Douglas Emmett Inc [DEI] Filings

10-Q 1 nysedei-20240630.htm 10-Q nysedei-20240630

United States

Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file number: 001-33106

Douglas Emmett, Inc.

(Exact name of registrant as specified in its charter)


Maryland						20-3073047
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1299 Ocean Avenue, Suite 1000, Santa Monica, California						90401
(Address of principal executive offices)						(Zip Code)

(310) 255-7700

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, $0.01 par value per share

DEI

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	Outstanding at	August 2, 2024
Common Stock, $0.01 par value per share	167,409,392	shares


DOUGLAS EMMETT, INC. FORM 10-Q
Table of Contents

		Page

	Glossary	3
	Forward Looking Statements	6

	PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (unaudited)	7
	Consolidated Balance Sheets	7
	Consolidated Statements of Operations	8
	Consolidated Statements of Comprehensive Income (Loss)	9
	Consolidated Statements of Equity	10
	Consolidated Statements of Cash Flows	12
	Notes to Consolidated Financial Statements	14
	Overview	14
	Summary of Significant Accounting Policies	15
	Investment in Real Estate	17
	Ground Lease	17
	Acquired Lease Intangibles	18
	Investment in Unconsolidated Fund	19
	Other Assets	19
	Secured Notes Payable, Net	20
	Interest Payable, Accounts Payable and Deferred Revenue	22
	Derivative Contracts	22
	Equity	24
	EPS	26
	Fair Value of Financial Instruments	27
	Segment Reporting	29
	Future Minimum Lease Rental Receipts	30
	Commitments, Contingencies & Guarantees	30

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4	Controls and Procedures	48

	PART II. OTHER INFORMATION

Item 1	Legal Proceedings	49
Item 1A	Risk Factors	49
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3	Defaults Upon Senior Securities	49
Item 4	Mine Safety Disclosures	49
Item 5	Other Information	49
Item 6	Exhibits	50

	SIGNATURES	51

Table of Contents

Glossary

Abbreviations used in this Report:


AOCI			Accumulated Other Comprehensive Income (Loss)
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
BOMA			Building Owners and Managers Association
CEO			Chief Executive Officer
CFO			Chief Financial Officer
Code			Internal Revenue Code of 1986, as amended
COVID-19			Coronavirus Disease 2019
DEI			Douglas Emmett, Inc.
EPS			Earnings Per Share
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FCA			Financial Conduct Authority
FDIC			Federal Deposit Insurance Corporation
FFO			Funds From Operations
Fund			Unconsolidated Institutional Real Estate Fund
GAAP			Generally Accepted Accounting Principles (United States)
JV			Joint Venture
LIBOR			London Interbank Offered Rate
LTIP Units			Long-Term Incentive Plan Units
NAREIT			National Association of Real Estate Investment Trusts
OCI			Other Comprehensive Income (Loss)
OP Units			Operating Partnership Units
Operating Partnership			Douglas Emmett Properties, LP
Partnership X			Douglas Emmett Partnership X, LP
PCAOB			Public Company Accounting Oversight Board (United States)
REIT			Real Estate Investment Trust
Report			Quarterly Report on Form 10-Q
SEC			Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
SOFR			Secured Overnight Financing Rate
TRS			Taxable REIT Subsidiary(ies)
US			United States
USD			United States Dollar
VIE			Variable Interest Entity(ies)

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Glossary

Defined terms used in this Report:


Annualized Rent			Annualized cash base rent (excludes tenant reimbursements, parking and other revenue) before abatements under leases commenced as of the reporting date and expiring after the reporting date. Annualized Rent for our triple net office properties (in Honolulu and one single tenant building in Los Angeles) is calculated by adding expense reimbursements and estimates of normal building expenses paid by tenants to base rent. Annualized Rent does not include lost rent recovered from insurance and rent for building management use. Annualized Rent includes rent for our corporate headquarters in Santa Monica. We report Annualized Rent because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine tenant demand and to compare our performance and value with other REITs. We use Annualized Rent to manage and monitor the performance of our office and multifamily portfolios.
Consolidated Portfolio			Includes all of the properties included in our consolidated results, including our consolidated JVs.
Funds From Operations (FFO)			We calculate FFO in accordance with the standards established by NAREIT by excluding gains (or losses) on sales of investments in real estate, gains (or losses) from changes in control of investments in real estate, real estate depreciation and amortization (other than amortization of right-of-use assets for which we are the lessee and amortization of deferred loan costs), impairment write-downs of real estate and impairment write-downs of our investment in our unconsolidated Fund from our net income (loss) (including adjusting for the effect of such items attributable to our consolidated JVs and our unconsolidated Fund, but not for noncontrolling interests included in our Operating Partnership). FFO is a non-GAAP supplemental financial measure that we report because we believe it is useful to our investors. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Report for a discussion of FFO.
Leased Rate			The percentage leased as of the reporting date. Management space is considered leased. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating the Leased Rate. For newly developed buildings going through initial lease up, units are included in both the numerator and denominator as they are leased. We report Leased Rate because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Leased Rate to manage and monitor the performance of our office and multifamily portfolios.
Net Operating Income (NOI)			We calculate NOI as revenue less operating expenses attributable to the properties that we own and operate. NOI is calculated by excluding the following from our net income (loss): general and administrative expenses, depreciation and amortization expense, other income, other expenses, income (loss) from unconsolidated Fund, interest expense, gains (or losses) on sales of investments in real estate and net income (loss) attributable to noncontrolling interests. NOI is a non-GAAP supplemental financial measure that we report because we believe it is useful to our investors. See Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Report for a discussion of our Same Property NOI.
Occupancy Rate			We calculate Occupancy Rate by excluding signed leases not yet commenced from the Leased Rate. Management space is considered occupied. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating the Occupancy Rate. For newly developed buildings going through initial lease up, units are included in both the numerator and denominator as they are occupied. We report Occupancy Rate because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Occupancy Rate to manage and monitor the performance of our office and multifamily portfolios.
Recurring Capital Expenditures			Building improvements required to maintain revenues once a property has been stabilized, and excludes capital expenditures for (i) acquired buildings being stabilized, (ii) newly developed space, (iii) upgrades to improve revenues or operating expenses or significantly change the use of the space, (iv) casualty damage and (v) bringing the property into compliance with governmental or lender requirements. We report Recurring Capital Expenditures because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine our cash flow requirements and to compare our performance with other REITs. We use Recurring Capital Expenditures to manage and monitor the performance of our office and multifamily portfolios.

