UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
| ☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the fiscal year ended December 31, 2025
or
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
For the transition period from _____ to _____
Commission file number: 1-33106
Douglas Emmett, Inc.
(Exact name of registrant as specified in its charter)
| Maryland | 20-3073047 | ||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
1299 Ocean Avenue, Suite 1000, Santa Monica, California 90401
(Address of principal executive offices, including zip code)
(310) 255-7700
(Registrant’s telephone number, including area code)
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
| Common Stock, $0.01 par value per share | DEI | New York Stock Exchange | ||||||
Securities registered pursuant to Section 12(g) of the Act: None
| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | Yes | ☑ | No | ☐ | ||||||||||
| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | Yes | ☐ | No | ☑ | ||||||||||
| Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | Yes | ☑ | No | ☐ | ||||||||||
| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). | Yes | ☑ | No | ☐ | ||||||||||
| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. | |||||||||||||||||
| Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | ||||||||||||
| Smaller reporting company | ☐ | Emerging growth company | ☐ | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ | |||||||||||||||||
| Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. | ☑ | ||||
| If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. | ☐ | ||||
| Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). | ☐ | ||||
| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). | Yes | ☐ | No | ☑ | ||||||||||
The aggregate market value of the common stock held by non-affiliates of the registrant, as of June 30, 2025, was $2.42 billion. (This computation excludes the market value of all shares of Common Stock reported as beneficially owned by executive officers and directors of the registrant. Such exclusion shall not be deemed to constitute an admission that any such person is an affiliate of the Registrant.)
The registrant had 167,462,215 shares of its common stock outstanding as of February 13, 2026.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement to be filed in conjunction with the registrant’s annual meeting of shareholders to be held in 2026 are incorporated by reference in Part III of this Report on Form 10-K. Such proxy statement will be filed by the registrant with the Securities and Exchange Commission not later than 120 days after the end of the registrant’s fiscal year ended December 31, 2025.
DOUGLAS EMMETT, INC.
FORM 10-K
| Table of Contents | ||||||||
| Page | ||||||||
1
Glossary
Abbreviations used in this Report:
| ADA | Americans with Disabilities Act of 1990 | ||||
| AI | Artificial Intelligence | ||||
| AOCI | Accumulated Other Comprehensive Income (Loss) | ||||
| ASC | Accounting Standards Codification | ||||
| ASU | Accounting Standards Update | ||||
| BOMA | Building Owners and Managers Association | ||||
| CEO | Chief Executive Officer | ||||
| CFO | Chief Financial Officer | ||||
| Code | Internal Revenue Code of 1986, as amended | ||||
| COVID-19 | Coronavirus Disease 2019 | ||||
| COO | Chief Operating Officer | ||||
| DEI | Douglas Emmett, Inc. | ||||
| EPA | United States Environmental Protection Agency | ||||
| EPS | Earnings Per Share | ||||
| Exchange Act | Securities Exchange Act of 1934, as amended | ||||
| FASB | Financial Accounting Standards Board | ||||
| FDIC | Federal Deposit Insurance Corporation | ||||
| FFO | Funds From Operations | ||||
| FIRPTA | Foreign Investment in Real Property Tax Act of 1980, as amended | ||||
| Fund | Unconsolidated Institutional Real Estate Fund | ||||
| GAAP | Generally Accepted Accounting Principles (United States) | ||||
| IRS | Internal Revenue Service | ||||
| IT | Information Technology | ||||
| JV | Joint Venture | ||||
| LTIP Units | Long-Term Incentive Plan Units | ||||
| MGCL | Maryland General Corporation Law | ||||
| NAREIT | National Association of Real Estate Investment Trusts | ||||
| NYSE | New York Stock Exchange | ||||
| OCI | Other Comprehensive Income (Loss) | ||||
| OP Units | Operating Partnership Units | ||||
| Operating Partnership | Douglas Emmett Properties, LP | ||||
| OFAC | Office of Foreign Assets Control | ||||
| Partnership X | Douglas Emmett Partnership X, LP | ||||
| PCAOB | Public Company Accounting Oversight Board (United States) | ||||
| QRS | Qualified REIT subsidiary(ies) | ||||
| REIT | Real Estate Investment Trust | ||||
| Report | Annual Report on Form 10-K | ||||
| SEC | Securities and Exchange Commission | ||||
| Securities Act | Securities Act of 1933, as amended | ||||
| S&P 500 | Standard & Poor's 500 Index | ||||
| SOFR | Secured Overnight Financing Rate | ||||
| TRS | Taxable REIT Subsidiary(ies) | ||||
| US | United States | ||||
| VIE | Variable Interest Entity(ies) | ||||
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Defined terms used in this Report:
| Annualized Rent | Annualized cash base rent (excludes tenant reimbursements, parking and other revenue) before abatements under leases commenced as of the reporting date and expiring after the reporting date. Annualized Rent for our triple net office properties (in Honolulu) is calculated by adding expense reimbursements and estimates of normal building expenses paid by tenants to base rent. Annualized Rent does not include lost rent recovered from insurance and rent for building management use. Annualized Rent includes rent for our corporate headquarters in Santa Monica. We report Annualized Rent because it is a widely reported measure of the performance of equity REITs, and is used by some investors as a means to determine tenant demand and to compare our performance and value with other REITs. We use Annualized Rent to manage and monitor the performance of our office and multifamily portfolios. | ||||
| Consolidated Portfolio | Includes all of the properties included in our consolidated results, including our consolidated JVs. | ||||
| Development Portfolio | Represents the following properties undergoing development activities: (i) a residential property with 712 apartments and approximately 34,000 square feet of retail space in Los Angeles which we removed from the residential rental market following a fire in January 2020, (ii) a 456,000 square foot single tenant office property in Los Angeles that we commenced converting to multi-tenant after the tenant's lease expired in 2024 and (iii) a 247,000 square foot office property in Westwood with an adjoining residential development site that we acquired in January 2025 and which we are planning to develop into 323 apartments. | ||||
| Funds From Operations (FFO) | We calculate FFO in accordance with the standards established by NAREIT by excluding gains (or losses) on sales of investments in real estate, gains (or losses) from changes in control of investments in real estate, real estate depreciation and amortization (other than amortization of right-of-use assets for which we are the lessee and amortization of deferred loan costs), impairment write-downs of real estate and impairment write-downs of our investment in our unconsolidated Fund from our net income (loss) (including adjusting for the effect of such items attributable to our consolidated JVs and our unconsolidated Fund, but not for noncontrolling interests included in our Operating Partnership). FFO is a non-GAAP supplemental financial measure that we report because we believe it is useful to our investors. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Report for a discussion of FFO. | ||||
| In-Service Portfolio | Represents our Total Portfolio excluding properties in our Development Portfolio. | ||||
| Leased Rate | Commencing in the fourth quarter of 2024, the Leased Rate reflects the percentage leased for our In-Service Portfolio as of the reporting date. Prior to the fourth quarter of 2024 the Leased Rate reflected the percentage leased for our Total Portfolio as of the reporting date. Management space is considered leased. Space taken out of service during a repositioning or which is vacant as a result of a fire or other damage is excluded from both the numerator and denominator for calculating the Leased Rate. For newly developed buildings going through lease up, units are included in both the numerator and denominator as they are leased. We report Leased Rate because it is a widely reported measure of the performance of equity REITs, and is also used by some investors as a means to determine tenant demand and to compare our performance with other REITs. We use Leased Rate to manage and monitor the performance of our office and multifamily portfolios. | ||||
| Net Operating Income (NOI) | We calculate NOI as revenue less operating expenses attributable to the properties that we own and operate. NOI is calculated by excluding the following from our net income (loss): general and administrative expenses, depreciation and amortization expense, other income, other expenses, income (loss) from unconsolidated Fund, interest expense, gains (or losses) on sales of investments in real estate, gain from consolidation of a JV, and net income (loss) attributable to noncontrolling interests. NOI is a non-GAAP supplemental financial measure that we report because we believe it is useful to our investors. See "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Report for a discussion of our Same Property NOI. | ||||
| Occupancy Rate | We calculate Occupancy Rate by excluding signed leases not yet commenced from the Leased Rate. 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. | ||||
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4
This Report contains forward-looking statements within the meaning of the Section 27A of the Securities Act and Section 21E of the Exchange Act. You can find many (but not all) of these statements by looking for words such as “believe”, “expect”, “anticipate”, “estimate”, “approximate”, “intend”, “plan”, “would”, “could”, “may”, “future” or other similar expressions in this Report. We claim the protection of the safe harbor contained in the Private Securities Litigation Reform Act of 1995. We caution investors that any forward-looking statements used in this Report, or those that we make orally or in writing from time to time, are based on our beliefs and assumptions, as well as information currently available to us. Actual outcomes will be affected by known and unknown risks, trends, uncertainties and factors beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution when relying on previously reported forward-looking statements, which were based on results and trends at the time they were made, to anticipate future results or trends. Some of the risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include the following:
•adverse economic, political or real estate developments affecting Southern California or Honolulu, Hawaii;
•competition from other real estate investors in our markets;
•decreasing rental rates or increasing tenant incentive and vacancy rates;
•reduced demand for office space, including as a result of remote work and flexible working arrangements that allow work from remote locations other than the employer’s office premises;
•defaults on, early terminations of, or non-renewal of leases by tenants;
•elevated or increasing interest rates;
•increases in operating and construction costs, including due to inflation and actual or potential tariffs or trade disruptions;
•insufficient cash flows to service our outstanding debt or pay rent on ground leases;
•difficulties in raising capital;
•inability to liquidate real estate or other investments quickly;
•adverse changes to rent control laws and regulations;
•environmental uncertainties;
•natural disasters;
•fire and other property damage;
•insufficient insurance, or increases in insurance costs;
•inability to successfully expand into new markets and submarkets;
•difficulties in identifying properties to acquire and failure to complete acquisitions successfully;
•failure to successfully operate acquired properties;
•risks associated with property development;
•risks associated with JVs;
•conflicts of interest with our officers and reliance on key personnel;
•changes in zoning and other land use laws;
•adverse results of litigation or governmental proceedings;
•failure to comply with laws, regulations and covenants that are applicable to our business;
•possible terrorist attacks or wars;
•possible cyber attacks or intrusions;
•adverse changes to accounting rules;
•weaknesses in our internal controls over financial reporting;
•failure to maintain our REIT status under federal tax laws; and
•adverse changes to tax laws, including those related to property taxes.
For further discussion of these and other risk factors see Item 1A "Risk Factors" in this Report. This Report and all subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to our forward-looking statements to reflect events or circumstances after the date of this Report except as required by law.
5
PART I
Item 1. Business
Overview
Douglas Emmett, Inc. is a fully integrated, self-administered and self-managed REIT. We are one of the largest owners and operators of high-quality office and multifamily properties located in premier coastal submarkets in Los Angeles and Honolulu. Through our interest in our Operating Partnership, its subsidiaries, and our consolidated JVs, we focus on owning, acquiring, developing and managing a substantial market share of top-tier office properties and premier multifamily communities in neighborhoods with significant supply constraints, high-end executive housing and key lifestyle amenities. Our properties are located in the Beverly Hills, Brentwood, Burbank, Century City, Olympic Corridor, Santa Monica, Sherman Oaks/Encino, Warner Center/Woodland Hills and Westwood submarkets of Los Angeles County, California, and in Honolulu, Hawaii. We intend to increase our market share in our existing submarkets and may enter into other submarkets with similar characteristics where we believe we can gain significant market share. The terms "us," "we" and "our" as used in this Report refer to Douglas Emmett, Inc. and its subsidiaries on a consolidated basis.
At December 31, 2025, our Total Portfolio consisted of (i) an 18.0 million square foot office portfolio, which included a 456 thousand square foot office property under development, (ii) 5,445 multifamily apartment units, which included 1,035 apartment units under development, and (iii) fee interests in two parcels of land from which we receive rent under ground leases. For more information, see Item 2 "Properties" of this Report. As of December 31, 2025, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases):
| Total Portfolio | |||||
| Office | |||||
| Wholly-owned properties | 52 | ||||
| Consolidated JV properties | 18 | ||||
| Total | 70 | ||||
| Multifamily | |||||
| Wholly-owned properties | 12 | ||||
| Consolidated JV properties | 3 | ||||
| Total | 15 | ||||
| Total | 85 | ||||
Business Strategy
We employ a focused business strategy that we have developed and implemented over the past four decades:
•Concentration of High Quality Office and Multifamily Properties in Premier Submarkets.
First we select submarkets that are supply constrained, with high barriers to entry, key lifestyle amenities, proximity to high-end executive housing and a strong, diverse economic base. Virtually no entitled Class A office space is currently under construction in our targeted submarkets. Our submarkets are dominated by small, affluent tenants, whose rents are very small relative to their revenues and often not the paramount factor in their leasing decisions. At December 31, 2025, our office portfolio median size tenant was approximately 2,400 square feet. Our office tenants operate in diverse industries, including among others legal, financial services, entertainment, real estate, accounting and consulting, health services, retail, technology and insurance, reducing our dependence on any one industry. In 2023, 2024 and 2025, no tenant accounted for more than 10% of our total revenues.
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•Disciplined Strategy of Acquiring Substantial Market Share In Each Submarket.
Once we select a submarket, we follow a disciplined strategy of gaining substantial market share to provide us with extensive local transactional market information, pricing power in lease and vendor negotiations and an enhanced ability to identify and negotiate investment opportunities. As a result, we average approximately a 39% share of the Class A office space in our submarkets based on the square feet of exposure in our total portfolio to each submarket. See "Office Portfolio Summary" in Item 2 “Properties” of this Report.
•Proactive Asset and Property Management.
Our fully integrated and focused operating platform provides the unsurpassed tenant service demanded in our submarkets, with in-house leasing, proactive asset and property management and internal design and construction services, which we believe provides us with a competitive advantage in managing our property portfolio. Our in-house leasing agents and legal specialists allow us to lease a large property portfolio with a diverse group of smaller tenants, closing an average of approximately three office leases each business day, and our in-house construction company allows us to compress the time required for building out many smaller spaces, resulting in reduced vacancy periods. Our property management group oversees day-to-day property management of both our office and multifamily portfolios, allowing us to benefit from the operational efficiencies permitted by our submarket concentration.
