Q4 2025 Douglas Emmett Inc Earnings Call

February 11, 2026

Speaker #1: And gentlemen, thank you for standing by. Welcome to Douglas Emmett's quarterly earnings call. Today's call is being recorded. At this time, all participants are in a listen-only mode.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to Douglas Emmett's Quarterly Earnings Call. Today's call is being recorded. At this time, all participants are in a listen-only mode. After management's prepared remarks, you will receive instructions for participating in the question-and-answer session. I will now turn the conference over to Stuart McElhinney, Vice President, Investor Relations, of Douglas Emmett. Please go ahead.

Speaker #1: After management's prepared remarks, you will receive instructions for participating in the question-and-answer session. I will now turn the conference over to Stuart McElhinney, Vice President, Investor Relations of Douglas Emmett.

Speaker #1: Please go

Speaker #1: ahead.

Speaker #2: Thank you. Joining us today on the call are

Stuart McElhinney: Thank you. Joining us today on the call are Jordan Kaplan, our Chairman and CEO, Kevin Crummy, our CIO, and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days. You can also find our earnings package at the Investor Relations section of our website. You can find reconciliations of non-GAAP financial measures discussed during today's call in the earnings package. During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will prove to be incorrect.

Speaker #2: Jordan Kaplan, our Chairman and CEO; Kevin Crummy, our CIO; and Peter Seymour, our CFO. This call is being webcast live from our website and will be available for replay during the next 90 days.

Speaker #2: You can also find our earnings package in the Investor Relations section of our website. You can find reconciliations of non-GAAP financial measures discussed during today's call in the earnings package.

Stuart McElhinney: During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us. Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will prove to be incorrect.

Speaker #2: During this call, we will make forward-looking statements. These forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us.

Speaker #2: Our actual results will be affected by known and unknown risks, trends, uncertainties, and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance, and some will prove to be incorrect.

Speaker #2: Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website.

Stuart McElhinney: Therefore, our actual future results can be expected to differ from our expectations, and those differences may be material. For a more detailed description of some potential risks, please refer to our SEC filings, which can be found in the Investor Relations section of our website. When we reach the question-and-answer portion in consideration of others, please limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Jordan.

Speaker #2: When we reach the question-and-answer portion, and consideration of others, please limit yourself to one question and one follow-up. Thank you. I will now turn the call over to Jordan.

Speaker #3: Good morning, and thank you for joining us. During the fourth quarter, we had good new office demand and very high retention. As a result, we achieved 100,000 square feet of net positive office absorption, while maintaining modest concessions and stable market rents.

Jordan Kaplan: Good morning, and thank you for joining us. During Q4, we had good new office demand and very high retention. As a result, we achieved 100,000 sq ft of net positive office absorption while maintaining modest concessions and stable market rents. On the multifamily side, our strong demand and increasing rents again led to full occupancy and an increase in same-property cash NOI of almost 5% compared to the prior year. You may recall that our Los Angeles residential assets are concentrated in the very high-end West Side. I am also proud of the fact that, by aggressively focusing on revenue growth and expense control, we achieved positive same-property cash NOI for the year. For the full year of 2025, we also made substantial progress on several key capital market objectives.

Speaker #3: On the multifamily side, our strong demand and increasing rents again led to full occupancy and an increase in same-property cash NOI of almost 5% compared to the prior year.

Jordan Kaplan: You may recall that our Los Angeles residential assets are concentrated in the very high-end West Side. I am also proud of the fact that, by aggressively focusing on revenue growth and expense control, we achieved positive same-property cash NOI for the year. For the full year of 2025, we also made substantial progress on several key capital market objectives.

Speaker #3: You may recall that our Los Angeles residential assets are concentrated in the very high-end West Side. I am also proud of the fact that by aggressively focusing on revenue growth and expense control, we achieved positive same-property cash NOI for the year.

Speaker #3: For the full year of 2025, we also made substantial progress on several key capital market objectives. We acquired 10,900 Wilshire and are close to beginning construction to convert it into a high-end mixed-use residential and office building.

Jordan Kaplan: We acquired 10,900 Wilshire and are close to beginning construction to convert it into a high-end mixed-use residential and office building. We strengthened our relationships with our joint venture partners and, as a result, we were substantially oversubscribed for our 10,900 Wilshire acquisition. We started construction at the Landmark Residences, our 712-unit redevelopment in Brentwood. In the Burbank Media District, we converted Studio Plaza into a multi-tenant office building, and leasing is progressing nicely. And we successfully executed almost $2 billion in debt transactions at competitive rates, both extending our maturity profile and further fortifying our balance sheet. Looking ahead, we have a straightforward strategic plan for 2026. Our primary focus remains office leasing, including re-tenanting Studio Plaza. Our Q1 always has somewhat higher seasonal moveouts, but our overall lease expirations during 2026 are relatively low. We will continue to refinance and extend maturities at advantageous rates.

Speaker #3: We strengthened our relationships with our joint venture partners and, as a result, we were substantially oversubscribed for our 10,900 Wilshire acquisition. We started construction at The Landmark Residences, our 712-unit redevelopment in Brentwood.

Speaker #3: In the Burbank Media District, we converted Studio Plaza into a multi-tenant office building, and leasing is progressing nicely. And we successfully executed almost $2 billion in debt transactions at competitive rates, both extending our maturity profile and further fortifying our balance sheet.

Speaker #3: Looking ahead, we have a straightforward strategic plan for 2026. Our primary focus remains office leasing, including retenanting Studio Plaza. Our first quarter always has somewhat higher seasonal move-outs, but our overall lease expirations during 2026 are relatively low.

Speaker #3: We will continue to refinance and extend maturities at advantageous rates. Construction of our new high-end residential units at The Landmark Residences and 10,900 Wilshire will, of course, be a key focus.

Jordan Kaplan: Construction of our new high-end residential units at the Landmark Residences and 10,900 Wilshire will, of course, be a key focus. We have begun planning additional residential development sites on our land in the West Side, and we believe we can make more very high-quality office acquisitions in our markets, where current valuations offer significant discount to long-term values. 2026 will surely present new challenges and opportunities. We feel well-positioned for both. I remain confident in the long-term fundamentals of our markets, the high quality of our portfolio and balance sheet, and our incredibly strong operating team, which has carried us through many other challenging periods. With that, I will turn the call over to Kevin.

Speaker #3: We have begun planning additional residential development sites on our land in the West Side. And we believe we can make more very high-quality office acquisitions in our markets, where current valuations offer significant discounts to long-term values.

Speaker #3: 2026 will surely present new challenges and opportunities. We feel well positioned for both. I remain confident in the long-term fundamentals of our markets, the high quality of our portfolio and balance sheet, and our incredibly strong operating team, which has carried us through many other challenging periods.

Speaker #3: With that, I will turn the call over to

Speaker #3: Kevin. Thanks, Jordan, and good

Kevin Crummy: Thanks, Jordan, and good morning. We're making progress with our development portfolio. At 10,900 Wilshire in Westwood, we expect to commence construction in 2026 to convert the existing office tower into 200 apartments and to develop an additional 123 units, and a new building at the site. Our very successful phased Honolulu conversion project demonstrated that full-floor office tenants and apartments coexist quite well. At Studio Plaza in Burbank, we have completed extensive common area upgrades to transition this asset into a premier multi-tenant property. We are well into lease-up, with construction fully underway on the new tenant suites. In Brentwood, we have started construction on the transformative redevelopment of our 712-unit Landmark Residences. After refinancing over $1.6 billion of loans during the first three quarters of 2025, we had another productive quarter.

Speaker #4: morning. We're making progress with our development portfolio. At 10,900 Wilshire in Westwood, we expect to commence construction in 2026 to convert the existing office tower into 200 apartments and to develop an additional 123 units and a new building at the site.

Speaker #4: Our very successful phased Honolulu conversion project demonstrated that full-floor office tenants and apartments coexist quite well. At Studio Plaza in Burbank, we have completed extensive common area upgrades to transition this asset into a premier multi-tenant property.

Speaker #4: We are well into lease-up with construction fully underway on the new tenant suites. In Brentwood, we have started construction on the transformative redevelopment of our 712-unit landmark residences.

Speaker #4: After refinancing over $1.6 billion of loans during the first three quarters of 2025, we had another productive quarter. In November, one of our consolidated JVs reduced its outstanding debt by $60 million and effectively fixed the interest on the remaining $565 million at 4.79% through November 2027.