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Glossary




Defined terms used in this Report (continued):

Rentable Square Feet			Based on the BOMA remeasurement and consists of leased square feet (including square feet with respect to signed leases not commenced as of the reporting date), available square feet, building management use square feet and square feet of the BOMA adjustment on leased space. We report Rentable Square Feet because it is a widely reported measure of the performance and value of equity REITs, and is also used by some investors to compare our performance and value with other REITs. We use Rentable Square Feet to manage and monitor the performance of our office portfolio.
Rental Rate			We present two forms of Rental Rates - Cash Rental Rates and Straight-Line Rental Rates. Cash Rental Rate is calculated by dividing the rent paid by the Rentable Square Feet. Straight-Line Rental Rate is calculated by dividing the average rent over the lease term by the Rentable Square Feet.
Same Properties			Our consolidated properties that have been owned and operated by us in a consistent manner, and reported in our consolidated results during the entire span of both periods being compared. We exclude from our same property subset any properties that during the comparable periods were: (i) acquired, (ii) sold, held for sale, contributed or otherwise removed from our consolidated financial statements, (iii) that underwent a major repositioning project or were impacted by development activity, or suffered significant casualty loss that we believed significantly affected the properties' operating results. We also exclude rent received from ground leases.
Short-Term Leases			Represents leases that expired on or before the reporting date or had a term of less than one year, including hold over tenancies, month to month leases and other short-term occupancies.
Total Portfolio			Includes our Consolidated Portfolio plus the properties owned by our Fund.

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Forward Looking Statements

This Report contains forward-looking statements within the meaning of the Section 27A of the Securities Act and Section 21E of the Exchange Act. You can find many (but not all) of these statements by looking for words such as “believe”, “expect”, “anticipate”, “estimate”, “approximate”, “intend”, “plan”, “would”, “could”, “may”, “future” or other similar expressions in this Report. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements used in this Report, or those that we make orally or in writing from time to time, are based on our beliefs and assumptions, as well as information currently available to us. Actual outcomes will be affected by known and unknown risks, trends, uncertainties and factors 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 future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution when relying on previously reported forward-looking statements, which were based on results and trends at the time they were made, to anticipate future results or trends. Some of the risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following:

•adverse economic, political or real estate developments affecting Southern California or Honolulu, Hawaii;

•competition from other real estate investors in our markets;

•decreasing rental rates or increasing tenant incentive and vacancy rates;

•reduced demand for office space, including as a result of remote work and flexible working arrangements that allow work from remote locations other than the employer’s office premises;

•defaults on, early terminations of, or non-renewal of leases by tenants;

•increases in interest rates;

•increases in operating costs, including due to inflation;

•insufficient cash flows to service our outstanding debt or pay rent on ground leases;

•difficulties in raising capital;

•inability to liquidate real estate or other investments quickly;

•adverse changes to rent control laws and regulations;

•environmental uncertainties;

•natural disasters;

•fire and other property damage;

•insufficient insurance, or increases in insurance costs;

•inability to successfully expand into new markets and submarkets;

•difficulties in identifying properties to acquire and failure to complete acquisitions successfully;

•failure to successfully operate acquired properties;

•risks associated with property development;

•risks associated with JVs;

•conflicts of interest with our officers and reliance on key personnel;

•changes in zoning and other land use laws;

•adverse results of litigation or governmental proceedings;

•failure to comply with laws, regulations and covenants that are applicable to our business;

•possible terrorist attacks or wars;

•possible cyber attacks or intrusions;

•adverse changes to accounting rules;

•weaknesses in our internal controls over financial reporting;

•failure to maintain our REIT status under federal tax laws; and

•adverse changes to tax laws, including those related to property taxes.

For further discussion of these and other risk factors see Item 1A. "Risk Factors” in our 2023 Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and Item 1A. "Risk Factors" in this Report. This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Report.

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements


Douglas Emmett, Inc. Consolidated Balance Sheets (Unaudited; In thousands, except share data)


	June 30, 2024		December 31, 2023

Assets
Investment in real estate, gross	$	12,458,771	$	12,405,814
Less: accumulated depreciation and amortization	(3,792,294)		(3,652,630)
Investment in real estate, net	8,666,477		8,753,184

Ground lease right-of-use asset	7,443		7,447
Cash and cash equivalents	561,066		523,082
Tenant receivables	5,342		6,096
Deferred rent receivables	116,265		115,321
Acquired lease intangible assets, net	2,727		2,971
Interest rate contract assets	144,224		170,880
Investment in unconsolidated Fund	25,198		15,977
Other assets	34,912		49,260
Total Assets	$	9,563,654	$	9,644,218

Liabilities
Secured notes payable, net	$	5,546,371	$	5,543,171
Ground lease liability	10,829		10,836
Interest payable, accounts payable and deferred revenue	133,585		131,237
Security deposits	62,787		61,958
Acquired lease intangible liabilities, net	15,269		19,838

Dividends payable	31,818		31,781
Total Liabilities	5,800,659		5,798,821

Equity
Douglas Emmett, Inc. stockholders' equity:
Common Stock, $0.01 par value, 750,000,000 authorized, 167,398,611 and 167,206,267 outstanding at June 30, 2024 and December 31, 2023, respectively	1,674		1,672
Additional paid-in capital	3,395,909		3,392,955
Accumulated other comprehensive income	100,627		115,917
Accumulated deficit	(1,334,501)		(1,290,682)
Total Douglas Emmett, Inc. stockholders' equity	2,163,709		2,219,862
Noncontrolling interests	1,599,286		1,625,535
Total Equity	3,762,995		3,845,397
Total Liabilities and Equity	$	9,563,654	$	9,644,218

See accompanying notes to the consolidated financial statements.

