey, Rich. No, I don't think that we're disappointed with the spreads or surprised by the spreads. The spreads are going to jump around. It's obviously, it's dependent on the mix of leases that get done. We did some larger leases and you had some longer leases rolling off.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

So longer leases have higher bumps in We focus on the straight line spreads, which are still positive, which is great. But I think in this market, you should expect the spreads to be in the territory they've been, and they'll be a little volatile quarter to quarter.

[Richard Anderson, Managing Director - Equity Research at Wedbush Securities]

But all in meeting your expectations you would say or exceeding your expectations when you take into account the pace of leasing, the velocity?

[Jordan Kaplan, President and CEO at Douglas Emmett]

The comment about exceeding expectations, that's an aside, related to Studio Plaza and the leasing there. So put that to the side, I want to add that it does and we've said this in a variety of ways over the last few quarters and I had it in my section. I am surprised we haven't seen much of a change in rents considering the vacancy in the market. And now I understand the reason for it. And I understand that where the vacancy is and how it's operating and tenants need to be where they want to be and all of that.

[Jordan Kaplan, President and CEO at Douglas Emmett]

But I know there hasn't been a lot written about this. I've talked about it, but I'm impressed that we are holding rates so well that we've stayed flat on the straight line, meaning like leases we did in a pretty good market, 2019, '20 '18, we're still holding that rate now. And it certainly isn't the same market. I think it's a testament to the fact that there's no new construction. It's a testament to the fact of the quality of buildings that we have.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And I see that in New York, we the higher quality buildings are also holding rate and doing better. And we're experiencing that there. I mean, can't speak for the B and C product that's in the market. I think they're suffering. But we people want to be in the buildings.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And they're well run and managed and kept clean and nice and with good amenities and all the good stuff. And it's making more of a difference than I ever really thought that it would in terms of holding rate and being a place that people want to end up at.

[Richard Anderson, Managing Director - Equity Research at Wedbush Securities]

Okay. All right. Sounds good. And Jordan, you made a comment in your remarks, interest costs up 100 to 200 basis points and you hope that NOI follows along at some point. Your guidance for same store cash NOI is, call it 1.5%, two % negative.

[Richard Anderson, Managing Director - Equity Research at Wedbush Securities]

So that's not happening now. But is this interest expense view like a sort of flash in the pan that's going to what's going to happen this year and into next year? And then you commence the catch up on the NOI line as long as we don't fall into some sort of major recession? Is that sort of your three, four year outlook when you look at those two competing measures?

[Jordan Kaplan, President and CEO at Douglas Emmett]

One thing is leasing up the portfolio. That's just straight perfect increases in NOI. Another thing is as the economy recovers, which we have seen in the past, you got to be around for a long time, because there's no new development and as companies recover, things tighten up and you see an acceleration in rental rates. And it's that acceleration in response to whether it be inflation and where interest rates are, it's that acceleration in rental rates that I'm hoping will offset interest rates. Now interest rates may also come down.

[Jordan Kaplan, President and CEO at Douglas Emmett]

I don't know what will happen there. I know that for now the reason I made that comment is because we are centered in the process literally of doing a lot of refis. We're refiling some stuff that's farther out. We're doing a lot of that kind of work, which we'll announce when it closes. And I could see where we're headed.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And we're about to move a bunch of stuff out quite a period of time and I could see where we're going to end up. So I know I'm going to end up in that generally I believe in that range that I gave you for at least the next few years. Now if the market also improves and rental rates go up, it should offset that and that was the point I was trying to make.

[Richard Anderson, Managing Director - Equity Research at Wedbush Securities]

Okay. All right. Fair enough. Thanks very much.

[Operator]

Thank

[Operator]

you. The next question comes from Peter Abramowitz from Jefferies. Please go ahead.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

Yes. Thanks for taking the question. Just wanted to dig a little more into the comments around Studio Plaza. So when you say leasing is surpassing expectations, is that just sort of in terms of demand and interest in asset? Have you actually gotten anything signed there?

[Peter Abramowitz, SVP - Equity Research at Jefferies]

And then just maybe kind of expectations around timing of when you think you could be close to full occupancy again?

[Jordan Kaplan, President and CEO at Douglas Emmett]

All

[Jordan Kaplan, President and CEO at Douglas Emmett]

three. Leasing demand, the amount of leases we're signing and the speed at which we'll reach a very reasonable occupancy level.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

Got it. I guess if you were to handicap when a reasonable occupancy level could be achieved, when do you think that is, I guess, for modeling purposes?

