Douglas Emmett Inc.

05/03/2022 | Press release | Distributed by Public on 05/03/2022 14:12

Executive Summary - Form 8-K

Executive Summary

We own and operate 18.2 million square feet of Class A office properties and 4,415 apartment units (excluding our residential development pipeline) in the premier coastal submarkets of Los Angeles and Honolulu.
Quarterly Results: For the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021:
•Our revenues increased by 10.4% to $238.9 million.
•Our net income attributable to common stockholders increased by 119.9% to $25.5 million, or $0.14 per diluted share.
•Our FFO increased by 15.4% to $103.8 million, or $0.50 per fully diluted share.
•Our AFFO increased by 20.2% to $94.1 million.
•Our same property Cash NOI increased by 10.7% to $151.1 million.
Leasing: During the first quarter, we signed 246 office leases covering approximately 898,000 square feet. Our leased rate increased to 87.7%, and our occupancy rate decreased to 84.6%. Comparing the office leases we signed in the first quarter to the expiring leases for the same space, straight-line rents increased by 9.4% and cash rents decreased by 3.7%. Our multifamily portfolio remains essentially fully leased at 99.7%, with average rent roll-up this quarter of almost 9% across our portfolio.
Acquisition: On April 26th, we acquired 1221 Ocean Avenue, an iconic apartment property overlooking the beach in Santa Monica. The property is currently 98% leased and includes 120 units with an average unit size of 1,500 square feet. The purchase price was $330 million, which works out to $2.75 million per unit or $1,800 per square foot. The 16-story high-rise features unobstructed panoramic ocean views from every residence, a rooftop amenity deck with 180-degree views of the Pacific Ocean, and a suite of high-end amenities. The purchase was made by a new joint venture that we manage and in which we own a 55% interest. The joint venture obtained a $175 million secured, non-recourse interest-only term loan that matures in April 2029. The loan bears interest at SOFR plus 1.25%, which we fixed at 3.90% through April 2026 with interest rate swaps.
Balance Sheet: We have no term loan maturities before December 2024 and we continue to have significant financing capacity.
Development: We continue to see strong tenant interest and rents above our pro formas at both 1132 Bishop in downtown Honolulu and the Landmark Los Angeles in Brentwood. When completed, these projects, along with 1221 Ocean, add almost 1,000 units to our portfolio.
Dividends: On April 19, 2022, we paid a quarterly cash dividend of $0.28 per common share, or $1.12 on an annualized basis.
Guidance: We are raising our guidance for 2022 net income per common share diluted to be between $0.53 and $0.59 and FFO per share to be between $2.02 and $2.08, which reflects an increase from our recent acquisition partially offset by higher interest rate assumptions. Our guidance does not include the impact of any future property acquisitions or dispositions, financings, property damage insurance recoveries, or other possible capital markets activities. See page 22.

NOTE: See the non-GAAP reconciliations for FFO & AFFO on page 8 and same property NOI on page 10.
See the "Definitions" section for definitions of certain terms used in this Earnings Package.

Table of Contents

Forward Looking Statements (FLS)
This First Quarter 2022 Earnings Results and Operating Information, which we refer to as our Earnings Package (EP), supplements the information provided in our reports filed with the Securities and Exchange Commission (SEC). It contains FLS 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, and we claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements related to the expectations regarding the performance of our business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these FLS can be identified by the use of words such as "expect," "potential," "continue," "may," "will," "should," "could," "seeks," "projects," "intends," "plans," "estimates," "anticipates," or the negative version of these words or other comparable words. FLS presented in this EP, and those that we may make orally or in writing from time to time, are based on our beliefs and assumptions. Our actual results will be affected by known and unknown risks, trends, uncertainties and factors, some of which are beyond our control or ability to predict, including, but not limited to: adverse developments related to the Coronavirus (COVID-19) global pandemic; adverse economic and real estate developments in Southern California and Honolulu; a general downturn in the economy; decreased rental rates or increased tenant incentives and vacancy rates; defaults on, and early terminations and non-renewal of, leases by tenants; increased interest rates and operating costs; failure to generate sufficient cash flows to service our debt; difficulties in acquiring properties; failure to successfully operate properties; failure to maintain our status as a REIT; possible adverse changes in rent control laws and regulations; environmental uncertainties; risks related to natural disasters; fire and other property damage, lack of or insufficient 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; possible future terrorist attacks; and other risks and uncertainties detailed in our Annual Report on Form 10-K for 2021, and other documents filed with the SEC. Although we believe that our assumptions underlying our forward looking statements 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, please use caution in relying on any FLS in this EP to anticipate future results or trends. This EP and all subsequent written and oral FLS 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 FLS.
2
Company Overview

Corporate Data
as of March 31, 2022

Office Portfolio
Consolidated Total
Properties 69 71
Rentable square feet (in thousands) 17,775 18,160
Leased rate 87.8 % 87.7 %
Occupancy rate 84.6 % 84.6 %
Multifamily Portfolio
Total
Properties 12
Units 4,415
Leased rate(1)
99.7 %
Market Capitalization (in thousands, except price per share)
Fully Diluted Shares outstanding as of March 31, 2022 207,140
Common stock closing price per share (NYSE:DEI) $ 33.42
Equity Capitalization $ 6,922,622
Net Debt(in thousands)
Consolidated Our Share
Debt principal(2)
$ 5,046,523 $ 4,150,091
Less: cash and cash equivalents(3)
(337,274) (218,706)
Net Debt $ 4,709,249 $ 3,931,385
Leverage Ratio (in thousands, except percentage)
Pro Forma Enterprise Value $ 10,854,007
Our Share of Net Debt to Pro Forma Enterprise Value 36 %
AFFO Payout Ratio
Three months ended March 31, 2022 61.8 %
_______________________________________________
(1) Both the numerator and denominator used in calculating the percentage of units leased do not include 85 units at one property which are temporarily unoccupied as a result of a fire.
(2) See page 12 for a reconciliation of consolidated debt principal and our share of debt principal to consolidated debt on the balance sheet.
(3) Our share of cash and cash equivalents is calculated starting with our consolidated cash and cash equivalents of $337.3 million, then deducting the other owners' share of our JVs' cash and cash equivalents of $123.4 million and then adding our share of our unconsolidated Fund's cash and cash equivalents of $4.8 million.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Company Overview

