form8k.htm

0001364250-09-000034.txt : 20091104 0001364250-09-000034.hdr.sgml : 20091104 20091103180715 ACCESSION NUMBER: 0001364250-09-000034 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20091103 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20091104 DATE AS OF CHANGE: 20091103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Douglas Emmett Inc CENTRAL INDEX KEY: 0001364250 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 203073047 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33106 FILM NUMBER: 091155671 BUSINESS ADDRESS: STREET 1: 808 WILSHIRE BLVD., SUITE 200 CITY: SANTA MONICA STATE: CA ZIP: 90401 BUSINESS PHONE: 310-255-7700 MAIL ADDRESS: STREET 1: 808 WILSHIRE BLVD., SUITE 200 CITY: SANTA MONICA STATE: CA ZIP: 90401 8-K 1 form8k.htm FORM 8K Q3-09 form8k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (date of earliest event reported)

November 3, 2009

Douglas Emmett, Inc.

(Exact name of registrant as specified in its charter)

Maryland	1-33106	20-3073047
(State or other jurisdiction of incorporation)	Commission file number	(I.R.S. Employer identification No.)

808 Wilshire Boulevard, Suite 200, Santa Monica, California 90401

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (310) 255-7700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Conditions

On November 3, 2009, Douglas Emmett, Inc. issued a press release setting forth the results for the Company for the quarter ended September 30, 2009 and provided certain Supplemental Financial and Operating Information. The press release is attached hereto as Exhibit 99.1 and the Supplemental Financial and Operating Information is attached hereto as Exhibit 99.2. The information contained in this report on Form 8-K, including the Exhibits, shall not be deemed “filed” with the Securities and Exchange Commission nor incorporated by reference in any registration statement filed by Douglas Emmett, Inc. under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

99.1	Press release issued by Douglas Emmett, Inc. dated November 3, 2009.

99.2	Supplemental Financial and Operating Information provided by Douglas Emmett, Inc. on November 3, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DOUGLAS EMMETT, INC.
Dated: November 3, 2009	By:	/s/WILLIAM KAMER
		William Kamer
		Chief Financial Officer

EX-99.1 2 ex99-1.htm EARNINGS PR Q3-09 ex99-1.htm

808 Wilshire Boulevard, 2nd Floor T: 310.255.7700

Santa Monica, California 90401F: 310.255.7702

FOR IMMEDIATE RELEASE

Mary Jensen, Vice President – Investor Relations

310.255.7751 or mjensen@douglasemmett.com

Douglas Emmett, Inc. Announces

2009 Third Quarter Earnings Results

Reports FFO of $0.31 Per Diluted Share

SANTA MONICA, CALIFORNIA – November 3, 2009 – Douglas Emmett, Inc. (NYSE:DEI), a real estate investment trust (REIT), today announced its 2009 third quarter financial results for the period ended September 30, 2009.

Financial Results

Funds From Operations (FFO) for the three months ended September 30, 2009 totaled $47.8 million, or $0.31 per diluted share, compared to $51.1 million, or $0.33 per diluted share, for the three months ended September 30, 2008. FFO for the nine months ended September 30, 2009 totaled $151.8 million, or $0.98 per diluted share, compared to $156.1 million, or $1.00 per diluted share, for the nine months ended September 30, 2008.

The Company reported a GAAP net loss attributable to common stockholders of $8.8 million, or ($0.07) per diluted share, for the three months ended September 30, 2009, compared to a GAAP net loss attributable to common stockholders of $9.7 million, or ($0.08) per diluted share, for the three months ended September 30, 2008. For the nine months ended September 30, 2009, the Company reported a GAAP net loss attributable to common stockholders of $18.2 million, or ($0.15) per diluted share, compared to $21.6 million, or ($0.18) per diluted share for the nine months ended September 30, 2008.

Same Property Net Operating Income (NOI) on a cash basis decreased 1.3% for the three months ended September 30, 2009 compared to the three months ended September 30, 2008. Same Property NOI on a GAAP basis for the three months ended September 30, 2009 decreased 2.4% compared to the three months ended September 30, 2008.

Company Operations

Office:

During the third quarter of 2009, the Company signed 147 new and renewal leases totaling more than 575,000 square feet, compared to 549,000 square feet in the prior quarter. New leasing activity increased significantly during the third quarter, marking the Company’s highest level of new leasing volume since the fourth quarter of 2007. During the third quarter, the Company entered into 62 new leases totaling 214,000 square feet, compared to 132,000 square feet in the prior quarter.

As of September 30, 2009, the Company’s office portfolio was 91.8% leased and 90.7% occupied, compared to 92.1% leased and 91.2% occupied at June 30, 2009. This excludes the six properties acquired in March 2008 and owned by Douglas Emmett Fund X, the Company’s institutional fund. As of September 30, 2009, the Company’s office portfolio, including the Fund X properties, was 90.4% leased and 89.2% occupied, compared to 90.7% leased and 89.9% occupied at June 30, 2009. The occupied percentage represents the leased portion of the Company’s office portfolio less those leases where the rent commencement date has yet to occur.

Douglas Emmett Fund X was deconsolidated from the Company’s results at the end of February 2009. As a result, the Company’s financial results reflect the results of the Fund X properties on a consolidated basis for the period from March 2008, when the Company acquired the properties, through February 2009 and on an unconsolidated basis for the period from March 2009 through September 2009. If the results of the Fund X properties were reflected on an unconsolidated basis in all applicable periods, total office revenues for the Company would have decreased to $123.5 million for the three months ended September 30, 2009 from $125.2 million for the three months ended September 30, 2008 and total office revenues for the nine months ended September 30, 2009 would have increased to $370.8 million from $369.0 million for the nine months ended September 30, 2008. Same property office revenues, on a cash basis, decreased to $114.6 million for the three months ended September 30, 2009, representing a decrease of 0.4% from the three months ended September 30, 2008.

Multifamily: For the quarter ended September 30, 2009, same property multifamily revenues, on a cash basis, decreased 3.6% to $16.1 million compared to the quarter ended September 30, 2008. For the quarter ended September 30, 2009, same property multifamily revenues, on a GAAP basis, decreased 3.4% to $17.0 million, compared to the quarter ended September 30, 2008.

As of September 30, 2009, the Company’s multifamily portfolio was 99.4% leased compared to 99.1% leased at June 30, 2009.

Financings, Equity Repurchase and Cash Position

Subsequent to the end of the third quarter, the Company consummated the renewal of its revolving credit facility extending its maturity date to October 30, 2010. The available proceeds under the credit facility have been reduced to $350 million from $370 million, but the pricing and other terms and conditions remain the same as prior to the extension. The Company maintained a zero balance on the credit facility throughout the third quarter. A second one-year extension option remains available to the Company, which would extend the maturity out to October 30, 2011.

During the third quarter, the Company repurchased 250,000 share equivalents in a private transaction at a total cost of $11.52 per share. Year-to-date, the Company has repurchased a total of 1,069,500 share equivalents totaling approximately $8.2 million, which represents an average cost of $7.68 per share.

At September 30, 2009, the Company had $63.8 million in cash and cash equivalents on hand. For the nine months ended September 30, 2009, the Company’s cash position increased by $55.2 million.

Dividends

During the quarter, the Company’s Board of Directors approved a quarterly cash dividend of $0.10 per share, which was paid on October 15, 2009 to shareholders of record as of September 30, 2009. On an annualized basis, the dividend totals $0.40 per common share.