Corporate Structure
Douglas Emmett, Inc. was formed as a Maryland corporation on June 28, 2005 to continue and expand the operations of Douglas Emmett Realty Advisors and its nine institutional funds. All of our assets are directly or indirectly held by our Operating Partnership, which was formed as a Delaware limited partnership on July 25, 2005. As the sole stockholder of the general partner of our Operating Partnership, we generally have the exclusive power under the partnership agreement to manage and conduct the business of our Operating Partnership, subject to certain limited approval and voting rights of the other limited partners. Our interest in our Operating Partnership entitles us to share in the profits and losses and cash distributions in proportion to our percentage ownership.
JVs
At December 31, 2025, in addition to 52 office properties and 12 residential properties wholly-owned by our Operating Partnership, we managed and owned equity interests in six consolidated JVs, through which we and institutional investors owned 18 office properties in our core markets totaling 4.6 million square feet, and 3 residential properties with 793 apartments, which included 323 apartment units under development. At December 31, 2025, we owned a weighted average interest in the consolidated JVs of approximately 47% based on square footage. We are entitled to: (i) distributions based on invested capital, (ii) additional distributions based on cash net operating income or invested capital, (iii) fees for property management and other services, (iv) reimbursement of certain acquisition-related expenses and certain other costs, and (v) a carried interest for certain JVs if the investors’ distributions exceed a hurdle rate.
The financial data in this Report presents our JVs on a consolidated basis in accordance with GAAP. See "Basis of Presentation" in Note 1 to our consolidated financial statements in Item 15 of this Report for more information regarding the consolidation of our JVs. The property data in this Report is presented for our Total Portfolio, which includes the properties owned by our JVs as we believe this presentation assists in understanding our business.
Segments
We operate two business segments, our office segment and our multifamily segment. Our segments include the acquisition, development, ownership and management of office and multifamily real estate. The services for our office segment include primarily the rental of office space and other tenant services, including parking and storage space rental. The services for our multifamily segment include primarily the rental of apartments and other tenant services, including parking and storage space rental. See Note 15 to our consolidated financial statements in Item 15 of this Report for more information regarding our segments.
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Taxation
We believe that we qualify, and we intend to continue to qualify, for taxation as a REIT under the Code, although we cannot provide assurance that this has happened or will happen. See Item 1A "Risk Factors" of this Report for the risks we face regarding taxation as a REIT. The following summary is qualified in its entirety by the applicable Code provisions and related rules, and administrative and judicial interpretations. If we qualify for taxation as a REIT, we will generally not be required to pay federal corporate income taxes on the portion of our net income that is currently distributed to stockholders. This treatment substantially eliminates the “double taxation” (i.e., at the corporate and stockholder levels) that generally results from investment in a corporation. However, we will be required to pay federal income tax under certain circumstances.
The Code defines a REIT as a corporation, trust or association (i) which is managed by one or more trustees or directors; (ii) the beneficial ownership of which is evidenced by transferable shares or certificates of beneficial interest; (iii) which would be taxable but for Sections 856 through 860 of the Code as a domestic corporation; (iv) which is neither a financial institution nor an insurance company subject to certain provisions of the Code; (v) the beneficial ownership of which is held by 100 or more persons; (vi) of which, during the last half of each taxable year, not more than 50% in value of the outstanding stock is owned, actually or constructively, by five or fewer individuals; and (vii) which meets certain other tests, described below, regarding the amount of its distributions and the nature of its income and assets. The Code requires that conditions (i) to (iv) be met during the entire taxable year and that condition (v) be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months.
There are two gross income requirements we must satisfy:
i.at least 75% of our gross income (excluding gross income from “prohibited transactions” as defined below and qualifying hedges) for each taxable year must be derived directly or indirectly from investments relating to real property or mortgages on real property or from certain types of temporary investment income, and
ii.at least 95% of our gross income (excluding gross income from “prohibited transactions” and qualifying hedges) for each taxable year must be derived from income that qualifies under the 75% test or from other dividends, interest or gain from the sale or other disposition of stock or securities or certain other passive sources. In general, a “prohibited transaction” is a sale or other disposition of property (other than foreclosure property) held primarily for sale to customers in the ordinary course of business.
We must satisfy five asset tests at the close of each quarter of our taxable year:
i.at least 75% of the value of our total assets must be represented by real estate assets including shares of stock of other REITs, debt instruments of publicly offered REITs, certain other stock or debt instruments purchased with the proceeds of a stock offering or long-term public debt offering by us (but only for the one-year period after such offering), cash, cash items and government securities,
ii.not more than 25% of our total assets may be represented by securities other than those in the 75% asset class,
iii.of the assets included in the 25% asset class, the value of any one issuer’s securities owned by us may not exceed 5% of the value of our total assets and we may not own more than 10% of the vote or value of the securities of any one issuer, in each case other than securities included under the 75% asset test above and interests in TRS or QRS, each as defined below, and in the case of the 10% value test, subject to certain other exceptions,
iv.not more than 20% of the value of our total assets may be represented by securities of one or more TRS (25% for taxable years beginning after July 30, 2008 and before January 1, 2018 and taxable years beginning after December 31, 2025), and
v.not more than 25% of the value of our total assets may be represented by nonqualified publicly offered REIT debt instruments.
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In order to qualify as a REIT, we are required to distribute dividends (other than capital gains dividends) to our stockholders equal to at least (A) the sum of (i) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the net income, if any (after tax), from foreclosure property, less (B) the sum of certain items of non-cash income. The distributions generally must be paid in the taxable year to which they relate. At our election, a distribution will be treated as paid in a taxable year if it is declared before we timely file our tax return for such year and is paid on or before the first regular dividend payment after such declaration, provided such payment is made during the 12-month period following the close of such year. To the extent that we do not distribute all of our net long-term capital gains or distribute at least 90%, but less than 100%, of our REIT taxable income, we will be required to pay tax thereon at the regular corporate tax rate. Furthermore, if we fail to distribute during each calendar year the sum of at least (i) 85% of our ordinary income for such year, (ii) 95% of our capital gains income for such year, and (iii) any undistributed taxable income from prior periods, we would be required to pay a 4% excise tax on the excess of such required distributions over the amounts actually distributed.
We own interests in various partnerships and limited liability companies. In the case of a REIT that is a partner in a partnership or a member of a limited liability company that is treated as a partnership under the Code, Treasury Regulations provide that for purposes of the REIT income and asset tests, the REIT will be deemed to own its proportionate share of the assets of the partnership or limited liability company (determined in accordance with its capital interest in the entity), subject to special rules related to the 10% asset test, and will be deemed to be entitled to the income of the partnership or limited liability company attributable to such share.
We own an interest in a subsidiary that is intended to be treated as a QRS. The Code provides that a QRS will not be treated as a separate corporation for federal income tax purposes, and all assets, liabilities and items of income, deduction and credit of the QRS will be treated as our assets, liabilities and items of income. We hold certain of our properties through subsidiaries that have elected to be taxed as REITs. Each such subsidiary REIT is subject to the various REIT qualification requirements and other limitations described herein that are applicable to us. We also wholly own a corporation which has elected to be treated as a TRS. A REIT may own more than 10% of the voting stock and value of the securities of a corporation that jointly elects with the REIT to be a TRS, provided certain requirements are met. A TRS generally may engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT and of others, except a TRS may not manage or operate a hotel or healthcare facility. A TRS is treated as a regular corporation and is subject to federal income tax and applicable state income and franchise taxes at regular corporate rates. In addition, a 100% tax may be imposed on a REIT if its rental, service or other agreements with its TRS, or the TRS agreements with the REIT’s tenants, are not on arm’s-length terms.
We may be required to pay state or local tax in various state or local jurisdictions, including those in which we own properties or otherwise transact business or reside. The state and local tax treatment of us and our stockholders may not conform to the federal income tax consequences discussed above. We may also be subject to certain taxes applicable to REITs, including taxes in lieu of disqualification as a REIT, on undistributed income, and on income from prohibited transactions.
In addition, if we acquire any asset from a corporation that is or has been a C corporation in certain transactions in which our tax basis in the asset is less than the fair market value of the asset, in each case determined as of the date on which we acquired the asset, and we subsequently recognize gain on the disposition of the asset during the five-year period beginning on the date on which we acquired the asset, then we generally will be required to pay tax at the highest regular corporate tax rate on this gain to the extent of the excess of (i) the fair market value of the asset over (ii) our adjusted tax basis in the asset, in each case determined as of the date on which we acquired the asset.
Insurance
We carry comprehensive liability, fire, extended coverage, business interruption and rental loss insurance covering all of the properties in our portfolio under blanket insurance policies. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss and the cost of the coverage and industry practice. See Item 1A "Risk Factors" of this Report for the risks we face regarding insurance.
Competition
We compete with a number of developers, owners and operators of office and multifamily real estate, many of which own properties similar to ours in the same markets in which our properties are located. See Item 2 "Properties" of this Report for more information about our properties. See Item 1A "Risk Factors" of this Report for the risks we face regarding competition.
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Regulation
Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas, fire and safety requirements, various environmental laws, the ADA, and rent control laws. See Item 1A "Risk Factors" of this Report for the risks we face regarding laws and regulations.
Environmental Sustainability
Our approach
We actively manage our operations in an environmentally sustainable manner. On an annual basis, our board of directors assesses material climate-related risks by assigning numeric values based on both the likelihood of occurrence and the potential impact, with mitigation approaches considered and evaluated. Throughout the year, our Corporate Sustainability Committee, led by our President and COO, oversees our policies and operational controls for environmental, health, safety and social risks, and monitors our progress and results. Every month, our Regional Engineers meet to monitor and implement the policies set by our Corporate Sustainability Committee. Our Regional Engineers hold monthly meetings with each Building Engineer in their respective regions to review specific building operating issues and opportunities for improvement. We also use external resources to provide critical expertise, tools and resources for our sustainability program.
We engage with our stakeholders to align sustainability efforts and improve the efficiency and health of our business and communities. We share our sustainability goals and standards with our tenants, vendors and suppliers and work closely with them to gather information, develop solutions, and implement technologies and programs to achieve our goals. In our communities, we seek input from other stakeholders and participate in local Business Improvement Districts. We have integrated sustainability into our property management practices, tenant improvement build-outs and meetings with existing and prospective tenants.
Our sustainability program covers four key areas:
•Energy Usage and Greenhouse Gas Emissions
Our principal approach to reducing greenhouse gas emissions is through reducing our energy consumption. Our actual energy consumption from year to year is impacted by many factors, such as weather, occupancy in our buildings and activities of our tenants. Many of these factors are beyond our control. However, we can and do seek to make our buildings more energy efficient.
Some of our initiatives to reduce our consumption include items such as real time energy monitoring software, LED lighting retrofitting, and new energy management systems. As a result of our efforts, more than 84% of our stabilized eligible office space as of December 31, 2024 qualified for "ENERGY STAR Certification" by the EPA as having energy efficiency in the top 25% of buildings nationwide (our 2025 ENERGY STAR scores were not yet available as of the date of this Report).
Our energy and electricity are provided by utility providers through the grid (LA Department of Water and Power, Southern California Edison, and Hawaii Electric Company). We estimate the percentage of renewable energy provided by our utility providers was approximately 45% in Los Angeles and 31% in Honolulu in 2024 (the most recent available data).
•Water Usage
We have undertaken a number of initiatives to conserve water across our portfolio. Our buildings use low flow faucets and toilets, and we have also saved water by using waterless urinals. Where permitted, we try to recycle used water (by law, we cannot recycle most of the water used in our buildings since it must be fit for human consumption). In a few of our buildings where groundwater naturally seeps into our subterranean parking garages, we treat the water before pumping it back into the ground.
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•Controlling Waste, including hazardous waste and recycling
Recycling: In partnership with our vendors and tenants, we have implemented business waste and e-waste recycling programs (we do not generate any production waste or packaging waste) at our properties.
Non-Hazardous Waste: Our routine operations only generate modest amounts of ancillary waste, primarily from typical operations in an office setting. A major source of our waste is the debris generated by refurbishment of our buildings, particularly in recurring tenant improvements that can be generated when a new tenant moves into a building. To minimize that waste, we attempt to construct tenant improvements that will be usable by future tenants, and to fit tenants into existing spaces without substantial refurbishment.
Hazardous Waste: Our operations only generate modest ancillary amounts of hazardous waste (mostly office supplies), which we dispose of in accordance with all applicable waste regulations. Similarly, our tenants are almost entirely limited by their leases to general office uses that prohibit the use of additional hazardous wastes and are required by their leases to comply with all applicable waste regulations.
•Air Emissions, including transportation
Although our operations do not create significant air emissions such as nitrogen oxides (NOx), sulfur oxides (Sox), volatile organic compounds (VOCs) or particulate matter (PM), our Los Angeles properties produce a small amount of emissions from stationary sources such as natural gas boilers. We have been working to reduce those emissions by upgrading to lower emission models. We expect to reduce the indirect air emissions from our utility suppliers by reducing our per square foot electricity usage.
We also encourage sustainable transportation choices by our tenants: We have installed almost 400 electric vehicle charging stations at our properties and have plans to add additional stations. All of our buildings provide ample bicycle parking.
Development
Ground up development is a small but growing part of our business. So far, all our development projects have been adding additional density in existing office or apartment community sites we already owned. We are committed to selecting development sites that are not in environmentally protected areas or areas of high biodiversity, and strive to use brownfield sites instead of greenfield sites.
Community Impact
We have a long history of providing meaningful, and often transformational, support to the communities in which we operate. We also provide charitable support to key industry and professional organizations, often in the form of event sponsorships.
Part of our business strategy is owning very large concentrations of office buildings and residential communities in our target submarkets. Our large ownership share in many of these neighborhoods puts us in a unique position to sometimes invest in outdoor enhancement projects that not only improve our properties but also provide a valuable amenity to the surrounding community. For example, at our Landmark Los Angeles residential development in Brentwood we invested significant additional capital to build a one acre park on Wilshire Boulevard that is available to the public, providing urban green space as well as a valuable amenity to the surrounding properties and community.
Human Capital
Central to our long-term strategy is attracting, developing and retaining the best talent with the right skills to drive our success. Our ability to maintain our competitive position is largely dependent upon the skill and effort of our executive officers and key personnel, who have significant real estate industry experience, strong industry reputations and networks, and assist us in identifying acquisition, disposition, development and borrowing opportunities, negotiating with tenants and sellers of properties, and managing our development projects and the operations of our properties. As of December 31, 2025, we employed approximately 778 people.
