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DE

Douglas Emmett Inc (DEI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean top-line and EPS beat, with revenue at $251.5M vs S&P Global consensus $246.5M (+2.0%) and GAAP EPS $0.24 vs consensus -$0.055, aided by a $47.2M consolidation gain; FFO/share was $0.40 vs consensus $0.388, a modest beat .*
  • Leasing momentum continued: 753K sf signed (276K new, 477K renewals), “best quarter in more than two years” for >10K sf tenants; straight-line rent spreads +0.9% while cash spreads -12.6% as larger-tenants skewed averages; multifamily stayed essentially full at 99.1% .
  • Guidance update: 2025 net income per diluted share revised up to $0.07–$0.13 (from prior -$0.17– -$0.11) while 2025 FFO/share held at $1.42–$1.48; assumptions unchanged (Same-Property Cash NOI -2.5% to -0.5%, interest expense $260–$270M) .
  • Balance sheet/financing actions: closed $127.2M 4.99% resi loan (2030 maturity) and refinanced $335M office loan to effective fixed 4.57% (2032); management expects average cost of debt to rise 100–200 bps vs pre-COVID 3% .
  • Stock catalysts: sustained large-tenant leasing (>10K sf), conversion of signed leases into occupied space, Studio Plaza lease-up outperformance, progress on 10900 Wilshire JV development, and forthcoming refinancing prints; watch macro/tariff risks and sequential in-service occupancy dips noted by analysts .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)$244.969 $244.979 $251.535
Net Income Attributable to Common ($USD Millions)$8.909 $(0.888) $39.800
GAAP EPS - Diluted ($USD)$0.05 $(0.01) $0.24
FFO per Share - Fully Diluted ($USD)$0.45 $0.38 $0.40
AFFO ($USD Millions)$74.716 $58.732 $62.346
Same-Property Cash NOI ($USD Millions)$151.761 $142.440 $151.409
Net Income Margin %3.64%*-0.36%*15.82%*
  • Values with * retrieved from S&P Global.

Segment breakdown:

Segment RevenueQ1 2024Q4 2024Q1 2025
Office Revenues ($USD Millions)$197.937 $196.566 $202.097
Multifamily Revenues ($USD Millions)$47.032 $48.413 $49.438

KPIs and leasing metrics:

KPIQ4 2024Q1 2025
Office New Leases Signed (sf)241,994 275,977
Office Renewal Leases Signed (sf)553,649 477,394
Total Office Leases Signed (sf)795,643 753,371
Cash Re-leasing Spread (%)-7.0% -12.6%
Straight-line Rent Spread (%)+4.0% +0.9%
Avg Lease Transaction Cost ($/sf per annum)$5.46 $6.17
Multifamily Leased Rate (%)99.1% 99.1%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Income per Common Share - DilutedFY 2025$(0.17) to $(0.11) $0.07 to $0.13 Raised
FFO per Share - Fully DilutedFY 2025$1.42 to $1.48 $1.42 to $1.48 Maintained
Same-Property Cash NOI GrowthFY 2025-2.5% to -0.5% -2.5% to -0.5% Maintained
Interest ExpenseFY 2025$260M to $270M $260M to $270M Maintained
Average Office Occupancy (In-Service)FY 202578% to 80% 78% to 80% Maintained
Residential Leased RateFY 2025Essentially fully leased Essentially fully leased Maintained
Dividend per ShareQuarterly$0.19 (paid 1/15/25) $0.19 (declared, payable 7/15/25) Maintained

Notes:

  • Guidance excludes future acquisitions/dispositions, stock actions, financings, insurance recoveries, impairments; refinancings not assumed in guidance .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024; Q-1: Q4 2024)Current Period (Q1 2025)Trend
Large-tenant demand (>10K sf)Q3: “best quarter since late 2022” for >10K sf; lease rate +50 bps to 82% . Q4: back to pre-pandemic average .“Best quarter in more than 2 years” for >10K sf; helped drive positive absorption .Improving/stronger mix
Studio Plaza conversion (Burbank)Q3: converting to multi-tenant; leasing interest growing . Q4: leasing underway; capex $75–$100M .Leasing “surpassed expectations”; remodel completes later ’25; lease commencements later ’25 .Ahead of plan
Debt refinancing & cost of capitalQ4: negotiating extensions; fixed loans added (6.36%, 6.00%) .Closed $127.2M at 4.99% (2030), refinanced $335M to 4.57% (2032); expect average cost of debt +100–200 bps vs 3% pre-COVID .De-risking at higher rates
Multifamily demand & pricingQ3: 99.1% leased; rents rising . Q4: portfolio essentially full .99.1% leased; same-store revenue +7.7%; asking rents unchanged under state oversight; turnover supporting roll-to-market .Sustained strength
Macro/tariffsQ4: limited commentary.Watching volatility and tariff turmoil; no tenant fallout yet; recession risk monitored .Heightened monitoring
External growth (10900 Wilshire JV, pipeline)Q4: JV formed; total project spend $150–$200M .Development planning underway; office acquisitions preferred; partners engaged; pipeline selective, not a flood .Selective/accretive focus