Guidance

FFO for the fourth quarter of 2009 is expected to range between $0.29 and $0.31 per diluted share. Therefore, the Company is narrowing its full year 2009 FFO guidance range to $1.26 - $1.28 per diluted share from $1.25 - $1.29 per diluted share. This guidance excludes any impact from future acquisitions, dispositions, equity purchases, debt financings, recapitalizations, or similar matters; and assumes that non-cash interest expense for the last quarter of 2009 relating to the Company’s pre-IPO interest rate swap contracts will approximate straight-line amortization.

Conference Call and Web Cast Information

A conference call to discuss the Company’s 2009 third quarter financial results is scheduled for Wednesday, November 4, 2009 at 2:00 pm Eastern Time or 11:00 am Pacific Time. Interested parties can access through the following mediums:

Internet: Go to www.douglasemmett.com at least fifteen minutes prior to the start time of the call in order to register, download and install any necessary audio software.

Phone: 877-298-7945 (U.S./Canada) or 706-758-2996 (International) – conference ID #33778566

Replay: A rebroadcast of the call will be available via the web site for 90 days, and can be accessed through the Company’s Web site at www.douglasemmett.com. A digital replay will be available beginning at 12:00 noon Pacific Time on Wednesday, November 4, 2009 through Tuesday, November 10, 2009 using 800-642-1687, or 706-645-9291 and conference ID #33778566.

Supplemental Information

Supplemental financial information for the Company’s 2009 third quarter financial results can be accessed on the Company’s Web site under the Investor Relations section at www.douglasemmett.com.

About Douglas Emmett, Inc.

Douglas Emmett, Inc. (NYSE: 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 premier submarkets in California and Hawaii. The Company’s properties are concentrated in ten submarkets – Brentwood, Olympic Corridor, Century City, Santa Monica, Beverly Hills, Westwood, Sherman Oaks/Encino, Warner Center/Woodland Hills, Burbank and Honolulu. The Company 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. The Company maintains a website at www.douglasemmett.com.

Safe Harbor Statement

Except for the historical facts, the statements in this press release are forward-looking statements based on our beliefs about and assumptions made by and information currently available to us about 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 inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements to anticipate future results or trends. For a discussion of some of the risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.

--tables follow--

page 2

Douglas Emmett, Inc. Announces 2009 Third Quarter Earnings Results

Douglas Emmett, Inc.

Consolidated Balance Sheets

(unaudited and in thousands)

	September 30, 2009			December 31, 2008
Assets
Investment in real estate:
Land	$	835,407		$	900,213
Buildings and improvements		5,014,894			5,528,567
Tenant improvements and lease intangibles		521,909			552,536
		6,372,210			6,981,316
Less: accumulated depreciation		(634,123	)		(490,125	)
Net investment in real estate		5,738,087			6,491,191

Cash and cash equivalents		63,834			8,655
Tenant receivables, net		1,530			2,427
Deferred rent receivables, net		38,108			33,039
Interest rate contracts		129,901			176,255
Acquired lease intangible assets, net		12,901			18,163
Investment in unconsolidated real estate fund		99,189			―
Other assets		29,349			31,304
Total assets	$	6,112,899		$	6,761,034

Liabilities
Secured notes payable	$	3,258,000		$	3,672,300
Unamortized non-cash debt premium		16,743			20,485
Interest rate contracts		283,591			407,492
Accrued interest payable		26,020			22,982
Accounts payable and accrued expenses		49,896			46,463
Acquired lease intangible liabilities, net		147,548			195,036
Security deposits		32,034			35,890
Dividends payable		12,155			22,856
Other liabilities		―			57,316
Total liabilities		3,825,987			4,480,820

Equity
Douglas Emmett, Inc. stockholders’ equity:
Common stock		1,216			1,219
Additional paid-in capital		2,289,094			2,284,429
Accumulated other comprehensive income (loss)		(210,152	)		(274,111	)
Accumulated deficit		(290,948	)		(236,348	)
Total Douglas Emmett, Inc. stockholders’ equity		1,789,210			1,775,189
Noncontrolling interests		497,702			505,025
Total equity		2,286,912			2,280,214
Total liabilities and equity	$	6,112,899		$	6,761,034

page 3

Douglas Emmett, Inc. Announces 2009 Third Quarter Earnings Results

Douglas Emmett, Inc.

Consolidated Statements of Operations

(unaudited and in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009(1)			2008(2)			2009(1)			2008(2)
Revenues:
Office rental:
Rental revenues	$	99,463		$	112,787		$	307,219		$	323,016
Tenant recoveries		8,059			8,335			23,159			22,523
Parking and other income		15,939			18,967			49,977			53,772
Total office revenues		123,461	(3)		140,089	(3)		380,355	(4)		399,311	(4)

Multifamily rental:
Rental revenues		15,980			16,483			48,174			50,130
Parking and other income		986			1,081			3,110			3,083
Total multifamily revenues		16,966			17,564			51,284			53,213
Total revenues		140,427			157,653			431,639			452,524
Operating Expenses:
Office expenses		38,691	(5)		44,201	(5)		115,668	(6)		121,924	(6)
Multifamily expenses		4,560			4,369			13,363			12,888
General and administrative		5,585			5,243			17,895			16,257
Depreciation and amortization		55,529			63,611			172,332			184,218
Total operating expenses		104,365			117,424			319,258			335,287
Operating income		36,062			40,229			112,381			117,237
Gain on disposition of interest in unconsolidated real estate fund		―			―			5,573			―
Interest and other income		56			(43	)		3,030			489
Loss, including depreciation, from unconsolidated real estate fund		(1,904	)		―			(4,710	)		―
Interest expense		(45,326	)		(52,586	)		(139,154	)		(145,580	)
Net loss		(11,112	)		(12,400	)		(22,880	)		(27,854	)
Less: Net loss attributable to noncontrolling interests		2,306			2,704			4,725			6,230
Net loss attributable to common stockholders	$	(8,806	)	$	(9,696	)	$	(18,155	)	$	(21,624	)
Net loss per common share – basic and diluted(7)	$	(0.07	)	$	(0.08	)	$	(0.15	)	$	(0.18	)
Weighted average shares of common stock outstanding – basic and diluted(7)		121,486			121,509			121,548			120,373

(1)

Douglas Emmett Fund X, LLC (Fund X) was deconsolidated from our financial statements as of the end of February 2009 and is presented on an unconsolidated basis beginning March 2009. As a result, the consolidated operating results of Douglas Emmett, Inc. for the nine months ended September 30, 2009 presented above reflect the impact of the properties owned by Fund X only for the months of January and February 2009 on a consolidated basis.

(2)	The properties currently owned by Fund X were acquired by us at the end of March 2008. As such, our consolidated operating results reflect the impact of the properties now owned by Fund X for the period from March 26, 2008 through September 30, 2008.

(3)

If the properties contributed to Fund X had been an unconsolidated equity investment for the entire third quarter of 2008, total office revenues for the third quarter of 2008 would have been $125,182 (after subtracting office revenues attributable to the properties contributed to Fund X of $14,907) in comparison to the total office revenues of $123,461 for the third quarter of 2009 shown above.