[Jordan Kaplan, President and CEO at Douglas Emmett]

I don't want to make a prediction about it beyond giving you that color because I've made other predictions that have been thrown back at me. But I can give you my feel about it and we're usually been right on those fronts. And I was very nervous going into it in the market and everything we're hearing about the studios and everything else. And this building has we're they're doing it. I don't have to say the team is doing a great job of leasing it.

[Jordan Kaplan, President and CEO at Douglas Emmett]

And this building has not been available for a long time. And it's a sought after location and an extremely high quality building. And we've done a really beautiful redo or remodel of all the common areas and it's working. I mean, it's attracting tenants. And I'm super pleased about it because I was nervous and now I'm happy.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

And Peter, that remodel work should be done later this year. And hopefully, we'll have some of the leases that we've signed already commencing later this year as well.

[Jordan Kaplan, President and CEO at Douglas Emmett]

We

[Jordan Kaplan, President and CEO at Douglas Emmett]

have some done on our website.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

Appreciate the color there. And then one more. Just could you comment on entertainment industry demand, I guess, in light of some of the challenges over the last two years or so, sort of how that's shaping up today?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Well, we really have only that one building in the Media District. We haven't been like a big landlord to the entertainment industry historically other than the vendors like the agents and whatnot. We renewed a giant lease with one of the big agencies and you know that we're having a good experience in the Media District. We don't really I don't think we have enough interaction to comment more largely on overall demand. And we're not in, obviously, the studio business, which is where like a lot of this discussion revolves.

[Peter Abramowitz, SVP - Equity Research at Jefferies]

All right. Thanks for the color, Jordan. Appreciate it.

[Operator]

Thank you. Your next question comes from the line of Opel Rana from KeyBanc Capital Markets. Please go ahead.

[Upal Rana, Director & Equity Research Analyst at KeyBanc Capital Markets]

Great. Thanks for taking my question. Just on the recovery in LA post the fires, how is that progressing broadly? Has there been any shifts in demand that you have noticed either by the size of tenants, industry or submarket? I know you already commented on the residential side, but just curious how it's going on the office side.

[Upal Rana, Director & Equity Research Analyst at KeyBanc Capital Markets]

Thanks.

[Jordan Kaplan, President and CEO at Douglas Emmett]

I know we've been asked a lot or people have proposed that we should see there's billions of dollars moving into the market that I'm definitely saying. Now that should translate to additional office leasing and I understand why people feel that will happen whether it be architects or contractors or whatever it is that want to be here near where all this construction is going on because it's not just houses. I mean, it's streets and utilities being installed and tons of stuff. And I but I anecdotally only know one or two small leases and I can't tell you we're seeing that flood at this moment, but maybe it takes time to formulate.

[Upal Rana, Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay, great. Thank you. And then just to well into the decision to consolidate the JV?

[Jordan Kaplan, President and CEO at Douglas Emmett]

We redid the agreement with our partners and extended it out substantially. And as a it's hard to call the decision one way or another. The terms of the agreement dictate whether it's consolidated or not consolidated. And under the new agreement, obviously, we're a very large owner and there are other terms in there that dictate that under the accounting rules now it's consolidated. I can't tell you I was thrilled about that.

[Jordan Kaplan, President and CEO at Douglas Emmett]

It gave us additional interest expense. It's kind of phantom because they act like you bought it. You want to talk?

[Peter Seymour, CFO at Douglas Emmett]

Yes, it's Peter. When we go through the consolidation process, mean, obviously, it affected a lot of line items on the consolidated P and L, not to mention the gain that we had to take on which rolls through net income. So overall, probably slightly negative impact to the interest because we had to also fair value of the debt when we put it on the balance sheet and it's obviously at a great interest rate. So we'll see some amortization roll through interest expense, maybe about $01 impact or so overall included in our guidance.

[Upal Rana, Director & Equity Research Analyst at KeyBanc Capital Markets]

Okay, great. Thank you.

[Operator]

Thank you. The next question comes from the line of Seth Durgy from Citi. Please go ahead.

[Seth Bergey, Senior Analyst at Citi]

Hi, thanks for taking my question. I was just kind of curious, would you look to do kind of future acquisitions with a JV partner or wholly owned? And where do you see the opportunity today? Is that kind of on the multifamily side or the office side?

[Kevin Crummy, CIO at Douglas Emmett]

It's definitely this is Kevin here. It's definitely on the office side is the resi pricing has backed up slightly, but not to the degree that the office market has backed up. And so the 10,900 acquisition raised a lot of eyebrows with some of our partners and other people that we've been talking to overseas about the opportunities. And so, we're going to focus on finding high quality office buildings in our markets that we can apply the operating platform to and create some value and our partners are very intrigued by what they're seeing.