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We promote a culture of openness, respect and trust and bring a sense of teamwork and inclusion to all we do. We recognize that having a range of experiences, backgrounds and perspectives allows us to find new ways of doing things. We make sure to walk the talk in fostering a workplace culture that encourages and empowers all our employees to have a voice and fulfill their potential. We have programs that actively promote our culture, such as our Daily Exchange program, which provides employees with daily training regarding our vision statement and core values, and our quarterly employee recognition program, the Jane Joyce Award.
We are committed to equal opportunity in workplaces that are free from discrimination or harassment on the basis of race, sex, color, ancestry, citizenship, marital status, family status, national or social origin, ethnicity, religion, age, disability, sexual orientation, gender identification or expression, medical condition, genetic information, military or veteran status, political opinion or any other status protected by applicable law. Recruitment, hiring, placement, development, training, compensation and advancement may not be based on any of these factors, but should instead be based on factors such as qualifications, performance, skills and experience.
We know that the first step in hiring and retaining the best talent is to create safe and inspiring workplaces where people feel valued. We offer competitive compensation and benefits to all regular full-time employees, including but not limited to paid holiday, vacation, and sick time, retirement savings plans and medical, dental, and vision coverage. We also offer a very generous equity compensation program that empowers our employees to act and feel like owners, not just employees. In 2025, we provided equity compensation to more than a quarter of our approximately 778 employees.
The health and safety of our employees, tenants, and vendors is of the utmost importance to us. We adhere to leading health and safety standards across our portfolio, and each year, we require all our employees to complete safety training. We have a wellness program that is designed to raise health awareness among our employees. Some of the program's activities include biometric screenings, flu shots, healthy snacks and employee walking challenges. The program provides many benefits including higher employee satisfaction, reduced healthcare costs, and improved employee performance.
Principal Executive Offices
Our principal executive offices are located in the building we own at 1299 Ocean Avenue, Suite 1000, Santa Monica, California 90401 (telephone 310-255-7700).
Available Information
We make available on our website at www.douglasemmett.com our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments thereto, free of charge, as soon as reasonably practicable after we file such reports with, or furnish them to, the SEC. See "Our Company - Investors - SEC Filings" on our website. Also available on our website, free of charge, are our governance documents, which includes our Code of Business Conduct and Ethics, and the charters of our board of directors and its committees. See "Our Company - Investors - Management" on our website. None of the information on or hyperlinked from our website is incorporated into this Report. For more information, please contact:
Stuart McElhinney
Vice President, Investor Relations
310-255-7751
smcelhinney@douglasemmett.com
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Item 1A. Risk Factors
The following risk factors are what we believe to be the most significant risk factors that could adversely affect our business and operations, including, without limitation, our financial condition, REIT status, results of operations and cash flows, our ability to service our debt and pay dividends to our stockholders, our ability to capitalize on business opportunities as they arise, our ability to raise capital, and the market price of our common stock. This is not an exhaustive list, and additional risk factors could adversely affect our business and financial performance. We operate in a very competitive and rapidly changing environment and new risk factors emerge from time to time. It is therefore not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. This discussion of risk factors includes many forward-looking statements. For cautions about relying on forward-looking statements see “Forward Looking Statements” at the beginning of this Report. Below is a summary of our risk factors:
Risks Related to Our Properties and Our Business
•The continuation of or further increases in inflation could adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
•Economic and political changes could adversely affect our business, operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
•All of our properties are located in Los Angeles County, California, and Honolulu, Hawaii, and we are therefore exposed to greater risk than if we owned a more geographically diverse portfolio. Our properties in Los Angeles County are concentrated in certain submarkets, exposing us to risks associated with those specific areas.
•Our operating performance and the market value of our common stock are subject to risks associated with our investments in real estate and with trends in the real estate industry.
•We have a substantial amount of debt, which exposes us to interest rate fluctuation risk and the risk of not being able to refinance our debt, which in turn could expose us to the risk of default under our debt obligations.
•The rents we receive from new leases may be less than our asking rents, and we may experience rent roll-down from time to time.
•Although we have a diverse tenant base, a large portion of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows.
•In order to successfully compete against other properties, we need to maintain, repair, and renovate our properties, which reduces our cash flows.
•We face intense competition, which could adversely impact the occupancy and rental rates of our properties.
•Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, may adversely affect our business, financial position, results of operations, cash flows, our ability to service our debt, our ability to pay dividends to our stockholders, our REIT status, our ability to capitalize on business opportunities as they arise, our ability to raise capital, and/or the market price of our common stock.
•Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance.
•We may be unable to renew leases or lease vacant space.
•Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants which may present greater credit risks.
•Real estate investments are generally illiquid.
•We may incur significant costs to comply with laws, regulations and covenants.
•Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities.
•Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
•Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants.
•We may be unable to complete acquisitions that would grow our business, or successfully integrate and operate acquired properties.
•We may be unable to successfully expand our operations into new markets and submarkets.
•We are exposed to risks associated with property development.
•We are exposed to certain risks when we enter into JVs or issue securities of our subsidiaries, including our Operating Partnership.
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•If we default on the ground lease to which one of our properties is subject, our business could be adversely affected.
•We may not have sufficient cash available for distribution to stockholders at expected levels in the future.
•We face risks associated with contractual counterparties being designated "Prohibited Persons" by the Office of Foreign Assets Control.
•Terrorism and war could harm our business and operating results.
Risks Related to Our Organization and Structure
•Tax consequences to holders of OP Units upon a sale or refinancing of our properties may cause the interests of our executive officers to differ from the interests of our stockholders.
•Our executive officers have significant influence over our affairs.
•Under their employment agreements, certain of our executive officers will receive severance if they are terminated without cause or resign for good reason.
•The loss of any of our executive officers or key senior personnel could significantly harm our business.
•Compensation awards to our management may not be tied to or correspond with improved financial results or the market price of our common stock.
•Our board of directors may change significant corporate policies without stockholder approval.
•Our growth depends on external sources of capital which are outside of our control.
•We face risks associated with short-term liquid investments.
•Our charter, the partnership agreement of our Operating Partnership, and Maryland law contain provisions that may delay or prevent a change of control transaction.
•Our fiduciary duties as the sole stockholder of the general partner of our Operating Partnership could create conflicts of interest.
Risks Related to Taxes and Our Status as a REIT
•Our property taxes could increase due to property tax rate changes, reassessments or changes in property tax laws, which would adversely impact our cash flows.
•Transfer taxes like those imposed by Los Angeles Measure ULA could have a negative impact on our property valuations and our ability to acquire or sell properties at favorable prices or on a timely basis.
•Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions.
•If the Operating Partnership, or any of its subsidiaries (other than any TRS), were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT.
•Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions.
•REIT distribution requirements could adversely affect our liquidity and cause us to forego otherwise attractive opportunities.
•REIT stockholders can receive taxable income without cash distributions.
•If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable or if we are unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis.
•Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification.
•Non-U.S. investors may be subject to FIRPTA, which would impose tax on certain distributions and on the sale of common stock if we are unable to qualify as a “domestically controlled” REIT or if our stock is not considered to be regularly traded on an established securities market.
General Risks
•Security breaches through cyber attacks, cyber intrusions or otherwise, could cause loss of confidential information, as well as significant disruptions of our IT networks and related systems, which could harm our business.
•The use of AI technologies presents certain risks that may adversely affect our business and operations.
•Litigation could have an adverse effect on our business.
•If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.
•New accounting pronouncements could adversely affect our operating results or the reported financial performance of our tenants.
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Risks Related to Our Properties and Our Business
The continuation of or further increases in inflation could adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
In recent years, the consumer price index has increased substantially and remains elevated. Federal policies and recent global events may exacerbate recent increases in the consumer price index. Sustained or further increases in inflation could have adverse impacts on our business, including:
•an increase in our rental operating costs and our general and administrative costs;
•our inability to increase rental rates at the same rate as inflation;
•reduction in tenant demand for our properties if we are able to increase rental rates at the same rate as inflation;
•our inability to recover higher rental operating costs from our office tenants;
•higher operating costs billed to our office tenants, which could reduce tenant demand for our office properties;
•elevated or increasing interest rates may: (i) increase our borrowing costs, (ii) adversely impact our property valuations, and (iii) cause an economic recession which would adversely affect our business;
•an increase in recurring capital expenditures to maintain our properties;
•an increase in construction costs, which would increase the cost of development and repositioning projects and adversely impact our investments in real estate assets and expected yields on our development and repositioning projects, which could make investment opportunities less profitable to us;
•reduced cash flows, which would adversely impact our ability to pay dividends and distributions.
In addition, historically, during periods of elevated or increasing interest rates, real estate valuations have generally decreased as a result of rising capitalization rates, which tend to be positively correlated with interest rates. Consequently, prolonged periods of elevated interest rates may negatively impact the valuation of our real estate portfolio and result in a decline of the market price of our common stock and market capitalization, as well as lower sales proceeds from future property dispositions.
Economic and political changes could adversely affect our business, operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
Our business may be adversely affected by global market, economic and geopolitical conditions, including general global economic and political uncertainty and dislocations in the credit markets. If these conditions become more volatile or worsen, our business, results of operations, liquidity and financial condition and those of our tenants may be adversely affected as a result of the following consequences, among others:
•tenant defaults under leases or tenants not renewing their leases, or renewing under less favorable terms, if the financial condition of our tenants is adversely impacted;
• reduced leasing to new tenants or leasing at less favorable terms;
•decreased demand for our office space if businesses, including our tenants, lay off employees;
•decreased commercial real estate occupancy and rental rates resulting in decreased property values;
• limitations in our ability to obtain financing on terms and conditions that we find acceptable, or at all, which could reduce our ability to refinance existing debt and obtain new debt to pursue acquisition and development opportunities; and
• reduced values of our properties, which may limit our ability to obtain new debt financing secured by our properties or limit our ability to refinance our existing debt secured by our properties.
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All of our properties are located in Los Angeles County, California, and Honolulu, Hawaii, and we are therefore exposed to greater risk than if we owned a more geographically diverse portfolio. Our properties in Los Angeles County are concentrated in certain submarkets, exposing us to risks associated with those specific areas.
Because of the geographic concentration of our properties, we are susceptible to adverse economic and regulatory developments, as well as natural disasters, in the markets and submarkets where we operate, including, for example, economic slowdowns, industry slowdowns, business downsizing, business relocations, increases in real estate and other taxes, changes in regulation, earthquakes, floods, droughts and wildfires. California is also regarded as being more litigious, regulated and taxed than many other states.
Any adverse developments in the economy or real estate market in Los Angeles County or Honolulu or the surrounding regions, or any decrease in demand for office space resulting from the Los Angeles County or Honolulu regulatory or business environment could impact our ability to generate revenues sufficient to meet our operating expenses or other obligations, which would adversely impact our operating results, cash flows, financial position, our ability to pay dividends and distributions, and the market price of our common stock.
Our operating performance and the market value of our common stock are subject to risks associated with our investments in real estate and with trends in the real estate industry.
Our economic performance and the value of our real estate, and consequently the market price of our common stock, are subject to the risk that our properties may not generate revenues sufficient to meet our operating expenses or other obligations. Real estate investments are subject to various risks, fluctuations and cycles in value and demand, many of which are beyond our control and could adversely affect our operating results, cash flows, and financial position. These events include, but are not limited to:
•adverse changes in international, national or local economic conditions;
•inability to rent space on favorable terms, including possible market pressures to offer tenants rent abatements, tenant improvements, early termination rights or below-market renewal options;
•adverse changes in financial conditions of actual or potential investors, buyers, sellers or tenants;
•inability to collect rent from tenants;
•competition from other real estate investors, including other real estate operating companies, publicly-traded REITs and institutional investment funds;
•reduced tenant demand for office space and residential units from matters such as: (i) trends in space utilization, including remote working arrangements, (ii) changes in the relative popularity of our properties, (iii) the type of space we lease, (iv) purchasing versus leasing, (v) increasing crime or homelessness in our submarkets, (vi) changing submarket demographics or (vii) economic recessions;
•reduced demand for parking space due to matters such as: (i) reduced attendance in our buildings, (ii) the impact of technology such as self-driving cars, or (iii) the increasing popularity of car ride sharing services;
•increases in the supply of office space and residential units;
•fluctuations in interest rates and the availability of credit, which could adversely affect our ability to obtain financing on favorable terms or at all;
•increases in operating costs (or our reduced ability to recover operating costs from our tenants), including: (i) insurance costs, (ii) labor costs (such as the unionization of our employees or the employees of any parties with whom we contract for services to our buildings), (iii) energy prices, (iv) real estate assessments and other taxes, and (v) costs of compliance with laws, regulations and governmental policies;
•utility disruptions;
•the effects of rent controls, stabilization laws and other laws or covenants regulating rental rates;
•changes in, and changes in enforcement of, laws, regulations and governmental policies, including, without limitation, health, safety, environmental, zoning and tax laws, governmental fiscal policies and the ADA;
•legislative uncertainty related to federal and state spending and tax policy;
•difficulty in operating properties effectively;
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•declines in real estate valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing;
•property damage resulting from seismic activity or other natural disasters;
•acquiring undesirable properties; and
•inability to dispose of properties at appropriate times or at favorable prices.
We have a substantial amount of debt, which exposes us to interest rate fluctuation risk and the risk of not being able to refinance our debt, which in turn could expose us to the risk of default under our debt obligations.
We have a substantial amount of debt and we may incur significant additional debt for various purposes, including, without limitation, to fund future property acquisitions and development activities, reposition properties and to fund our operations. As of December 31, 2025, we had approximately $5.6 billion of debt outstanding, of which $1.6 billion is floating rate debt, which exposes us to interest rate fluctuation risk. See Note 8 to our consolidated financial statements in Item 15 of this Report for more detail regarding our consolidated debt. See "Off-Balance Sheet Arrangements" in Item 7 of this Report for more detail regarding our unconsolidated debt.