(4)

If the properties contributed to Fund X had been an unconsolidated equity investment for the period during the first nine months of 2008 following our acquisition of the properties and for the entire first nine months of 2009, total office revenues would have been $368,955 for the first nine months of 2008 (after subtracting office revenues attributable to the properties contributed to Fund X of $30,356) in comparison to total office revenues of $370,779 for the first nine months of 2009 (after subtracting office revenues attributable to the properties contributed to Fund X of $9,576).

(5)

If the properties contributed to Fund X had been an unconsolidated equity investment for the entire third quarter of 2008, total office expenses for the third quarter of 2008 would have been $38,841 (after subtracting office expenses attributable to the properties contributed to Fund X of $5,360) in comparison to the total office expenses of $38,691 for the third quarter of 2009 shown above.

(6)

If the properties contributed to Fund X had been an unconsolidated equity investment for the period during the first nine months of 2008 following our acquisition of the properties and for the entire first nine months of 2009, total office expenses would have been $111,474 for the first nine months of 2008 (after subtracting office expenses attributable to the properties contributed to Fund X of $10,450) in comparison to total office expenses of $112,970 for the first nine months of 2009 (after subtracting office expenses attributable to the properties contributed to Fund X of $2,698).

(7)

Diluted shares are calculated in accordance with accounting principles generally accepted in the United States (GAAP) and include common stock plus dilutive equity instruments, as appropriate. This amount excludes OP units, which are included in the non-GAAP calculation of fully diluted shares on the following page of this release.

page 4

Douglas Emmett, Inc. Announces 2009 Third Quarter Earnings Results

Douglas Emmett, Inc.

FFO Reconciliation

(unaudited and in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Funds From Operations (FFO) (1)
Net loss attributable to common stockholders	$	(8,806	)	$	(9,696	)	$	(18,155	)	$	(21,624	)
Depreciation and amortization of real estate assets		55,529			63,611			172,332			184,218
Net loss attributable to noncontrolling interests		(2,306	)		(2,704	)		(4,725	)		(6,230	)
Loss on asset disposition		―			33			―			65
Gain on disposition of interest in unconsolidated real estate fund		―			―			(5,573	)		―
Less: adjustments attributable to consolidated joint venture and unconsolidated investment in real estate fund		3,366			(151	)		7,934			(313	)
FFO	$	47,783		$	51,093		$	151,813		$	156,116

Weighted average share equivalents outstanding - fully diluted		155,439			156,519			155,622			156,555
FFO per share - fully diluted	$	0.31		$	0.33		$	0.98		$	1.00

(1)

We calculate funds from operations before noncontrolling 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.

page 5

Douglas Emmett, Inc. Announces 2009 Third Quarter Earnings Results

Douglas Emmett, Inc.

Same Property Statistical and Financial Data

(unaudited and in thousands, except statistics)

	Three Months Ended September 30,
	2009			2008			% Favorable (Unfavorable)

Same Property Office Statistics
Number of properties		49			49
Rentable square feet		11,889,279			11,888,814
% leased at September 30		91.8	%		94.8	%
% occupied at September 30		90.7	%		94.1	%

Same Property Multifamily Statistics
Number of properties		9			9
Number of units		2,868			2,868
% leased at September 30		99.4	%		99.6	%

Same Property Net Operating Income - GAAP Basis (1)(3)
Total office revenues	$	123,461		$	125,182		(1.4	)%
Total multifamily revenues		16,966			17,564		(3.4	)
Total revenues		140,427			142,746		(1.6	)

Total office expense		(38,691	)		(38,841	)	0.4
Total multifamily expense		(4,560	)		(4,369	)	(4.4	)
Total property expense		(43,251	)		(43,210	)	(0.1	)

Same Property NOI - GAAP basis	$	97,176		$	99,536		(2.4	)%

Same Property Net Operating Income - Cash Basis(1)(2)(3)
Total office revenues	$	114,608		$	115,096		(0.4	)%
Total multifamily revenues		16,085			16,681		(3.6	)
Total revenues		130,693			131,777		(0.8	)

Total office expense		(38,736	)		(38,886	)	0.4
Total multifamily expense		(4,560	)		(4,369	)	(4.4	)
Total property expense		(43,296	)		(43,255	)	(0.1	)

Same Property NOI - cash basis	$	87,397		$	88,522		(1.3	)%

NOTE: See below for a description of same property, cash basis and NOI.

page 6

Douglas Emmett, Inc. Announces 2009 Third Quarter Earnings Results

Douglas Emmett, Inc.

Reconciliation of Same Property NOI to GAAP Net Income (Loss)

(unaudited and in thousands)

	Three Months Ended September 30,
	2009			2008
Same property office revenues - cash basis (1)(2)	$	114,608		$	115,096
GAAP adjustments		8,853			10,086
Same property office revenues - GAAP basis		123,461			125,182
Same property multifamily revenues - cash basis		16,085			16,681
GAAP adjustments		881			883
Same property multifamily revenues - GAAP basis		16,966			17,564
Same property revenues - GAAP basis		140,427			142,746
Same property office expenses - cash basis		(38,736	)		(38,886	)
GAAP adjustments		45			45
Same property office expenses - GAAP basis		(38,691	)		(38,841	)
Same property multifamily expenses - cash basis		(4,560	)		(4,369	)
GAAP adjustments		―			―
Same property multifamily expenses - GAAP basis		(4,560	)		(4,369	)
Same property expenses - GAAP basis		(43,251	)		(43,210	)
Same property Net Operating Income (NOI) (3)- GAAP basis		97,176			99,536
Non-comparable office revenues		―			14,907
Non-comparable office expenses		―			(5,360	)
Total property NOI - GAAP basis		97,176			109,083
General and administrative expenses		(5,585	)		(5,243	)
Depreciation and amortization		(55,529	)		(63,611	)
Operating income		36,062			40,229
Interest and other income		56			(43	)
Loss, net of depreciation, from unconsolidated real estate fund		(1,904	)		―
Interest expense		(45,326	)		(52,586	)
Net loss		(11,112	)		(12,400	)
Less: Net loss attributable to noncontrolling interests		2,306			2,704
Net loss attributable to common stockholders	$	(8,806	)	$	(9,696	)

(1)	To facilitate a more meaningful comparison of NOI between periods, we calculate comparable amounts for a subset of our owned properties referred to as “same properties”. Same property amounts are calculated as the amounts attributable to properties which have been owned and operated by us during the entire span of both periods compared. Therefore, any properties either acquired after the first day of the earlier comparison period or sold or unconsolidated before the last day of the later comparison period are excluded from same properties. We may also exclude from the same property set any property that is undergoing a major repositioning project that would impact the comparability of its results between two periods.
(2)	NOI (as defined in the next footnote) includes the revenue and expense directly attributable to our real estate properties calculated in accordance with GAAP, and is specifically labeled as “GAAP basis.” We also believe that NOI calculated on a cash basis is useful for investors to understand our operations. Cash basis NOI is also a non-GAAP measure, which we calculate by excluding from GAAP basis NOI our straight-line rent adjustments and the amortization of above/below market lease intangible assets and liabilities. Accordingly, cash basis NOI should be considered only as a supplement to net income as a measure of our performance. Cash basis NOI 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. Cash basis NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP.
(3)	Reported net income (or loss) is computed in accordance with GAAP. In contrast, net operating income (NOI) is a non-GAAP measure consisting of the revenue and expense attributable to the real estate properties that we own and operate. Although NOI is considered a non-GAAP measure, we present NOI on a “GAAP basis” by using property revenues and expenses calculated in accordance with GAAP. The most directly comparable GAAP measure to NOI is net income (or loss), adjusted to exclude general and administrative expense, depreciation and amortization expense, interest income, interest expense, income from unconsolidated partnerships, noncontrolling interests in consolidated partnerships, gains (or losses) from sales of depreciable operating properties, net income from discontinued operations and extraordinary items. Management uses NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense and gains (or 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 NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI 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 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 NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI 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. NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP.