Kevin Crummy: In November, one of our consolidated JVs reduced its outstanding debt by $60 million and effectively fixed the interest on the remaining $565 million at 4.79% through November 2027. That loan matures in August 2028. In December, we closed a non-recourse first trustee construction loan, which will provide up to $375 million for the redevelopment of our Landmark Residences project in Brentwood. As of December 31, we had drawn $49.5 million against this facility. The loan matures in December 2030 with interest at SOFR plus 245 basis points. We entered into accretion swaps that mature in January 2030 to effectively fix the interest rate at 5.8% per annum on 75% of the increasing estimated balance outstanding under this loan. Looking ahead, we are well-positioned to address our remaining 2026 loan maturities and capitalize on attractive acquisitions during this stage of the cycle.

Speaker #4: That loan matures in August 2028. In December, we closed a non-recourse first trustee construction loan which will provide up to $375 million for the redevelopment of our landmark residences project in Brentwood.

Speaker #4: As of December 31st, we had drawn $49.5 million against this facility. The loan matures in December 2030 with interest at SOFR plus 245 basis points.

Speaker #4: We entered into a credit swap that matures in January 2030 to effectively fix the interest rate at 5.8% per annum on 75% of the increasing estimated balance outstanding under this loan.

Speaker #4: Looking ahead, we are well positioned to address our remaining 2026 loan maturities and capitalize on attractive acquisitions during this stage of the cycle. With that, I will turn the...

Kevin Crummy: With that, I will turn the call over to Stuart.

Speaker #4: call over to Stuart. Thanks, Kevin.

Operator: Thanks, Kevin. Good morning, everyone. For all of 2025, we signed 896 office leases totaling 3.4 million sq ft. During Q4, we signed 224 office leases covering 906,000 sq ft, including 274,000 sq ft of new leases and 632,000 sq ft of renewal leases. Office tenant demand continues to be spread across the multiple diversified tenant industries in our markets. During Q4, financial services, legal, health services, education, and real estate led the way, but no one segment provided more than 20% of tenant demand. As Jordan said, with the combination of good new demand and high retention, we achieved 104,000 sq ft of positive net absorption for Q4.

Stuart McElhinney: Thanks, Kevin. Good morning, everyone. For all of 2025, we signed 896 office leases totaling 3.4 million sq ft. During Q4, we signed 224 office leases covering 906,000 sq ft, including 274,000 sq ft of new leases and 632,000 sq ft of renewal leases. Office tenant demand continues to be spread across the multiple diversified tenant industries in our markets. During Q4, financial services, legal, health services, education, and real estate led the way, but no one segment provided more than 20% of tenant demand. As Jordan said, with the combination of good new demand and high retention, we achieved 104,000 sq ft of positive net absorption for Q4.

Speaker #5: Good morning, everyone. For all of 2025, we signed 896 office leases totaling 3.4 million square feet. During the fourth quarter, we signed 224 office leases covering 906,000 square feet, including 274,000 square feet of new leases and 632,000 square feet of renewal leases.

Speaker #5: Office tenant demand continues to be spread across the multiple diversified tenant industries in our markets. During the fourth quarter, financial services, legal, health services, education, and real estate led the way.

Speaker #5: But no one segment provided more than 20% of tenant demand. As Jordan said, with the combination of good new demand and high retention, we achieved 104,000 square feet of positive net absorption for the quarter.

Speaker #5: We continue to sign higher-value new leases, increasing the straight-line value over the life of the leases executed in the quarter by 2%. As our 3% to 5% annual fixed rent bumps more than offset the impact of beginning cash rent that was 10% lower than the prior leases' ending cash rent.

Operator: We continue to sign higher-value new leases, increasing the straight-line value over the life of the leases executed in the quarter by 2%, as our 3 to 5% annual fixed rent bumps more than offset the impact of beginning cash rent that was 10% lower than the prior leases' ending cash rent. At an average of only $5.76 per sq ft per year, our office leasing costs during the fourth quarter remained well below the average of other office rates in our benchmark group. Our residential portfolio, with cash same property NOI of 5% compared to last year's fourth quarter, continues to enjoy strong demand and remains essentially fully leased. With that, I'll turn the call over to Peter to discuss our results.

Stuart McElhinney: We continue to sign higher-value new leases, increasing the straight-line value over the life of the leases executed in the quarter by 2%, as our 3 to 5% annual fixed rent bumps more than offset the impact of beginning cash rent that was 10% lower than the prior leases' ending cash rent. At an average of only $5.76 per sq ft per year, our office leasing costs during the fourth quarter remained well below the average of other office rates in our benchmark group. Our residential portfolio, with cash same property NOI of 5% compared to last year's fourth quarter, continues to enjoy strong demand and remains essentially fully leased. With that, I'll turn the call over to Peter to discuss our results.

Speaker #5: At an average of only $5.76 per square foot per year, our office leasing costs during the fourth quarter remained well below the average of other office REITs in our benchmark group.

Speaker #5: Our residential portfolio with cash-chain property NOI of 5% compared to last year's fourth quarter continues to enjoy strong demand and remains essentially fully leased.

Speaker #5: With that, I'll turn the call over to Peter to discuss our results.

Speaker #6: Thanks, Stuart. Good morning, everyone. Compared to the fourth quarter of 2024, revenue increased 1.8% to $249 million, reflecting increases in both office and multifamily revenues.

Peter Seymour: Thanks, Stuart. Good morning, everyone. Compared to the fourth quarter of 2024, revenue increased 1.8% to $249 million, reflecting increases in both office and multifamily revenues. FFO decreased to $0.35 per share, and AFFO decreased to $53 million, reflecting increased interest expense and lower interest income partly offset by strong multifamily performance. Same property cash NOI decreased 1.4% for the quarter, largely as a result of higher office operating expenses, offset by multifamily NOI growth. At approximately 4.9% of revenue, our G&A remains low. Turning to guidance, we expect our 2026 net income per common share diluted to be between negative $0.20 and negative $0.14, and our FFO per fully diluted share to be between $1.39 and $1.45. Our guidance primarily reflects the impact of increased interest expense. We have not assumed occupancy growth despite our fourth quarter results, though we will be watching it closely.

Speaker #6: FFO decreased to $0.35 per share, and AFFO decreased to $53 million, reflecting increased interest expense and lower interest income, partly offset by strong multifamily performance.

Speaker #6: Same property cash NOI decreased 1.4% for the quarter, largely as a result of higher office operating expenses, offset by multifamily NOI growth. At approximately 4.9% of revenue, our G&A remains low.

Speaker #6: Turning to guidance, we expect our 2026 net income per common share, diluted, to be between negative $0.20 and negative $0.14, and our FFO per fully diluted share to be between $1.39 and $1.45.

Speaker #6: Our guidance primarily reflects the impact of increased interest expense. We have not assumed occupancy growth despite our fourth quarter results, though we will be watching it closely.

Speaker #6: For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges, or other possible capital markets activities.

Peter Seymour: For information on assumptions underlying our guidance, please refer to the schedule in the earnings package. As usual, our guidance does not assume the impact of future property acquisitions or dispositions, common stock sales or repurchases, financings, property damage insurance recoveries, impairment charges, or other possible capital markets activities. I will now turn the call over to the operator so we can take your questions.

Speaker #6: I will now turn the call over to the operator so we can take your questions.

Speaker #6: I will now turn the call over to the operator so we can take your questions. Thank you.

Speaker #7: We will now begin the question-and-answer session. To ask a question, you may press star, then one, on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question today comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Speaker #7: To withdraw your question, please press star than two. Our first question today comes from Alexander Goldfarb with Piper Sandler. Please go ahead.

Speaker #8: Hey, good morning. Good morning out there. Jordan, hey, how are you? I guess maybe we'll just go to the stock first. You spoke I think Kevin spoke about doing acquisitions, but obviously, the stock has languished on our numbers trading around a 9 cap.

Alexander Goldfarb: Hey, good morning. Good morning out there. Jordan.

Jordan Kaplan: Good morning, Alex.

Alexander Goldfarb: Hey, how are you? I guess maybe we'll just go to the stock first. I think Kevin spoke about doing acquisitions, but obviously the stock has languished on our numbers, trading around a 9 cap. I know that you want to assemble more assets, but at the same time, the stock just seems to be incredibly attractive versus buying office directly. So given the persistent depressed value that the stock is trading, are you more inclined to dial back from acquisitions and focus more on stock buybacks, or is your view that you still want to grow assets still there?

Speaker #8: How do you as you I know that you want to assemble more assets, but at the same time, the stock just seems to be incredibly attractive versus buying office directly.