Our ability to service and refinance our debt and to fund our operations, working capital, and capital expenditures, depends on our ability to generate cash flow in the future. Our cash flow is subject to general economic, industry, financial, competitive, operating, legislative, regulatory, environmental and other factors, many of which are beyond our control. Our substantial indebtedness, and the limitations and other constraints imposed on us by our debt agreements, especially during economic downturns when credit is harder to obtain, could adversely affect us, including the following:
•periods of rising or elevated interest rates may adversely affect: (i) our results of operations, (ii) our ability to pay dividends and distributions, (iii) the market price of our common stock, (iv) our ability to borrow or to borrow on favorable terms and (v) our ability to refinance existing debt on commercially reasonable terms or at all;
•our cash flows may be insufficient to meet our required principal and interest payments;
•servicing our borrowings may leave us with insufficient cash to operate our properties or to pay the distributions necessary to maintain our REIT qualification;
•we may be unable to borrow additional funds as needed or on favorable terms, which could, among other things, adversely affect our ability to capitalize upon acquisition opportunities;
•we may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our existing indebtedness;
•we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;
•we may violate any restrictive covenants in our loan documents, which could entitle the lenders to accelerate our debt obligations;
•we may be unable to hedge floating rate debt, counterparties may fail to honor their obligations under our hedge agreements, the hedge agreements may not effectively hedge the interest rate fluctuation risk, and, upon the expiration of any hedge agreements we do have, we will be exposed to the then-existing market rates of interest and future interest rate volatility with respect to debt that is currently hedged; we could also be declared in default on our hedge agreements if we default on the underlying debt that we are hedging;
•we may default on our obligations and the lenders or mortgagees may foreclose on our properties that secure their loans and receive an assignment of rents and leases;
•our default under any of our indebtedness with cross default provisions could result in a default on other indebtedness; and
•any foreclosure on our properties could also create taxable income without accompanying cash proceeds, which could adversely affect our ability to meet the REIT distribution requirements imposed by the Code.
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The rents we receive from new leases may be less than our asking rents, and we may experience rent roll-down from time to time.
As a result of various factors, such as competitive pricing pressure in our submarkets, adverse conditions in the Los Angeles County or Honolulu real estate market, general economic downturns, or the desirability of our properties compared to other properties in our submarkets, the rents we receive on new leases could be less than our in-place rents, which could adversely affect our operating results, cash flows, and financial position.
Although we have a diverse tenant base, a large portion of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows.
As of December 31, 2025, as a percentage of our annualized base rental revenue for the stabilized portfolio, 19.7% of our tenants operated in the legal industry, 16.8% in the financial services industry, 13.3% in the real estate industry and 9.9% in the health services industry. As we continue our development and potential acquisition activities, our tenant mix could become more concentrated, further exposing us to risks associated with those industries. For the composition of our tenants by industry, see “Item 2. Properties—Office Industry Diversification as of December 31, 2025.” An economic downturn in any of these industries, or in any industry in which a significant number of our tenants currently or may in the future operate, could negatively impact the financial condition of such tenants and cause them to fail to make timely rental payments or default on lease obligations, fail to renew their leases or renew their leases on terms less favorable to us, become bankrupt or insolvent, or otherwise become unable to satisfy their obligations to us. As a result, a downturn in an industry in which a significant number of our tenants operate could adversely affect our financial conditions, result of operations and cash flows.
In order to successfully compete against other properties, we need to maintain, repair, and renovate our properties, which reduces our cash flows.
If our properties are not as attractive to current and prospective tenants in terms of rent, services, condition, or location as properties owned by our competitors, we could lose tenants or suffer lower rental rates. As a result, we may from time to time be required to incur significant capital expenditures to maintain the competitiveness of our properties. For additional information see “We are exposed to risks associated with property development.” There can be no assurances that any such expenditures would result in higher occupancy or rental rates, or deter existing tenants from relocating to properties owned by our competitors.
We face intense competition, which could adversely impact the occupancy and rental rates of our properties.
We compete with a number of developers, owners and operators of office and multifamily real estate, many of which own properties similar to ours in the same markets in which our properties are located. If our competitors offer space at rental rates below current market rates, or below the rental rates that we currently charge our tenants, or if they offer tenants significant rent or other concessions, we may lose existing or potential tenants and may not be able to replace them, and we may be pressured to reduce our rental rates below those we currently charge or offer more substantial rent abatements, tenant improvements, early termination rights or below-market renewal options in order to retain tenants when our tenants’ leases expire.
Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, may adversely affect our business, financial position, results of operations, cash flows, our ability to service our debt, our ability to pay dividends to our stockholders, our REIT status, our ability to capitalize on business opportunities as they arise, our ability to raise capital, and/or the market price of our common stock.
Epidemics, pandemics or other outbreaks of an illness, disease or virus, such as COVID-19, can severely disrupt general economic activities in a variety of ways that are difficult to predict. For example, governments and businesses may take actions to mitigate the public health crisis, including quarantines, stay-at-home orders, density limitations, social distancing measures, and/or restrictions on types of business that may continue to operate. The extent to which an outbreak could impact our business will depend on factors such as the duration and spread, its severity, the actions taken to contain the virus, the emergence and impact of future virus variants, and how quickly and to what extent normal economic and operating conditions resume. The economic impact of an outbreak, including any resulting economic recession, could significantly impact our business, for example: (i) lower occupancy levels, (ii) reduced attendance in our buildings and lower parking income, (iii) tenants inability to pay rent in full or on a timely basis, (iv) government moratoriums that could affect our ability to collect rents, (v) disruptions to our operations, and (vi) increases in the cost or availability of insurance. The impacts to our business could impact our financial condition, results of operations, cash flows, liquidity and our ability to meet our debt service obligations.
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Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance.
Our business operations in Los Angeles County, California and Honolulu, Hawaii are susceptible to, and could be significantly affected by, adverse weather conditions and natural disasters such as fires, earthquakes, tsunamis, hurricanes, volcano eruptions, drought, wind, floods and landslides. The likelihood and severity of such disasters may be increased as a result of climate change, and climate change could also have other impacts such as rising sea levels, which could impact our properties in Honolulu.
Adverse weather conditions, natural disasters and climate change impacts could cause significant damage to our properties or to the economies of the regions in which they are located, the risk of which is enhanced by the concentration of our properties’ locations. Our insurance coverage may not be adequate to cover business interruption or losses resulting from adverse weather or natural disasters. In addition, our insurance policies include substantial self-insurance portions and significant deductibles and co-payments for such events, and we are subject to the availability of insurance in the US and the pricing thereof. As a result, we may incur significant costs in the event of adverse weather conditions and natural disasters.
Most of our properties are located in Southern California, an area subject to an increased risk of earthquakes. While we presently carry earthquake insurance on our properties, the amount of our earthquake insurance coverage may not be sufficient to fully cover losses from earthquakes. We may reduce or discontinue earthquake or any other insurance coverage on some or all of our properties in the future if the cost of premiums for any of these policies in our judgment exceeds the value of the coverage discounted for the risk of loss.
We do not carry insurance for certain losses, such as losses caused by certain environmental conditions, asbestos, riots or war. In addition, our title insurance policies generally only insure the value of a property at the time of purchase, and we have not and do not intend to increase our title insurance coverage as the market value of our portfolio increases. As a result, we may not have sufficient coverage against all losses that we may experience, including from adverse title claims.
If we experience a loss that is uninsured or which exceeds policy limits, we could incur significant costs and lose the capital invested in the damaged properties as well as the anticipated future cash flows from those properties. If the damaged properties are encumbered, we may continue to be liable for the indebtedness, even if these properties were irreparably damaged.
If any of our properties were destroyed or damaged, then we might not be permitted to rebuild many of those properties to their existing height or size at their existing location under current zoning and land use regulations. In the event that we experience a substantial or comprehensive loss of one of our properties, we may not be able to rebuild such property to its existing specifications and otherwise may have to upgrade such property to meet current code requirements.
New regulations in the submarkets in which we operate could require us to make safety improvements to our buildings, for example requiring us to retrofit our buildings to better withstand earthquakes, and we could incur significant costs complying with those regulations.
We may be unable to renew leases or lease vacant space.
We may be unable to renew our tenants' leases, in which case we must find new tenants. To attract new tenants or retain existing tenants, particularly in periods of recession, we may have to accept rental rates below our existing rental rates or offer substantial rent abatements, tenant improvements, early termination rights or below-market renewal options. Accordingly, portions of our office and multifamily properties may remain vacant for extended periods of time. In addition, some existing leases currently provide tenants with options to renew the terms of their leases at rates that are below the current market rates or to terminate their leases prior to the expiration date thereof. We actively pursue opportunities for what we believe to be well-located and high quality buildings that may be in a transitional phase due to current or impending vacancies. We cannot assure that any such vacancies will be filled following a property acquisition, or that new tenant leases will be executed at or above market rates. As of December 31, 2025, 19.7% of the square footage in our total office portfolio was available for lease and 11.7% was scheduled to expire in 2026. As of December 31, 2025, 0.5% of the units in our multifamily portfolio were available for lease, and substantially all of the leases in our multifamily portfolio must be renewed within the next year. For more information see Item 2 “Properties” of this Report.
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Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants which may present greater credit risks.
Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants, which may present greater credit risks because they are more susceptible to economic downturns than larger tenants, and may be more likely to cancel or not renew their leases.
Real estate investments are generally illiquid.
Our real estate investments are relatively difficult to sell quickly. Return of capital and realization of gains, if any, from an investment will generally occur upon disposition or refinancing of the underlying property. We may not be able to realize our investment objectives by sale or be able to refinance at attractive prices within any given period of time. We may also not be able to complete any exit strategy. Any number of factors could increase these risks, such as (i) weak market conditions, (ii) the lack of an established market for a property, (iii) changes in the financial condition or prospects of prospective buyers, (iv) changes in local, national or international economic conditions, and (v) changes in laws, regulations or fiscal policies. Furthermore, certain properties may be adversely affected by contractual rights, such as rights of first offer or ground leases.
We may incur significant costs to comply with laws, regulations and covenants.
The properties in our portfolio are subject to various covenants, federal, state and local laws, ordinances, regulatory requirements, including permitting and licensing requirements, various environmental laws, the ADA and rent control laws. Such laws and regulations, including municipal or local ordinances, zoning restrictions and restrictive covenants imposed by community developers may restrict our use of our properties and may require us to obtain approval from local officials or community standards organizations at any time with respect to our properties, including prior to acquiring a property or when undertaking renovations of any of our existing properties. Among other things, these restrictions may relate to fire and safety, seismic, asbestos abatement or hazardous material cleanup requirements. There can be no assurance that existing laws and regulations will not adversely affect us or the timing or cost of any future acquisitions, developments or renovations, or that additional regulations that increase such delays or result in additional costs will not be adopted. Under the ADA, our properties must meet federal requirements related to access and use by disabled persons to the extent that such properties are “public accommodations”. The costs of our on-going efforts to comply with these laws and regulations are substantial. Similarly, our properties are subject to land use rules and regulations that govern our development, repositioning and use of our properties, such as Title 24 of the California Code of Regulations, which prescribes building energy efficiency standards for residential and nonresidential buildings in the State of California. Moreover, as we have not conducted a comprehensive audit or investigation of all of our properties to determine our compliance with applicable laws and regulations, we may be liable for investigation and remediation costs, penalties, and/or damages, which could be substantial and could adversely affect our ability to sell or rent our property or to borrow using such property as collateral. In addition, changes in the existing land use rules and regulations and approval process that restrict or delay our ability to develop, redevelop or use our properties (such as potential restrictions on the use and/or density of new developments, water use and other uses and activities) or that prescribe additional standards could have a material adverse effect on our financial position, results of operations, cash flows, the market price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities.
Environmental laws regulate, and impose liability for, releases of hazardous or toxic substances into the environment. Under various provisions of these laws, a current or former owner or operator of real estate may be liable for costs related to soil or groundwater contamination on, in, or migrating to or from its property. Persons who arrange for the disposal or treatment of hazardous or toxic substances may be liable for the costs of cleaning up contamination at the disposal site. Such laws often impose liability regardless of whether the person knew of, or was responsible for, the presence of the hazardous or toxic substances that caused the contamination. In addition, some laws may create a lien on a contaminated site in favor of the government for damages and costs it incurs in connection with the contamination. The presence of, or contamination resulting from, any of these substances, or the failure to properly remediate them, may adversely affect our ability to sell or rent our property or to borrow using the property as collateral. Persons exposed to hazardous or toxic substances at our properties may sue for personal injury damages, for example, some laws impose liability for release of or exposure to asbestos-containing materials, a substance known to be present in a number of our buildings. In other cases, some of our properties have been (or may have been) impacted by contamination from past operations or from off-site sources. As a result, in connection with our current or former ownership, operation, management and development of real properties, we may be potentially liable for investigation and cleanup costs, penalties, and damages under environmental laws.
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Although most of our properties have been subjected to preliminary environmental assessments, known as Phase I assessments, by independent environmental consultants in order to identify potential environmental concerns, Phase I assessments are limited in scope, and may not identify all potential environmental liabilities or risks associated with the property. For example, a prior owner or operator of a property or historical operations at or near our properties may have created a material environmental condition that is not known to us or the independent consultants preparing the Phase I assessments. Unless required by applicable laws or regulations, we may not further investigate, remedy or ameliorate the environmental conditions identified in the Phase I assessments. We cannot assure that these or other environmental studies identified all potential environmental liabilities, or that we will not incur material environmental liabilities in the future. If we do incur material environmental liabilities in the future, we may face significant remediation costs and may find it difficult to sell any affected properties. See Note 17 to our consolidated financial statements in Item 15 of this Report for more detail regarding our buildings that contain asbestos.
In addition, we may incur costs to comply with federal, state and local legislation and regulations that are implemented to mitigate the effects of climate change. The costs of complying with evolving regulatory requirements could negatively impact our results of operations.
Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation.
Moisture may accumulate in buildings or on building materials, and mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Indoor air quality issues can also stem from inadequate ventilation, chemical contamination from indoor or outdoor sources, and other biological contaminants such as pollen, viruses and bacteria. Indoor exposure to airborne toxins or irritants above certain levels can be alleged to cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold or other airborne contaminants at any of our properties could require us to undertake a costly remediation program to contain or remove the mold or other airborne contaminants from the affected property or increase indoor ventilation. In addition, the presence of significant mold or other airborne contaminants could expose us to liability from our tenants, employees of our tenants or others if property damage or personal injury is alleged to have occurred.
Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants.
We presently expect to continue operating and acquiring properties in areas that have adopted laws and regulations imposing restrictions on the timing or amount of rent increases or have imposed regulations relating to low- and moderate-income housing.