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Douglas Emmett, Inc.

Consolidated Statements of Operations

(Unaudited; in thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Revenues
Office rental
Rental revenues and tenant recoveries	$	171,069	$	177,792	$	340,795	$	354,137
Parking and other income	28,171		27,641		56,382		54,654
Total office revenues	199,240		205,433		397,177		408,791

Multifamily rental
Rental revenues	42,653		44,289		85,873		88,262
Parking and other income	3,884		3,685		7,696		8,747
Total multifamily revenues	46,537		47,974		93,569		97,009

Total revenues	245,777		253,407		490,746		505,800

Operating Expenses
Office expenses	67,141		72,862		134,361		145,630
Multifamily expenses	15,967		16,326		31,817		33,214
General and administrative expenses	11,488		10,932		23,059		21,872
Depreciation and amortization	95,492		121,573		191,261		214,749
Total operating expenses	190,088		221,693		380,498		415,465



Other income	7,430		3,049		14,474		6,332
Other expenses	(80)		(125)		(194)		(645)
Income from unconsolidated Fund	1,147		598		1,121		887
Interest expense	(54,955)		(50,305)		(110,287)		(95,816)



Net income (loss)	9,231		(15,069)		15,362		1,093
Net loss attributable to noncontrolling interests	1,647		7,807		4,425		10,018
Net income (loss) attributable to common stockholders	$	10,878	$	(7,262)	$	19,787	$	11,111

Net income (loss) per common share – basic and diluted	$	0.06	$	(0.04)	$	0.11	$	0.06

See accompanying notes to the consolidated financial statements.

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Douglas Emmett, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited and in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Net income (loss)	$	9,231	$	(15,069)	$	15,362	$	1,093
Other comprehensive (loss) income: cash flow hedges	(26,730)		37,185		(22,630)		(14,712)
Comprehensive (loss) income	(17,499)		22,116		(7,268)		(13,619)
Comprehensive loss (income) attributable to noncontrolling interests	10,005		(5,557)		11,765		12,564
Comprehensive (loss) income attributable to common stockholders	$	(7,494)	$	16,559	$	4,497	$	(1,055)

See accompanying notes to the consolidated financial statements.

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Douglas Emmett, Inc.

Consolidated Statements of Equity

(Unaudited; in thousands, except dividend per share data)


		Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023

Shares of Common Stock	Beginning balance	167,372		174,375		167,206		175,810
	Exchange of OP Units for common stock	27		—		193		—

	Repurchases of common stock	—		(7,637)		—		(9,072)
	Ending balance	167,399		166,738		167,399		166,738

Common Stock	Beginning balance	$	1,674	$	1,744	$	1,672	$	1,758
	Exchange of OP units for common stock	—		—		2		—

	Repurchases of common stock	—		(77)		—		(91)
	Ending balance	$	1,674	$	1,667	$	1,674	$	1,667

Additional Paid-in Capital	Beginning balance	$	3,395,499	$	3,476,811	$	3,392,955	$	3,493,307
	Exchange of OP Units for common stock	409		—		2,952		—
	Repurchases of OP Units with cash	1		105		2		109


	Repurchases of common stock	—		(92,642)		—		(109,142)
	Ending balance	$	3,395,909	$	3,384,274	$	3,395,909	$	3,384,274

Accumulated Other Comprehensive Income	Beginning balance	$	118,999	$	151,076	$	115,917	$	187,063

	Cash flow hedge adjustments	(18,372)		23,821		(15,290)		(12,166)
	Ending balance	$	100,627	$	174,897	$	100,627	$	174,897

Accumulated Deficit	Beginning balance	$	(1,313,573)	$	(1,134,472)	$	(1,290,682)	$	(1,119,714)


	Net income (loss) attributable to common stockholders	10,878		(7,262)		19,787		11,111
	Dividends	(31,806)		(31,681)		(63,606)		(64,812)
	Ending balance	$	(1,334,501)	$	(1,173,415)	$	(1,334,501)	$	(1,173,415)

Noncontrolling Interests	Beginning balance	$	1,614,271	$	1,688,647	$	1,625,535	$	1,713,369

	Net loss attributable to noncontrolling interests	(1,647)		(7,807)		(4,425)		(10,018)
	Cash flow hedge adjustments	(8,358)		13,364		(7,340)		(2,546)
	Contributions	—		—		—		125


	Distributions	(7,645)		(10,148)		(18,102)		(20,288)



	Exchange of OP Units for common stock	(409)		—		(2,954)		—
	Repurchases of OP Units with cash	(11)		(337)		(18)		(430)

	Stock-based compensation	3,085		3,176		6,590		6,683
	Ending balance	$	1,599,286	$	1,686,895	$	1,599,286	$	1,686,895

Statement continues on the next page.

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Douglas Emmett, Inc.

Consolidated Statements of Equity

(Unaudited; in thousands, except dividend per share data)




		Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023

Total Equity	Beginning balance	$	3,816,870	$	4,183,806	$	3,845,397	$	4,275,783


	Net income (loss)	9,231		(15,069)		15,362		1,093
	Cash flow hedge adjustments	(26,730)		37,185		(22,630)		(14,712)





	Repurchases of OP Units with cash	(10)		(232)		(16)		(321)
	Repurchases of common stock	—		(92,719)		—		(109,233)
	Contributions	—		—		—		125

	Dividends	(31,806)		(31,681)		(63,606)		(64,812)
	Distributions	(7,645)		(10,148)		(18,102)		(20,288)
	Stock-based compensation	3,085		3,176		6,590		6,683
	Ending balance	$	3,762,995	$	4,074,318	$	3,762,995	$	4,074,318

Dividends declared per common share		$	0.19	$	0.19	$	0.38	$	0.38

See accompanying notes to the consolidated financial statements.

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Douglas Emmett, Inc.