Management Commentary

  • “Leasing during the first quarter of 2025 was quite successful. We achieved positive absorption… We signed over 300,000 square feet of new leases… New leasing to tenants over 10,000 square feet was well above our historical averages.” — Jordan Kaplan, CEO .
  • “We are working on four solid avenues for restoring and then exceeding our pre-pandemic FFO… leasing up our office portfolio, redeveloping Barrington Plaza, converting Studio Plaza, and acquiring additional properties.” — CEO .
  • “I suspect that our cost of debt will increase between 100 and 200 basis points from the 3% average we enjoyed before COVID.” — CEO .
  • “Compared to the first quarter of 2024, revenue increased by 2.7%. FFO decreased to $0.40 per share, and AFFO decreased to $62.3 million… We expect 2025 net income per diluted share $0.07–$0.13 and FFO/share $1.42–$1.48.” — Peter Seymour, CFO .
  • “Lease-up and repositioning of Studio Plaza into a multi-tenant office building has surpassed expectations.” — Kevin Crummy, CIO .

Q&A Highlights

  • Debt refinancings: $335M office loan extended to an effective 4.57%; $127.2M resi loan at 4.99%. Management expects average cost of debt +100–200 bps; future refinancings are not embedded in guidance .
  • Absorption vs in-service occupancy: Positive total absorption, but slight sequential dips in in-service lease and occupancy rates noted; conversion of signed leases to occupancy has a lag .
  • Multifamily fundamentals: Same-store revenue up ~7.7% driven by occupancy and roll-to-market; asking rents unchanged under state oversight; legal 10% cap with cautious approach; turnover supports growth .
  • Studio Plaza: Leasing exceeding expectations; remodel completion targeted later this year; no building-level lease rate disclosed .
  • Capital allocation: Focus on office acquisitions with JV partners; completed ~$115M buybacks in past period but no active program; partners expect participation to avoid “cherry-picking” .

Estimates Context

Q1 2025 actuals vs S&P Global consensus:

MetricConsensus (S&P)*Actual
Revenue ($USD Millions)$246.489*$251.535
GAAP EPS - Diluted ($USD)-$0.055*$0.24
FFO per Share - Fully Diluted ($USD)$0.3879*$0.40
  • Beats driven by: $47.2M gain from consolidation of a previously unconsolidated JV flowing through net income, plus stable operations and higher tenant recoveries; FFO/share beat modest given non-GAAP nature excludes consolidation gain .
  • Values with * retrieved from S&P Global.

What Went Well and What Went Wrong

  • What Went Well

    • Large-tenant demand returned: “best quarter in more than 2 years” for >10K sf tenants; positive absorption achieved .
    • Studio Plaza outperformed: lease-up “surpassed expectations”; remodel to complete later 2025 with some leases commencing later this year .
    • Financing progress at attractive rates relative to office sector: effective 4.57% (2032) and 4.99% (2030) fixed outcomes; balance sheet cash $525.7M .

  • What Went Wrong

    • Cash re-leasing spreads compressed (-12.6%) on larger-tenant mix and difficulty exceeding 3–4% contractual bumps; straight-line spreads only +0.9% .
    • Same-Property Cash NOI essentially flat YoY ($151.4M vs $151.8M), reflecting office headwinds; office cash NOI down YoY .
    • In-service occupancy/lease rate showed slight sequential softness as noted by analysts, underscoring lag from signed to occupied space .

Earnings Call Themes & Trends

(See table above for full quarter-over-quarter evolution)

Other Relevant Press Releases (Q1 period)

  • Company posted Q1 2025 earnings materials on May 6, 2025 .
  • Declared a $0.19 quarterly cash dividend on May 29, 2025, payable July 15, 2025 (annualized $0.76) .

Key Takeaways for Investors

  • Leasing momentum with larger tenants is a bona fide positive; monitor conversion of signed leases into occupancy and straight-line rent spreads to gauge revenue trajectory .
  • Expect financing announcements to remain a near-term catalyst; achieved sub-5% effective fixed rates on recent deals; average cost of debt likely 100–200 bps above pre-COVID, partially offset by rent growth over time .
  • Studio Plaza is tracking ahead of plan; commencement of leases later this year should aid 2H occupancy metrics and forward NOI .
  • Multifamily strength continues (99.1% leased); turnover and roll-to-market underpin high-single-digit same-store revenue growth, even with cautious pricing under state oversight .
  • Guidance reset on GAAP EPS (raised to positive) reflects consolidation accounting; FFO guidance unchanged—focus on FFO drivers (leasing, NOI, financing) rather than GAAP EPS optics .
  • Watch macro/tariff volatility; management reports no tenant fallout yet but remains cautious on recession risk—position sizing should reflect these macro sensitivities .
  • Tactical: short-term trading may benefit from beats tied to leasing updates/refinancing prints; medium-term thesis hinges on multi-tenant lease-up (Studio Plaza), selective office acquisitions in supply-constrained Westside/Valley/Honolulu, and steady multifamily cash flows .

*All S&P Global consensus values marked with ; document-based figures are cited to company filings and transcripts.