California and various municipalities within Southern California, including the cities of Los Angeles and Santa Monica where our properties are located, have enacted rent control legislation. All of our multifamily properties in Los Angeles County are affected by these laws and regulations. Under current California law we are able to increase rents to market rates once a tenant vacates a rent-controlled unit; however, increases in rental rates for renewing tenants are limited by California, Los Angeles and Santa Monica rent control regulations.
Hawaii does not have state mandated rent control, however portions of the Honolulu multifamily market are subject to low- and moderate-income housing regulations. We have agreed to rent specified percentages of the units at some of our Honolulu multifamily properties to persons with income below specified levels in exchange for certain tax benefits.
These laws and regulations can (i) limit our ability to charge market rents, increase rents, evict tenants or recover increases in our operating expenses, (ii) negatively impact our ability to attract higher-paying tenants, (iii) require us to incur costs for reporting and compliance, and (iv) make it more difficult for us to dispose of properties in certain circumstances. Any failure to comply with these regulations could result in fines, penalties and/or the loss of certain tax benefits and the forfeiture of rents.
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We may be unable to complete acquisitions that would grow our business, or successfully integrate and operate acquired properties.
Our planned growth strategy includes the disciplined acquisition of properties as opportunities arise. Our ability to acquire properties on favorable terms and to successfully integrate and operate them is subject to significant risks, including the following:
•we may be unable to acquire desired properties because of competition from other real estate investors, including other real estate operating companies, publicly-traded REITs and investment funds;
•competition from other potential acquirers may significantly increase the purchase price of a desired property;
•we may acquire properties that are not accretive to our results upon acquisition or we may not successfully manage and lease them up to meet our expectations;
•we may be unable to generate sufficient cash from operations, or obtain the necessary debt or equity financing to consummate an acquisition or, if obtained, the financing may not be on favorable terms;
•cash flows from the acquired properties may be insufficient to service the related debt financing;
•we may need to spend more than we budgeted to make necessary improvements or renovations to acquired properties;
•we may spend significant time and money on potential acquisitions that we do not close;
•the process of acquiring or pursuing the acquisition of a property may divert the attention of our senior management team from our existing business operations;
•we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations;
•occupancy and rental rates of acquired properties may be less than expected; and
•we may acquire properties without recourse, or with limited recourse, for liabilities, whether known or unknown, such as clean-up of environmental contamination, claims by tenants, vendors or other persons against the former owners of the properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the properties.
We may be unable to successfully expand our operations into new markets and submarkets.
If the opportunity arises, we may explore acquisitions of properties in new markets. The risks applicable to our ability to acquire, integrate and operate properties in our current markets are also applicable to our ability to acquire, integrate and operate properties in new markets. In addition to these risks, we will not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could adversely affect our ability to expand into those markets. We may be unable to build a significant market share or achieve a desired return on our investments in new markets.
We are exposed to risks associated with property development.
We engage in development and redevelopment activities with respect to certain of our properties. To the extent that we do so, we are subject to certain risks, including the following:
•We may not complete a development or redevelopment project on schedule or within budgeted amounts (as a result of risks beyond our control, such as weather, labor conditions, permitting issues, material shortages and price increases, including increases in the costs of building materials or construction services resulting from trade tensions, disruptions, actual or potential tariffs, duties or restrictions);
•We may be unable to lease the developed or redeveloped properties at budgeted rental rates or lease up the property within budgeted time frames;
•We may devote time and expend funds on development or redevelopment of properties that we may not complete;
•We may encounter delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, and building, occupancy and other required governmental permits and authorizations, and our costs to comply with the conditions imposed by such permits and authorizations could increase;
•We may encounter delays, refusals and unforeseen cost increases resulting from third-party litigation or objections; and
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•We may fail to obtain the financial results expected from properties we develop or redevelop.
We are exposed to certain risks when we enter into JVs or issue securities of our subsidiaries, including our Operating Partnership.
We have and may in the future develop or acquire properties with, or raise capital from, third parties through partnerships, JVs or other entities, or through acquiring or disposing of non-controlling interests in, or sharing responsibility for managing the affairs of, a property, partnership, JV or other entity. This may subject us to risks that may not be present with other methods of ownership, including for example the following:
•We may not be able to exercise sole decision-making authority regarding the properties, partnership, JV or other entity, which would allow for impasses on decisions that could restrict our ability to sell or transfer our interests in such entity or such entity’s ability to transfer or sell its assets;
•Partners or co-venturers may default on their obligations including those related to capital contributions, debt financing or interest rate swaps, which could delay acquisition, construction or development of a property or increase our financial commitment to the partnership or JV;
•Conflicts of interests with our partners or co-venturers as result of matters such as different needs for liquidity, assessments of the market or tax objectives; ownership of competing interests in other properties; and other business interests, policies or objectives that are competitive or inconsistent with ours;
•If any such jointly owned or managed entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may suffer significantly, including having to dispose of our interest in such entity (if that is possible) or even losing our status as a REIT;
•Our assumptions regarding the tax impact of any structure or transaction could prove to be incorrect, and we could be exposed to significant taxable income, property tax reassessments or other liabilities, including any liability to third parties that we may assume as part of such transaction or otherwise;
•Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses, affect our ability to develop or operate a property and/or prevent our officers and/or directors from focusing their time and effort on our business;
•We may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers; and
•We may not be able to raise capital as needed from institutional investors or sovereign wealth funds, or on terms that are favorable.
If we default on the ground lease to which one of our properties is subject, our business could be adversely affected.
Some of our properties may be subject to a ground lease. A default under the terms of such a lease, or the inability to renegotiate a new lease upon expiration of a lease, could have a material adverse effect on our operating results, cash flows and financial condition.
We may not have sufficient cash available for distribution to stockholders at expected levels in the future.
Our distributions could exceed our cash generated from operations. If necessary, we may fund the difference from our existing cash balances or additional borrowings. If our available cash were to decline significantly below our taxable income, we could lose our REIT status unless we could borrow to make such distributions or make any required distributions in common stock.
We face risks associated with contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control.
The OFAC of the US Department of the Treasury maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”). The OFAC regulations and other laws prohibit conducting business or engaging in transactions with Prohibited Persons. Some of our agreements require us and the other party to comply with the OFAC requirements. If a party with whom we contract is placed on the OFAC list we may be required by the OFAC regulations to terminate the agreement, which could result in a losses or a damage claim by the other party that the termination was wrongful.
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Terrorism and war could harm our business and operating results.
The possibility of future terrorist attacks or war could have a negative impact on our operations, even if they are not directed at our properties and even if they never actually occur. Terrorist attacks can also substantially affect the availability and price of insurance coverage for certain types of damages or occurrences, and our insurance policies for terrorism include large deductibles and co-payments. The lack of sufficient insurance for these types of acts could expose us to significant losses.
Risks Related to Our Organization and Structure
Tax consequences to holders of OP Units upon a sale or refinancing of our properties may cause the interests of our executive officers to differ from the interests of our stockholders.
Some of our properties were contributed to us in exchange for units of our Operating Partnership. As a result of the unrealized built-in gain attributable to such properties at the time of their contribution, some holders of OP Units, including our executive officers, may suffer different and more adverse tax consequences than holders of our common stock upon the sale or refinancing of the properties owned by our Operating Partnership, including disproportionately greater allocations of items of taxable income and gain upon a realization event. As a result, those holders may have different objectives regarding the appropriate pricing, timing and other material terms of any sale or refinancing of certain properties, or whether to sell or refinance such properties at all.
Our executive officers have significant influence over our affairs.
At December 31, 2025, our executive officers owned 3% of our outstanding common stock, but they would own 17% if all of their outstanding LTIPs and OP Units were converted into common stock. As a result, our executive officers, to the extent that they vote their shares in a similar manner, will have significant influence over our affairs and could exercise such influence in a manner that is not in the best interests of our other stockholders, including by attempting to delay, defer or prevent a change of control transaction that might otherwise be in the best interests of our stockholders.
Under their employment agreements, certain of our executive officers will receive severance if they are terminated without cause or resign for good reason.
We have employment agreements with our CEO, Jordan L. Kaplan, and our President and COO, Kenneth M. Panzer, which provide each executive with severance if they are terminated without cause or resign for good reason (including following a change of control). The severance is based upon three times the average of the respective executives annual compensation (base salary and annual bonus) during the last three full calendar years ending prior to the termination date. In addition, these executive officers would not be restricted from competing with us after their departure.
The loss of any of our executive officers or key senior personnel could significantly harm our business.
Our ability to maintain our competitive position is largely dependent upon the skill and effort of our executive officers and key personnel, who have significant real estate industry experience, strong industry reputations and networks, and assist us in identifying acquisition, disposition, development and borrowing opportunities, negotiating with tenants and sellers of properties, and managing our development projects and the operations of our properties. If we lose the services of any of our executive officers or key senior personnel our business could be adversely affected.
Compensation awards to our management may not be tied to or correspond with improved financial results or the market price of our common stock.
The compensation committee of our board of directors is responsible for overseeing our compensation and incentive compensation plans. Our compensation committee has significant discretion in structuring compensation packages and may make compensation decisions based on any number of factors. Compensation awards may not be tied to or correspond with improved financial results or the market price of our common stock. See Note 13 to our consolidated financial statements in Item 15 of this Report for more information regarding our stock-based compensation.
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Our board of directors may change significant corporate policies without stockholder approval.
Our investment, financing, borrowing, dividend, operating and other policies are determined by our board of directors. These policies may be amended or revised at any time and from time to time at the discretion of our board of directors without a vote of our stockholders. Our board of directors may change our policies with respect to conflicts of interest provided that such changes are consistent with applicable legal requirements.
Our growth depends on external sources of capital which are outside of our control.
In order to qualify as a REIT, we are required under the Code to distribute annually at least 90% of our “REIT taxable income", determined without regard to the dividends paid deduction and by excluding any net capital gain. To the extent that we do not distribute all of our net long-term capital gains or at least 90% of our REIT taxable income, we will be required to pay tax thereon at the regular corporate tax rate. Because of these distribution requirements, we may not be able to fund future capital needs from our operating cash flows, including acquisitions, development and debt refinancing. Consequently, we expect to rely on third-party sources to fund some of our capital needs and we may not be able to obtain financing on favorable terms or at all. Any additional borrowings will increase our leverage, and any additional equity that we issue will dilute our common stock. Our access to third-party sources of capital depends on many factors, some of which include:
•general market conditions;
•the market’s perception of our growth potential;
•our current debt levels;
•our current and expected future earnings;
•our cash flows and cash dividends; and
•the market price per share of our common stock.
We face risks associated with short-term liquid investments.
From time to time, we have significant cash balances that we invest in a variety of short-term money market fund investments that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. These investments are not insured against loss of principal and there is no guarantee that our investments in these funds will be redeemable at par value. If we cannot liquidate our investments or redeem them at par we could incur losses and experience liquidity issues.
Our charter, the partnership agreement of our Operating Partnership, and Maryland law contain provisions that may delay or prevent a change of control transaction.
(i) Our charter contains a five percent ownership limit.
Our charter, subject to certain exceptions, contains restrictions on ownership that limit, and authorizes our directors to take such actions as are necessary and desirable to limit, any person to actual or constructive ownership of not more than five percent of the value or number, whichever is more restrictive, of the outstanding shares of our common stock. Our board of directors, in its sole discretion, may exempt a proposed transferee from the ownership limit. The ownership limit contained in our charter may delay or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
(ii) Our board of directors may create and issue a class or series of preferred stock without stockholder approval.
Our board of directors is empowered under our charter to amend our charter to increase or decrease the aggregate number of shares of our common stock or the number of shares of stock of any class or series that we have authority to issue, to designate and issue from time to time one or more classes or series of preferred stock and to classify or reclassify any unissued shares of our common stock or preferred stock without stockholder approval. Our board of directors may determine the relative rights, preferences and privileges of any class or series of preferred stock issued. As a result, we may issue series or classes of preferred stock with preferences, dividends, powers and rights, voting or otherwise, senior to the rights of our common stock holders. The issuance of preferred stock could also have the effect of delaying or preventing a change of control transaction that might otherwise be in the best interests of our stockholders.
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(iii) Certain provisions in the partnership agreement of our Operating Partnership may delay or prevent an unsolicited acquisition of us.
Provisions in our Operating Partnership agreement may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable. These provisions include, among others:
•redemption rights of qualifying parties;
•transfer restrictions on our OP Units;
•the ability of the general partner in some cases to amend the partnership agreement without the consent of the limited partners; and
•the right of the limited partners to consent to transfers of the general partnership interest and mergers under specified circumstances.
Any potential change of control transaction may be further limited as a result of provisions of the partnership unit designation for certain LTIP Units, which require us to preserve the rights of LTIP unit holders and may restrict us from amending the partnership agreement for our Operating Partnership in a manner that would have an adverse effect on the rights of LTIP unit holders.
(iv) Certain provisions of Maryland law could inhibit changes in control.
Certain provisions of the MGCL may have the effect of inhibiting a third party from making a proposal to acquire us or impeding a change of control under circumstances that otherwise could provide our stockholders with the opportunity to realize a premium over the market price of our common stock, including:
•“business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special appraisal rights and special stockholder voting requirements on these combinations; and
•“control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
We have elected to opt out of these provisions of the MGCL, in the case of the business combination provisions of the MGCL, by resolution of our board of directors, and in the case of the control share provisions of the MGCL, pursuant to a provision in our bylaws. However, our board of directors may by resolution elect to repeal the foregoing opt-outs from the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt in to the control share provisions of the MGCL in the future.
Our charter, bylaws, our Operating Partnership agreement and Maryland law also contain other provisions that may delay, defer or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
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Our fiduciary duties as the sole stockholder of the general partner of our Operating Partnership could create conflicts of interest.
As the sole stockholder of the general partner of our Operating Partnership, we have fiduciary duties to the other limited partners in our Operating Partnership, the discharge of which may conflict with the interests of our stockholders. The limited partners of our Operating Partnership have agreed that, in the event of a conflict in the fiduciary duties owed by us to our stockholders and, in our capacity as general partner of our Operating Partnership, to such limited partners, we are under no obligation to give priority to the interests of such limited partners. The limited partners have the right to vote on certain amendments to the Operating Partnership agreement (which require approval by a majority in interest of the limited partners, including us) and individually to approve certain amendments that would adversely affect their rights. These voting rights may be exercised in a manner that conflicts with the interests of our stockholders. For example, we are unable to modify the rights of limited partners to receive distributions as set forth in the Operating Partnership agreement in a manner that adversely affects their rights without their consent, even though such modification might be in the best interest of our stockholders.