Speaker #8: So, given the persistently depressed value at which the stock is trading, are you more inclined to dial back on acquisitions and focus more on stock buybacks, or is your view that you still want to grow assets unchanged?

Speaker #9: Okay. So when you talk about stock buyback at a time like this, one of the problems for it, which I like I mean, I understand what you're saying because it does seem like quite an opportunity, is that for the company to buy back stock, mathematically and every other way, it means I'm increasing our leverage.

Jordan Kaplan: Okay. So when you talk about stock buyback at a time like this, one of the problems for it, which I mean, I understand what you're saying because it does seem like quite an opportunity, is that for the company to buy back stock, mathematically and every other way, it means I'm increasing our leverage. And I'll say right now for everybody, I'm not working to increase our leverage much other than where I know it would really need to be judiciously used to protect the company. We know we have leasing. We have debt that we have to be very careful and monitor. It's in a good place. We have a lot of we have a lot of room on it, but I don't want to let it get away. Times like this is where it can get away from you, right?

Speaker #9: And I'm just going to I'll say right now for everybody, I'm not working to increase our leverage much other than where I know it would really need to be judiciously used to protect the company.

Speaker #9: We have we know we have leasing; we have debt that we have to be very careful and monitor. It's in a good place. We have a lot of we have a lot of room on it, but I don't want to let it get away.

Speaker #9: Times like this is where it can get away from you, right? We have our development projects that have to get finished, right? And then we have our kind of growth platform that we want to build, right?

Jordan Kaplan: We have our development projects that have to get finished, right? And then we have our kind of growth platform that we want to build, right? So we're trying to watch all of them and moderate all of them. But for new stuff, the growth platform in buying is very forgiving because we're able to make deals with our joint venture partners. We've done a lot of work to make sure that we have them there and we're able to get control of great properties at great prices without stretching the balance sheet very hard because we just take a piece of those deals. And so for us now, that's the best way to go.

Speaker #9: So we're trying to watch all of them and moderate all of them. But for new stuff, the growth platform and buying is very forgiving because we're able to We've done a lot of work to make sure that we have them there and we're able to get control of make deals with our joint venture partners.

Speaker #9: Great properties at great prices without stretching the balance sheet very hard, because we just take a piece of those deals. And so, for us now, that's the best way to go.

Speaker #9: And I'm just not comfortable doing this kind of double whammy, regardless of how great the price is for buying stock—which, effectively, I'm doing with leverage and in two different ways.

Jordan Kaplan: I'm just not comfortable doing this kind of double whammy, regardless of how great the price is, of buying stock, which effectively I'm doing with leverage and, in two different ways, I'm increasing our Loan to Value.

Speaker #9: I'm increasing our loan to value.

Speaker #8: Okay. And then the second question is, the positive absorption—clearly a good thing. You've had fits and starts before. Are you seeing a fundamental shift in market demand, or was it just some year-end activity that drove the absorption?

Alexander Goldfarb: Okay. And then the second question is, the positive absorption, clearly a good thing. You've had fits and starts before. Are you seeing a fundamental shift in market demand, or was it just some year-end activity that drove the absorption? Just trying to understand if LA is finally healing or if there's still a long way to go. Obviously, your guidance suggests some caution for the upcoming year.

Speaker #8: Just trying to understand if L.A. is finally healing, or if there's still a long way to go. Obviously, your guidance suggests some caution for the upcoming year.

Speaker #9: Well, I mean, one point doesn't create a line. But I mean, I'm obviously hopeful that that's the case. Our pipeline today is equally as strong as it was last quarter.

Jordan Kaplan: Well, I mean, one point doesn't create a line. But I mean, I'm obviously hopeful that that's the case. Our pipeline today is equally as strong as it was last quarter. Now, we need to perform well for many quarters in a row for us to say that we're solidly on the path to recovery. But I mean, I feel very good about what's going on, and I feel great about the way the last quarter rolled out and my hopes for this quarter.

Speaker #9: Now, we need to perform well for many quarters in a row for us to say that we're solidly on the path of recovery. But, I mean, I feel very good about what's going on, and I feel great about the way the last quarter rolled out.

Speaker #9: And my hopes for this

Speaker #9: quarter. Thank

Speaker #8: you.

Alexander Goldfarb: Thank you.

Jordan Kaplan: Thanks.

Speaker #7: Thank you. And our next question comes from Yusaku at Evercore. Please go ahead.

Operator: Thank you. And our next question comes from Yusakwa at Evercore. Please go ahead.

Speaker #10: Yeah, good morning out there. Jordan, maybe just a follow-up on Alex's question on kind of leasing. We're obviously going through a bunch of kind of large mergers within kind of the media business.

Steve Sakwa: Yeah. Good morning out there. Jordan, maybe just a follow-up on Alex's question on kind of leasing. We're obviously going through a bunch of kind of large mergers within kind of the media business. And I realize the large tenants, per se, are not your kind of focal point for leasing, but there's obviously derivatives that kind of come off of those larger companies and probably would be in your portfolio. So I guess what concerns, if any, do you have about kind of industry consolidation within kind of the media space right now?

Speaker #10: And I realize the large tenants, per se, are not your kind of focal point for leasing, but there's obviously derivatives that kind of come off of those larger companies and probably would be in your portfolio.

Speaker #10: So I guess, what concerns, if any, do you have about kind of industry consolidation within kind of the media space, right?

Speaker #10: So I guess, what concerns, if any, do you have about industry consolidation within the media space right now? Well, I'm...

Jordan Kaplan: Well, I'm not concerned that the consolidation will impact us if you're saying concerns with respect to Douglas Emmett. I do think the consolidation will help to kind of rejuvenate the making of movies and all of that because I think the guys that are buying those other platforms aren't buying them to shrink them. But whether it be Netflix or LSNs, I don't see, and the tenants we have probably at this time are growing and making money because of the consolidation, because they're all the service providers of those guys, and the lawyers, and all the rest of it. And I don't see them going down. Now, of course, at the same time, we feel pretty good with how things are going at Studio Plaza. So maybe it's having a positive impact for us out there. I don't know. But we're certainly still leasing there.

Speaker #9: not concerned that the consolidation will impact us if you're saying concerns with respect to Douglas Emmett. I do think the consolidation will help to kind of rejuvenate the making of movies and all of that.

Speaker #9: But because I think the guys that are buying those other platforms aren't buying them to shrink them. But whether it be Netflix or Elsen, I don't see—and the tenants we have probably at this time are growing and making money because of the consolidation, because they are all the service providers of those guys, and the lawyers and all the rest of it.

Speaker #9: And I don't see them going down. Now, of course, at the same time, we feel pretty good with how things are going at Studio Plaza.

Speaker #9: So maybe it's having a positive impact for us out there. I don't know, but we're certainly still leasing.

Speaker #9: there. Okay.

Steve Sakwa: Okay. And the second question, I guess last quarter or this quarter, you've disclosed you have about 9,000 apartment units that you could develop, I think, primarily on either vacant land or parking garages. It really doesn't disrupt much of the income-producing assets that you have. I'm just curious, how quickly are you able to kind of put those in service? Are most of those kind of entitled and ready to go? And it's just a question of designing buildings, or what do you think the rollout of that pipeline looks like? And what are the yields that you can get on those assets if you were to start them today?

Speaker #10: And the second question, I guess last quarter and this quarter, you've disclosed you have about 9,000 apartment units that you could develop, I think primarily on either vacant land or parking garages.

Speaker #10: It really doesn't disrupt much of the income-producing assets that you have. I'm just curious, how quickly are you able to kind of put those in the service?

Speaker #10: Are most of those kind of entitled and ready to go? And it's just a question of designing buildings, or what do you think the rollout of that pipeline looks like?

Speaker #10: And what are the yields that you can get on those assets if you were to start them?

Speaker #9: So I actually today mentioned in the prepared remarks, but it was just one little short sentence, that we have already started on planning—architectural planning—on two more projects.

Jordan Kaplan: So I actually mentioned in the prepared remarks, but it was one little short sentence, that we have already started on planning, architectural planning on two more projects. And we got kind of first rounds on that, and that's now moving through the system. And that'll represent that's another pretty good amount of units, similar to what we've got going on right now. So that's been started with the architects. That's both on West Side sites. I'm excited about both of those because this part's fun. Every other part is not fun after this. But those have gotten going. So to answer your question directly, we're actually already moving to another, I don't know, 500 or 1,000 units. And what was the second part of your question? What kind of yields would we get? I don't think anything.