Consolidated Statements of Cash Flows

(Unaudited and in thousands)


	Six Months Ended June 30,
	2024		2023
Operating Activities
Net income	$	15,362	$	1,093
Adjustments to reconcile net income to net cash provided by operating activities:
Income from unconsolidated Fund	(1,121)		(887)



Depreciation and amortization	191,261		214,749
Net accretion of acquired lease intangibles	(4,326)		(5,695)
Straight-line rent	(943)		(807)

Loan premium amortized and written off	(229)		(228)
Deferred loan costs amortized and written off	4,415		4,362

Amortization of stock-based compensation	5,292		5,226
Operating distributions from unconsolidated Fund	573		614

Change in working capital components:
Tenant receivables	754		(3,338)
Interest payable, accounts payable and deferred revenue	4,782		12,520
Security deposits	829		902
Other assets	14,239		13,212
Net cash provided by operating activities	230,888		241,723

Investing Activities
Capital expenditures for improvements to real estate	(87,778)		(91,303)
Capital expenditures for developments	(19,727)		(29,839)
Insurance recoveries for damage to real estate	2,342		1,139









Acquisition of additional interest in unconsolidated Fund	(5,214)		—
Capital distributions from unconsolidated Fund	147		69
Net cash used in investing activities	(110,230)		(119,934)

Financing Activities
Proceeds from borrowings	—		115,000
Repayment of borrowings	(446)		(45,426)

Loan cost payments	(540)		(764)


Contributions from noncontrolling interests in consolidated JVs	—		125
Distributions paid to noncontrolling interests	(18,102)		(20,288)

Dividends paid to common stockholders	(63,570)		(66,535)



Repurchases of OP Units	(16)		(321)

Repurchases of common stock	—		(109,233)
Net cash used in financing activities	(82,674)		(127,442)

Increase (decrease) in cash and cash equivalents and restricted cash	37,984		(5,653)
Cash and cash equivalents and restricted cash - beginning balance	523,183		268,938
Cash and cash equivalents and restricted cash - ending balance	$	561,167	$	263,285

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Douglas Emmett, Inc.

Consolidated Statements of Cash Flows

(Unaudited and in thousands)



Reconciliation of Ending Cash Balance
	June 30, 2024		June 30, 2023

Cash and cash equivalents	$	561,066	$	263,184
Restricted cash (included in Other assets on our consolidated balance sheets)	101		101
Cash and cash equivalents and restricted cash	$	561,167	$	263,285

Supplemental Cash Flows Information


	Six Months Ended June 30,
	2024		2023

Cash paid for interest, net of capitalized interest	$	106,803	$	89,106
Capitalized interest paid	$	3,912	$	1,076

Non-cash Investing Transactions
Accrual for real estate and development capital expenditures	$	14,348	$	25,143
Capitalized stock-based compensation for improvements to real estate and developments	$	1,298	$	1,457
Removal of fully depreciated and amortized buildings, building improvements, tenant improvements and lease intangibles	$	49,834	$	43,659
Removal of fully amortized acquired lease intangible assets	$	96	$	77
Removal of fully accreted acquired lease intangible liabilities	$	9,089	$	14,234







Non-cash Financing Transactions

Gain recorded in AOCI - consolidated derivatives	$	51,587	$	51,777
Gain recorded in AOCI - unconsolidated Fund's derivatives (our share)	$	5,550	$	671



Dividends declared	$	63,606	$	64,812
Exchange of OP Units for common stock	$	2,954	$	—

See accompanying notes to the consolidated financial statements.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited)

1. Overview

Organization and Business Description

Douglas Emmett, Inc. is a fully integrated, self-administered and self-managed REIT. We are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and Honolulu, Hawaii. Through our interest in our Operating Partnership and its subsidiaries, consolidated JVs and unconsolidated Fund, we focus on owning, acquiring, developing and managing a substantial market 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 terms "us," "we" and "our" as used in the consolidated financial statements refer to Douglas Emmett, Inc. and its subsidiaries on a consolidated basis.

At June 30, 2024, our Consolidated Portfolio consisted of (i) a 17.6 million square foot office portfolio, (ii) 4,483 multifamily apartment units and (iii) fee interests in two parcels of land from which we receive rent under ground leases. We also manage and own an equity interest in an unconsolidated Fund which, at June 30, 2024, owned an additional 0.4 million square feet of office space. We manage our unconsolidated Fund alongside our Consolidated Portfolio, and we therefore present the statistics for our office portfolio on a Total Portfolio basis. As of June 30, 2024, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases):


	Consolidated Portfolio	Total Portfolio
Office
Wholly-owned properties	52	52
Consolidated JV properties	16	16
Unconsolidated Fund properties	—	2
	68	70

Multifamily
Wholly-owned properties	12	12
Consolidated JV properties	2	2
	14	14

Total	82	84

Basis of Presentation

The accompanying consolidated financial statements are the consolidated financial statements of Douglas Emmett, Inc. and its subsidiaries, including our Operating Partnership and our consolidated JVs. All significant intercompany balances and transactions have been eliminated in our consolidated financial statements.

We consolidate entities in which we are considered to be the primary beneficiary of a VIE or have a majority of the voting interest of the entity. We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of that VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We do not consolidate entities in which the other parties have substantive kick-out rights to remove our power to direct the activities, most significantly impacting the economic performance, of that VIE. In determining whether we are the primary beneficiary, we consider factors such as ownership interest, management representation, authority to control decisions, and contractual and substantive participating rights of each party.

We consolidate our Operating Partnership through which we conduct substantially all of our business, and own, directly and through subsidiaries, substantially all of our assets, and are obligated to repay substantially all of our liabilities. The consolidated debt, excluding our consolidated JVs, was $3.76 billion as of June 30, 2024 and December 31, 2023. See Note 8. We also consolidate four JVs through our Operating Partnership. We consolidate our Operating Partnership and our four JVs because they are VIEs and we or our Operating Partnership are the primary beneficiary for each.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

As of June 30, 2024, our consolidated VIE entities, excluding our Operating Partnership, had:

•aggregate consolidated assets of $3.79 billion (of which $3.43 billion related to investment in real estate), and

•aggregate consolidated liabilities of $1.87 billion (of which $1.81 billion related to debt).

As of December 31, 2023, our consolidated VIE entities, excluding our Operating Partnership, had:

•aggregate consolidated assets of $3.83 billion (of which $3.47 billion related to investment in real estate), and

•aggregate consolidated liabilities of $1.88 billion (of which $1.81 billion related to debt).