Risks Related to Taxes and Our Status as a REIT
Our property taxes could increase due to property tax rate changes, reassessments or changes in property tax laws, which would adversely impact our cash flows.
We are required to pay property taxes for our properties, which could increase as property tax rates increase or as our properties are assessed or reassessed by taxing authorities. In California, pursuant to an existing state law commonly referred to as Proposition 13, properties are currently reassessed to market value only at the time of change in ownership or completion of construction, and thereafter, annual property reassessments are generally limited to 2% increases over the previously assessed values. As a result, Proposition 13 generally results in significant below-market assessed values over time.
From time to time, including recently, lawmakers and political coalitions have initiated efforts to repeal or amend Proposition 13 to eliminate its application to commercial and/or other properties. If Proposition 13 no longer limited the assessed value of our California properties, the assessed values and property taxes for those properties could increase substantially, which could have a material impact on our results of operations, cash flows and financial condition.
Transfer taxes like those imposed by Los Angeles Measure ULA could have a negative impact on our property valuations and our ability to acquire or sell properties at favorable prices or on a timely basis.
During 2022, voters in the City of Los Angeles approved Measure ULA, which imposes an additional transfer tax as much as 5.5% on real estate sales and transfers valued at over $5 million. This tax applies in addition to existing documentary transfer taxes levied by the City and County of Los Angeles. Transfer taxes like Measure ULA may have adverse effects on our business in the cities in which they are imposed. The increased transaction costs associated with the transfer tax may negatively impact our ability to buy or sell properties at favorable prices or in a timely manner. The tax could deter investors and developers from engaging in large-scale transactions in Los Angeles, potentially reducing demand for office and multifamily properties. If transaction volume declines due to the increased cost of transfers, property values in the affected price ranges may experience downward pressure, which could adversely impact our balance sheet and borrowing capacity. Given the evolving regulatory and legal landscape, any future challenges to Measure ULA or modifications to its implementation could also introduce additional uncertainty regarding our Los Angeles-based properties. Other cities in which we operate could adopt similar transfer taxes.
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Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions.
We have elected to be taxed as a REIT under the Code, commencing with our initial taxable year ended December 31, 2006. To qualify as a REIT, we must satisfy on a continuing basis certain technical and complex income, asset, organizational, distribution, stockholder ownership and other requirements. See Item 1 "Business Overview" of this Report for more information regarding these tests. Our ability to satisfy these tests depends upon our analysis of and compliance with numerous factors, many of which are not subject to a precise determination and have only limited judicial and administrative interpretations, and which are not entirely within our control. Holding substantially all of our assets through our Operating Partnership further complicates the application of the REIT requirements and a technical or inadvertent mistake could jeopardize our REIT status. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly change the tax laws with respect to the requirements for qualification as a REIT or the federal income tax consequences of qualification as a REIT. Although we believe that we will continue to qualify as a REIT, we can give no assurance that we have qualified or will continue to qualify as a REIT.
If we were to fail to qualify as a REIT in any taxable year, and certain relief provisions did not apply, we would be subject to federal income tax on our taxable income at the regular corporate rate, and distributions to stockholders would not be deductible by us in computing our taxable income. Any such corporate tax liability could be substantial and would reduce the amount of cash available for distribution to our stockholders. Unless entitled to relief under certain Code provisions, we would also be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. In addition, if we fail to qualify as a REIT, we would not be required to make distributions to stockholders, and all distributions to stockholders will be subject to tax as dividend income to the extent of our current and accumulated earnings and profits. If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the relief provisions under the Code in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure.
As a result of the above factors, our failure to qualify as a REIT could impair our ability to raise capital and expand our business, substantially reduce distributions to stockholders, result in us incurring substantial indebtedness (to the extent borrowings are feasible) or liquidating substantial investments in order to pay the resulting taxes, and adversely affect the market price of our common stock.
Three of our consolidated JVs also own properties through one or more entities which are intended to qualify as REITs, and we may in the future use other structures that include REITs. The failure of any such entities to qualify as a REIT could have similar consequences to the REIT subsidiary and could also cause us to fail to qualify as a REIT.
If the Operating Partnership, or any of its subsidiaries (other than any TRS), were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT.
Although we believe that the Operating Partnership and other subsidiary partnerships, limited liability companies, REIT subsidiaries, QRS and other subsidiaries (other than a TRS) in which we own a direct or indirect interest will be treated for tax purposes as a partnership, disregarded entity (e.g., in the case of a 100% owned limited liability company), REIT or QRS, as applicable, no assurance can be given that the IRS will not challenge the tax classification of any such entity, or that a court would not sustain such a challenge. If the IRS were successful in treating the Operating Partnership or other subsidiaries (other than a TRS) as entities taxable as a corporation (including a “publicly traded partnership” taxed as a corporation) for federal income tax purposes, we would likely fail to qualify as a REIT and it would significantly reduce the amount of cash available for distribution by such subsidiaries to us.
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Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions.
Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property. For example, we will be subject to income tax to the extent that we distribute less than 100% of our REIT taxable income (including capital gains). In addition, any net taxable income earned directly by our TRS, or through entities that are disregarded for federal income tax purposes as entities separate from our TRS, will be subject to federal and possibly state corporate income tax. We have elected to treat one of our subsidiaries as a TRS, and we may elect to treat other subsidiaries as TRSs in the future. In this regard, several provisions of the laws applicable to REITs and their subsidiaries ensure that a TRS will be subject to an appropriate level of federal income taxation. In addition, the REIT has to pay a 100% tax on some payments that it receives or on some deductions taken by its TRS if the economic arrangements between the REIT, the REIT’s tenants, and the TRS are not comparable to similar arrangements between unrelated parties. In addition, some state and local jurisdictions may tax some of our income even though as a REIT we are not subject to federal income tax on that income because not all states and localities treat REITs the same as they are treated for federal income tax purposes. Moreover, if we have net income from “prohibited transactions,” that income will be subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property held primarily for sale to customers in the ordinary course of business. Although we do not intend to hold any properties that would be characterized as held primarily for sale to customers in the ordinary course of our business, such characterization is a factual determination and we cannot guarantee that the IRS would agree with our characterization of our properties. To the extent that we are required to pay federal, state and local taxes, we will have less cash available for distributions to our stockholders.
REIT distribution requirements could adversely affect our liquidity and cause us to forego otherwise attractive opportunities.
To qualify as a REIT, we generally must distribute annually at least 90% of our REIT taxable income, excluding any net capital gains. To the extent that we do not distribute all of our net long-term capital gains or all of our REIT taxable income, we will be required to pay tax thereon at the regular corporate tax rate. We intend to make distributions to our stockholders to comply with the Code requirements for REITs and to minimize or eliminate our corporate income tax obligation. Certain types of assets and activities generate substantial mismatches between taxable income and available cash, either because of differences in timing between the recognition of income and the actual receipt of cash or because of differences between the deduction of expenses and the actual payment of those expenses. Such assets include rental real estate that has been financed through financing structures which require some or all of available cash flows to be used to service borrowings. As a result, the requirement to distribute a substantial portion of our taxable income could cause us to sell assets in adverse market conditions, borrow on unfavorable terms, make a taxable distribution of our stock as part of a distribution in which stockholders may elect to receive our stock or (subject to a limit measured as a percentage of the total distribution) cash, distribute amounts that could otherwise be used to fund our operations, capital expenditures, acquisitions or repayment of debt, or cause us to forego otherwise attractive opportunities.
REIT stockholders can receive taxable income without cash distributions.
Under certain circumstances, REITs are permitted to pay a portion of the required dividends in shares of their stock rather than in cash. If we were to avail ourselves of that option, our stockholders could be required to pay taxes on such stock distributions without the benefit of cash distributions to pay the resulting taxes.
If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable or if we are unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis.
From time to time we may dispose of real properties in transactions that are intended to qualify as tax deferred exchanges under Section 1031 of the Code (Section 1031 Exchanges). It is possible that the qualification of a transaction as a Section 1031 Exchange could be successfully challenged and determined to be currently taxable. In such cases, our taxable income would increase as would the amount of distributions we are required to make to satisfy our REIT distribution requirements. This could increase the dividend income to our stockholders by reducing any return of capital they receive. In some circumstances, we may be required to pay additional dividends or, in lieu of that, corporate income tax, possibly including interest and penalties. As a result, we may be required to borrow in order to pay additional dividends or taxes, and the payment of such taxes could cause us to have less cash available to distribute to our stockholders. If a Section 1031 Exchange were later to be determined to be taxable, we may be required to amend our tax returns for the applicable year in question, including any reports we distributed to our stockholders. It is possible that legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of real properties on a tax deferred basis.
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Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification.
Federal income tax laws are constantly under review by persons involved in the legislative process, the IRS and the U.S. Department of the Treasury. Changes to the laws could adversely affect us and our investors. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us. Changes to laws relating to the tax treatment of other entities, or an investment in other entities, could make an investment in such other entities more attractive relative to an investment in a REIT.
Non-U.S. investors may be subject to FIRPTA, which would impose tax on certain distributions and on the sale of common stock if we are unable to qualify as a “domestically controlled” REIT or if our stock is not considered to be regularly traded on an established securities market.
A non-U.S. investor disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally of U.S. real property interests or USRPIs is generally subject to a tax, known as FIRPTA tax, on the gain recognized on the disposition. Such FIRPTA tax does not apply, however, to the disposition of stock in a REIT if the REIT is a “domestically controlled qualified investment entity”. A domestically controlled qualified investment entity includes a REIT in which, at all times during a specified testing period, less than 50% of the value of its shares is held directly or indirectly by non-U.S. holders. In the event that we do not constitute a domestically controlled qualified investment entity, a non-U.S. investor’s sale of our common stock nonetheless will generally not be subject to tax under FIRPTA as a sale of a USRPI, provided that (1) the stock owned is of a class that is “regularly traded” as defined by applicable Treasury regulations, on an established securities market, and (2) the selling non-U.S. investor held 10% or less of our outstanding common stock at all times during a specified testing period. If we were to fail to so qualify as a domestically controlled qualified investment entity and our common stock were to fail to be “regularly traded”, a gain realized by a non-U.S. investor on a sale of our common stock would be subject to FIRPTA tax and applicable withholding. No assurance can be given that we will be a domestically controlled qualified investment entity. Additionally, any distributions we make to our non-U.S. stockholders that are attributable to gain from the sale of any USRPI will also generally be subject to FIRPTA tax and applicable withholdings, unless the recipient non-U.S. stockholder has not owned more than 10% of our common stock at any time during the year preceding the distribution and our common stock is treated as being “regularly traded”.
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General Risks
Security breaches through cyber attacks, cyber intrusions or otherwise, could cause loss of confidential information, as well as significant disruptions of our IT networks and related systems, which could harm our business.
We face risks associated with security breaches that impact our IT networks and information, whether through cyber attacks or cyber intrusions over the Internet, malware (including ransomware), computer viruses, social engineering and phishing e-mails, exploitation of vulnerabilities in software used in our business, malfeasance by insiders or malicious persons with access to systems inside our organization, vulnerabilities in our or third party software, human or technological error, and other security issues with our and third party IT systems. The risk of a security breach or disruption, particularly through cyber attack or cyber intrusion, including by computer hackers (individuals or hacking organizations), foreign governments and cyber terrorists, is expected to increase as the number, intensity and sophistication of attacks and intrusions from around the world is escalating, especially given the use of more advanced hacking tools and techniques and use of AI that can circumvent controls, evade detection and even remove forensic evidence. Our IT networks and related systems are essential to the operation of our business and our ability to perform day-to-day operations (including managing our building systems) and, in some cases, may be critical to the operations of certain of our tenants. We own and manage some of these systems but must rely on third parties for a range of systems, networks and other products and services, including but not limited to software and cloud computing services, that are critical to our business. In addition, we and others collect, maintain and process data about employees, business partners and others, including personally identifiable information, as well as proprietary data belonging to our business such as trade secrets.
There can be no assurance that our security measures, or those of third parties on whom we rely, will effectively protect the confidentiality, integrity and availability of our networks, systems and data from security breaches or disruptions. While to date we have experienced no cyber attacks or incidents that have had a material impact on our operations or financial results, we cannot guarantee that material incidents will not occur in the future.
Our information, networks, systems and facilities remain vulnerable as techniques and sophistication used to conduct cybersecurity attacks and breaches of IT systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time and in some cases are designed not be detected and, in fact, may not be detected. Remote and hybrid working arrangements at many third party providers also increase cybersecurity risks due to the challenges associated with managing remote computing assets and security vulnerabilities that are present in many non-corporate and home networks. The use of AI has further enhanced malicious actors’ ability to conduct sophisticated attacks, often at a low cost, including through the use of deepfake and similar social engineering techniques and technologies.
Accordingly, we may be unable to anticipate these techniques or to implement adequate security barriers or other preventative measures, and thus it is impossible for us to entirely mitigate this risk. A security breach or other significant disruption involving our IT networks and related systems could have an adverse effect on our business, for example:
•Disruption to our networks and systems and thus our operations and/or those of our tenants or vendors;
•Misstated financial reports, violations of loan covenants, missed reporting deadlines and missed permitting deadlines;
•Inability to comply with laws and regulations;
•Unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, which others could be used to compete against us or for disruptive, destructive or otherwise harmful purposes;
•Rendering us unable to maintain the building systems relied upon by our tenants;
•The requirement of significant management attention and resources to restore our business and remedy any damages that result;
•Claims for breach of contract, damages, credits, penalties or termination of leases or other agreements;
•Regulatory inquiries, investigations and fines or penalties; and
•Damage to our reputation among our tenants, investors, or others.
We cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all.
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The use of AI technologies presents certain risks that may adversely affect our business and operations.