Speaker #9: And we got kind of first rounds on that, and that's now moving through the system. And that'll represent—that's another pretty good amount of units.

Speaker #9: Similar to what we've got going on right now. So that's been started with the architects. That's on both on Westside sites. I'm excited about both of those because this part's fun.

Speaker #9: Every other part is not fun after this, but those have gotten going. So, to answer your question directly, we're actually already moving to another—I don't know—500 or 1,000 units.

Speaker #9: And what was the second part of your question? What kind of yields would we get? I don't think.

Speaker #10: Yeah. What kind of—yeah. What kind of yields?

Steve Sakwa: Yeah. What kind of yields on cost?

Speaker #10: on cost? Yeah.

Jordan Kaplan: Yeah. So obviously, we own the land, and you stated correctly that it's not very disruptive. Most of these sites are not very disruptive to the income-producing properties that are already on that land. And I just can't imagine we're going to do anything that's going to be less than, when finished, an 8 Cap Rate. And I hope better. And historically, it has been better. But nothing's going to be below an 8. Of course, it's not including the cost of the land, so I'm not saying something that's so spectacular.

Speaker #9: So I don't, obviously, we own the land, and you stated correctly that it's not very disruptive. Most of these sites are not very disruptive to the income-producing properties that are already on that land.

Speaker #9: And I just can't imagine we're going to do anything that's being less than when finished in a cap rate. And I hope better. And historically, it has been better.

Speaker #9: But nothing's going to be below an 8. Of course, it's not including the cost of the land and so on. I'm not saying something that's so—

Speaker #9: spectacular. Thank

Steve Sakwa: Thank you.

Speaker #9: All right. you.

Jordan Kaplan: All right.

Speaker #7: Thank

Speaker #7: Our next question today comes from Nick Yulika with Scotiabank. Please go ahead.

Operator: Thank you. Our next question today, I guess, from Nick Yulico with Scotiabank. Please go ahead.

Speaker #9: Hi, Nick.

Peter Seymour: Hi, Nick.

Speaker #11: Thanks, good morning. Good morning, everyone. Hi, Jordan. I guess, first off, I had a question on the guidance. The straight-line rent this year is higher than it's been in prior years—kind of what's driving that?

Michael Griffin: Thanks. Good morning. Good morning, everyone. Hi, Jordan. I guess, first off, I just had a question on the guidance. Can you explain, in terms of the straight-line rent this year is higher than it's been in prior years, kind of what's driving that? And I wasn't sure if it was at all related to Studio Plaza and if you could also just tell us sort of what's assumed in terms of NOI benefit for Studio Plaza this year, if any.

Nick Yulico: Thanks. Good morning. Good morning, everyone. Hi, Jordan. I guess, first off, I just had a question on the guidance. Can you explain, in terms of the straight-line rent this year is higher than it's been in prior years, kind of what's driving that? And I wasn't sure if it was at all related to Studio Plaza and if you could also just tell us sort of what's assumed in terms of NOI benefit for Studio Plaza this year, if any.

Speaker #11: I wasn't sure if it was at all related to Studio Plaza, and if you could also just tell us sort of what's assumed in terms of NOI benefit for Studio Plaza this year.

Speaker #11: If any.

Speaker #9: Yeah, hi, Nick. It's Peter. So, yeah, our guidance for straight-line is higher this year. It's an estimate of what we think it's going to be.

Peter Seymour: Yeah. Hi, Nick. It's Peter. So yeah, our guidance for straight-line is higher this year. It's an estimate of what we think it's going to be. Obviously, a lot goes into that. Studio Plaza is a piece of it. You'll see that last year's straight-line was higher than the year before. So it reflects the existing leases that we have. It reflects the new leasing that we do and the occupancy that takes place. And we're not ready at this point to give a breakout on NOI on Studio Plaza.

Speaker #9: Obviously, a lot goes into that. Studio Plaza is a piece of it. You'll see that last year's straight-line was higher than the year before.

Speaker #9: So, it reflects the existing leases that we have. It reflects the new leasing that we do and the occupancy that takes place. And we're not ready at this point to give a breakout on NOI on Studio.

Speaker #9: Plaza. Okay.

Michael Griffin: Okay. And then the second question is, in terms of leasing and just thinking about kind of the bogey you guys have to hit each quarter, I mean, it does feel like it's sort of in that 250,000 sq ft of new leasing, what you did got done above that this quarter to kind of drive absorption versus your expirations. Is that kind of the right way to think about it in terms of the math of how you could keep up positive net absorption as hitting that type of new leasing number each quarter? Thanks.

Nick Yulico: Okay. And then the second question is, in terms of leasing and just thinking about kind of the bogey you guys have to hit each quarter, I mean, it does feel like it's sort of in that 250,000 sq ft of new leasing, what you did got done above that this quarter to kind of drive absorption versus your expirations. Is that kind of the right way to think about it in terms of the math of how you could keep up positive net absorption as hitting that type of new leasing number each quarter? Thanks.

Speaker #11: And then the second question is, in terms of leasing and just thinking about kind of the bogey you guys have to hit each quarter.

Speaker #11: I mean, it does feel like it's sort of in that 250,000 square feet of new leasing, which you did get done above that this quarter, to kind of drive absorption versus your expirations.

Speaker #11: Is that kind of the right way to think about it, in terms of the magnitude of how you could keep up positive net absorption—by hitting that type of new leasing number each quarter?

Speaker #11: Thanks.

Speaker #12: Hey,

Peter Seymour: Hey, Nick. It's Stuart. I think better than a number like 250 or 300, look at the percentage of leasing we're doing new versus renewal. We know pretty reliably that our retention rate is around 70%. So if we're doing 30% or more of our leasing as new leasing, when we look at those quarters, those are generally positive quarters. That was true. This quarter, it was about 30% new leasing overall versus new versus renewal. So sometimes we've had quarters that are positive less than 250, and sometimes we do more than 250,000, and it's still a negative quarter. But I think that kind of 30% is more reliable.

Stuart McElhinney: Hey, Nick. It's Stuart. I think better than a number like 250 or 300, look at the percentage of leasing we're doing new versus renewal. We know pretty reliably that our retention rate is around 70%. So if we're doing 30% or more of our leasing as new leasing, when we look at those quarters, those are generally positive quarters. That was true. This quarter, it was about 30% new leasing overall versus new versus renewal. So sometimes we've had quarters that are positive less than 250, and sometimes we do more than 250,000, and it's still a negative quarter. But I think that kind of 30% is more reliable.

Speaker #12: Than a number like 250 or 300, look at the percentage of leasing we're doing—new versus renewal. We know pretty reliably that our retention rate is around 70%.

Speaker #12: So, if we're doing 30% or more of our leasing as new leasing, when we look at those quarters, those are generally positive quarters. That was true this quarter.

Speaker #12: It was about 30% new leasing overall, versus new versus renewal. So sometimes we've had quarters that are positive, less than 250, and sometimes we do more than 250,000, and it's still a negative quarter.

Speaker #12: But I think that kind of 30% is more reliable.

Speaker #11: Okay. Thanks.

Michael Griffin: Okay. Thanks.

Nick Yulico: Okay. Thanks.

Speaker #7: Thank you. And our next question today comes from Blaine Heck at Wells Fargo. Please go ahead.

Operator: Thank you. And our next question today comes from Blaine Heck at Wells Fargo. Please go ahead.

Speaker #7: ahead. Great.

Speaker #13: Thanks. Hoping you could talk about UCLA. They obviously are still your largest expiration this year and have additional space expiring through 2033. Jordan, last quarter you talked about some issues with government funding impacting them, but it looks like their total lease with you increased this quarter.

Blaine Heck: Great. Thanks. Hoping you could talk about UCLA. They obviously are still your largest expiration this year and have additional space expiring through 2033. Jordan, last quarter, you talked about some issues with government funding impacting them, but it looks like your total lease with you increased this quarter. So maybe talk about what happened there and whether you have any updated color to provide on your ability to retain them as their leases expire.

Speaker #13: So maybe talk about what happened there, and whether you have any updated color to provide on your ability to retain them, as their lease is expired.

Speaker #9: So when you look at UCLA, I know you're looking at that largest tenant thing and all the leases together. They really do operate as completely separate groups.