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC in conformity with US GAAP as established by the FASB in the ASC. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in conformity with US GAAP may have been condensed or omitted pursuant to SEC rules and regulations, although we believe that the disclosures are adequate to make their presentation not misleading. The accompanying unaudited interim consolidated financial statements include, in our opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial information set forth therein. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements in our 2023 Annual Report on Form 10-K and the notes thereto. Any references to the number or class of properties, square footage, per square footage amounts, apartment units and geography, are outside the scope of our independent registered public accounting firm’s review of our consolidated financial statements in accordance with the standards of the PCAOB.

2. Summary of Significant Accounting Policies

We have not made any changes to our significant accounting policies disclosed in our 2023 Annual Report on Form 10-K.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make certain estimates that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.

Revenue Recognition

Rental revenues and tenant recoveries

We account for our rental revenues, and variable lease payments such as tenant recoveries and parking revenues, in accordance with Topic 842. We adopted a practical expedient which allows us to account for our rental revenues, tenant recoveries and parking revenues on a combined basis. Rental revenues and tenant recoveries from tenant leases are included in Rental revenues and tenant recoveries on our consolidated statements of operations. Tenant recoveries were $11.5 million and $12.6 million for the three months ended June 30, 2024 and 2023, and $20.5 million and $25.7 million for the six months ended June 30, 2024 and 2023, respectively. Parking revenues are included in Parking and other income on our consolidated statements of operations.

Collectibility

In accordance with Topic 842, we perform an assessment as to whether or not substantially all of the amounts due under a tenant’s lease agreement is deemed probable of collection. This assessment involves using a methodology that requires judgment and estimates about matters that are uncertain at the time the estimates are made, including tenant specific factors, specific industry conditions, and general economic trends and conditions.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

For leases where we have concluded it is probable that we will collect substantially all the lease payments due under those leases, we continue to record lease income on a straight-line basis over the lease term. For leases where we have concluded that it is not probable that we will collect substantially all the lease payments due under those leases, we limit the lease income to the lesser of the income recognized on a straight-line basis or cash basis. We write-off tenant receivables and deferred rent receivables as a charge against rental revenues and tenant recoveries in the period we conclude that substantially all of the lease payments are not probable of collection. If we subsequently collect amounts that were previously written off then the amounts collected are recorded as an increase to our rental revenues and tenant recoveries in the period they are collected. If our conclusion of collectibility changes, we will record the difference between the lease income that would have been recognized on a straight-line basis and cash basis as a current-period adjustment to rental revenues and tenant recoveries.

Charges for uncollectible office tenant receivables and deferred rent receivables, reduced our office revenues by:

•$0.5 million and $0.2 million for the three months ended June 30, 2024 and 2023, respectively, and

•$0.8 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively.

We restored accrual basis accounting for certain office tenants that were previously determined to be uncollectible and accounted for on a cash basis of accounting, which increased our office revenues by:

•$0.8 million and $1.8 million for the three months ended June 30, 2024 and 2023, respectively, and

•$0.8 million and $2.0 million for the six months ended June 30, 2024 and 2023, respectively.

Income Taxes

We have elected to be taxed as a REIT under the Code. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate-level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. We are subject to corporate-level income tax on the earnings that we derive through our TRS.

New Accounting Pronouncements

Changes to US GAAP are implemented by the FASB in the form of ASUs. We consider the applicability and impact of all ASUs. As of the date of this Report, the FASB has not issued any ASUs that we expect to be applicable and have a material impact on our consolidated financial statements.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

3. Investment in Real Estate

The table below summarizes our investment in real estate:


(In thousands)	June 30, 2024		December 31, 2023

Land	$	1,185,977	$	1,185,977
Buildings and improvements(1)	10,174,128		10,142,410
Tenant improvements and lease intangibles	1,034,695		1,020,988
Property under development(1)	63,971		56,439
Investment in real estate, gross	$	12,458,771	$	12,405,814

________________________________________________

(1) During the six months ended June 30, 2024, Property under development balances transferred to Building and improvements for real estate placed into service was $13.4 million.

Property to be Removed from Service

During the second quarter of 2023, we removed our Barrington Plaza Apartments property in Los Angeles from the rental market. In connection with the removal of the aforementioned property from the rental market, we accelerated and recorded additional depreciation expense of $27.4 million for the three months ended June 30, 2023, which is included in Depreciation and amortization on our consolidated statements of operations.

4. Ground Lease

We pay rent under a ground lease located in Honolulu, Hawaii, which expires on December 31, 2086. The rent is fixed at $733 thousand per year until February 28, 2029, after which it will reset to the greater of the existing ground rent or the market rent at the time.

As of June 30, 2024, the ground lease right-of-use asset carrying value was $7.4 million and the ground lease liability was $10.8 million. Ground rent expense, which is included in Office expenses on our consolidated statements of operations, was:

•$183 thousand for each of the three month periods ended June 30, 2024 and 2023, and

•$366 thousand for each of the six month periods ended June 30, 2024 and 2023.

The table below, which assumes that the ground rent payments will continue to be $733 thousand per year after February 28, 2029, presents the future minimum ground lease payments as of June 30, 2024:


Twelve months ending June 30:	(In thousands)

2025	$	733
2026	733
2027	733
2028	733
2029	733
Thereafter	42,147
Total future minimum ground lease payments	$	45,812

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

5. Acquired Lease Intangibles

Summary of our Acquired Lease Intangibles


(In thousands)	June 30, 2024		December 31, 2023

Above-market tenant leases	$	4,445	$	4,541
Above-market tenant leases - accumulated amortization	(2,570)		(2,430)
Above-market ground lease where we are the lessor	1,152		1,152
Above-market ground lease - accumulated amortization	(300)		(292)
Acquired lease intangible assets, net	$	2,727	$	2,971

Below-market tenant leases	$	38,919	$	48,008
Below-market tenant leases - accumulated accretion	(23,650)		(28,170)
Acquired lease intangible liabilities, net	$	15,269	$	19,838

Impact on the Consolidated Statements of Operations

The table below summarizes the net amortization/accretion related to our above- and below-market leases:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023

Net accretion of above- and below-market tenant lease assets and liabilities(1)	$	1,987	$	2,662	$	4,334	$	5,703
Amortization of an above-market ground lease asset(2)	(4)		(4)		(8)		(8)
Total	$	1,983	$	2,658	$	4,326	$	5,695

______________________________________________

(1) Recorded as a net increase to office and multifamily rental revenues.