We are beginning to use AI, machine learning, and automated decision-making technologies, including proprietary AI and machine learning algorithms and models, (collectively, “AI Technologies”) in our business. For example, we are exploring the use of AI Technologies in reviewing lease documents. We expect that increased investment could be required in the future to continuously improve our use of AI Technologies. As with many technological innovations, there are significant risks involved in developing, maintaining and deploying these technologies and there can be no assurance that the usage of our investments in such technologies will always enhance our products or services or be beneficial to our business, including our efficiency or profitability. In particular, if the models underlying our AI Technologies are: incorrectly designed or implemented; trained or reliant on incomplete, inadequate, inaccurate, biased or otherwise poor quality data, or on data to which we do not have sufficient rights or in relation to which we and/or the providers of such data have not implemented sufficient legal compliance measures; used without sufficient oversight and governance to ensure their responsible use; and/or adversely impacted by unforeseen defects, technical challenges, cybersecurity threats or material performance issues, the performance of our business, as well as our reputation, could suffer or we could incur liability resulting from the violation of laws or contracts to which we are a party or civil claims.
Litigation could have an adverse effect on our business.
From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. An unfavorable resolution of litigation could adversely affect us. Even when there is a favorable outcome, litigation may result in substantial expenses and significantly divert the attention of our management with a similar adverse effect on us.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.
An effective system of internal control over financial reporting is necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. There can be no guarantee that our internal controls over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including material weaknesses, in our internal control over financial reporting that may occur in the future could result in material misstatements in our financial reporting, which could result in restatements of our financial statements. Failure to maintain effective internal controls could cause us to not meet our reporting obligations, which could affect our ability to remain listed with the NYSE or result in SEC enforcement actions, and could cause investors to lose confidence in our reported financial information.
New accounting pronouncements could adversely affect our operating results or the reported financial performance of our tenants.
Accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Uncertainties posed by various initiatives of accounting standard-setting by the FASB and the SEC, which create and interpret applicable accounting standards for U.S. companies, may change the financial accounting and reporting standards or their interpretation and application of these standards that govern the preparation of our financial statements. Similarly, these changes could have a material impact on our tenants’ reported financial condition or results of operations, credit ratings and preferences regarding leasing real estate. See "New Accounting Pronouncements" in Note 2 to our consolidated financial statements in Item 15 of this Report.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk Management and Strategy
We have developed a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information.
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Our program is based on frameworks provided by the Center for Internet Security Controls. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the CIS Controls as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational and financial risk areas.
Our cybersecurity risk management program includes among other things:
a.Risk assessments designed to help identify significant cybersecurity risks to our critical systems, information and services;
b.A security team principally responsible for managing (1) our cybersecurity risk assessment process, (2) our security controls, and (3) our response to cybersecurity incidents;
c.The use of external service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security controls;
d.An incident response plan with procedures for responding to cybersecurity incidents; and
e.Cybersecurity awareness training of our employees, and senior management.
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations or financial condition. We face ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors in Item 1A."
Governance
Our Board of Directors considers cybersecurity risk as part of its risk oversight function and has delegated to our Audit Committee (Committee) oversight of cybersecurity and other IT risks. The Committee receives periodic reports from management on our cybersecurity risks. In addition, management updates the Committee as necessary, regarding any significant cybersecurity incidents.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full Board also receives briefings from management on our cybersecurity risk management program. Board members receive presentations on cybersecurity topics from our Chief Information Officer (CIO), internal security staff, or external experts as part of the Board’s continuing education on topics that impact public companies.
Our management team, led by our CIO, is responsible for assessing and managing our significant risks from cybersecurity threats. Our CIO has the primary responsibility for our overall cybersecurity risk management program. Our CIO has 35 years of experience in building, implementing and administering technology solutions, with half that time dedicated to Douglas Emmett, Inc. He is responsible for developing our current systems environment, which leverages SaaS (Software as a Service) vendors, and for overseeing the security controls framework around our systems environment. Our management team’s experience includes multiple team members with 60 collective years of relevant experience with Douglas Emmett, Inc. The team has extensive knowledge of the technologies and applications addressed by the cybersecurity risk management program.
Our CIO supports the management team in staying informed about and monitoring efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources; and alerts and reports produced by security tools deployed in the IT environment.
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Item 2. Properties
We present property level data for our Total Portfolio, except that we present historical capital expenditures for our Consolidated Portfolio. Commencing with the fourth quarter of 2024, we present the data for our In-Service Portfolio.
In-Service Office Portfolio Summary as of December 31, 2025
| Region | Westside | Valley | Honolulu | Total / Weighted Average | |||||||||||||||||||||||||
| Number of Office Properties | 52 | 15 | 2 | 69 | |||||||||||||||||||||||||
| Our Rentable Square Feet | 10,000,661 | 6,334,572 | 1,190,835 | 17,526,068 | |||||||||||||||||||||||||
Region Rentable Square Feet (1) | 39,387,351 | 13,889,773 | 5,339,375 | 58,616,499 | |||||||||||||||||||||||||
Our Market Share(2) | 36.0 | % | 47.5 | % | 22.3 | % | 39.2 | % | |||||||||||||||||||||
| Our Percent Leased | 79.7 | % | 79.7 | 89.9 | % | 80.4 | % | ||||||||||||||||||||||
| Our Annualized Rent | $ | 438,390,903 | $ | 166,339,123 | $ | 39,292,153 | $ | 644,022,179 | |||||||||||||||||||||
Annualized Rent Per Leased Square Foot (3) | $ | 57.49 | $ | 34.29 | $ | 37.84 | $ | 47.65 | |||||||||||||||||||||
Monthly Rent Per Leased Square Foot (3) | $ | 4.79 | $ | 2.86 | $ | 3.15 | $ | 3.97 | |||||||||||||||||||||
_______________________________________________
(1) The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2025 fourth 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 to our submarkets in each region. In calculating market share, we adjusted the rentable square footage by: (i) removing 62,000 rentable square feet for an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the region, and (ii) adding a 218,000 square foot property located just outside the Beverly Hills city limits to both the numerator and the denominator.
(3) Does not include signed leases not yet commenced, which are included in percent leased but excluded from Annualized Rent.
In-Service Office Portfolio Lease Diversification as of December 31, 2025
| Portfolio Tenant Size | |||||||||||
| Median | Average | ||||||||||
| Square feet | 2,400 | 5,000 | |||||||||
| Office Leases | Rentable Square Feet | Annualized Rent | ||||||||||||||||||||||||||||||||||||
| Square Feet Under Lease | Number | Percent | Amount | Percent | Amount | Percent | ||||||||||||||||||||||||||||||||
| 2,500 or less | 1,372 | 51.1 | % | 1,981,021 | 14.7 | % | $ | 87,392,272 | 13.6 | % | ||||||||||||||||||||||||||||
| 2,501-10,000 | 1,002 | 37.4 | 4,885,656 | 36.1 | 225,735,926 | 35.0 | ||||||||||||||||||||||||||||||||
| 10,001-20,000 | 200 | 7.5 | 2,757,100 | 20.4 | 132,099,727 | 20.5 | ||||||||||||||||||||||||||||||||
| 20,001-40,000 | 82 | 3.1 | 2,191,421 | 16.2 | 106,190,884 | 16.5 | ||||||||||||||||||||||||||||||||
| 40,001-100,000 | 25 | 0.9 | 1,444,099 | 10.7 | 74,835,243 | 11.6 | ||||||||||||||||||||||||||||||||
| Greater than 100,000 | 1 | — | 255,884 | 1.9 | 17,768,127 | 2.8 | ||||||||||||||||||||||||||||||||
| Total for all leases | 2,682 | 100.0 | % | 13,515,181 | 100.0 | % | $ | 644,022,179 | 100.0 | % | ||||||||||||||||||||||||||||
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In-Service Office Portfolio Largest Tenants as of December 31, 2025
The table below presents 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 | |||||||||||||||||||||||||||||||||||||
William Morris Endeavor(2) | 1 | 1 | 2037 | 255,884 | 1.4 | $ | 17,768,127 | 2.8 | ||||||||||||||||||||||||||||||||||||
Equinox Fitness(3) | 6 | 5 | 2029-2038 | 185,236 | 1.1 | 11,094,444 | 1.7 | |||||||||||||||||||||||||||||||||||||
Morgan Stanley(4) | 5 | 5 | 2027-2030 | 145,062 | 0.8 | 11,076,807 | 1.7 | |||||||||||||||||||||||||||||||||||||
UCLA(5) | 13 | 8 | 2026-2033 | 151,431 | 0.9 | 8,461,101 | 1.3 | |||||||||||||||||||||||||||||||||||||
| NKSFB | 2 | 2 | 2030 | 135,066 | 0.8 | 7,150,417 | 1.1 | |||||||||||||||||||||||||||||||||||||
| Total | 27 | 21 | 872,679 | 5.0 | % | $ | 55,550,896 | 8.6 | % | |||||||||||||||||||||||||||||||||||
______________________________________________________
(1) Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
(2) Tenant has the option to terminate its lease in 2033.
(3) 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.
(4) Square footage (rounded) expires as follows: 89,000 square feet in 2027; 30,000 square feet in 2028; and 26,000 square feet in 2030.
(5) Square footage (rounded) expires as follows: 5 leases totaling 60,000 square feet in 2026; 2 leases totaling 18,000 square feet in 2028; 2 leases totaling 28,000 square feet in 2029; 1 lease totaling 12,000 square feet in 2030; 1 lease totaling 18,000 square feet in 2031; and 2 leases totaling 14,000 square feet in 2033.
In-Service Office Portfolio Industry Diversification as of December 31, 2025
| Industry | Number of Leases | Annualized Rent as a Percent of Total | ||||||||||||
| Legal | 597 | 19.7 | % | |||||||||||
| Financial Services | 368 | 16.8 | % | |||||||||||
| Real Estate | 315 | 13.3 | % | |||||||||||
| Health Services | 396 | 9.9 | % | |||||||||||
| Entertainment | 127 | 9.7 | % | |||||||||||
| Accounting & Consulting | 304 | 9.2 | % | |||||||||||
| Retail | 162 | 5.8 | % | |||||||||||
| Technology | 88 | 5.0 | % | |||||||||||
| Insurance | 85 | 3.0 | % | |||||||||||
| Public Administration | 71 | 2.6 | % | |||||||||||
| Educational Services | 37 | 2.2 | % | |||||||||||
| Manufacturing & Distribution | 49 | 1.3 | % | |||||||||||
| Advertising | 30 | 0.9 | % | |||||||||||
| Other | 53 | 0.6 | % | |||||||||||
| Total | 2,682 | 100.0 | % | |||||||||||
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In-Service Office Portfolio Lease Expirations as of December 31, 2025 (assuming non-exercise of renewal options and early termination rights)
| Year of Lease Expiration | Number of Leases | Rentable Square Feet | Expiring Square Feet as a Percent of Total | Annualized Rent at December 31, 2025 | 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 | 69 | 243,726 | 1.4 | % | $ | 8,959,051 | 1.4 | % | $ | 36.76 | $ | 36.76 | |||||||||||||||||||||||||||||
| 2026 | 566 | 2,044,738 | 11.7 | 94,002,952 | 14.6 | 45.97 | 46.45 | ||||||||||||||||||||||||||||||||||
| 2027 | 543 | 2,256,727 | 12.9 | 106,378,736 | 16.5 | 47.14 | 49.74 | ||||||||||||||||||||||||||||||||||
| 2028 | 509 | 2,096,422 | 12.0 | 96,840,247 | 15.0 | 46.19 | 50.29 | ||||||||||||||||||||||||||||||||||
| 2029 | 328 | 1,637,970 | 9.3 | 72,985,214 | 11.3 | 44.56 | 48.53 | ||||||||||||||||||||||||||||||||||
| 2030 | 247 | 1,460,070 | 8.3 | 71,551,307 | 11.1 | 49.01 | 55.94 | ||||||||||||||||||||||||||||||||||
| 2031 | 167 | 1,019,033 | 5.8 | 49,019,854 | 7.6 | 48.10 | 54.57 | ||||||||||||||||||||||||||||||||||
| 2032 | 69 | 621,960 | 3.5 | 30,950,944 | 4.8 | 49.76 | 57.27 | ||||||||||||||||||||||||||||||||||
| 2033 | 66 | 495,474 | 2.8 | 25,824,145 | 4.0 | 52.12 | 66.23 | ||||||||||||||||||||||||||||||||||
| 2034 | 38 | 359,311 | 2.1 | 17,598,526 | 2.7 | 48.98 | 63.50 | ||||||||||||||||||||||||||||||||||
| 2035 | 35 | 333,504 | 1.9 | 16,799,573 | 2.6 | 50.37 | 67.11 | ||||||||||||||||||||||||||||||||||
| Thereafter | 45 | 946,246 | 5.4 | 53,111,630 | 8.4 | 56.13 | 77.60 | ||||||||||||||||||||||||||||||||||
| Subtotal/weighted average | 2,682 | 13,515,181 | 77.1 | 644,022,179 | 100.0 | 47.65 | 53.68 | ||||||||||||||||||||||||||||||||||
| Signed leases not commenced | 422,231 | 2.4 | |||||||||||||||||||||||||||||||||||||||
| Available | 3,439,897 | 19.7 | |||||||||||||||||||||||||||||||||||||||
| Building management use | 107,696 | 0.6 | |||||||||||||||||||||||||||||||||||||||
BOMA adjustment (3) | 41,063 | 0.2 | |||||||||||||||||||||||||||||||||||||||
| Total/Weighted Average | 2,682 | 17,526,068 | 100.0 | % | $ | 644,022,179 | 100.0 | % | $ | 47.65 | $ | 53.68 | |||||||||||||||||||||||||||||
_____________________________________________________
(1)Represents Annualized Rent at December 31, 2025 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.
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Office Portfolio Tenant Improvements and Leasing Commissions
Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Renewal leases(1) | |||||||||||||||||
| Number of leases | 579 | 556 | 576 | ||||||||||||||
| Square feet | 2,349,466 | 2,763,902 | 2,359,780 | ||||||||||||||
Tenant improvement costs per square foot (2) | $ | 13.64 | $ | 16.37 | $ | 11.15 | |||||||||||
Leasing commission costs per square foot (2) | 6.95 | 9.71 | 5.98 | ||||||||||||||
Total costs per square foot (2) | $ | 20.59 | $ | 26.08 | $ | 17.13 | |||||||||||
New leases(1) | |||||||||||||||||
| Number of leases | 280 | 298 | 289 | ||||||||||||||
| Square feet | 915,565 | 881,884 | 792,716 | ||||||||||||||
Tenant improvement costs per square foot (2) | $ | 24.89 | $ | 20.17 | $ | 21.69 | |||||||||||
Leasing commission costs per square foot (2) | 8.79 | 8.46 | 7.39 | ||||||||||||||
Total costs per square foot (2) | $ | 33.68 | $ | 28.63 | $ | 29.08 | |||||||||||
Total leases(1) | |||||||||||||||||
| Number of leases | 859 | 854 | 865 | ||||||||||||||
| Square feet | 3,265,031 | 3,645,786 | 3,152,496 | ||||||||||||||
Tenant improvement costs per square foot (2) | $ | 16.80 | $ | 17.29 | $ | 13.80 | |||||||||||
Leasing commission costs per square foot (2) | 7.47 | 9.41 | 6.34 | ||||||||||||||
Total costs per square foot (2) | $ | 24.27 | $ | 26.70 | $ | 20.14 | |||||||||||
______________________________________________________
(1)Excludes square feet for ancillary retail space.