Jordan Kaplan: So when you look at UCLA, I know you're looking at that largest tenant thing and all the leases together. They really do operate as completely separate groups, leasing or not leasing based on their departmental or whether it be the medical center or whatever's needs. And there are just many independent divisions that could be or not be leasing. I think that, in general, I don't see them substantially trying to shrink anymore. But like I said, to make a global statement about the university and their desire for outside office space is a huge mistake. I mean, you got to look at whether individually the medical center or individually what's happening in the other departments, the XMBA program or whatever, that have space scattered around or admin divisions. But do you have something you wanted to say?

Speaker #9: Leasing or not leasing, based on their departmental or whether it be the medical center or whatever's needs, and there are just many independent divisions that could be or not be leasing.

Speaker #9: I think that in general, I don't see them substantially trying to shrink anymore, but like I said, to make a global statement about the university and their desire for outside office space is a huge mistake.

Speaker #9: I mean, you’ve got to look at whether individually the medical center, or individually, what’s happening in the other departments— that MBA program or whatever that has space scattered around, or admin divisions.

Speaker #9: But do you have something you

Speaker #9: wanted to say? Yeah.

Speaker #11: Blaine, I was just going to mention that the expirations this year—that's five leases. So they're not large leases; I mean, they're around 12,000 feet on average.

Peter Seymour: Yeah. Blaine, I was just going to mention that the expirations this year, that's 5 leases. So they're not large leases. I mean, they're around 12,000 feet on average. They're not very big.

Speaker #11: They're not very

Speaker #11: big. So some might go

Jordan Kaplan: So some might go out.

Speaker #13: Got it. out.

Peter Seymour: Got it.

Blaine Heck: Got it.

Speaker #9: Some might stay. Some might expand. You just don't.

Jordan Kaplan: Some might stay. Some might expand. You just don't.

Speaker #13: No, that's fair. That's helpful color. Second, I was hoping you could just provide a little color on any political initiatives you guys are pursuing in '26.

Peter Seymour: No, that's fair. That's helpful color. Second, I was hoping you could just provide a little color on any political initiatives you guys are pursuing in 2026. I guess, what specific regulations are you kind of targeting in that process, and how is that impacting G&A in 2026?

Blaine Heck: No, that's fair. That's helpful color. Second, I was hoping you could just provide a little color on any political initiatives you guys are pursuing in 2026. I guess, what specific regulations are you kind of targeting in that process, and how is that impacting G&A in 2026?

Speaker #13: I guess, what specific regulations are you kind of targeting in that process, and how is that impacting G&A?

Speaker #13: '26? So over the

Jordan Kaplan: So over the last, I don't know, 6 years, on the even years, which is when elections are, we've seen politics having a meaningful impact on the operation of the company, and we have realized we have to get engaged in that. And so when there are things going on that can impact Douglas Emmett, we have to get engaged in it, and we are. And therefore, we're running into these additional costs that run through G&A in each of these periods. I hope that will wane over time. But certainly, politics are a hot topic right now, and it impacts real estate in California and in our city.

Speaker #9: Last, I don't know, six years, on the even years, which is when elections are, we've seen politics having a meaningful impact on the operation of the company.

Speaker #9: And we have realized we have to get engaged in that. And so, when there are things going on that can impact Douglas Emmett, we have to get engaged in it, and we are.

Speaker #9: And therefore, we're running into these additional G&A. In each of these costs that run through periods, I hope that will wane.

Speaker #9: Over time, but certainly, politics are a hot topic right now, and it impacts real estate in California—and in our city.

Speaker #11: Yeah, it's Peter. I'd also just point out we've historically had lower G&A than our office peers, and we do expect that to continue even with a little bit of room for advocacy spending.

Peter Seymour: Yeah. It's Peter. I'd also just point out we've historically had lower G&A than our office peers, and we do expect that to continue even with a little bit of room for advocacy spending.

Speaker #13: Got it. That's helpful. Thanks,

Michael Griffin: Got it. That's helpful. Thanks, guys.

Blaine Heck: Got it. That's helpful. Thanks, guys.

Speaker #13: guys. All

Peter Seymour: All righty.

Speaker #7: Thank you. And our next question today comes from Seth Berge with Citi. Please go ahead.

Operator: Thank you. And our next question today comes from Seth Bergey with Citi. Please go ahead.

Speaker #13: Hey, thanks for taking my question. I just wanted to ask a little bit more about the additional residential development sites that you mentioned in your prepared remarks.

Michael Griffin: Hey. Thanks for taking my question. I just wanted to ask a little bit more on the additional residential development sites that you mentioned in your prepared remarks. What is kind of the size and scope of those projects, and how do you think about funding needs for those?

Seth Bergey: Hey. Thanks for taking my question. I just wanted to ask a little bit more on the additional residential development sites that you mentioned in your prepared remarks. What is kind of the size and scope of those projects, and how do you think about funding needs for those?

Speaker #13: What is kind of the size and scope of those projects, and how do you think about funding needs for

Speaker #13: those? They range

Jordan Kaplan: They range from 3 to 500 units for each of them, maybe as low as 250, but really more of 3 to 500. You might even be able to build more, but it's probably kind of the type of sizing we would build. We typically fund all the early stages, and then we look at the cost to do the construction. And then at the time we're doing that, we got to look at our cash positions and the rest of the things regarding the company, and we can bring in. Those are the type of deals that very easy understates how easy it is to bring in partners on those deals. But also, they're pretty high-yielding deals because remember, I was asked before, and I said, "I think it's like an 8 cap," and put a plus sign on that.

Speaker #9: From 3 to 500 units for each of them, maybe as low as 250, but really more of 3 to 500. You might be able to build more, but that's probably kind of the type of sizing we would build.

Speaker #9: We typically fund all the early stages, and then we look at the cost to do the construction, and then at the time we're doing that, we've got to look at our cash positions and the rest of the things regarding the company.

Speaker #9: And we can bring in—it's very, those are the type of deals that very easily understate how easy it is to bring in partners on those deals.

Speaker #9: But also, they're pretty high-yielding deals, because—memorize an ACAP and put a plus sign on that. So, and because it doesn't take a huge amount of capital out of the gate, right? Because when you're doing construction, you're leaking equity in over a couple of years as you're doing the work.

Jordan Kaplan: Because it doesn't take a huge amount of capital out of the gate, right. Because when you're doing construction, you're leaking equity in over a couple of years as you're doing the work, many times, we can fund it ourselves. But then, of course, there could be a time when we have to bring in a partner.

Speaker #9: Most, many times, we can fund it ourselves, but then, of course, there could be a time when we have to bring in a—

Speaker #9: Most, many times we can fund it ourselves, but then, of course, there could be a time when we have to bring in a partner.

Speaker #11: Thanks, that's helpful. And then I guess just on the leasing, I think you kind of said the pipeline size is kind of similar to last quarter.

Michael Griffin: Thanks. That's helpful. And then I guess just on the leasing, I think you kind of said the pipeline size is kind of similar to last quarter. Are you seeing any of that change between the mix of new versus kind of renewal leases? And then just broadly, any kind of changes that you're seeing with tenant behavior, whether continuing to look for additional space or anything to call out with different industry groups there?

Seth Bergey: Thanks. That's helpful. And then I guess just on the leasing, I think you kind of said the pipeline size is kind of similar to last quarter. Are you seeing any of that change between the mix of new versus kind of renewal leases? And then just broadly, any kind of changes that you're seeing with tenant behavior, whether continuing to look for additional space or anything to call out with different industry groups there?

Speaker #11: Are you seeing any of that change between the mix of new versus kind of renewal leases? And then just broadly, any kind of changes that you're seeing with tenant behavior, whether continuing to look for additional space or anything to call out with different industry groups there?

Speaker #9: Yeah, like I said, when we're talking about the pipeline, that's kind of only talking about new. Our renewals, like I said, are very reliably going to be in that 70% range. Last quarter was a little higher, which was good.

Peter Seymour: Yeah. Hey, Seth. When we're talking about the pipeline, that's kind of only talking about new. Are renewals, like I said, very reliably going to be in that 70% range? Last quarter was a little higher, which was good, but typically, it's right around 70%. So the pipeline that Jordan referred to is on the new side. You asked about industries, or you asked about expansions and contractions. Last quarter, our expansions outpaced our contractions. We look at that every quarter. It's generally been more expansions than contractions the last few quarters, which is also good to see.

Speaker #9: But typically, it's right around 70. So the pipeline that Jordan referred to is on the new side. You asked about industries, or you asked about expansions and contractions.

Speaker #9: Last quarter, our expansions outpaced our contractions. We look at that every quarter. It's generally been more expansions than contractions the last few quarters, which is also good to see.