(2) Recorded as a decrease to office parking and other income.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

6. Investment in Unconsolidated Fund

Description of our Fund

As of June 30, 2024, we managed and owned an equity interest of 74.0% in an unconsolidated Fund, Partnership X, through which we and another investor in the Fund owned two office properties totaling 0.4 million square feet. During 2023 we owned an equity interest of 33.5% in the Fund. On December 31, 2023, we purchased an additional 20.2% equity interest in the Fund which increased our equity interest in the Fund to 53.8%. On February 29, 2024, we purchased an additional 20.2% equity interest in the Fund which increased our equity interest in the Fund to 74.0%.

Partnership X pays us fees and reimburses us for certain expenses related to property management and other services we provide, which are included in Other income on our consolidated statements of operations. We also receive distributions based on invested capital and on any profits that exceed certain specified cash returns to the investors. The table below presents the cash distributions we received from Partnership X:


	Six Months Ended June 30,
(In thousands)	2024		2023

Operating distributions received	$	573	$	614
Capital distributions received	147		69
Total distributions received	$	720	$	683

Summarized Financial Information for Partnership X

The tables below present selected financial information for Partnership X. The amounts presented reflect 100% (not our pro-rata share) of the amounts related to the Fund, and are based upon historical book value:


(In thousands)	June 30, 2024		December 31, 2023

Total assets	$	147,453	$	146,945
Total liabilities	$	118,849	$	118,822
Total equity	$	28,604	$	28,123


	Six Months Ended June 30,
(In thousands)	2024		2023

Total revenues	$	8,685	$	10,165
Operating income	$	2,104	$	3,484
Net income	$	1,248	$	2,405

7. Other Assets


(In thousands)	June 30, 2024		December 31, 2023

Restricted cash	$	101	$	101
Prepaid expenses	5,340		20,594
Indefinite-lived intangibles	1,988		1,988
Deposit with lender(1)	13,758		13,440
Furniture, fixtures and equipment, net	6,877		7,014
Other	6,848		6,123
Total other assets	$	34,912	$	49,260

_______________________________________________________________________

(1) In connection with the Barrington Plaza loan, we deposited cash into an interest-bearing collateral account with the lender. See our debt disclosures in Note 8 (note 4 to the table) for more detail regarding this loan and the related deposit.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

8. Secured Notes Payable, Net


Description	Maturity Date(1)	Principal Balance as of June 30, 2024		Principal Balance as of December 31, 2023		Variable Interest Rate	Fixed Interest Rate(2)	Swap Maturity Date

		(In thousands)

Consolidated Wholly Owned Subsidiaries
Term loan(3)	3/3/2025	$	335,000	$	335,000	SOFR + 1.41%	N/A	N/A
Fannie Mae loan(3)	4/1/2025	102,400		102,400		SOFR + 1.36%	N/A	N/A
Term loan(3)	8/15/2026	415,000		415,000		SOFR + 1.20%	3.07%	8/1/2025
Term loan(3)	9/19/2026	400,000		400,000		SOFR + 1.25%	2.44%	9/1/2024
Term loan(3)	9/26/2026	200,000		200,000		SOFR + 1.30%	2.36%	10/1/2024
Term loan(3)	11/1/2026	400,000		400,000		SOFR + 1.25%	2.31%	10/1/2024
Fannie Mae loan(3)(4)	6/1/2027	550,000		550,000		SOFR + 1.48%	N/A	N/A
Term loan(3)	5/18/2028	300,000		300,000		SOFR + 1.51%	2.21%	6/1/2026
Term loan(3)	1/1/2029	300,000		300,000		SOFR + 1.56%	2.66%	1/1/2027
Fannie Mae loan(3)	6/1/2029	255,000		255,000		SOFR + 1.09%	3.26%	6/1/2027
Fannie Mae loan(3)	6/1/2029	125,000		125,000		SOFR + 1.09%	3.25%	6/1/2027
Fannie Mae loan(3)(5)	8/1/2033	350,000		350,000		SOFR + 1.37%	N/A	N/A
Term loan(6)	6/1/2038	27,195		27,640		N/A	4.55%	N/A
Total Wholly-Owned Subsidiary Debt		3,759,595		3,760,040

Consolidated JVs
Term loan(3)	12/19/2024	400,000		400,000		SOFR + 1.40%	N/A	N/A
Term loan(3)	5/15/2027	450,000		450,000		SOFR + 1.45%	2.26%	4/1/2025
Term loan(3)	8/19/2028	625,000		625,000		SOFR + 1.45%	2.12%	6/1/2025
Term loan(3)(7)	4/26/2029	175,000		175,000		SOFR + 1.25%	3.90%	5/1/2026
Fannie Mae loan(3)	6/1/2029	160,000		160,000		SOFR + 1.09%	3.25%	7/1/2027
Total Consolidated Debt(8)		5,569,595		5,570,040
Unamortized loan premium, net(9)		2,858		3,087
Unamortized deferred loan costs, net(10)		(26,082)		(29,956)
Total Consolidated Debt, net		$	5,546,371	$	5,543,171

_______________________________________________________________________

Except as noted below, our loans: (i) are non-recourse, (ii) are secured by separate collateral pools consisting of one or more properties, (iii) require interest-only monthly payments with the outstanding principal due upon maturity, and (iv) contain certain financial covenants which could require us to deposit excess cash flow with the lender under certain circumstances unless we (at our option) either provide a guarantee or additional collateral or pay down the loan within certain parameters set forth in the loan documents. Certain loans with maturity date extension options require us to meet minimum financial thresholds in order to extend the loan maturity date.

(1)Maturity dates include extension options.