###

page 7

EX-99.2 3 ex99-2.htm SUPPLEMENTAL Q3-09 ex99-2.htm

Supplemental Operating and Financial Data

For the Quarter Ended September 30, 2009

Douglas Emmett, Inc.

TABLE OF CONTENTS

	PAGE

Corporate Data	2
Investor Information	3

CONSOLIDATED FINANCIAL RESULTS

Balance Sheets	5
Quarterly Operating Results	6
Funds from Operations and Adjusted Funds from Operations	7
Same Property Statistical and Financial Data	8
Reconciliation of Same Property NOI to GAAP Net Income (Loss)	9
Definitions	10
Debt Balances	11

PORTFOLIO DATA

Office Portfolio Summary	13
Office Portfolio Percent Leased and In-Place Rents	14
Multifamily Portfolio Summary	15
Tenant Diversification	16
Industry Diversification	17
Lease Distribution	18
Lease Expirations	19
Quarterly Lease Expirations – Next Four Quarters	20
Office Portfolio Leasing Activity	21

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 possible future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Douglas Emmett, Inc.

CORPORATE DATA

Douglas Emmett, Inc.

CORPORATE DATA

as of September 30, 2009

Douglas Emmett, Inc. (NYSE: 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 submarkets in California and Hawaii. The Company’s properties are concentrated in ten submarkets – Brentwood, Olympic Corridor, Century City, Santa Monica, Beverly Hills, Westwood, Sherman Oaks/Encino, Warner Center/Woodland Hills, Burbank, and Honolulu. The Company 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.

This Supplemental Operating and Financial Data supplements the information provided in our reports filed with the Securities and Exchange Commission. We maintain a website at www.douglasemmett.com.

Number of office properties owned (1)		55
Square feet owned (in thousands) (1)		13,329
Office leased rate as of September 30, 2009 (1)		90.4	%
Office occupied rate as of September 30, 2009 (1) (2)		89.2	%
Number of multifamily properties owned		9
Number of multifamily units owned		2,868
Multifamily leased rate as of September 30, 2009		99.4	%
Market capitalization (in thousands):
	Total debt (3) (4)	3,430,193
	Common equity capitalization (5)	1,904,913
	Total market capitalization	5,335,106
Debt/total market capitalization		64.3	%
Common stock data (NYSE:DEI):
	Range of closing prices (6)	$7.93 - $13.87
	Closing price at quarter end	$12.28
	Weighted average fully diluted shares outstanding (in thousands) (6) (7)	155,439
	Shares of common stock outstanding on September 30, 2009 (in thousands) (8)	121,554

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	Represents percent leased less signed leases not yet commenced.
(3)	Excludes non-cash loan premium.
(4)	Excludes one-third of the $18 million debt attributable to the noncontrolling interest in a consolidated joint venture; includes $178 million of debt carried by an unconsolidated entity in which our operating partnership (OP) owns an equity interest.
(5)	Common equity capitalization represents the total number of shares of common stock and OP units outstanding multiplied by the closing price of our stock at the end of the period.
(6)	For the quarter ended September 30, 2009.
(7)	Diluted shares represent ownership in our company through shares of common stock, OP units and other convertible equity instruments.
(8)	This amount represents undiluted shares, and does not include OP units and other convertible equity instruments.

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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 Chief Executive Officer, PinnacleCare	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 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 Former Chief Executive Officer, NHP Foundation	William Wilson III Former Chairman, Cornerstone Properties, Inc., Managing Partner, Wilson Meany Sullivan, LLC

EXECUTIVE AND SENIOR MANAGEMENT

Jordan L. Kaplan President and Chief Executive Officer	Kenneth M. Panzer Chief Operating Officer	William Kamer Chief Financial Officer
Allan B. Golad SVP, Property Management	Gregory R. Hambly Chief Accounting Officer	Michael J. Means SVP, Commercial Leasing

INVESTOR RELATIONS

Mary C. Jensen

Vice President - Investor Relations

(310) 255-7751

Email Contact: mjensen@douglasemmett.com

Please visit our corporate website at: www.douglasemmett.com

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Douglas Emmett, Inc.

CONSOLIDATED

FINANCIAL RESULTS

Douglas Emmett, Inc.

BALANCE SHEETS

(unaudited and in thousands)

	September 30, 2009			December 31, 2008

Assets
Investment in real estate:
Land	$	835,407		$	900,213
Buildings and improvements		5,014,894			5,528,567
Tenant improvements and lease intangibles		521,909			552,536
		6,372,210			6,981,316
Less: accumulated depreciation		(634,123	)		(490,125	)
Net investment in real estate		5,738,087			6,491,191

Cash and cash equivalents		63,834			8,655
Tenant receivables, net		1,530			2,427
Deferred rent receivables, net		38,108			33,039
Interest rate contracts		129,901			176,255
Acquired lease intangible assets, net		12,901			18,163
Investment in unconsolidated real estate fund		99,189			-
Other assets		29,349			31,304
Total assets	$	6,112,899		$	6,761,034

Liabilities
Secured notes payable	$	3,258,000		$	3,672,300
Unamortized non-cash debt premium		16,743			20,485
Interest rate contracts		283,591			407,492
Accrued interest payable		26,020			22,982
Accounts payable and accrued expenses		49,896			46,463
Acquired lease intangible liabilities, net		147,548			195,036
Security deposits		32,034			35,890
Dividends payable		12,155			22,856
Other liabilities		-			57,316
Total liabilities		3,825,987			4,480,820

Equity
Douglas Emmett, Inc. stockholders' equity
Common stock		1,216			1,219
Additional paid-in capital		2,289,094			2,284,429
Accumulated other comprehensive income (loss)		(210,152	)		(274,111	)
Accumulated deficit		(290,948	)		(236,348	)
Total Douglas Emmett, Inc. stockholders' equity		1,789,210			1,775,189
Noncontrolling interests		497,702			505,025
Total equity		2,286,912			2,280,214
Total liabilities and equity	$	6,112,899		$	6,761,034

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Douglas Emmett, Inc.