[Seth Bergey, Senior Analyst at Citi]

Great. Thanks.

[Operator]

Thank you. The next question comes from the line of Jana Gallen from Bank of America. Please go ahead.

[Jana Galan, Director at Bank of America]

Thank you. Maybe digging a little bit deeper into that, kind of curious around your capital allocation thinking between these opportunistic acquisitions? Would they be for the property? Could you also think about third party management and then redevelopment like in Studio Plaza or share buybacks?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Obviously, we've already committed to rebuild and we're leasing up Studio Plaza, so consider that one done. Now you're asking me about share buyback and versus acquisitions?

[Jana Galan, Director at Bank of America]

Yes. And whether they would be with partners or on balance sheet?

[Jordan Kaplan, President and CEO at Douglas Emmett]

So we have bought back shares. I think we bought back $115,000,000

[Jordan Kaplan, President and CEO at Douglas Emmett]

something like that, 115,000,000

[Jordan Kaplan, President and CEO at Douglas Emmett]

or something like that. But it's done. I don't like issuing stock and I don't like tinkering with our stock because I don't think we've been great at predicting where the price is or any of that. I mean sometimes it's so extreme that we do it and we have a group here and we all talk about it, but you got to really be really in a clear thing. In terms of doing acquisitions, I mean, think we have an opportunity to buy stuff directly.

[Jordan Kaplan, President and CEO at Douglas Emmett]

But if we don't include our partners in our acquisitions, we're going to lose the partners because they're going to look at us like we're cherry picking. And they're going go, oh, yes, you come to us when you don't want to do the deal because we obviously have money to do deals, but you don't come to us when you really love the deal. So in general, everything we buy, we give them an opportunity to come in and historically they have. So I would expect to continue that way.

[Jana Galan, Director at Bank of America]

Thank you.

[Operator]

Thank you. The next question comes from the line of John Kim from BMO Capital Markets. Please go ahead.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Thank you. Can I just follow-up

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

on Steve's question on the multifamily growth? You had 7.7% same store revenue, not much of pickup in occupancy. You don't have a lot of turnover in the assets, so you can't really push rents to market. So were there onetime items in the first quarter that don't carry on for the rest of the year?

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

No, John, no one timers. We did have an increase in occupancy year over year in the same store pool, so that was contributing factor. And we do have pretty good turnover. We do have some rent controlled units in Santa Monica that turnover less frequently, but the rest of the portfolio besides those turns over at a pretty good normal rate. So, we had occupancy contributing as Jordan said, we're very full and good rent growth.

[Jordan Kaplan, President and CEO at Douglas Emmett]

I think what is being missed and maybe I'm misleading by saying we haven't raised rents since the fire, but rents have been really moving up. And just sticking even at that new number with the roll that's now happening over the last few months is rolling through in terms of the 7% to 8% that you're referring to. I think that's probably the primary cause.

[Peter Seymour, CFO at Douglas Emmett]

Yes. I mean, it's Peter. The same store includes all of last year and rent growth over the course of that year.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

So I know you don't give guidance on same store to multifamily, but high single digits, is that a good assumption?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Well, it has been, but we don't give guidance.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Okay. Switching gears, can I ask about Warner Center and the new Rams Village development proposal? If you're involved at all as far as potentially selling assets to the organization or maybe overall how that impacts the office market in Warner Center?

[Jordan Kaplan, President and CEO at Douglas Emmett]

It's very good for the market in Warner Center and the stuff that Kroenke and Auto and that crowd is doing is outstanding and we're certainly in communication with them. And hugely in favor of the things they're doing and supportive.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

But you're not looking to sell any assets to their organization?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Well, historically, we don't talk about deals and we still and by me saying yes or no, go, you only talk about when it's yes or no. So we really don't talk about. I we do a deal, we'll definitely announce it.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

A few years ago, I think this was a market that you were looking to potentially exit. So I'm wondering if that's still on the cards or this changes your view of your long term ownership?

[Jordan Kaplan, President and CEO at Douglas Emmett]

I don't think I ever said I was trying to exit this market. That's not correct. I mean, I don't know if that was out in the world, but it didn't come from me.

[John Kim, Managing Director - US Real Estate at BMO Capital Markets]

Okay. Thank you.

[Jordan Kaplan, President and CEO at Douglas Emmett]

All right.

[Operator]

Thank you. Our next question comes from the line of Dylan Perzynski from Green Street. Please go ahead.

[Dylan Burzinski, Senior Analyst, Office at Green Street Advisors, LLC]

Okay. Thanks for taking the question. Most of my questions have already been asked, but I guess just can you touch on sort of the acquisition pipeline and if things are sort of accelerating as it relates to sellers willing to come to market and part ways with their properties?