(2)Effective rate as of June 30, 2024. Includes the effect of interest rate swaps (if applicable) and excludes the effect of prepaid loan fees and loan premiums. See Note 10 for details of our interest rate swaps. See further below for details of our loan costs and loan premiums.

(3)The loan agreement includes a zero-percent SOFR floor. If the loan is swap-fixed then the related swaps do not include such a floor.

(4)The loan is secured by four residential properties. A portion of the loan totaling $472 million has a lender-required out-of-the-money interest rate cap at a weighted average of 8.99% until July 2026. For the portion of the loan relating to Barrington Plaza, in connection with the removal of that property from the rental market during 2023, the lender is treating the debt as a construction loan and we signed a construction completion guarantee in January 2024. See "Guarantees" in Note 16. The lender also required a $13.3 million cash deposit, which we placed into an interest bearing collateral account during 2023. The lender will return the deposit at the earlier of August 2026 or when the loan is paid in full. The deposit is included in Other assets in our consolidated balance sheets. See Note 7.

(5)The loan has a lender-required out-of-the-money interest rate cap at an interest rate of 7.84% until August 2026.

(6)The loan requires monthly payments of principal and interest. The principal amortization is based upon a 30-year amortization schedule.

(7)We guaranteed the portion of the loan principal that would need to be paid down in order to meet the minimum debt yield in the loan agreement. See "Guarantees" in Note 16.

(8)The table does not include our unconsolidated Fund's loan - see "Guarantees" in Note 16. See Note 13 for our debt fair value disclosures.

(9)Balances are net of accumulated amortization of $4.3 million and $4.1 million at June 30, 2024 and December 31, 2023, respectively.

(10)Balances are net of accumulated amortization of $59.9 million and $56.0 million at June 30, 2024 and December 31, 2023, respectively.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

Debt Statistics

The table below summarizes our consolidated fixed and floating rate debt:


(In thousands)	Principal Balance as of June 30, 2024		Principal Balance as of December 31, 2023

Aggregate swap-fixed rate loans	$	3,805,000	$	3,805,000
Aggregate fixed rate loans	27,195		27,640
Aggregate capped rate loans	822,000		822,000
Aggregate floating rate loans	915,400		915,400
Total Debt	$	5,569,595	$	5,570,040

The table below summarizes certain consolidated debt statistics as of June 30, 2024:


Statistics for consolidated loans with interest fixed under the terms of the loan or a swap

Principal balance (in billions)						$3.83
Weighted average remaining life (including extension options)						3.5 years
Weighted average remaining fixed interest period						1.4 years
Weighted average annual interest rate						2.66%

Future Principal Payments

At June 30, 2024, the minimum future principal payments due on our consolidated secured notes payable were as follows:


Twelve months ending June 30:	Including Maturity Extension Options(1)

	(In thousands)

2025	$	838,322
2026	965
2027	2,416,010
2028	301,057
2029	1,641,106
Thereafter	372,135
Total future principal payments	$	5,569,595

________________________________________________

(1) Some of our loan agreements require that we meet certain minimum financial thresholds to be able to extend the loan maturity.

Loan Premium and Loan Costs

The table below presents loan premium and loan costs, which are included in Interest expense on our consolidated statements of operations:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023

Loan premium amortized and written off	$	(114)	$	(115)	$	(229)	$	(228)
Deferred loan costs amortized and written off	2,206		2,228		4,415		4,362
Loan costs expensed	1		17		53		20
Total	$	2,093	$	2,130	$	4,239	$	4,154

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

9. Interest Payable, Accounts Payable and Deferred Revenue


(In thousands)	June 30, 2024		December 31, 2023

Interest payable	$	17,945	$	18,647
Accounts payable and accrued liabilities	70,118		61,767
Deferred revenue	45,522		50,823
Total interest payable, accounts payable and deferred revenue	$	133,585	$	131,237

10. Derivative Contracts

We make use of interest rate swap and cap contracts to manage the risk associated with changes in interest rates on our floating-rate debt and to satisfy certain lender requirements. When we enter into a floating-rate term loan, we generally enter into an interest rate swap agreement for the equivalent principal amount, for a period covering the majority of the loan term, which effectively converts our floating-rate debt to a fixed-rate basis during that time. We also enter into interest rate cap agreements from time to time to cap the interest rates on our floating rate loans. We may enter into derivative contracts that are intended to hedge certain economic risks, even though hedge accounting does not apply or we elect to not apply hedge accounting. We do not speculate in derivatives and we do not make use of any other derivative instruments. See Note 8 regarding our debt and our consolidated JVs' debt that is hedged.

Derivative Summary

The table below summarizes our derivative contracts as of June 30, 2024:


	Number of Interest Rate Contracts	Notional (In thousands)

Derivatives Designated as Cash Flow Hedges:
Consolidated derivatives - swaps(1)(2)(3)	24	$	3,805,000
Consolidated derivatives - caps(2)(3)	5	$	822,000
Unconsolidated Fund's derivatives - swaps(2)(3)(4)	2	$	115,000

___________________________________________________

(1)The notional amount reflects 100%, not our pro-rata share, of our consolidated JVs' derivatives. See Note 8 for more information about our hedged consolidated debt.

(2)Our derivative contracts do not provide for right of offset between derivative contracts.

(3)See Note 13 for our derivative fair value disclosures.

(4)The notional amount reflects 100%, not our pro-rata share, of our unconsolidated Fund's derivatives. See Note 6 for more information about our Fund, including our equity interest percentage. See "Guarantees" in Note 16 for more information about our Fund's hedged debt.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

Counterparty Credit Risk

We are subject to credit risk from the counterparties on our interest rate swap and cap contract assets because we do not receive collateral. We seek to minimize that risk by entering into agreements with a variety of counterparties with investment grade ratings. The fair value of our interest rate swap and cap contract assets, including accrued interest and excluding credit risk adjustments, was as follows:


(In thousands)	June 30, 2024		December 31, 2023

Consolidated derivatives(1)	$	156,757	$	184,700
Unconsolidated Fund's derivatives(2)	$	9,601	$	9,643

________________________________________________________

(1)The amounts reflect 100%, not our pro-rata share, of our consolidated JVs' derivatives.