Property Map
as of March 31, 2022

Company Overview

Board of Directors and Executive Officers
as of May 3, 2022

BOARD OF DIRECTORS
__________________________________________________________________________________________________________________________________
Dan A. Emmett Our Executive Chairman of the Board
Jordan L. Kaplan Our Chief Executive Officer and President
Kenneth M. Panzer Our Chief Operating Officer
Leslie E. Bider Retired Executive and Investor
Dorene C. Dominguez Chairwoman and CEO of Vanir Group of Companies
Dr. David T. Feinberg President and Chief Executive Officer, Cerner Corporation
Ray C. Leonard President, Sugar Ray Leonard Foundation
Virginia A. McFerran Technology and Data Science Advisor
Thomas E. O'Hern Chief Executive Officer, Macerich
William E. Simon, Jr. Partner Emeritus, Simon Quick Advisors
Johnese M. Spisso President, UCLA Health; Chief Executive Officer, UCLA Hospital System; Associate Vice Chancellor, UCLA Health Sciences
Shirley Wang Founder and CEO, Plastpro Inc.

EXECUTIVE OFFICERS
__________________________________________________________________________________________________________________________________
Dan A. Emmett Chairman of the Board
Jordan L. Kaplan Chief Executive Officer and President
Kenneth M. Panzer Chief Operating Officer
Peter D. Seymour Chief Financial Officer
Kevin A. Crummy Chief Investment Officer

CORPORATE OFFICE
1299 Ocean Avenue, Suite 1000, Santa Monica, California 90401
Phone: (310) 255-7700

For more information, please visit our website at www.douglasemmett.com or contact:
Stuart McElhinney, Vice President, Investor Relations
(310) 255-7751
Financial Results

Consolidated Balance Sheets
(Unaudited; In thousands)

March 31, 2022 December 31, 2021
Assets
Investment in real estate, gross $ 11,841,693 $ 11,819,077
Less: accumulated depreciation and amortization (3,096,857) (3,028,645)
Investment in real estate, net 8,744,836 8,790,432
Ground lease right-of-use asset 7,461 7,464
Cash and cash equivalents 337,274 335,905
Tenant receivables 10,216 13,127
Deferred rent receivables 115,037 115,148
Acquired lease intangible assets, net 3,969 4,168
Interest rate contract assets 125,189 15,473
Investment in unconsolidated Fund 47,873 46,594
Other assets 48,459 25,721
Total assets $ 9,440,314 $ 9,354,032
Liabilities
Secured notes payable and revolving credit facility, net $ 5,013,876 $ 5,012,076
Ground lease liability 10,856 10,860
Interest payable, accounts payable and deferred revenue 154,932 145,460
Security deposits 56,346 55,285
Acquired lease intangible liabilities, net 22,714 24,710
Interest rate contract liabilities 6,667 69,930
Dividends payable 49,226 49,158
Total liabilities 5,314,617 5,367,479
Equity
Douglas Emmett, Inc. stockholders' equity:
Common stock 1,758 1,755
Additional paid-in capital 3,492,659 3,488,886
Accumulated other comprehensive income (loss) 83,029 (38,774)
Accumulated deficit (1,059,499) (1,035,798)
Total Douglas Emmett, Inc. stockholders' equity 2,517,947 2,416,069
Noncontrolling interests 1,607,750 1,570,484
Total equity 4,125,697 3,986,553
Total liabilities and equity $ 9,440,314 $ 9,354,032

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Results

Consolidated Operating Results
(Unaudited; in thousands, except per share data)

Three Months Ended March 31,
2022 2021
Revenues
Office rental
Rental revenues and tenant recoveries(1)
$ 180,427 $ 168,179
Parking and other income 22,713 18,464
Total office revenues 203,140 186,643
Multifamily rental
Rental revenues 31,228 27,083
Parking and other income 4,514 2,569
Total multifamily revenues 35,742 29,652
Total revenues 238,882 216,295
Operating Expenses
Office expenses 67,374 62,178
Multifamily expenses 10,173 9,311
General and administrative expenses 11,240 9,571
Depreciation and amortization 89,365 92,797
Total operating expenses 178,152 173,857
Other income 367 351
Other expenses (183) (163)
Income from unconsolidated Fund 247 167
Interest expense (34,902) (35,205)
Net income 26,259 7,588
Less: Net (income) loss attributable to noncontrolling interests (745) 4,013
Net income attributable to common stockholders $ 25,514 $ 11,601
Net income per common share - basic and diluted $ 0.14 $ 0.06
Dividends declared per common share $ 0.28 $ 0.28
Weighted average shares of common stock outstanding - basic and diluted 175,656 175,464

_______________________________________________________________________
(1)Rental revenues and tenant recoveries include tenant recoveries of $15.2 million and $9.0 million for the three months months ended March 31, 2022 and 2021, respectively.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Results

Funds From Operations & Adjusted Funds From Operations(1)
(Unaudited; in thousands, except per share data)

The table below presents a reconciliation of Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) to Net income attributable to common stockholders:

Three Months Ended March 31,
2022 2021
Funds From Operations (FFO)
Net income attributable to common stockholders $ 25,514 $ 11,601
Depreciation and amortization of real estate assets 89,365 92,797
Net income (loss) attributable to noncontrolling interests 745 (4,013)
Adjustments attributable to unconsolidated Fund(2)
694 708
Adjustments attributable to consolidated JVs(2)
(12,555) (11,156)
FFO $ 103,763 $ 89,937
Adjusted Funds From Operations (AFFO)
FFO $ 103,763 $ 89,937
Straight-line rent 111 (635)
Net accretion of acquired above- and below-market leases (1,797) (3,114)
Loan costs, loan premium amortization and swap amortization 1,514 1,592
Recurring capital expenditures, tenant improvements and capitalized leasing expenses(3)
(16,795) (16,901)
Non-cash compensation expense 5,633 4,890
Adjustments attributable to unconsolidated Fund(2)
(318) (182)
Adjustments attributable to consolidated JVs(2)
1,981 2,678
AFFO $ 94,092 $ 78,265
Weighted average shares of common stock outstanding - diluted 175,656 175,464
Weighted average units in our operating partnership outstanding 31,445 30,479
Weighted average fully diluted shares outstanding 207,101 205,943
Net income per common share - basic and diluted $ 0.14 $ 0.06
FFO per share - fully diluted $ 0.50 $ 0.44
Dividends paid per share(4)
$ 0.28 $ 0.28
__________________________________________________________
(1)Presents the FFO and AFFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership, including our share of our consolidated JVs and our unconsolidated Fund.
(2)Adjusts for the portion of each other listed adjustment item on our share of the results of our unconsolidated Fund and for each other listed adjustment item that is attributed to the noncontrolling interests in our consolidated JVs.
(3)Under the GAAP lease accounting rules, we expense non-incremental leasing expenses (leasing expenses not directly related to the signing of a lease) and capitalize incremental leasing expenses. Since non-incremental leasing expenses are included in the calculation of net income attributable to common stockholders and FFO, the capitalized leasing expenses adjustment to AFFO only includes incremental leasing expenses.
(4)Reflects dividends paid within the respective periods.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Results

Same Property Statistics & Net Operating Income (NOI)(1)
(Unaudited; in thousands, except statistics)

As of March 31,
2022 2021
Office Statistics
Number of properties 67 67
Rentable square feet (in thousands) 17,561 17,557
Ending % leased 87.6 % 87.6 %
Ending % occupied 84.5 % 86.2 %
Quarterly average % occupied 84.7 % 86.7 %
Multifamily Statistics
Number of properties 10 10
Number of units 3,449 3,449
Ending % leased 99.7 % 99.5 %

Three Months Ended March 31, % Favorable
2022 2021 (Unfavorable)
Net Operating Income (NOI)
Office revenues $ 200,019 $ 183,532 9.0 %
Office expenses (66,177) (60,461) (9.5) %
Office NOI 133,842 123,071 8.8 %
Multifamily revenues 27,558 24,943 10.5 %
Multifamily expenses (8,560) (7,760) (10.3) %
Multifamily NOI 18,998 17,183 10.6 %
Total NOI $ 152,840 $ 140,254 9.0 %
Cash Net Operating Income (NOI)
Office cash revenues $ 198,290 $ 179,771 10.3 %
Office cash expenses (66,177) (60,461) (9.5) %
Office cash NOI 132,113 119,310 10.7 %
Multifamily cash revenues 27,555 24,947 10.5 %
Multifamily cash expenses (8,560) (7,760) (10.3) %
Multifamily cash NOI 18,995 17,187 10.5 %
Total Cash NOI $ 151,108 $ 136,497 10.7 %
_________________________________________________
(1) The amounts presented include 100% (not our pro-rata share). See page 10 for a reconciliation of these non-GAAP measures to net income attributable to common stockholders.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Results
Reconciliation of Same Property NOI to Net Income
(Unaudited and in thousands)

Three Months Ended March 31,
2022 2021
Same property office cash revenues $ 198,290 $ 179,771
Non-cash adjustments per definition of NOI 1,729 3,761
Same property office revenues 200,019 183,532
Same property office expenses (66,177) (60,461)
Office NOI 133,842 123,071
Same property multifamily cash revenues 27,555 24,947
Non-cash adjustments per definition of NOI 3 (4)
Same property multifamily revenues 27,558 24,943
Same property multifamily expenses (8,560) (7,760)
Multifamily NOI 18,998 17,183
Same Property NOI 152,840 140,254
Non-comparable office revenues 3,121 3,111
Non-comparable office expenses (1,197) (1,717)
Non-comparable multifamily revenues 8,184 4,709
Non-comparable multifamily expenses (1,613) (1,551)
NOI 161,335 144,806
General and administrative expenses (11,240) (9,571)
Depreciation and amortization (89,365) (92,797)
Other income 367 351
Other expenses (183) (163)
Income from unconsolidated Fund 247 167
Interest expense (34,902) (35,205)
Net income 26,259 7,588
Less: Net (income) loss attributable to noncontrolling interests (745) 4,013
Net income attributable to common stockholders $ 25,514 $ 11,601

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Results

Financial Data for JVs & Fund
(Unaudited, in thousands)