QUARTERLY OPERATING RESULTS

(unaudited and in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009		(1)		2008	(2)		2009	(1)		2008	(2)
Revenues:
Office rental:
Rental revenues	$	99,463		$	112,787		$	307,219		$	323,016
Tenant recoveries		8,059			8,335			23,159			22,523
Parking and other income		15,939			18,967			49,977			53,772
Total office revenues		123,461	(3)		140,089	(3)		380,355	(4)		399,311	(4)

Multifamily rental:
Rental revenues		15,980			16,483			48,174			50,130
Parking and other income		986			1,081			3,110			3,083
Total multifamily revenues		16,966			17,564			51,284			53,213

Total revenues		140,427			157,653			431,639			452,524

Operating Expenses:
Office expenses		38,691	(5)		44,201	(5)		115,668	(6)		121,924	(6)
Multifamily expenses		4,560			4,369			13,363			12,888
General and administrative		5,585			5,243			17,895			16,257
Depreciation and amortization		55,529			63,611			172,332			184,218
Total operating expenses		104,365			117,424			319,258			335,287

Operating income		36,062			40,229			112,381			117,237

Gain on disposition of interest in unconsolidated real estate fund		-			-			5,573			-
Interest and other income		56			(43	)		3,030			489
Loss, including depreciation, from unconsolidated real estate fund		(1,904	)		-			(4,710	)		-
Interest expense		(45,326	)		(52,586	)		(139,154	)		(145,580	)
Net loss		(11,112	)		(12,400	)		(22,880	)		(27,854	)
Less: Net loss attributable to noncontrolling interests		2,306			2,704			4,725			6,230
Net loss attributable to common stockholders	$	(8,806	)	$	(9,696	)	$	(18,155	)	$	(21,624	)

Net loss per common share – basic and diluted (7)	$	(0.07	)	$	(0.08	)	$	(0.15	)	$	(0.18	)

Weighted average shares of common stock outstanding – basic and diluted (7)		121,486			121,509			121,548			120,373

(1)

(2)	The properties currently owned by Fund X were acquired by us at the end of March 2008. As such, our consolidated operating results reflect the impact of the properties now owned by Fund X for the period from March 26, 2008 through September 30, 2008.

(3)

(4)

(5)

(6)

If the properties contributed to Fund X had been an unconsolidated equity investment for the period during the first nine months of 2008 following our acquisition of the properties and for the entire first nine months of 2009, total office expenses would have been $111,474 for the first nine months of 2008 (after subtracting office expenses attributable to the properties contributed to Fund X of $10,450) in comparison to total office expenses of $112,970 for the first nine months of 2009 (after subtracting office expenses attributable to the properties contributed to Fund X of $2,698).

(7)

Diluted shares are calculated in accordance with accounting principles generally accepted in the United States (GAAP) and include common stock plus dilutive equity instruments, as appropriate. This amount excludes OP units, which are included in the non-GAAP calculation of diluted shares on the “Corporate Data” page preceding this section.

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Douglas Emmett, Inc.

FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(unaudited and in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2009			2008			2009			2008
Funds From Operations (FFO)
Net loss attributable to common stockholders	$	(8,806	)	$	(9,696	)	$	(18,155	)	$	(21,624	)
Depreciation and amortization of real estate assets		55,529			63,611			172,332			184,218
Net loss attributable to noncontrolling interests		(2,306	)		(2,704	)		(4,725	)		(6,230	)
Loss on asset disposition		-			33			-			65
Gain on disposition of interest in unconsolidated real estate fund		-			-			(5,573	)		-
Less: adjustments attributable to consolidated joint venture and unconsolidated investment in real estate fund		3,366			(151	)		7,934			(313	)
FFO	$	47,783		$	51,093		$	151,813		$	156,116

Adjusted Funds From Operations (AFFO)
FFO	$	47,783		$	51,093		$	151,813		$	156,116
Straight-line rent adjustment		(2,249	)		(3,244	)		(6,674	)		(10,886	)
Amortization of acquired above and below market leases		(7,530	)		(10,639	)		(25,470	)		(32,330	)
Amortization of interest rate contracts and loan premium		3,716			4,376			11,229			9,378
Amortization of prepaid financing		483			577			1,573			1,417
Recurring capital expenditures, tenant improvements and leasing commissions		(6,839	)		(6,501	)		(20,126	)		(18,400	)
Non-cash compensation expense		1,226			1,119			4,992			5,459
Less: adjustments attributable to consolidated joint venture and unconsolidated investment in real estate fund		(870	)		58			(2,136	)		106
AFFO	$	35,720		$	36,839		$	115,201		$	110,860

Weighted average share equivalents outstanding - fully diluted		155,439			156,519			155,622			156,555
FFO per share- fully diluted	$	0.31		$	0.33		$	0.98		$	1.00
Dividends per share declared	$	0.10		$	0.1875		$	0.30		$	0.5625
AFFO payout ratio		43.43	%		79.39	%		40.42	%		79.07	%

NOTE: Our definitions of FFO and AFFO are contained on the page titled "Definitions" which follows.

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Douglas Emmett, Inc.

SAME PROPERTY STATISTICAL AND FINANCIAL DATA

(unaudited and in thousands, except statistics)

	Three Months Ended September 30,						% Favorable
	2009			2008			(Unfavorable)

Same Property Office Statistics
Number of properties		49			49
Rentable square feet		11,889,279			11,888,814
% leased at September 30		91.8	%		94.8	%
% occupied at September 30		90.7	%		94.1	%

Same Property Multifamily Statistics
Number of properties		9			9
Number of units		2,868			2,868
% leased at September 30		99.4	%		99.6	%

Same Property Net Operating Income - GAAP Basis
Total office revenues	$	123,461		$	125,182		(1.4	) %
Total multifamily revenues		16,966			17,564		(3.4	)
Total revenues		140,427			142,746		(1.6	)

Total office expense		(38,691	)		(38,841	)	0.4
Total multifamily expense		(4,560	)		(4,369	)	(4.4	)
Total property expense		(43,251	)		(43,210	)	(0.1	)

Same Property NOI - GAAP basis	$	97,176		$	99,536		(2.4	) %

Same Property Net Operating Income - Cash Basis
Total office revenues	$	114,608		$	115,096		(0.4	) %
Total multifamily revenues		16,085			16,681		(3.6	)
Total revenues		130,693			131,777		(0.8	)

Total office expense		(38,736	)		(38,886	)	0.4
Total multifamily expense		(4,560	)		(4,369	)	(4.4	)
Total property expense		(43,296	)		(43,255	)	(0.1	)

Same Property NOI - cash basis	$	87,397		$	88,522		(1.3	) %

NOTE: Our definitions of NOI, same property and cash basis are contained on the page titled "Definitions" which follows.

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Douglas Emmett, Inc.

RECONCILIATION OF SAME PROPERTY NOI TO GAAP NET INCOME (LOSS)

(unaudited and in thousands)

	Three Months Ended September 30,
	2009			2008
Same property office revenues - cash basis	$	114,608		$	115,096
GAAP adjustments		8,853			10,086
Same property office revenues - GAAP basis		123,461			125,182

Same property multifamily revenues - cash basis		16,085			16,681
GAAP adjustments		881			883
Same property multifamily revenues - GAAP basis		16,966			17,564

Same property revenues - GAAP basis		140,427			142,746

Same property office expenses - cash basis		(38,736	)		(38,886	)
GAAP adjustments		45			45
Same property office expenses - GAAP basis		(38,691	)		(38,841	)

Same property multifamily expenses - cash basis		(4,560	)		(4,369	)
GAAP adjustments		-			-
Same property multifamily expenses - GAAP basis		(4,560	)		(4,369	)

Same property expenses - GAAP basis		(43,251	)		(43,210	)

Same property Net Operating Income (NOI) - GAAP basis		97,176			99,536
Non-comparable office revenues		-			14,907
Non-comparable office expenses		-			(5,360	)
Total property NOI - GAAP basis		97,176			109,083
General and administrative expenses		(5,585	)		(5,243	)
Depreciation and amortization		(55,529	)		(63,611	)
Operating income		36,062			40,229
Interest and other income		56			(43	)
Loss, net of depreciation, from unconsolidated real estate fund		(1,904	)		-
Interest expense		(45,326	)		(52,586	)
Net loss		(11,112	)		(12,400	)
Less: Net loss attributable to noncontrolling interests		2,306			2,704
Net loss attributable to common stockholders	$	(8,806	)	$	(9,696	)

NOTE: Our definitions of NOI, same property and cash basis are contained on the page titled "Definitions" which follows.