[Jordan Kaplan, President and CEO at Douglas Emmett]

What do you think?

[Kevin Crummy, CIO at Douglas Emmett]

I think that people's Westside assets are the family jewels. And so people will do as much as they can to hold on to those assets. We don't have a lot of distressed bank opportunities, but there are some core funds and other people who have other more portfolio pressure that might end up selling some of their Westside assets because they don't have liquidity in their other markets.

[Jordan Kaplan, President and CEO at Douglas Emmett]

It's certainly not a flood, that's for sure.

[Kevin Crummy, CIO at Douglas Emmett]

Right.

[Dylan Burzinski, Senior Analyst, Office at Green Street Advisors, LLC]

Okay. That's helpful guys. Thanks.

[Operator]

Thank you. Our next question comes from Anthony Paolone from JPMorgan. Please go ahead.

[Anthony Paolone, Executive Director at J.P. Morgan]

Yes, thanks. Just first one on Studio Plaza, apologies if I missed this, but what is the leased rate at this point at that asset?

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

Hey, Tony, we're not giving we're not tracking individual buildings or leases that way. So we haven't provided a rate.

[Anthony Paolone, Executive Director at J.P. Morgan]

Okay. When you talk about your leasing the new leasing in the quarter, the difference between the over $300,000 and I think the 275,000 or whatever for the in service, is it safe to assume that the rest of it was Studio Plaza or is there something else outside

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

We've got two buildings in the not in the in service portfolio. So it will be Studio Plaza and then the new acquisition in Westwood.

[Anthony Paolone, Executive Director at J.P. Morgan]

Okay. Got it. And then just the other question, you did a couple of debt deals in the quarter. And so I guess next up is the 2026. Any thoughts as to when you like are those on deck for near term?

[Anthony Paolone, Executive Director at J.P. Morgan]

Or sort of imagine they'll have some implication on earnings for this year?

[Jordan Kaplan, President and CEO at Douglas Emmett]

Yes, that's what I was alluding to. We're working on a lot of debt right now and we do start early on stuff and yes, you're right. That's why I'm able to give you my prediction.

[Kevin Crummy, CIO at Douglas Emmett]

And just to remind you, Anthony, we typically like to do a seven year loan that swap for five years and leave ourselves a two year runway. And so those 2026 expirations, that's the floating rate debt that you're seeing. And so we're working with our lenders right now to figure out new deals and we'll announce them when we close them.

[Jordan Kaplan, President and CEO at Douglas Emmett]

I tried to give you guys a feel for it because I said in my prepared remarks, I think we're going to be up 100 to 200 basis points over the 3% rate that we enjoyed pre COVID.

[Anthony Paolone, Executive Director at J.P. Morgan]

Right. Just to make sure I understand that those because you have been pretty clear that you want to get those done this year and you kind of gave us those brackets, but those aren't but you didn't put those in your guide, right? Like we would have to kind of think about that separately.

[Stuart McElhinney, Vice President, Investor Relations at Douglas Emmett]

That's right. We don't put future refinancings in the guidance. So, we'll

[Jordan Kaplan, President and CEO at Douglas Emmett]

The guidance has a bump in it at the rate of floating and the curve that you guys could also figure out.

[Anthony Paolone, Executive Director at J.P. Morgan]

Okay. Thank you.

[Operator]

Thank you. This concludes our question and answer session. I would now like to turn the conference back over to Jordan Kaplan for any closing remarks.

[Jordan Kaplan, President and CEO at Douglas Emmett]

All I can say is thank you for joining us and we'll speak to you next quarter. Goodbye.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Stuart McElhinney, Vice President, Investor Relations
• Kevin Crummy, CIO
• Peter Seymour, CFO

Analysts

• Jordan Kaplan, President and CEO at Douglas Emmett
• Steve Sakwa, Senior Managing Director & Senior Equity Research Analyst at Evercore ISI
• Nicholas Yulico, Managing Director at Scotiabank
• Connor Mitchell, Equity Research Analyst at Piper Sandler Companies
• Richard Anderson, Managing Director - Equity Research at Wedbush Securities
• Peter Abramowitz, SVP - Equity Research at Jefferies
• Upal Rana, Director & Equity Research Analyst at KeyBanc Capital Markets
• Seth Bergey, Senior Analyst at Citi
• Jana Galan, Director at Bank of America
• John Kim, Managing Director - US Real Estate at BMO Capital Markets
• Dylan Burzinski, Senior Analyst, Office at Green Street Advisors, LLC
• Anthony Paolone, Executive Director at J.P. Morgan