Three Months Ended March 31, 2022
Wholly-Owned Properties
Consolidated JVs(1)
Unconsolidated Fund(2)
Revenues $ 181,113 $ 57,769 $ 4,397
Office and multifamily operating expenses $ 57,024 $ 20,523 $ 1,521
Straight-line rent $ (413) $ 302 $ (11)
Above/below-market lease revenue $ 426 $ 1,371 $ -
Cash NOI attributable to outside interests(3)
$ - $ 18,228 $ 1,670
Our share of cash NOI(4)
$ 124,076 $ 17,345 $ 1,217
______________________________________________________
(1) Represents stand-alone financial data (with property management fees excluded from operating expenses as a consolidating entry) for three consolidated JVs that we manage. We own a weighted average interest of approximately 46% (based on square footage) in the three JVs, which owned a combined sixteen Class A office properties totaling 4.2 million square feet and one residential property with 350 apartments in our submarkets. We are entitled to (i) distributions based on invested capital, (ii) fees for property management and other services, (iii) reimbursement of certain acquisition-related expenses and certain other costs and (iv) additional distributions based on Cash NOI.
(2) Represents stand-alone financial data (with property management fees excluded from operating expenses as a consolidating entry) for one unconsolidated Fund that we manage. We own an interest of approximately 34% in the Fund, which owns two Class A office properties totaling 0.4 million square feet in our submarkets. We are entitled to (i) priority distributions, (ii) distributions based on invested capital, (iii) a carried interest if the investors' distributions exceed a hurdle rate, (iv) fees for property management and other services and (v) reimbursement of certain costs.
(3) Represents the share of Cash NOI allocable under the applicable agreements to interests other than our Fully Diluted Shares.
(4) Represents the share of Cash NOI allocable to our Fully Diluted Shares.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Financial Results
Loans
(As of March 31 2022, unaudited)
Maturity Date(1)
Principal Balance
(In Thousands)
Our Share(2)
(In Thousands)
Effective
Rate(3)
Swap Maturity Date
Consolidated Wholly-Owned Subsidiaries
3/3/2025 $ 335,000 $ 335,000 3.84% 3/1/2023
4/1/2025 102,400 102,400 2.76% 3/1/2023
8/15/2026 415,000 415,000 3.07% 8/1/2025
9/19/2026 400,000 400,000 2.44% 9/1/2024
9/26/2026 200,000 200,000 2.36% 10/1/2024
11/1/2026 400,000 400,000 2.31% 10/1/2024
6/1/2027 550,000 550,000 3.16% 6/1/2022
5/18/2028 300,000 300,000 2.21% 6/1/2026
1/1/2029 (4) 300,000 300,000 2.66% 1/1/2027
6/1/2029 255,000 255,000 3.26% 6/1/2027
6/1/2029 125,000 125,000 3.25% 6/1/2027
6/1/2038 (5) 29,123 29,123 4.55% N/A
8/21/2023 (6) - - LIBOR + 1.15% N/A
Subtotal 3,411,523 3,411,523
Consolidated JVs
12/19/2024 400,000 80,000 3.47% 1/1/2023
5/15/2027 (7) 450,000 400,500 3.04% 4/1/2025
8/19/2028 625,000 187,500 2.12% 6/1/2025
6/1/2029 160,000 32,000 3.25% 7/1/2027
Total Consolidated Loans (8) $ 5,046,523 $ 4,111,523
Unconsolidated Fund
9/14/2028 $ 115,000 $ 38,568 2.19% 10/1/2026
Total Loans $ 4,150,091
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Except as noted below, our loans and revolving credit facility: (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 at 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 exercise those extension options.
(1)Maturity dates include the effect of extension options.
(2)"Our Share" is calculated by multiplying the principal balance by our share of the borrowing entity's equity, and is used to calculate the non-GAAP measure "Our Share of Net Debt" - see Corporate Data on page 3.
(3)Effective rate as of March 31, 2022. Includes the effect of interest rate swaps and excludes the effect of prepaid loan costs.
(4)Effective rate decreased from 3.42% to 2.66% on January 1, 2022 when a new swap replaced old swaps that expired.
(5)Requires monthly payments of principal and interest. Principal amortization is based upon a 30-year amortization schedule.
(6)$400.0 million revolving credit facility. The unused commitment fees range from 0.10% to 0.15%.
(7)Effective rate will decrease to 2.26% on July 1, 2022 when new swaps replace existing swaps that will expire.
(8)Our consolidated debt on the balance sheet (see page 6) of $5.01 billion is calculated by adding $3.9 million of unamortized loan premium and deducting $36.5 million of unamortized deferred loan costs from our total consolidated loans of $5.05 billion.
Statistics for consolidated loans with interest fixed under the terms of the loan or a swap
Principal balance (in billions) $5.05
Weighted average remaining life (including extension options) 5.2 years
Weighted average remaining fixed interest period 2.8 years
Weighted average annual interest rate 2.89%
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Office Portfolio Summary
Total Office Portfolio as of March 31, 2022

Region Number of Properties Our Rentable Square Feet
Region Rentable Square Feet(1)
Our Average Market Share(2)
Los Angeles
Westside(3)
52 9,998,784 39,442,310 35.3 %
Valley 16 6,790,777 21,348,263 43.7
Honolulu(3)
3 1,370,805 4,979,267 27.5
Total / Average 71 18,160,366 65,769,840 37.9 %
_________________________________________________
(1) The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2022 first quarter CBRE Marketview report for our submarkets in that region.
(2) Our market share is calculated by dividing our Rentable Square Feet by the applicable Region's Rentable Square Feet, weighted in the case of averages based on the square feet of exposure in our total portfolio to each submarket as follows:
Region Submarket Number of Properties Our Rentable Square Feet
Our Market Share(2)
Westside Brentwood 15 2,085,745 60.3 %
Westwood 7 2,191,444 43.6
Olympic Corridor 5 1,142,885 34.6
Beverly Hills(3)
11 2,196,067 27.8
Santa Monica 11 1,425,374 14.5
Century City 3 957,269 9.0
Valley Sherman Oaks/Encino 12 3,488,995 53.6
Warner Center/Woodland Hills 3 2,845,577 37.5
Burbank 1 456,205 6.3
Honolulu
Honolulu(3)
3 1,370,805 27.5
Total / Weighted Average 71 18,160,366 37.9 %
_______________________________________________
(3) In calculating market share, we adjusted the rentable square footage by (i) removing approximately 313,000 rentable square feet of vacant space at an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the submarket and (ii) removing a 218,000 square foot property located just outside the Beverly Hills city limits from both the numerator and the denominator.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Office Percentage Leased and In-Place Rents
Total Office Portfolio as of March 31, 2022
Region(1)
Percent Leased
Annualized Rent(2)
Annualized Rent Per Leased Square Foot(2)
Monthly Rent Per Leased Square Foot(2)
Los Angeles
Westside 88.0 % $ 461,754,900 $ 55.87 $ 4.66
Valley 86.1 204,725,316 36.21 3.02
Honolulu 93.9 40,552,829 34.22 2.85
Total / Weighted Average 87.7 % $ 707,033,045 $ 46.81 $ 3.90
_______________________________________________________________
(1)Regional data reflects the following underlying submarket data:
Region Submarket
Percent Leased
Monthly Rent Per Leased Square Foot(2)
Westside Beverly Hills 93.5 % $ 4.70
Brentwood 82.7 4.02
Century City 89.5 4.43
Olympic Corridor 83.1 3.37
Santa Monica 92.1 6.87
Westwood 86.7 4.45
Valley Burbank 100.0 4.68
Sherman Oaks/Encino 87.3 3.11
Warner Center/Woodland Hills 82.3 2.57
Honolulu Honolulu 93.9 2.85
Weighted Average 87.7 % $ 3.90