Speaker #13: Great. Great. Thanks.

Michael Griffin: Great. Thanks.

Seth Bergey: Great. Thanks.

Speaker #7: Thank you. And our next question today comes from Rich Anderson at Cantor Fitzgerald. Please go ahead.

Operator: Thank you. And our next question today comes from Rich Anderson at Cantor Fitzgerald. Please go ahead.

Speaker #12: Thanks, good morning out there. So, I know you don't want to divulge too much on the process at Studio Plaza—only to say that it's progressing nicely.

Rich Anderson: Thanks. Good morning out there. So I know you don't want to divulge too much on the process at Studio Plaza, only to say that it's progressing nicely. But 450,000 sq ft, obviously going multi-tenant, do you think that the average tenant size at the end of the day will be still larger than your typical for the company, or do you think it can get into that sort of 5,000 sq ft average range? I'm just wondering what the end tenant might look like at the facility.

Speaker #12: But 450,000 square feet, obviously going multi-tenant. Do you think that the average tenant size, at the end of the day, will still be larger than your typical for the company, or do you think it can get into that sort of 5,000 square foot average range?

Speaker #12: I'm just wondering what the end tenant might look like at the facility.

Speaker #9: It's larger. My guess is we end up with an average size of a full floor, and maybe even—

Jordan Kaplan: It's larger. My guess is we end up with an average size of a full floor, something, and maybe even bigger.

Speaker #9: bigger. Was that a quote

Rich Anderson: Was that a Q2?

Speaker #9: Not to, too? Florida, like 25,000 feet or something. I think those floors are bigger than that. But yeah, it'll start out larger, and then over time, probably shrink, but it's going to start out much larger than our typical building.

Jordan Kaplan: That's a floor that's like 25,000 feet.

Peter Seymour: Okay. I think those floors are bigger than that. But yeah, it'll start out larger and then over time probably shrink, but it's going to start out much larger than our typical building.

Speaker #12: I only have a couple of floors at Kent's broken up to the smaller tenants. I don't think we have a lot of that. Yeah.

Jordan Kaplan: We only have a couple of floors at Kent's, broken up to the smaller tenants. I don't think we have a lot of that.

Peter Seymour: Yeah. Okay. And then, second question, sort of absent from the conversation a little bit lately, has been Honolulu. And just because of everything that's going on in LA, I'm curious how you're feeling about the market today. You've got Bishop done, obviously. Is there anything on the priority list in Honolulu? Is it kind of running in autopilot right now? I'm just curious if you have any comment at all on the market as it stands today.

Rich Anderson: Yeah. Okay. And then, second question, sort of absent from the conversation a little bit lately, has been Honolulu. And just because of everything that's going on in LA, I'm curious how you're feeling about the market today. You've got Bishop done, obviously. Is there anything on the priority list in Honolulu? Is it kind of running in autopilot right now? I'm just curious if you have any comment at all on the market as it stands today.

Speaker #12: Okay. And then, second question—sort of absent from the conversation a little bit lately—has been Honolulu. And just because of everything that's going on, I'm curious how you're feeling about the market today.

Speaker #12: In L.A., I'm—You've got Bishop Dunn, obviously. Is there anything on the priority list in Honolulu? Is it kind of running on autopilot right now?

Speaker #12: I'm just curious if you have any comment at all on the market as it stands.

Speaker #12: today. First of all,

Jordan Kaplan: First of all, I've never met over 1 million feet that ran on autopilot, which are the amount of tenants we have in Honolulu. And not to mention the what do we have? 2,000 or 3,000 apartment units on 70 or 80 acres. So it's definitely not on autopilot. If you're talking about next capital step, next steps in the capital side, not to I mean, in a sense, you got to love autopilot because it means you're leased to the 90s, which it's a bright star in the portfolio. But the next big move there, very likely, is we had started, and even during COVID, Kevin on Zoom spoke to the city council and got some special entitlements for us with respect to residential towers. We have 12 acres right next to downtown.

Speaker #9: I've never met over a million feet to run on autopilot with about the tenants we have in Honolulu. And not to mention, what do we have?

Speaker #9: Two or three thousand apartment units on 70, 70, 80 acres. But so, it's definitely not on autopilot. If you're talking about next capital step, next steps on the capital side, not to—I mean, in a sense, you got to love autopilot because it means you're leasing to the 90s, which, it's a bright star in the portfolio.

Speaker #9: But the next big move there, very likely, is we had started, and even during COVID, Kevin on Zoom spoke to the city council and got some special entitlements for us with respect to residential towers.

Speaker #9: We have a 12-acre right next to downtown. We have 30 acres that we've already built—500 units on—in that Red Hill area, next to Tripler Hospital.

Jordan Kaplan: We have 30 acres that we've already built 500 units on in that Red Hill area next to Tripler Hospital. Then we also have 30 acres out in the rural Kaneohe area. So we have significant development sites there. The next step, as costs and everything lines up there, and frankly, capacity and attention and all the rest, we need to move and start building out those additional units that work extremely well. They're putting the light rail in. It's very close to our projects. So there really will be a good way to get back, not that downtown needs the help. Downtown's doing extremely well. But these projects are well-suited to get back and forth to where the density of jobs are.

Speaker #9: And then we also have 30 acres out in the Royal Canadian area. And so we have significant development sites there. And so the next step, as cost and everything lines up there, and frankly, capacity and attention and all the rest, we need to move and start building out those additional units that work extremely well.

Speaker #9: They're putting the light rail in. It's very close to our projects. So there really will be a good way to get back—not that downtown needs the help.

Speaker #9: Downtown's doing extremely well. But these projects are well-suited to where the jobs are. So, I mean, it's getting back and forth to where the density is just great, because we spent so many years explaining to you guys we thought Hawaii was going to come back.

Jordan Kaplan: So, I mean, it's just great because we spent so many years explaining to you guys, we thought Hawaii was going to come back. And so I don't feel like I got my due to ask the question the same amount of times now that Hawaii's doing so well. But those are the next steps on capital.

Speaker #9: And so I don't seem like I feel like I got my due to ask the question the same amount of times, now that Hawaii is doing so well.

Speaker #9: But those are the next steps on.

Speaker #9: capital. Okay.

Speaker #12: Great. And if I could just sneak in one quick one—last quarter, I asked about the Olympics and whether there's any sort of forces at work positively, and you pointed out the Olympic Village at UCLA and some other stuff going on in Santa Monica.

Rich Anderson: Okay. Great. And if I could just sneak in one quick one. Last quarter, I asked about Olympics and whether there's any sort of forces at work positively. And you pointed out the Olympic Village at UCLA and some other stuff going on in Santa Monica. Is there any update to is it just too short of a time, three months previous? Or is there any update to anything going on that's sort of tethered to the Olympics that you're getting yourselves involved in? Thanks.

Speaker #12: Is there any update to, is it just too short of a time, three months previous? Or is there any update to anything going on that's sort of tethered to the Olympics that you're getting yourselves involved in?

Speaker #12: Thanks.

Speaker #9: Well, we are seeing—I have been into meetings recently. There's a lot of tension now that's being focused on preparing the village for it.

Jordan Kaplan: Well, we are seeing. I have been in some meetings recently. There's a lot of tension now that's being focused on preparing the village for the Olympics. I've been in some meetings for it. And people are definitely now taking seriously the time we have left and the stuff that needs to be done. And I see them working on it. And it is coming out of the council. It's coming out of UCLA. It's coming out of private ownership in the village. Everybody's having meetings and focused on it.

Speaker #9: Olympics. I've been in some meetings for And people are definitely now taking seriously the time we have left and the stuff that needs to be done.

Speaker #9: And I see them working on it. But it is coming out of the council. It's coming out of UCLA. It's coming out of private ownership in the village.

Speaker #9: Everybody's having meetings and focused on

Speaker #12: Okay. Great. Thank you.

Rich Anderson: Okay. Great. Thank you.

Speaker #9: Thanks. Thank you.

Jordan Kaplan: Thanks.

Operator: Thank you. And our next question today comes from Jana Galan with Bank of America. Please go ahead.

Speaker #7: And our next question today comes from Janet Galen with Bank of America. Please go ahead.

Speaker #1: Thank you. And congrats on a nice fourth quarter. When thinking about your 2026 cash same-store in Hawaii guidance, what are the assumptions for kind of cash releasing spreads?

