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1. Company Snapshot

1.a. Company Description

Douglas Emmett, Inc.(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.

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1.b. Last Insights on DEI

Douglas Emmett's recent performance was negatively impacted by a decline in same-store NOI (Net Operating Income) of 3.1%, driven by a 2.2% decrease in base rents and a 2.3% increase in operating expenses. While the company beat FFO estimates, its Q4 earnings were marred by a decrease in property operations and a higher operating expense ratio.

1.c. Company Highlights

2. Earnings Report Analysis: A Mixed Bag

The company's financial performance for the quarter was mixed, with revenue coming in flat at $251 million compared to the same period last year. FFO decreased to $0.34 per share, in line with analyst estimates, while AFFO decreased to $52 million due to increased interest expense outpacing higher contribution from operations. Same-property cash NOI increased 3.5%, driven by a strong 6.8% increase from multifamily and a 2.6% increase from office.

Publication Date: Nov -07

📋 Highlights
  • Office Leasing Slowdown:: Q3 office leasing declined, with 215 leases covering 840,000 sq ft, including 200,000 sq ft of new leases, while tenant retention exceeded 70% long-term average.
  • Multifamily Growth:: Same-store cash NOI rose 7% YoY, driven by strong demand and a fully leased portfolio, with plans to expand residential units via 2026 conversions and ground-up projects.
  • Development Pipeline:: 10900 Wilshire and Westwood office-to-apartment conversion, plus The Landmark Residences in Brentwood, will significantly boost residential portfolio capacity.
  • Financial Performance:: Q3 revenue held flat at $251M, with same-property cash NOI up 3.5% (6.8% from multifamily, 2.6% from office), but FFO/AFFO declined due to higher interest costs.
  • Capital Strategy:: Leveraging joint venture partnerships and free cash flow for acquisitions, prioritizing top-quartile assets, while rejecting private takeovers to capitalize on undervalued stock.

Segment Performance

The multifamily segment continued to perform well, with same-store cash NOI increasing almost 7% compared to the prior year. The office segment, however, saw a slowdown in leasing activity, particularly in August and September, although it has picked up in October. As Jordan Kaplan noted, "We're now hesitant to be encouraging until we complete the quarter."

Development Projects

The company is making progress on its development projects, with construction underway at The Landmark Residences in Brentwood and plans to convert the existing office tower to apartments and build a new ground-up apartment building at 10900 Wilshire and Westwood. These projects are expected to meaningfully add to the company's in-service residential portfolio.

Valuation

With a P/E Ratio of 90.19 and a P/B Ratio of 1.03, the company's valuation appears to be driven by its growth prospects. The Dividend Yield of 6.35% and Free Cash Flow Yield of 6.33% suggest that the company is generating sufficient cash to reward shareholders. Analysts estimate revenue growth at 1.6% for next year, which may be a challenging target given the current market conditions.

Outlook

The company's ability to execute on its development projects and acquire new assets will be crucial to its future growth. With a strong multifamily segment and a picking up office leasing activity, the company is well-positioned to navigate the current market challenges. As Jordan Kaplan stated, "We have extremely good engagement from our joint venture platform," which should help the company to fund new acquisitions and drive growth.

3. NewsRoom

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AT&T commits to ending DEI programs

Dec -02

Source: reuters.com

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Meet 33 Ideal "Safer" November Small/MidCap Value DiviBuys Of The S&P600

Nov -26

Source: seekingalpha.com

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Cracker Barrel shareholders ax DEI specialist over logo flap, spare CEO

Nov -20

Source: nypost.com

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Douglas Emmett: NOI Returns To Growth Even As Office Turnaround Remains Elusive

Nov -12

Source: seekingalpha.com

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Cracker Barrel investors urged to oust DEI specialist in wake of rebranding fiasco

Nov -10

Source: nypost.com

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Douglas Emmett, Inc. (DEI) Q3 2025 Earnings Call Transcript

Nov -05

Source: seekingalpha.com

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Douglas Emmett (DEI) Q3 Earnings: How Key Metrics Compare to Wall Street Estimates

Nov -05

Source: zacks.com

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Douglas Emmett (DEI) Meets Q3 FFO Estimates

Nov -05

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (1.82%)

6. Segments

Office

Expected Growth: 1.8%

Douglas Emmett's 1.8% office segment growth is driven by strong demand in Los Angeles and Honolulu, fueled by the thriving tech and healthcare industries. Additionally, the company's strategic acquisitions and renovations have enhanced its portfolio, attracting high-quality tenants and increasing rental rates.

Multifamily

Expected Growth: 1.9%

Douglas Emmett's multifamily segment growth of 1.9% is driven by strong demand for luxury apartments in coastal California and Hawaii, fueled by job growth, limited supply, and increasing renter demographics. Additionally, the company's value-add initiatives, such as unit renovations and amenity upgrades, contribute to higher rents and occupancy rates.

7. Detailed Products

Office Properties

Douglas Emmett, Inc. owns and operates a diverse portfolio of office properties, including Class A and B office buildings, in prime locations.

Multifamily Properties

The company's multifamily portfolio consists of luxury apartments and condominiums in desirable locations, offering residents upscale amenities and services.

Suburban Office Parks

Douglas Emmett's suburban office parks offer a campus-like setting with amenities such as parking, fitness centers, and outdoor spaces.

Medical Office Buildings

The company's medical office buildings cater to healthcare professionals and medical organizations, providing convenient and accessible locations.

Retail and Restaurant Space

Douglas Emmett's retail and restaurant spaces are located in high-traffic areas, offering prime locations for retailers and restaurateurs.

8. Douglas Emmett, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Douglas Emmett, Inc. is medium due to the availability of alternative office spaces and flexible work arrangements.

Bargaining Power Of Customers

The bargaining power of customers is low for Douglas Emmett, Inc. as the company has a diverse tenant base and long-term leases.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Douglas Emmett, Inc. as the company relies on a few large contractors and suppliers for its development projects.

Threat Of New Entrants

The threat of new entrants is low for Douglas Emmett, Inc. due to the high barriers to entry in the office real estate market, including high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high for Douglas Emmett, Inc. due to the competitive office real estate market in Los Angeles and the presence of several large competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 71.40%
Debt Cost 9.27%
Equity Weight 28.60%
Equity Cost 9.27%
WACC 9.27%
Leverage 249.71%

11. Quality Control: Douglas Emmett, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
COPT Defense

A-Score: 6.1/10

Value: 4.2

Growth: 4.8

Quality: 5.7

Yield: 8.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Kilroy Realty

A-Score: 6.0/10

Value: 5.1

Growth: 3.9

Quality: 5.8

Yield: 8.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

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Stock-Card
Vornado Realty

A-Score: 5.2/10

Value: 5.4

Growth: 2.2

Quality: 6.6

Yield: 6.0

Momentum: 5.5

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Douglas Emmett

A-Score: 4.9/10

Value: 4.3

Growth: 4.6

Quality: 3.7

Yield: 8.0

Momentum: 3.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Boston Properties

A-Score: 4.8/10

Value: 3.3

Growth: 3.1

Quality: 3.8

Yield: 8.0

Momentum: 4.0

Volatility: 6.7

1-Year Total Return ->

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Stock-Card
SL Green Realty

A-Score: 4.1/10

Value: 2.1

Growth: 0.9

Quality: 3.5

Yield: 9.0

Momentum: 3.5

Volatility: 5.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

12.04$

Current Price

12.04$

Potential

-0.00%

Expected Cash-Flows