(2) Does not include signed leases not yet commenced, which are included in percent leased but excluded from annualized rent.
Recurring Office Capital Expenditures per Rentable Square Foot
Three months ended March 31, 2022 $ 0.07

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Office Lease Diversification
Total Office Portfolio as of March 31, 2022

Portfolio Tenant Size
Median Average
Square feet 2,500 5,500

Office Leases Rentable Square Feet Annualized Rent
Square Feet Under Lease Number Percent Amount Percent Amount Percent
2,500 or less 1,351 49.3 % 1,931,175 12.8 % $ 84,858,585 12.0 %
2,501-10,000 1,046 38.2 5,039,267 33.4 231,350,749 32.7
10,001-20,000 216 7.9 3,038,417 20.1 137,214,722 19.4
20,001-40,000 89 3.3 2,459,560 16.3 115,692,182 16.4
40,001-100,000 30 1.1 1,725,043 11.4 90,926,678 12.9
Greater than 100,000 4 0.2 910,353 6.0 46,990,129 6.6
Total for all leases 2,736 100.0 % 15,103,815 100.0 % $ 707,033,045 100.0 %

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Largest Office Tenants
Total Office Portfolio as of March 31, 2022

Tenants paying 1% or more of our aggregate Annualized Rent:
Tenant Number of Leases Number of Properties
Lease Expiration(1)
Total Leased Square Feet Percent of Rentable Square Feet Annualized Rent Percent of Annualized Rent
WarnerMedia/AT&T(2)
5 4 2022-2024 488,808 2.7 % $ 27,129,694 3.8 %
UCLA(3)
26 10 2022-2027 310,972 1.7 16,680,829 2.4
William Morris Endeavor(4)
3 1 2022-2027 215,353 1.2 13,304,841 1.9
Morgan Stanley(5)
6 5 2022-2027 145,595 0.8 10,265,044 1.4
Equinox Fitness(6)
6 5 2029-2038 185,236 1.0 9,738,153 1.4
Macerich(7)
2 1 2023-2028 82,368 0.5 7,230,118 1.0
Total 48 26 1,428,332 7.9 % $ 84,348,679 11.9 %
______________________________________________________
(1) Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
(2) Square footage (rounded) expires as follows: 15,000 square feet in 2022; 13,000 square feet in 2023; and 462,000 square feet in 2024.
(3) Square footage (rounded) expires as follows: 6 leases totaling 63,000 square feet in 2022; 6 leases totaling 47,000 square feet in 2023; 2 leases totaling 11,000 square feet in 2024; 4 leases totaling 89,000 square feet in 2025; 5 leases totaling 32,000 square feet in 2026; and 3 leases totaling 71,000 square feet in 2027. Tenant has options to terminate 15,000 square feet in 2023; and 51,000 square feet in 2025.
(4) Square footage (rounded) expires as follows: 1,000 square feet in 2022; and 209,000 square feet in 2027.
(5) Square footage (rounded) expires as follows: 4,000 square feet in 2022; 30,000 square feet in 2023; 26,000 square feet in 2025; and 70,000 square feet in 2027. Tenant has options to terminate 32,000 square feet in 2024.
(6) Square footage (rounded) expires as follows: 34,000 square feet in 2029; 46,000 square feet in 2035, 31,000 square feet in 2037, and 74,000 square feet in 2038.
(7) Square footage (rounded) expires as follows: 27,000 square feet in 2023, and 55,000 square feet in 2028.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data
Office Industry Diversification
Total Office Portfolio as of March 31, 2022

Percentage of Annualized Rent by Tenant Industry
Industry Number of Leases Annualized Rent as a Percent of Total
Legal 579 18.5 %
Financial Services 365 15.3
Entertainment 177 14.2
Real Estate 318 12.4
Accounting & Consulting 299 9.4
Health Services 363 8.0
Retail 166 4.8
Technology 93 4.3
Insurance 93 3.9
Educational Services 53 3.3
Public Administration 83 2.5
Other 58 1.3
Manufacturing & Distribution 50 1.1
Advertising 39 1.0
Total 2,736 100.0 %
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data
Office Lease Expirations
Total Office Portfolio as of March 31, 2022