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Douglas Emmett, Inc.

DEFINITIONS

Funds From Operations (FFO): We calculate funds from operations before noncontrolling 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. We use 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.

Adjusted Funds From Operations (AFFO): 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 our financial position as compared to other REITs since AFFO is a widely reported measure used by other REITs. However, other REITs may use different methodologies for calculating AFFO and, accordingly, our AFFO may not be comparable to other REITs.

Net Operating Income (NOI): Reported net income (or loss) is computed in accordance with GAAP. In contrast, net operating income (NOI) is a non-GAAP measure consisting of the revenue and expense attributable to the real estate properties that we own and operate. Although NOI is considered a non-GAAP measure, we present NOI on a “GAAP basis” by using property revenues and expenses calculated in accordance with GAAP. The most directly comparable GAAP measure to NOI is net income (or loss), adjusted to exclude general and administrative expense, depreciation and amortization expense, interest income, interest expense, income from unconsolidated partnerships, income (or loss) attributable to noncontrolling interests, gains (or losses) from sales of depreciable operating properties, net income from discontinued operations and extraordinary items. We use NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense and gains (or 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 NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI 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 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 NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs’ NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI 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. NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP.

Same Property NOI: To facilitate a more meaningful comparison of NOI between periods, we calculate comparable amounts for a subset of our owned properties referred to as “same properties.” Same property amounts are calculated as the amounts attributable to properties which have been owned and operated by us, and reported in our consolidated results, during the entire span of both periods compared. Therefore, any properties either acquired after the first day of the earlier comparison period or sold, contributed or otherwise removed from our consolidated financial statements before the last day of the later comparison period are excluded from same properties. We may also exclude from the same property set any property that is undergoing a major repositioning project that would impact the comparability of its results between two periods.

Cash Basis NOI: NOI as defined above includes the revenue and expense directly attributable to our real estate properties calculated in accordance with GAAP, and is specifically labeled as “GAAP basis.” We also believe that NOI calculated on a cash basis is useful for investors to understand our operations. Cash basis NOI is also a non-GAAP measure, which we calculate by excluding from GAAP basis NOI our straight-line rent adjustments and the amortization of above/below market lease intangible assets and liabilities. Accordingly, cash basis NOI should be considered only as a supplement to net income as a measure of our performance. Cash basis NOI 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. Cash basis NOI should not be used as a substitute for cash flow from operating activities computed in accordance with GAAP.

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Douglas Emmett, Inc.

DEBT BALANCES

as of September 30, 2009

(unaudited and in thousands)

	Maturity Date(1)		Principal Balance			Variable Rate		Effective Annual Fixed Rate(2)			Swap Maturity Date(1)
Variable Rate Swapped to Fixed Rate:
Fannie Mae Loan I(3)	06/01/12		$	293,000		DMBS + 0.60%		4.70	%		08/01/11
Fannie Mae Loan II(3)	06/01/12			95,080		DMBS + 0.60%		5.78			08/01/11
Modified Term Loan(4)(5)	08/31/12			2,300,000		LIBOR + 0.85%		5.13			08/01/10 - 08/01/12
Fannie Mae Loan III(3)	02/01/15			36,920		DMBS + 0.60%		5.78			08/01/11
Fannie Mae Loan IV(3)	02/01/15			75,000		DMBS + 0.76%		4.86			08/01/11
Term Loan(6)	04/01/15			340,000		LIBOR + 1.50%		4.77			01/02/13
Fannie Mae Loan V(3)	02/01/16			82,000		LIBOR + 0.62%		5.62			03/01/12
Fannie Mae Loan VI(3)	06/01/17			18,000		LIBOR + 0.62%		5.82			06/01/12
Subtotal				3,240,000				5.10	%	(2)

Variable Rate:
Wells Fargo Loan(7)	03/01/11	(8)		12,000		LIBOR + 1.25%		--			--
Secured Revolving Credit Facility(9)	10/30/11	(10)		-		LIBOR / Fed Funds +	(11)	--			--
Subtotal				12,000
Consolidated total, net of portion attributable to noncontrolling interest in consolidated joint venture				3,252,000	(12)

Debt Attributable from Unconsolidated Real Estate Fund:
Term Loan(13)	08/18/13			178,193		LIBOR + 1.65%		5.52	%		09/04/12
Total consolidated and unconsolidated debt			$	3,430,193

(1)	As of September 30, 2009, the weighted average remaining life of our consolidated outstanding debt is 3.3 years, and the weighted average remaining life of the interest rate swaps is 1.6 years.
(2)	Includes the effect of interest rate contracts. Based on actual/360-day basis and excludes amortization of loan fees and unused fees on credit line. The total consolidated effective rate on an actual/365-day basis is 5.17% at September 30, 2009.
(3)	Secured by four separate collateralized pools. Fannie Mae Discount Mortgage-Backed Security (DMBS) has historically tracked 90-day LIBOR, although volatility may exist between the two rates, resulting in an immaterial amount of swap ineffectiveness.
(4)	Secured by seven separate collateralized pools. Requires monthly payments of interest only, with outstanding principal due upon maturity.
(5)	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. Each of these rates is based on actual/360-day basis.
(6)	Secured by four properties in a collateralized pool. Requires monthly payments of interest only, with outstanding principal due upon maturity.
(7)	This is an $18 million loan held by a consolidated entity in which our Operating Partnership owns a two-thirds interest. The loan has a one-year extension option.
(8)	Represents maturity date of March 1, 2010 which we may extend to March 1, 2011.
(9)	This credit facility is secured by nine properties and has no borrowings outstanding. We exercised a one-year extension option and renewed the credit facility for $350 million (reduced from $370 million, but on the same pricing and otherwise on the same terms and conditions as prior to the extension). A second one-year extension option remains available.
(10)	Represents the current maturity date of October 30, 2010 which we may extend to October 30, 2011.
(11)	This revolver bears interest at either LIBOR +0.70% or Fed Funds +0.95% at our election. If the amount outstanding exceeds $262.5 million, the credit facility bears interest at either LIBOR +0.80% or Fed Funds +1.05% at our election.
(12)	Excludes the unamortized non-cash debt premium of $16,743 which represents the mark-to-market adjustment recorded on all variable rate debt outstanding at the time of our IPO.
(13)	This is a $365 million loan held by an unconsolidated real estate fund in which our Operating Partnership owns an equity interest. Secured by six properties in a cross-collateralized pool. Requires monthly payments of interest only, with outstanding principal due upon maturity.

-11-

Douglas Emmett, Inc.

PORTFOLIO DATA

Douglas Emmett, Inc.

OFFICE PORTFOLIO SUMMARY (1)

as of September 30, 2009

Submarket	Number of Properties	Rentable Square Feet (2)	Square Feet as a Percent of Total

West Los Angeles
Brentwood	13	1,390,773	10.4	%
Olympic Corridor	05	1,096,081	8.2
Century City	03	915,980	6.9
Santa Monica	08	969,982	7.3
Beverly Hills	06	1,343,185	10.1
Westwood	02	396,807	3.0
San Fernando Valley
Sherman Oaks/Encino	11	3,181,037	23.9
Warner Center/Woodland Hills	03	2,855,868	21.4
Tri-Cities
Burbank	01	420,949	3.1
Honolulu	03	757,901	5.7
Total	55	13,328,563	100.0	%

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	Based on BOMA 1996 remeasurement. Total consists of 11,892,795 leased square feet, 1,280,981 available square feet, 76,441 building management use square feet, and 78,346 square feet of BOMA 1996 adjustment on leased space.