Jana Galan: Thank you. And congrats on a nice Q4. When thinking about your 2026 cash same-store in Hawaii guidance, what are the assumptions for kind of cash releasing spreads? Is there a range there, or do you think we remain in this kind of low to mid $40 per sq ft? And then if you could maybe give a little color around which submarkets you think that may start to inflect positive.

Speaker #1: Is there a range there? Or do you think we remain in this kind of low to mid 40 dollars per square foot? And then if you could maybe give a little color around which submarkets you think that may start to inflect

Speaker #1: positive. Yeah.

Speaker #9: I think you should assume the leasing spreads stay; we've been in a pretty consistent range over the last couple of years. Our contractual rent bumps are built into all our leases.

Peter Seymour: Yeah. I think you should assume the leasing spreads stay. We've been in a pretty consistent range over the last couple of years. Our contractual rent bumps built into all our leases, we get between 3% and 5% increase every year on basically all our office leases. So our straight-line spreads have stayed positive. The overall value of the leases has been increasing. That's been nice. That increase in cash every year is really nice to get. It makes that cash releasing spread metric really hard to go positive unless your market rents are really moving up at a good clip. But I would expect those metrics to stay pretty stable. As far as submarkets, I don't want to make any predictions about submarkets and which ones inflect. I think we've got a lot of leasing to do, with the exception of Hawaii, kind of across the board.

Speaker #9: We get between 3% and 5% increase every year on basically all our office leases. So our straight-line spreads have stayed positive. The overall value of the leases has been increasing.

Speaker #9: That's been nice. That increase in cash every year is really nice to get. It makes that cash lease-releasing spread metric really hard to go positive.

Speaker #9: Unless your market rents are really moving up at a good clip. But I would expect those metrics to stay pretty stable. As far as submarkets, I don't want to make any predictions about submarkets and which ones inflect.

Speaker #9: I think we've got a lot of leasing to do, with the exception of Hawaii, kind of across the board. And all our markets had good, positive momentum in Q4.

Peter Seymour: All our markets had good positive momentum in Q4. We'll hope that continues.

Speaker #9: So we'll hope that

Speaker #9: continues.

Speaker #1: Thank you. And

Jana Galan: Thank you. And then just following up on the residential development, when will those kind of first units at Landmark start delivering? And then maybe when is 10,900 Wilshire expected to start delivering units?

Speaker #1: then just following up on the residential development, when will this kind of first units at landmark start delivering? And then maybe when is 10,000, 900 Wilshire expected to start delivering

Speaker #1: Units? We got a couple of—

Jordan Kaplan: We got a couple of years on Landmark LA. It's years out. Construction has started, but we're looking out 2, 3+ years. And at 10,900 Wilshire, it's a different type of conversion. So it's both building a building in the back and then converting floors, which, of course, we at the same time are also willing to have office tenants here. So the first move that's going to probably happen there is the amenities. We try and get them in, and then we just start moving through full vacant floors, building out, and building out the apartments. Historically, once we get them built out, which that construction we expect to have start this year, once we do it, the single floors tend to lease very fast.

Speaker #9: years on landmark LA. It's years out. Construction has started. But it's we're looking out two, three, plus years. And at 10,900, it's a different type of conversion.

Speaker #9: So it's both building a building in the back and then converting floors, which, of course, we at the same time are also willing to have office tenants here.

Speaker #9: So, the first move that's going to probably happen there is the amenities. We try and get them in, and then we just start moving through full vacant floors, building out and building out the apartments.

Speaker #9: Historically, once we get them built out, which that construction, we expect to have start this year, once we do it, the single floors tend to lease very fast.

Speaker #9: So my guess is, my hope is, that we'll get those floors. We're going to start that later this year, and those floors will be ready and start leasing.

Jordan Kaplan: So, my guess is, my hope is, that we'll get those floors. We're going to start that later this year, and those floors will be ready and start leasing. I'm not sure you'll see much of an impact of revenue, actually, as compared to our whole company in 2026, but pretty hopeful for 2027.

Speaker #9: I'm not sure you'll see much of an impact on revenue, actually, as compared to our whole company in 2026. But pretty hopeful for—

Speaker #9: 2027.

Speaker #1: Thank

Speaker #1: you.

Jana Galan: Thank you.

Operator: Thank you. And our next question comes from Upal Rana with KeyBanc Capital Markets. Please go ahead.

Speaker #7: And our next question comes from Opal Rena with KeyBank Capital Markets. Please go ahead.

Speaker #12: Great, thank you. Jordan, going back to the first question on acquisitions versus buybacks, it sounds like you prefer acquisitions at the moment. Maybe you could talk a little bit about the transaction market in LA and what kind of opportunities you're seeing out there, and what kind of opportunities maybe would get you to transact today.

Upal Rana: Great. Thank you. Jordan, going back to the first question on acquisitions versus buybacks, it sounds like you prefer acquisitions at the moment. Maybe you could talk a little bit about the transaction market in LA and what kind of opportunities you're seeing out there and what kind of opportunities maybe would get you to transact today.

Speaker #9: Well, I thought the way that Stuart drafted the first round of our script had the way he said it, that was such a good way to say it that we probably repeated it three or four times.

Jordan Kaplan: Well, I thought the way that Stuart drafted the first round of our script had the way he said it, that was such a good way to say it that we probably repeated it three or four times. But the long and short of it is, you can never argue that value today. Oh, yeah, the value we're getting today is less than the value today. The value today is the value itself for it. That's the value today. But what he said was, which is how we feel, is, I think that the transactions we're doing today and that we can buy today will be at, are very good. The pricing's very good compared to where we think the long-term value is for these properties. And that's a reason, and it's always hard in markets like this to do this.

Speaker #9: But the long and short of it is you can never argue that value today—'Oh, yeah, value we're getting today is less than the value today.' Value today is the value it sells for.

Speaker #9: That's the value today. But what he said was, which is how we feel, is I think that the transactions we're doing today and that we can buy today, the pricing's very good compared to where we think the long-term value is for these properties.

Speaker #9: And that's a reason, and it's always hard in markets like this to do this. That's a reason, and I mentioned it with respect to our capital part—our equity partners and the time we're spending with them.

Jordan Kaplan: That's a reason, and I mentioned it with respect to our capital part, our equity partners, and the time we're spending with them. That's a reason to work double hard and make sure that even though you have a huge focus on whether it be refinancing your debt, huge focus, obviously, on leasing, you can't take your eye off the ball of an opportunity like this. So we're working very hard to make those happen. I am extremely confident that we will deliver more on the acquisition front to you in 2026 of deals done that we really feel are good deals. I'm not telling you they're off-market to today, but I'm telling you I think they're very good deals for companies like ours to run over a period of time, and you'll get an opportunity to see those. We are going to make those deals.

Speaker #9: That's a reason to work double hard and make sure that, even though you have a huge focus on where there'd be refinancing your debt—a huge focus, obviously, on leasing—you can't take your eye off the ball of an opportunity like this.

Speaker #9: So we're working very hard to make those happen. I am extremely confident that we will deliver more on the acquisition front to you in 2026.

Speaker #9: Of deals done, that we really feel are good deals. I'm not telling you they're off-market today, but I'm telling you, I think they're very good deals for companies like ours to run over a period of time.

Speaker #9: And you'll get an opportunity to see those. We are going to make those deals. I don't know how many, but we'll make some.

Jordan Kaplan: I don't know how many, but we'll make some.

Speaker #12: Okay, great. That was helpful. And then, could you spend some time talking about where LA stands in terms of the anti-rent-gouging ordinance that was passed last year after the fires?

Upal Rana: Okay. Great. That was helpful. And then could you spend some time talking about where LA stands in terms of the anti-rent gouging ordinance that was passed last year after the fires and what that could mean for future multi-family rent growth for the company this year?

Speaker #12: And what that could mean for future multifamily rent growth for the company this year?

Speaker #9: That was very odd. Where we stand, we don't like to expire again in, like, three months or something. Is that—yeah. I don't think it's been super impactful to us.

Jordan Kaplan: That was very odd. Where we stand? It expires again in three months or something. Is that?

Peter Seymour: Yeah. I don't think it's been super impactful for us. I don't think it's material for what we're doing. For our existing tenants, the increases, we weren't generally trying to go up huge amounts on.

Speaker #9: I don't think it's material for what we're doing. For our existing tenants, the increases—we weren't generally trying to go up huge amounts on.

Speaker #9: Yeah. We weren't trying to go up that amount. And you saw our multifamily growth. It's been fantastic in 2025. But the anti-gouging thing really hasn't had a material impact.