(1) Average of the percentage of leases expiring at March 31, 2019, 2020, and 2021 with the same remaining duration as the leases for the labeled year had at March 31, 2022. Acquisitions are included in the comparable average commencing in the quarter after the acquisition.
Year of Lease Expiration Number of Leases Rentable Square Feet Expiring Square Feet as a Percent of Total Annualized Rent at March 31, 2022 Annualized Rent as a Percent of Total
Annualized Rent Per Leased Square Foot(1)
Annualized Rent Per Leased Square Foot at Expiration(2)
Short Term Leases 83 344,474 1.9 % $ 13,266,019 1.9 % $ 38.51 $ 38.52
2022 443 1,790,276 9.9 79,451,579 11.3 44.38 44.74
2023 642 2,840,637 15.6 131,260,971 18.6 46.21 47.81
2024 492 2,810,062 15.5 131,662,409 18.6 46.85 49.98
2025 379 1,995,816 11.0 92,611,396 13.1 46.40 51.26
2026 274 1,579,421 8.7 72,006,719 10.2 45.59 52.42
2027 196 1,634,668 9.0 80,842,800 11.4 49.46 58.00
2028 76 577,540 3.2 31,193,006 4.4 54.01 64.70
2029 43 344,467 1.9 16,557,189 2.3 48.07 59.82
2030 32 403,114 2.2 20,909,831 3.0 51.87 66.86
2031 38 308,817 1.7 15,745,990 2.2 50.99 67.30
Thereafter 38 474,524 2.6 21,525,136 3.0 45.36 63.00
Subtotal/weighted average 2,736 15,103,816 83.2 % $ 707,033,045 100.0 % $ 46.81 $ 51.98
Signed leases not commenced 574,317 3.2
Available 2,226,648 12.3
Building management use 119,524 0.6
BOMA adjustment(3)
136,061 0.7
Total/weighted average 2,736 18,160,366 100.0 % $ 707,033,045 100.0 % $ 46.81 $ 51.98
___________________________________________________
(1)Represents annualized rent at March 31, 2022 divided by leased square feet.
(2)Represents annualized rent at expiration divided by leased square feet.
(3)Represents the square footage adjustments for leases that do not reflect BOMA remeasurement.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Office Lease Expirations - Next Four Quarters
Total Office Portfolio as of March 31, 2022

Q2 2022 Q3 2022 Q4 2022 Q1 2023
Los Angeles
Westside 287,270 299,855 355,175 455,742
Valley 120,159 200,579 300,864 255,329
Honolulu 32,333 39,693 113,509 47,220
Expiring Square Feet(1)
439,762 540,127 769,548 758,291
Percentage of Portfolio 2.4 % 3.0 % 4.2 % 4.2 %
Los Angeles
Westside $51.25 $50.96 $52.96 $63.11
Valley $34.74 $34.06 $34.62 $36.23
Honolulu $38.73 $32.91 $37.00 $31.57
Expiring Rent per Square Foot(2)
$45.82 $43.36 $43.44 $52.10
________________________________________________________
(1)Includes leases with an expiration date in the applicable period where the space had not been re-leased as of March 31, 2022, other than 344,474 square feet of Short-Term Leases.
(2)Fluctuations in this number primarily reflect the mix of buildings/submarkets involved, as well as the varying terms and square footage of the individual leases expiring. As a result, the data in this table should only be extrapolated with caution. While the following table sets forth data for our underlying submarkets, that data is even more influenced by such issues:
Next Four Quarters
Region Submarket Expiring SF Expiring Rent per SF
Westside Beverly Hills 239,781 $54.79
Brentwood 373,935 $50.10
Century City 104,423 $50.67
Olympic Corridor 170,387 $44.73
Santa Monica 198,761 $86.88
Westwood 310,754 $49.95
Valley Sherman Oaks/Encino 470,580 $38.13
Warner Center/Woodland Hills 406,352 $31.32
Honolulu Honolulu 232,755 $35.44

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Office Leasing Activity
Total Office Portfolio during the Three Months ended March 31, 2022

Net Absorption During Quarter 0.09%

Office Leases Signed During Quarter Number of Leases Rentable Square Feet Weighted Average Lease Term (months)
New leases 89 326,117 58
Renewal leases 157 571,436 39
All leases 246 897,553 46

Change in Rental Rates for Office Leases Executed during the Quarter(1)
Expiring
Rate(1)
New/Renewal Rate(1)
Percentage Change
Cash Rent $49.19 $47.35 (3.7)%
Straight-line Rent $44.62 $48.83 9.4%

Average Office Lease Transaction Costs
Lease Transaction Costs per SF Lease Transaction Costs per Annum
New leases signed during the quarter $31.92 $6.86
Renewal leases signed during the quarter $18.06 $5.60
All leases signed during the quarter $23.00 $6.16
________________________________________________________________
(1)Represents the average annual initial stabilized cash and straight-line rents per square foot on new and renewed leases signed during the quarter compared to the prior leases for the same space. Excludes leases with a term of twelve months or less, leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated at the landlord's request, leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe the base rent reflects other off-market inducements to the tenant, and other non-comparable leases.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Portfolio Data

Multifamily Portfolio Summary
as of March 31, 2022

Annualized Rent by Submarket
Submarket Number of Properties Number of Units Units as a Percent of Total
Los Angeles
Santa Monica 2 820 19 %
West Los Angeles 6 1,300 29
Honolulu 4 2,295 52
Total 12 4,415 100 %
Submarket Percent Leased
Annualized Rent(1)
Monthly Rent Per Leased Unit
Los Angeles
Santa Monica 99.4 % $ 30,622,500 $ 3,135
West Los Angeles(2)
99.9 43,913,220 3,022
Honolulu 99.7 54,869,532 2,004
Total / Weighted Average 99.7 % $ 129,405,252 $ 2,504

Recurring Multifamily Capital Expenditures per Unit (2)
Three months ended March 31, 2022 $ 125
________________________________________________________________
(1) The multifamily portfolio also includes 10,495 square feet of ancillary retail space generating annualized rent of $436,530, which is not included in multifamily annualized rent.
(2) 85 units at one property, which are temporarily unoccupied as a result of a fire, are omitted from the calculation of Percent Leased. These units, as well as insurance recoveries for lost rent, are also omitted from the calculation of Annualized Rent. Unit turn costs from this property are excluded from Recurring Multifamily Capital Expenditures per Unit calculation.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Guidance

2022 Guidance

Metric Per Share
Net income per common share - diluted
$0.53 to $0.59
FFO per share - fully diluted
$2.02 to $2.08

Assumptions
Metric Assumption Range Compared to Prior Assumption
Average Office Occupancy
84% to 86%
Unchanged
Residential Leased Rate
Essentially fully leased
Unchanged
Same Property Cash NOI Growth
4.5% to 5.5%
Unchanged
Above/Below Market Net Revenue
$8 to $12 million
Increased
Straight-line Revenue
$1 to $3 million
Unchanged
G&A
$42 to $46 million
Unchanged
Interest Expense
$152 to $155 million
Increased
Weighted average fully diluted shares outstanding
207 million
Unchanged
___________________________________________
All of our assumptions include 100% of our consolidated JVs share, not our pro rata share. Except as disclosed, our guidance does not include the impact of future property acquisitions or dispositions, financings, property damage insurance recoveries or other possible capital markets activities or impairment charges. It is also subject to the changing impacts of the COVID-19 pandemic and general economic conditions.