-13-

Douglas Emmett, Inc.

OFFICE PORTFOLIO PERCENT LEASED AND IN-PLACE RENTS(1)

as of September 30, 2009

Submarket	Percent Leased(2)		Annualized Rent(3)		Annualized Rent Per Leased Square Foot (4)		Monthly Rent Per Leased Square Foot
West Los Angeles
Brentwood	95.4	%	$	51,905,736	$	39.67	$	3.31
Olympic Corridor	92.4			32,746,755		33.73		2.81
Century City	98.1			33,159,277		37.22		3.10
Santa Monica (5)	95.5			47,407,103		52.14		4.34
Beverly Hills	88.6			45,694,698		39.84		3.32
Westwood	89.5			13,329,936		38.02		3.17
San Fernando Valley
Sherman Oaks/Encino	90.1			88,276,797		31.85		2.65
Warner Center/Woodland Hills	83.2			67,541,176		29.24		2.44
Tri-Cities
Burbank	100.0			13,415,742		31.87		2.66
Honolulu	89.2			22,505,723		34.40		2.87

Total / Weighted Average	90.4		$	415,982,943		35.45		2.95


Recurring Capital Expenditures (1)
- Office (per rentable square foot) for the three months ended September 30, 2009					$	0.03
- Office (per rentable square foot) for the nine months ended September 30, 2009					$	0.16

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	Includes 159,043 square feet with respect to signed leases not yet commenced.
(3)	Represents annualized monthly cash base rent under leases commenced as of September 30, 2009 (excluding 159,043 square feet with respect to signed leases not yet commenced). The amount reflects total cash base rent before abatements. For our Burbank and Honolulu office properties, annualized base rent is converted from triple net to gross by adding expense reimbursements to base rent.
(4)	Represents annualized rent divided by leased square feet (excluding 159,043 square feet with respect to signed leases not commenced) as set forth in note (2) above for the total.
(5)	Includes $1,287,232 of annualized rent attributable to our corporate headquarters at our Lincoln/Wilshire property.

-14-

Douglas Emmett, Inc.

MULTIFAMILY PORTFOLIO SUMMARY

as of September 30, 2009

Submarket		Number of Properties			Number of Units		Units as a 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		99.6	%	$	22,646,139	$	1,995
	Santa Monica(2)		99.5			20,475,480		2,091
Honolulu			99.3			17,918,362		1,370
Total / Weighted Average			99.4		$	61,039,981		1,784

Recurring Capital Expenditures
	- Multifamily (per unit) for the three months ended September 30, 2009						$	107
	- Multifamily (per unit) for the nine months ended September 30, 2009						$	266

(1)	Represents annualized monthly multifamily rental income under leases commenced as of September 30, 2009.
(2)	Excludes 10,013 square feet of ancillary retail space, which generates $300,545 of annualized rent as of September 30, 2009.

-15-

Douglas Emmett, Inc.

TENANT DIVERSIFICATION (1)

(1.0% or Greater of Annualized Rent)

as of September 30, 2009

	Number of Leases	Number of Properties	Lease Expiration(2)	Total Leased Square Feet	Percent of Rentable Square Feet		Annualized Rent(3)		Percent of Annualized Rent

Time Warner(4)	4	4	2010-2019	642,845	4.8	%	$	21,498,330	5.2	%
AIG (Sun America Life Insurance)	1	1	2013	182,010	1.4			5,704,276	1.4
William Morris Endeavor	2	1	2019	118,612	0.9			5,337,866	1.3
Bank of America(5)	12	9	2010-2018	123,633	0.9			4,981,980	1.2
The Macerich Partnership, L.P.	1	1	2018	90,832	0.7			4,316,880	1.0
Total	20	16		1,157,932	8.7	%	$	41,839,332	10.1	%

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	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.
(3)	Represents annualized monthly cash base rent under leases commenced as of September 30, 2009. The amount reflects total cash base rent before abatements. For our Burbank and Honolulu office properties, annualized base rent is converted from triple net to gross by adding expense reimbursements to base rent.
(4)	Includes a 62,000 square foot lease expiring in June 2010, a 10,000 square foot lease expiring in October 2013, a 150,000 square foot lease expiring in April 2016, and a 421,000 square foot lease expiring in September 2019.
(5)	Includes a 9,000 square foot lease expiring in September 2010, a 7,000 square foot lease expiring in December 2010, two leases totaling 19,000 square feet expiring in January 2011, a 2,000 square foot lease expiring in May 2011, a 16,000 square foot lease expiring in July 2011, a 41,000 square foot lease expiring in January 2012, a 6,000 square foot lease expiring in May 2012, an 8,000 square foot lease expiring in July 2013, a 4,000 square foot lease expiring in February 2015, and a 12,000 square foot lease expiring in March 2018. Excludes a lease that expired at the end of September 30, 2009 for 5,000 square feet that is now leased to another tenant who is not affiliated with Bank of America.

-16-

Douglas Emmett, Inc.

INDUSTRY DIVERSIFICATION (1)

as of September 30, 2009

Industry	Number of Leases		Annualized Rent as a Percent of Total

Legal		344		16.1	%
Financial Services		260		14.7
Entertainment		115		11.8
Real Estate		155		9.6
Accounting & Consulting		212		8.4
Health Services		290		8.4
Insurance		81		7.7
Retail		161		7.0
Technology		63		3.8
Advertising		54		3.4
Public Administration		30		1.8
Educational Services		10		0.7
Other		257		6.6
Total		2,032		100.0	%

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.

-17-

Douglas Emmett, Inc.

LEASE DISTRIBUTION (1)

as of September 30, 2009

	Number of Leases	Leases as a Percent of Total	Rentable Square Feet (2)		Square Feet as a Percent of Total	Annualized Rent(3)		Annualized Rent as a Percent of Total

2,500 or less	1,027	50.5%	1,398,255		10.5%	$	52,400,881	12.6%
2,501-10,000	732	36.0	3,603,642		27.0		129,196,596	31.0
10,001-20,000	179	8.8	2,508,200		18.8		87,617,971	21.1
20,001-40,000	66	3.3	1,809,793		13.6		64,326,448	15.5
40,001-100,000	22	1.1	1,300,372		9.8		46,923,028	11.3
Greater than 100,000	6	0.3	1,113,490		8.3		35,518,019	8.5
Subtotal	2,032	100.0%	11,733,752	(5)	8.0%		415,982,943	100.0%
Available	-	-	1,280,981		9.6		-	-
BOMA Adjustment(4)	-	-	78,346		0.6		-	-
Building Management Use	-	-	76,441		0.6		-	-
Signed leases not commenced	-	-	159,043		1.2		-	-
Total	2,032	100.0%	13,328,563		100.0%	$	415,982,943	100.0%

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	Based on BOMA 1996 remeasurement. Total consists of 11,892,795 leased square feet (includes 159,043 square feet with respect to signed leases not commenced), 1,280,981 available square feet, 76,441 building management use square feet, and 78,346 square feet of BOMA 1996 adjustment on leased space.
(3)	Represents annualized monthly cash base rent (i.e., excludes tenant reimbursements, parking and other revenue) under leases commenced as of September 30, 2009 (does not include 159,043 square feet with respect to signed leases not yet commenced). The amount reflects total cash base rent before abatements. For our Burbank and Honolulu office properties, annualized base rent is converted from triple net to gross by adding expense reimbursements to base rent.
(4)	Represents square footage adjustments for leases that do not reflect BOMA 1996 remeasurement.
(5)	Average tenant size is approximately 5,800 square feet. Median is approximately 2,500 square feet.