Jordan Kaplan: Yeah. We weren't trying to go up that amount.

Peter Seymour: You saw our multi-family growth. It's been fantastic in 2025, but the anti-gouging thing really hasn't had a material impact on us.

Speaker #9: Yeah, I mean, we're calling fantastic fives and sevens and stuff. That thing kicks in at like 10. I mean, to me, the worst form of just political grandstanding.

Jordan Kaplan: I mean, we're calling fantastic 5s and 7s and stuff. That being kicked in at like 10. I mean, to me, it's the worst form of just political grandstanding. But I'm not sure what it's doing to actually whether it's having any impact on anyone. And by the way, the people I don't want to spend time on it. It's not doing anything.

Speaker #9: But I'm not sure what it's doing to actually—the way that it's having any impact on anyone. And, by the way, the people—I don't want to spend time on it.

Speaker #9: It's not doing anything.

Speaker #12: Okay. Great.

Upal Rana: Okay. Great. Thank you.

Speaker #12: Thank you. All

Peter Seymour: All right.

Speaker #7: And our next question right today comes from Dylan Brzezinski at Green Street. Please go ahead.

Operator: Our next question today comes from Dylan Brzezinski at Green Street. Please go ahead.

Speaker #13: Good afternoon, guys. Thanks for taking the question. Maybe just touching on, sort of, or I guess—could you touch on any differences in depth of demand across the Westside versus the Valley?

Dylan Burzinski: Good afternoon, guys. Thanks for taking the question. Maybe just touching on sort of or I guess could you touch on any differences in depth of demand across the West Side versus the Valley? Are you guys seeing any sort of outsized strength on the West Side? And maybe if you can kind of just talk about expectations for whether or not you see the same timeline of recovery for those areas within the portfolio.

Speaker #13: Are you guys seeing any sort of outsized strength on the west side? And maybe if you can kind of just talk about expectations for whether or not you see the same timeline of recovery for those areas within the portfolio.

Speaker #9: Yeah. Well, I'll say that we did have positive—the positive absorption we saw was across the board. The only market that we actually had a dip a little bit in Q4 was Hawaii, which is our strongest market, and our pipeline there is very good.

Peter Seymour: Yeah. Well, I'll say that we did have positive absorption we saw was across the board. The only market that we actually had a dip a little bit in Q4 was Hawaii, which is our strongest market, and our pipeline there is very good. But every other market we're in in LA moved up in Q4. So great to see that demand kind of across the board. In past cycles, we've had markets that historically were Santa Monica and Beverly Hills for a long time were our strongest markets, I suspect. They've got unique aspects that drove certain tenants there to those markets. I suspect that those markets, over the long term, will continue to be some of the best.

Speaker #9: But every other market we're in in LA, moved up in the fourth quarter. So great to see that demand kind of across the board.

Speaker #9: In past cycles, we've had markets that historically were Santa Monica and Beverly Hills for a long time were our strongest markets, I suspect, for they've got unique aspects that drove certain tenants there.

Speaker #9: To those markets, I suspect that those markets, over the long term, will continue to be some of the best. But our markets—we're in our core markets for all the reasons we like.

Peter Seymour: But our markets were in our core markets for all the reasons we like, the supply constraints, the proximity to expensive housing, the amenities in these areas. So I expect them all to perform well over the long term.

Speaker #9: The supply constraints, the proximity to expensive housing, the amenities in these areas—so I expect them all to perform well over the long term.

Speaker #9: term. That's it from

Dylan Burzinski: That's it from me. Thanks.

Speaker #13: me. Thanks.

Speaker #7: Thank you. And our next question today comes from John Kim at BMO Capital Markets. Please go

Operator: Thank you. And our next question today comes from John Kim at BMO Capital Markets. Please go ahead.

Speaker #7: ahead. Thank you.

John Kim: Thank you. I wanted to ask about how you see the occupancy trajectory during the year. Looking at your lease expirations, it is heavily weighted towards Q4. So I'm wondering if you envision occupancy kind of picking up during the year until you hit that headwind.

Speaker #13: I wanted to ask about how you see the occupancy trajectory during the year. I'm looking at your lease expirations. It is heavily weighted towards the fourth quarter.

Speaker #13: So, I'm wondering if you envision occupancy kind of picking up during the year until you hit that headwind.

Speaker #9: John, we mentioned a little bit on the call the seasonality of move-outs. For whatever reason, more than their fair share of leases expire 12/31.

Peter Seymour: John, we mentioned a little bit on the call the seasonality of move-outs. For whatever reason, more than their fair share of leases expire 31 December. And those.

Speaker #9: So, in those, those move-outs tend to impact the first quarter. But those expirations are listed in Q4, at the 12/31 expiration. So that's typical seasonality for us.

Speaker #13: That impacts the first.

Jordan Kaplan: That impacts the first.

Peter Seymour: Those move-outs tend to impact Q1, but those expirations, they're listed in Q4 at the 12/31 expiration. So that's typical seasonality for us. The overall move-outs for the year are below kind of average, the rollouts. I should say expirations, not move-outs. So the expirations relative to kind of historical averages are low, which has us optimistic. We do expect a little bit of seasonality always to happen for those 12/31 expirations.

Speaker #9: The overall move-outs for the year are below, kind of average. The rollouts—I should say expirations, not move-outs. So, the expirations relative to kind of historical averages are low.

Speaker #9: Which has us optimistic. And we do expect a little bit of seasonality always to happen for those 12/31 expirations.

Speaker #13: Okay. And just wanted to ask on your views, Jordan, on the Hollywood union negotiations, which have started up again, beginning with SAG-AFTRA. Has this impacted leasing demand at all in your portfolio or for an asset like Studio Plaza?

John Kim: Okay. And just wanted to ask on your views, Jordan, on the Hollywood union negotiations, which have started up again, beginning with SAG-AFTRA. Has this impacted leasing demand at all in your portfolio or for an asset like Studio Plaza? When I look at your 2023 leasing, that was sort of a light year, and that's the year of the big Hollywood strikes. So I'm just wondering if you view that to be a potential issue this year.

Speaker #13: When I look at your 2023 leasing, that was sort of a light year, and that's the year of the big Hollywood strikes. So I'm just wondering if you view that to be a potential issue this year.

Jordan Kaplan: I'm sure for some people, it will be an issue. For us, I don't view it as having any issue for us at all. I think we barely have any even exposure. And other than knowing it's happening, I haven't been following it. And believe me, I follow a lot of other things that I am worried about, but that's not on the list.

Speaker #9: For some people, it will be an issue. For us, I don't view it as having any issue for us at all. I think we barely have any, even, exposure.

Speaker #9: And I haven't, other than knowing it's happening, I haven't been following it. And believe me, I follow a lot of other things that I am worried about.

Speaker #9: But that's not on the list.

Speaker #13: So people you talk to, business leaders, are they more concerned of a Hollywood

John Kim: The people you talk to, business leaders, are they more concerned of a Hollywood strike?

Speaker #13: strike? I don't

Speaker #9: You know, I actually am surrounded by entertainment people, and none of them have brought company and said, 'This is the disaster in the making.' So I don't know if it's just that unions have gotten used to doing.

Jordan Kaplan: I don't know. I am surrounded by entertainment people, and none of them have come to me and said, "This is the disaster in the making." So I don't know if it's just that unions have gotten used to doing it. I really don't have an opinion on it. It hasn't been a subject, even with the people in the entertainment business that I'm talking to.

Speaker #9: I really don't have an opinion on it. It hasn't been a subject, even with the people in the entertainment business that I'm talking to.

Speaker #13: Interesting. Okay. Thank you.

John Kim: Interesting. Okay. Thank you.

Speaker #9: Thanks. Thank you.

Jordan Kaplan: Thanks.

Operator: Thank you. And that concludes our question and answer session. I'd like to turn the conference back over to the company for any closing remarks.

Speaker #7: And that concludes our question and answer session. I’d like to turn the conference back over to the company for any closing remarks.

Speaker #9: Well, thank you all for joining us. And I'm sure we'll be seeing many of you during the quarter. Goodbye.

John Kim: Well, thank you all for joining us, and I'm sure we'll be seeing many of you during the quarter. Goodbye.

Jordan Kaplan: Well, thank you all for joining us, and I'm sure we'll be seeing many of you during the quarter. Goodbye.

Speaker #7: Thank you. And that concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Q4 2025 Douglas Emmett Inc Earnings Call

Request a DemoDemo

DEI

Douglas Emmett

Earnings