The guidance and representative assumptions on this page are forward looking statements, subject to the safe harbor contained at the beginning of this Earnings Package, and reflect our views of current and future market conditions. Ranges represent a set of likely assumptions, but actual results could fall outside the ranges presented. Only a few of our assumptions underlying our guidance are disclosed above, and our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying our guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material. See page 23 for a reconciliation of our Non-GAAP guidance.
NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Guidance

Reconciliation of 2022 Non-GAAP Guidance(1)
(Unaudited; in millions, except per share amounts)

Reconciliation of our guided Net income per common share - diluted to FFO per share - fully diluted:

Reconciliation of net income attributable to common stockholders to FFO Low High
Net income attributable to common stockholders $ 93.0 $ 103.5
Adjustments for depreciation and amortization of real estate assets 377.0 367.0
Adjustments for noncontrolling interests, consolidated JVs and unconsolidated Fund (51.9) (39.9)
FFO $ 418.1 $ 430.6
Weighted average fully diluted shares outstanding High Low
Weighted average shares of common stock outstanding - diluted 175.5 175.5
Weighted average units in our operating partnership outstanding 31.5 31.5
Weighted average fully diluted shares outstanding 207.0 207.0
Per share Low High
Net income per common share - diluted $ 0.53 $ 0.59
FFO per share - fully diluted $ 2.02 $ 2.08
_____________________________________________
(1) Our guidance does not include the impact of future property acquisitions or dispositions, financings, property damage insurance recoveries, if any, or other possible capital markets activities or impairment charges. The reconciliation should be used as an example only, with the numbers presented only as representative assumptions. Ranges represent a set of likely assumptions, but actual results could fall outside the ranges presented. All assumptions are forward looking statements, subject to the safe harbor contained at the beginning of this Earnings Package, and reflect our views of current and future market conditions. Our actual results will be affected by known and unknown risks, trends, uncertainties and other factors, some of which are beyond our control or ability to predict. Although we believe that the assumptions underlying the guidance are reasonable, they are not guarantees of future performance and some of them will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences could be material.

NOTE: See the "Definitions" section for definitions of certain terms used in this Earnings Package.
Definitions
Adjusted Funds From Operations (AFFO): We calculate AFFO from FFO by (i) eliminating the impact on FFO of straight-line rent; amortization/accretion of acquired above/below market leases; loan costs such as amortization/accretion of loan premiums/discounts; amortization and hedge ineffectiveness of interest rate contracts; amortization/expense of loan costs; non-cash compensation expense, and (ii) subtracting recurring capital expenditures, tenant improvements and capitalized leasing expenses (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 calculation of fully diluted equity). Recurring capital expenditures, tenant improvements and leasing expenses are those required to maintain current revenues once a property has been stabilized, generally excluding those for acquired buildings being stabilized, newly developed space and upgrades to improve revenues or operating expenses or significantly change the use of the space, as well as those resulting from casualty damage or bringing the property into compliance with governmental requirements. We report AFFO because it is a widely reported measure of the performance of equity Real Estate Investments Trusts (REITs), and is also used by some investors to compare our performance with other REITs. However, the National Association of Real Estate Investment Trusts (NAREIT) has not defined AFFO, and other REITs may use different methodologies for calculating AFFO, and accordingly, our AFFO may not be comparable to the AFFO of other REITs. AFFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. AFFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

AFFO Payout Ratio:Represents dividends paid within each period divided by the AFFO for that period. We report AFFO Payout Ratio because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to compare our performance with other REITs.

Annualized Rent: Represents annualized cash base rent (i.e. excludes tenant reimbursements, parking and other revenue) before abatements under leases commenced as of the reporting date and expiring after the reporting date (does not include 574,317 square feet with respect to signed leases not yet commenced at March 31, 2022). For our triple net office properties (in Honolulu and one single tenant building in Los Angeles), annualized rent is calculated for triple net leases 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.

Average Office Occupancy: Calculated by averaging the Occupancy Rates on the last day of the current and prior quarter and, for reporting periods longer than a quarter, by averaging the Occupancy Rates for all the quarters in the respective reported period.

Consolidated Portfolio: Includes all of the properties included in our consolidated results, including our consolidated JVs. At March 31, 2022, we own 100% of our consolidated portfolio, except for sixteen office properties totaling 4.2 million square feet and one residential property with 350 apartments, which we own through three consolidated JVs and in which we own a weighted average interest of approximately 46% based on square footage.

Consolidated Net Debt: Represents our consolidated debt, net of cash and cash equivalents, and before adding unamortized loan premium and deducting unamortized deferred loan costs. Cash and cash equivalents are subtracted because they could be used to reduce the debt obligations and unamortized loan premium and deferred loan costs are not adjusted for because they do not require cash settlement. Consolidated Net Debt is a non-GAAP financial measure for which we believe that consolidated debt is the most directly comparable GAAP financial measure. We report Consolidated Net Debt because some investors use it to evaluate and compare our leverage and financial position with that of other REITs. A limitation associated with using Consolidated Net Debt is that it subtracts cash and cash equivalents and may therefore imply that there is less debt than the most comparable GAAP financial measure indicates.

Equity Capitalization: Represents our Fully Diluted Shares multiplied by the closing price of our common stock on the New York Stock Exchange as of March 31, 2022.
Definitions
Fully Diluted Shares: Calculated according to the treasury stock method, based on our diluted outstanding stock and units in our Operating Partnership.

Fund: At March 31, 2022, we owned an interest of approximately 34% in Douglas Emmett Partnership X, LP (Partnership X). The Fund owns two office properties totaling 0.4 million square feet.