(2)The amounts reflect 100%, not our pro-rata share, of our unconsolidated Fund's derivatives. For more information about our Fund, including our equity interest percentage, see Note 6.

Impact of Hedges on AOCI and the Consolidated Statements of Operations

The table below presents the effect of our derivatives on our AOCI and the consolidated statements of operations:


(In thousands)	Six Months Ended June 30,
	2024		2023
Derivatives Designated as Cash Flow Hedges:

Consolidated derivatives:
Gains recorded in AOCI before reclassifications(1)	$	51,587	$	51,777
Gains reclassified from AOCI to Interest Expense(1)	$	(77,965)	$	(66,397)
Interest expense presented on the consolidated statements of operations	$	(110,287)	$	(95,816)
Unconsolidated Fund's derivatives (our share)(2):
Gains recorded in AOCI before reclassifications(1)	$	5,550	$	671
Gains reclassified from AOCI to Income from unconsolidated Fund(1)	$	(1,802)	$	(763)
Income from unconsolidated Fund presented on the consolidated statements of operations	$	1,121	$	887

________________________________________________________________

(1)See Note 11 for our AOCI reconciliation.

(2)We calculate our share by multiplying the total amount for the Fund by our equity interest in the Fund. For more information about our Fund, including our equity interest percentage, see Note 6.

Future Reclassifications from AOCI

As of June 30, 2024, our estimate of the AOCI related to derivatives designated as cash flow hedges that will be reclassified to earnings during the next twelve months is as follows:


	(In thousands)

Consolidated derivatives:
Gains to be reclassified from AOCI to Interest Expense	$	102,929
Unconsolidated Fund's derivatives (our share)(1):
Gains to be reclassified from AOCI to Income from unconsolidated Fund	$	3,522

________________________________________________________

(1) We calculate our share by multiplying the total amount for the Fund by our equity interest in the Fund. For more information about our Fund, including our equity interest percentage, see Note 6.

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

11. Equity

Transactions

During the Six Months Ended June 30, 2024

•We acquired 193 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.

•We acquired 1,164 OP Units for $16 thousand in cash.

During the Six Months Ended June 30, 2023

•We repurchased 9.1 million shares of our common stock for $109.1 million in cash, excluding transaction costs, in open market transactions. The average purchase price was $12.03 per share.

•We acquired 26 thousand OP Units for $321 thousand in cash.

Noncontrolling Interests

Our noncontrolling interests consist of interests in our Operating Partnership and consolidated JVs which are not owned by us. As of June 30, 2024, noncontrolling interests in our Operating Partnership owned 33.7 million OP Units and fully-vested LTIP Units, which represented approximately 16.7% of our Operating Partnership's total outstanding interests, and we owned 167.4 million OP Units (to match our 167.4 million shares of outstanding common stock), which represented approximately 83.3% of our Operating Partnership's total outstanding interests.

A share of our common stock, an OP Unit and an LTIP Unit (once vested and booked up) have essentially the same economic characteristics, sharing equally in the distributions from our Operating Partnership. Investors who own OP Units have the right to cause our Operating Partnership to acquire their OP Units for an amount of cash per unit equal to the market value of one share of our common stock at the date of acquisition, or, at our election, exchange their OP Units for shares of our common stock on a one-for-one basis. LTIP Units have been granted to our employees and non-employee directors as part of their compensation. These awards generally vest over a service period and once vested can generally be converted to OP Units provided our stock price increases by more than a specified hurdle.

Changes in our Ownership Interest in our Operating Partnership

The table below presents the effect on our equity from net income attributable to common stockholders and changes in our ownership interest in our Operating Partnership:


	Six Months Ended June 30,
(In thousands)	2024		2023

Net income attributable to common stockholders	$	19,787	$	11,111

Transfers from noncontrolling interests:
Exchange of OP Units with noncontrolling interests	2,954		—
Repurchases of OP Units from noncontrolling interests	2		109
Net transfers from noncontrolling interests	2,956		109

Change from net income attributable to common stockholders and transfers from noncontrolling interests	$	22,743	$	11,220

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Douglas Emmett, Inc.

Notes to Consolidated Financial Statements (unaudited) (continued)

AOCI Reconciliation(1)

The table below presents a reconciliation of our AOCI, which consists solely of adjustments related to derivatives designated as cash flow hedges:


	Six Months Ended June 30,
(In thousands)	2024		2023

Accumulated Other Comprehensive Income - Beginning balance	$	115,917	$	187,063
Consolidated derivatives:
Other comprehensive income before reclassifications	51,587		51,777
Reclassification of gains from AOCI to Interest Expense	(77,965)		(66,397)
Unconsolidated Fund's derivatives (our share)(2):
Other comprehensive income before reclassifications	5,550		671
Reclassification of gains from AOCI to Income from unconsolidated Fund	(1,802)		(763)
Net current period OCI	(22,630)		(14,712)
OCI attributable to noncontrolling interests	7,340		2,546
OCI attributable to common stockholders	(15,290)		(12,166)

Accumulated Other Comprehensive Income - Ending balance	$	100,627	$	174,897

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(1)See Note 10 for the details of our derivatives and Note 13 for our derivative fair value disclosures.

(2)We calculate our share by multiplying the total amount for our Fund by our equity interest in the Fund. For more information about our Fund, including our equity interest percentage, see Note 6.

Stock-Based Compensation

The Douglas Emmett, Inc. 2016 Omnibus Stock Incentive Plan, as amended (the "2016 Plan"), permits us to make grants of stock-based compensation awards to our directors, officers, employees and consultants. The plan is administered by the compensation committee of our board of directors. As of June 30, 2024, we had an aggregate of 16.6 million shares of common stock available for future awards. The table below presents our stock-based compensation expense:


	Three Months Ended June 30,				Six Months Ended June 30,
(In thousands)	2024		2023		2024		2023

Stock-based compensation expense, net	$	2,429	$	2,432	$	5,292	$	5,226
Capitalized stock-based compensation	$	656	$	744	$	1,298	$	1,457