-18-

Douglas Emmett, Inc.

LEASE EXPIRATIONS (1)

as of September 30, 2009

Year of Lease Expiration	Number of Leases Expiring	Rentable Square Feet(2)	Expiring Square Feet as a Percent of Total		Annualized Rent(3)		Annualized Rent as a Percent of Total		Annualized Rent Per Leased Square Foot(4)		Annualized Rent Per Leased Square Foot at Expiration(5)

Available	-	1,280,981	9.6	%	$	-	-	%	$	-	$	-
2009	131	487,677	3.7			16,859,679	4.1			34.57		34.65
2010	457	1,803,934	13.5			62,110,258	14.9			34.43		34.93
2011	402	1,791,554	13.4			63,757,770	15.3			35.59		37.25
2012	347	1,613,260	12.1			55,783,501	13.4			34.58		37.69
2013	268	1,652,586	12.4			62,076,743	14.9			37.56		42.19
2014	211	1,330,889	10.0			45,053,847	10.8			33.85		39.35
2015	85	787,557	5.9			26,765,985	6.5			33.99		40.88
2016	39	658,424	4.9			22,118,244	5.3			33.59		39.89
2017	31	343,154	2.6			12,269,500	3.0			35.76		47.26
2018	29	316,774	2.4			15,109,940	3.6			47.70		64.42
2019	23	737,075	5.5			26,288,576	6.3			35.67		46.08
Thereafter	9	210,868	1.6			7,788,900	1.9			36.94		52.80
BOMA Adjustment(6)	-	78,346	0.6			-	-			-		-
Building Management Use	-	76,441	0.6			-	-			-		-
Signed leases not commenced	-	159,043	1.2			-	-			-		-
Total/Weighted Average	2,032	13,328,563	100.0	%	$	415,982,943	100.0	%	$	35.45	$	40.03

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	Based on BOMA 1996 remeasurement. Total consists of 11,892,795 leased square feet (includes 159,043 square feet with respect to signed leases not commenced), 1,280,981 available square feet, 76,441 building management use square feet, and 78,346 square feet of BOMA 1996 adjustment on leased space.
(3)	Represents annualized monthly base rent under leases commenced as of September 30, 2009. The amount reflects total base rent before abatements.
(4)	Represents annualized base rent divided by leased square feet.
(5)	Represents annualized base rent at expiration divided by leased square feet.
(6)	Represents the square footage adjustments for leases that do not reflect BOMA 1996 remeasurement.

- -19-

Douglas Emmett, Inc.

QUARTERLY LEASE EXPIRATIONS – NEXT FOUR QUARTERS (1)

as of September 30, 2009

Submarket				Q4 2009			Q1 2010			Q2 2010			Q3 2010

West Los Angeles
	Brentwood	Expiring SF		52,942			51,371			82,427			45,191
		Rent per SF(2)	$	36.46		$	39.07		$	46.75		$	34.25
	Olympic Corridor	Expiring SF		51,944			52,853			31,077			75,113
		Rent per SF(2)	$	32.09		$	31.39		$	30.31		$	31.03
	Century City	Expiring SF		27,850			35,262			15,808			31,155
		Rent per SF(2)	$	31.85		$	38.21		$	33.18		$	38.17
	Santa Monica	Expiring SF		45,548			8,691			78,108			37,074
		Rent per SF(2)	$	62.44		$	44.75		$	38.75		$	44.09
	Beverly Hills	Expiring SF		88,100			58,181			51,831			55,432
		Rent per SF(2)	$	32.69		$	31.07		$	38.02		$	38.69
	Westwood	Expiring SF		2,491			4,384			19,652			31,408
		Rent per SF(2)	$	38.94		$	37.04		$	36.93		$	35.83
San Fernando Valley
	Sherman Oaks/Encino	Expiring SF		137,759			80,579			95,645			100,352
		Rent per SF(2)	$	30.45		$	30.61		$	31.10		$	29.08
	Warner Center/Woodland Hills	Expiring SF		71,215			56,900			52,906			137,215
		Rent per SF(2)	$	29.06		$	29.68		$	27.73		$	30.27
Tri-Cities
	Burbank	Expiring SF		-			-			-			-
		Rent per SF(2)	$	-		$	-		$	-		$	-
Honolulu		Expiring SF		9,828			13,970			22,258			16,992
		Rent per SF(2)	$	33.40		$	31.61		$	33.02		$	31.52
Total		Expiring SF		487,677	(3)		362,191	(4)		449,712	(5)		529,932	(6)
		Rent per SF(2)	$	34.65		$	33.05		$	36.07		$	33.17

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(2)	Represents annualized base rent (i.e., excludes tenant reimbursements, parking and other revenue) per leased square foot at expiration. The amount reflects total cash base rent before abatements. For our Burbank and Honolulu office properties, annualized base rent is converted from triple net to gross by adding expense reimbursements to base rent.
(3)	As of September 30, 2009, 215,560 rentable square feet had been renewed for leases that were previously scheduled to expire in the quarter ending December 31, 2009.
(4)	As of September 30, 2009, 102,252 rentable square feet had been renewed for leases that were previously scheduled to expire in the quarter ending March 31, 2010.
(5)	As of September 30, 2009, 51,111 rentable square feet had been renewed for leases that were previously scheduled to expire in the quarter ending June 30, 2010.
(6)	As of September 30, 2009, 6,370 rentable square feet had been renewed for leases that were previously scheduled to expire in the quarter ending September 30, 2010.

-20-

Douglas Emmett, Inc.

OFFICE PORTFOLIO LEASING ACTIVITY (1)

for the three months ended September 30, 2009

Gross New Leasing Activity
Rentable square feet				214,303
Number of leases				62
Gross Renewal Leasing Activity
Rentable square feet				361,114
Number of leases				85
Net Absorption
Leased rentable square feet				(38,119)
Cash Rent Growth (2)
Expiring Rate			$	35.73
New/Renewal Rate			$	35.13
Change				(1.7%)
Straight-Line Rent Growth (3)
Expiring Rate			$	33.71
New/Renewal Rate			$	36.25
Change				7.5%
Weighted Average Lease Terms
New (in months)				71
Renewal (in months)				51

		Total Lease		Annual Lease
		Transaction		Transaction
Tenant Improvement and Leasing Commissions (per rentable square foot) (4)		Costs		Costs
New leases	$	28.38	$	4.81
Renewal leases	$	8.38	$	1.96
Blended	$	15.83	$	3.24

(1)	All properties are 100% owned except Honolulu Club (78,000 square feet) owned by a joint venture in which we own a 66.7% interest and 6 properties totaling 1.4 million square feet owned by an unconsolidated real estate fund.
(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 leases and the straight-line rent for new leases on the same space.
(4)	Represents weighted average lease transaction costs based on the leases executed in the current quarter in our properties, including repositioned properties.

-21-

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