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), and impairment write-downs of real estate 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 calculation of fully diluted equity). We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding impacts from changes in the value of our real estate, and to compare our performance with other REITs. FFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. FFO has limitations as a measure of our performance because it excludes depreciation and amortization of real estate, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements and leasing expenses necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Other REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to the FFO of other REITs.
GAAP: Refers to accounting principles generally accepted in the United States.

Joint Ventures (JVs): At March 31, 2022, we owned a weighted average interest of approximately 46% based on square footage in three consolidated JVs. The JVs owned sixteen office properties totaling 4.2 million square feet and one residential property with 350 apartments.

Lease Transaction Costs: Represents the weighted average of tenant improvements and leasing commissions for leases signed by us during the quarter, excluding leases substantially negotiated by the seller in the case of acquired properties and leases for tenants relocated from space being taken out of service. We report Lease Transaction Costs because it is a widely reported measure of the performance of equity REITs, and is used by some investors to determine our cash needs and to compare our performance with other REITs. We use Lease Transaction Costs to manage and monitor the performance of our office and multifamily portfolios.

Leased Rate: The percentage leased as of March 31, 2022. 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 percentage leased. We report Leased Rates 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 Absorption: Represents the change in percentage leased between the last day of the current and prior quarter, excluding a property undergoing conversion from office to residential use, as well as properties acquired or sold during the current quarter. The calculation also excludes the impact of building remeasurement. We report Net Absorption 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 with other REITs. We use Net Absorption to manage and monitor the performance of our office portfolio.

Definitions
Net Income Per Common Share - Diluted: We calculate Net Income Per Common Share - Diluted in accordance with GAAP by dividing the net income attributable to common stockholders for the period by the weighted average number of common shares and dilutive instruments outstanding during the period using the treasury stock method. We account for unvested Long Term Incentive Plan Unit awards that contain non-forfeitable rights to dividends as participating securities and include these securities in the computation using the two-class method.

Net Operating Income (NOI): We calculate NOI as revenue less operating expenses attributable to the properties that we own and operate. We present two forms of NOI:
•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 from unconsolidated Fund, interest expense, gains (losses) on sales of investments in real estate and net income attributable to noncontrolling interests.
•Cash NOI: is calculated by excluding from NOI our straight-line rent and the amortization/accretion of acquired above/below market leases.
We report NOI because it is a widely recognized measure of the performance of equity REITs, and is used by some investors to identify trends in occupancy rates, rental rates and operating costs and to compare our operating performance with that of other REITs. NOI is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. NOI has limitations as a measure of our performance because it 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, tenant improvements and leasing expenses necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. NOI should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Other REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to the NOI of other REITs.

Occupancy Rate: We calculate the 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. 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.

Operating Partnership: Douglas Emmett Properties, LP

Our Share of Net Debt: We calculate Our Share of Net Debt by multiplying the principal balance of our consolidated loans and our unconsolidated Fund's loan by our equity interest in the relevant borrower, and subtracting the product of cash and cash equivalents multiplied by our equity interest in the entity that owns the cash or cash equivalent. We subtract cash and cash equivalents because they could be used to reduce the debt obligations, and do not add unamortized loan premium or subtract unamortized deferred loan costs because they do not require cash settlement. Our Share of Net Debt is a non-GAAP financial measure for which we believe that consolidated debt is the most directly comparable GAAP financial measure. We report Our Share of Net Debt because some investors use it to evaluate and compare our leverage and financial position with that of other REITs.

Pro Forma Enterprise Value: We calculate Pro Forma Enterprise Value by adding Equity Capitalization to Our Share of Net Debt. Pro Forma Enterprise Value is a non-GAAP financial measure for which we believe that consolidated total equity and liabilities is the most directly comparable GAAP financial measure. We report Pro Forma Enterprise Value because some investors use it to evaluate and compare our financial position with that of other REITs.

Definitions
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.

Rental Rate: We report Rental Rate because it is a widely reported measure of the performance of equity REITs, and is used by some investors to compare our performance with other REITs. We use Rental Rate to manage and monitor the performance of our office and multifamily portfolios. We present two forms of 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.

Rentable Square Feet: Based on the Building Owners and Managers Association (BOMA) measurement. At March 31, 2022, total consists of 15,678,133 leased square feet (including 574,317 square feet with respect to signed leases not commenced), 2,226,648 available square feet, 119,524 building management use square feet and 136,061 square feet of 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.

Same Property NOI: To facilitate a comparison of NOI between reported periods, we report NOI for a subset of our properties referred to as our "same properties," which are properties that have been owned and operated by us during both periods being compared. We exclude from our same property subset properties that during the comparable periods were: (i) acquired, (ii) sold, held for sale, contributed or otherwise removed from our consolidated financial statements, or (iii) that underwent a major repositioning project, 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. Our Same Property NOI is not adjusted for noncontrolling interests in properties which are not wholly owned.
Our same properties for 2022 include all of our Consolidated Portfolio properties, other than: (1) a 493,000 square foot office property in Honolulu affected by development activity, (2) a residential community with 712 apartments and approximately 34,000 square feet of retail space in Los Angeles partially affected by fire damage and (3) a new residential property with 376 apartments in Los Angeles that we expect to place into service in the second quarter of 2022.
We report Same Property NOI because it is a widely reported measure of the performance and value of equity REITs, and it is used by some investors to: (i) analyze our operating results excluding the impact of properties not being operated on a consistent basis, and (ii) to compare our performance and value with other REITs. We use Same Property NOI to manage and monitor the performance of our office portfolio.

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: At March 31, 2022, our Total Portfolio included our Consolidated Portfolio plus two office properties totaling 0.4 million square feet owned by one unconsolidated Fund in which we owned approximately 34%.

"We" and "our" refers to Douglas Emmett, Inc., our Operating Partnership and its subsidiaries, as well as our consolidated JVs and our unconsolidated Fund.