(2)Tenant improvements and leasing commissions are reported in the period in which the lease is signed. Tenant improvements are based on signed leases, or, for leases in which a tenant improvement allowance was not specified, the amount budgeted at the time the lease commenced.
Consolidated Office Portfolio Recurring Capital Expenditures
Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Recurring Capital Expenditures(1) | $ | 2,825,003 | $ | 3,324,572 | $ | 3,279,814 | |||||||||||
Total square feet(1) | 14,782,611 | 14,851,645 | 14,851,645 | ||||||||||||||
Recurring Capital Expenditures per square foot(1) | $ | 0.19 | $ | 0.22 | $ | 0.22 | |||||||||||
____________________________________________________
(1)We excluded the following properties in accordance with our definition of Recurring Capital Expenditures:
•For 2025, we excluded ten properties with an aggregate 2.7 million square feet.
•For 2024, we excluded ten properties with an aggregate 2.7 million square feet.
•For 2023, we excluded ten properties with an aggregate 2.7 million square feet.
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In-Service Multifamily Portfolio Summary as of December 31, 2025
| Submarket | Number of Properties | Number of Units | Units as a Percent of Total | |||||||||||||||||
| Los Angeles | ||||||||||||||||||||
| Santa Monica | 3 | 940 | 21 | % | ||||||||||||||||
| West Los Angeles | 6 | 964 | 22 | % | ||||||||||||||||
| Honolulu | 4 | 2,506 | 57 | % | ||||||||||||||||
| Total | 13 | 4,410 | 100 | % | ||||||||||||||||
| Submarket | Percent Leased | Annualized Rent(1) | Monthly Rent Per Leased Unit | |||||||||||||||||
| Los Angeles | ||||||||||||||||||||
| Santa Monica | 99.7 | % | $ | 52,298,052 | $ | 4,656 | ||||||||||||||
| West Los Angeles | 99.0 | 55,700,724 | 4,881 | |||||||||||||||||
| Honolulu | 99.7 | 72,572,184 | 2,427 | |||||||||||||||||
| Total / Weighted Average | 99.5 | % | $ | 180,570,960 | $ | 3,436 | ||||||||||||||
_______________________________________________________
(1) The multifamily portfolio also includes: (i) 72,613 square feet consisting of ancillary retail space at three properties and the remaining office space at a building undergoing conversion from office to residential, and (ii) 712 apartment units at The Landmark Residences (formerly Barrington Plaza) which is undergoing redevelopment. These items are not included in this table.
Multifamily Portfolio Recurring Capital Expenditures
Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
Recurring Capital Expenditures(1)(2) | $ | 3,356,058 | $ | 3,342,407 | $ | 2,978,083 | |||||||||||
Total units(1)(2) | 4,410 | 4,015 | 4,013 | ||||||||||||||
Recurring Capital Expenditures per unit(1)(2) | $ | 762 | $ | 832 | $ | 747 | |||||||||||
____________________________________________________
(1)Recurring Capital Expenditures include costs associated with the turnover of units. Our multifamily portfolio includes a large number of units that, due to Santa Monica rent control laws, have had only modest rent increases since 1979. During 2025, when a tenant vacated one of these units, we incurred on average $58 thousand per unit to bring the unit up to our standards. We classify these capital expenditures as non-recurring.
(2)We excluded the following properties in accordance with our definition of Recurring Capital Expenditures:
•For 2025, we excluded one property with an aggregate 69 units.
•For 2024, we excluded two properties with an aggregate 457 units.
•For 2023, we excluded two properties with an aggregate 563 units.
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Item 3. Legal Proceedings
From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. Excluding ordinary, routine litigation incidental to our business, we are not currently a party to any legal proceedings that we believe would reasonably be expected to have a materially adverse effect on our business, financial condition or results of operations. See "Legal Proceedings" in Note 17 to our consolidated financial statements in Item 15 of this Report.
Item 4. Mine Safety Disclosures
None.
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market for Common Stock; Dividends
Our common stock is traded on the NYSE under the symbol “DEI”. On December 31, 2025, the closing price of our common stock was $10.99.
The table below presents the dividends declared for our common stock as reported by the NYSE:
| First Quarter | Second Quarter | Third Quarter | Fourth Quarter | |||||||||||||||||||||||
| 2025 | ||||||||||||||||||||||||||
| Dividend declared | $ | 0.19 | $ | 0.19 | $ | 0.19 | $ | 0.19 | ||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||
| Dividend declared | $ | 0.19 | $ | 0.19 | $ | 0.19 | $ | 0.19 | ||||||||||||||||||
Holders of Record
We had seven holders of record of our common stock on February 13, 2026. Most of the shares of our common stock are held in “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Sales of Unregistered Securities
None.
Repurchases of Equity Securities
None.
39
Performance Graph
The information below shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A or 14C, other than as provided in Item 201 of Regulation S-K, or to the liabilities of Section 18 of the Exchange Act, except to the extent we specifically request that such information be treated as soliciting material or specifically incorporate it by reference into a filing under the Securities Act or the Exchange Act.
The graph below compares the cumulative total return on our common stock from December 31, 2020 to December 31, 2025 to the cumulative total return of the S&P 500, NAREIT Equity and an appropriate “peer group” index (assuming a $100 investment in our common stock and in each of the indexes on December 31, 2020, and that all dividends were reinvested into additional shares of common stock at the frequency with which dividends are paid on the common stock during the applicable fiscal year). The total return performance presented in this graph is not necessarily indicative of, and is not intended to suggest, the total future return performance.
| Period Ending | ||||||||||||||||||||||||||||||||||||||||||||
| Index | 12/31/20 | 12/31/21 | 12/31/22 | 12/31/23 | 12/31/24 | 12/31/25 | ||||||||||||||||||||||||||||||||||||||
| DEI | 100.00 | 118.75 | 58.32 | 57.23 | 77.02 | 48.13 | ||||||||||||||||||||||||||||||||||||||
| S&P 500 | 100.00 | 128.71 | 105.40 | 133.10 | 166.40 | 196.16 | ||||||||||||||||||||||||||||||||||||||
NAREIT Equity(1) | 100.00 | 143.24 | 108.34 | 123.21 | 133.97 | 137.83 | ||||||||||||||||||||||||||||||||||||||
Peer group(2) | 100.00 | 121.48 | 68.82 | 81.82 | 98.96 | 86.38 | ||||||||||||||||||||||||||||||||||||||
_____________________________________________
(1)FTSE NAREIT Equity REITs index.
(2)Consists of BXP, Inc. (BXP), Hudson Pacific Properties (HPP), Kilroy Realty Corporation (KRC), SL Green Realty Corp. (SLG), and Vornado Realty Trust (VNO).
Item 6. [Reserved]
40
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our Forward Looking Statements disclaimer and our consolidated financial statements and related notes in Item 15 of this Report. During 2025, our results of operations were impacted by: (i) various transactions - see "Acquisitions, Debt and Equity Transactions, Development and Repositioning Projects, and Other Transactions" further below, and (ii) the consolidation of Partnership X. See Note 3 to our consolidated financial statements in Part IV, Item 15 of this Report.
Business Description
Douglas Emmett, Inc. is a fully integrated, self-administered and self-managed REIT. Through our interest in our Operating Partnership and its subsidiaries and our consolidated JVs, we are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and in Honolulu, Hawaii. We focus on owning, acquiring, developing and managing a substantial market share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.
For the purpose of reporting key operating metrics, commencing with the fourth quarter of 2024, we are focused on the properties in our In-Service Portfolio. Our In-Service Portfolio consists of our Total Portfolio excluding our Development Portfolio. The Development Portfolio consists of two multifamily properties and one office property whose operations are significantly limited by the development activity and are excluded from our In-Service Portfolio statistics and operating metrics. Our portfolio statistics and operating metrics as of December 31, 2025 were as follows:
| In-Service Portfolio | Development Portfolio | Total Portfolio | |||||||||||||||||||||
| Office Portfolio | |||||||||||||||||||||||
| Number of Properties | 69 | 1 | 70 | ||||||||||||||||||||
| Rentable square feet | 17,526,068 | 456,205 | 17,982,273 | ||||||||||||||||||||
| Multifamily Portfolio | |||||||||||||||||||||||
| Number of Properties | 13 | 2 | 15 | ||||||||||||||||||||
| Number of Units | 4,410 | 1,035 | 5,445 | ||||||||||||||||||||
| In-Service Portfolio Leasing Statistics | |||||||||||
| Office Portfolio | |||||||||||
| Leased Rate | 80.4 | % | |||||||||
| Occupancy Rate | 78.0 | % | |||||||||
| Multifamily Portfolio Leased Rate | 99.5 | % | |||||||||
Revenues by Segment and Location
During 2025, revenues from our Total Portfolio were derived as follows:
____ 
41
Acquisitions, Debt and Equity Transactions, and Development and Repositioning Projects
Acquisitions, Debt and Equity Transactions
During the first quarter of 2025:
•A consolidated JV that we manage, and in which we own a 30% interest, acquired a 17-story 247,000 square foot office property located at 10900 Wilshire Boulevard in Westwood. Title to the property was transferred following the purchase of a secured note by the respective JV.
•We modified and extended a $335.0 million term loan for seven years, effective March 3, 2025. The loan is secured by an office property. The loan consists of a $200 million note that bears interest at 4.5%, of which 2.825% is accrued, and a $135 million note that accrues interest at 6.0%. The accrued interest for both notes is due at maturity and is not subject to compounding. The weighted average face rate on the principal balance is 5.10%, and the effective rate as a result of the non-compounding is 4.57%.
•During March 2025, we closed a $127.2 million loan and used part of the proceeds to pay off a $102.4 million loan. The interest rate is fixed at 4.99% and the loan matures in April 2030.
During the second quarter of 2025:
•In May 2025, one of our consolidated JVs made a $70.0 million loan principal payment to extend a term loan for up to two years. The related loan's interest rate swaps expired in April 2025, and in May 2025, the JV purchased an interest rate cap which capped the interest rate at 7.45% until May 2026.
•In June 2025, one of our consolidated JVs raised $12.0 million of additional capital. We contributed $6.6 million of cash to the JV and another investor contributed $5.4 million of cash to the JV.
During the third quarter of 2025:
•In July 2025, we refinanced a $200.0 million office term loan that was scheduled to mature in September 2026. The new, non-recourse, interest-only term loan has a floating interest rate of SOFR + 2%, which we swapped to a fixed rate of 5.60% through 2030. The new loan matures in July 2032.
•In August 2025, we closed eight new residential term loans. The new secured, non-recourse, interest-only loans total approximately $941.5 million, mature in September 2030, and bear interest at a fixed-rate of 4.80%. The new loans replace four loans aggregating $550.0 million that were scheduled to mature on June 1, 2027 and five loans aggregating $380.0 million that were scheduled to mature on June 1, 2029. The debt encumbering The Landmark Residences (formerly Barrington Plaza) was repaid.
During the fourth quarter of 2025:
•In November 2025, one of our consolidated JVs made a $60.0 million loan principal payment, which reduced the term loan principal balance to $565.0 million, and entered into an interest rate swap to swap-fix the interest rate at 4.79% through December 5, 2027. The loan matures on August 19, 2028.
•In December 2025, we closed a non-recourse construction loan for up to $375.0 million for The Landmark Residences (formerly Barrington Plaza). The loan has a floating interest rate of SOFR + 2.45%. We entered into accreting swaps starting January 2, 2026 that mature January 1, 2030 to effectively fix the interest rate on 75% of the increasing estimated balance outstanding under this loan at 5.80%. The loan matures on December 10, 2030. As of December 31, 2025 we had borrowed $49.5 million to fund the associated development project.
See Notes 3 8, 10 and 11 to our consolidated financial statements in Item 15 of this Report for more information regarding our acquisitions, debt, derivatives contracts, and equity, respectively.
Development Portfolio
Studio Plaza
Studio Plaza is a 456,000 square foot office property located in Burbank. Following the move-out of a long-term single tenant, we are converting the property into a multi-tenant office building. The extensive common area upgrades are now complete and the construction of new tenant suites is ongoing. Commencing with the fourth quarter of 2024, we classified this property as part of our Development Portfolio and exclude it from our In-Service Portfolio statistics and operating metrics.
42
The Landmark Residences (Formerly Barrington Plaza)
During the second quarter of 2023, we removed The Landmark Residences residential property in Los Angeles from the rental market. A reconstruction of this property is expected to take a number of years at a cost of several hundred million dollars. As of December 31, 2025, a significant majority of the tenants have vacated. See "Legal Proceedings" in Note 17 to our consolidated financial statements in Item 15 of this Report. Commencing with the fourth quarter of 2024, we classified this property as part of our Development Portfolio and exclude it from our In-Service Portfolio statistics and operating metrics.
10900 Wilshire Boulevard
See "Acquisitions, Debt and Equity Transactions" above regarding the acquisition of 10900 Wilshire Boulevard in Westwood. We are developing a mixed-use community featuring up to 323 apartment units. We will convert the existing 247,000 square foot office tower into a residential and office building with up to 200 units, integrating it with a new residential building that we are constructing on the property. The conversion of the office tower will occur in phases over a number of years as the office space in the building is vacated. Commencing with the first quarter of 2025, we classified this property as part of our Development Portfolio and exclude it from our In-Service Portfolio statistics and operating metrics.
Repositionings
We often strategically purchase properties with large vacancies or expected near-term lease roll-over and use our knowledge of the property and submarket to reposition the property for the optimal use and tenant mix. In addition, we may reposition properties already in our portfolio. The work we undertake to reposition a building typically takes months or even years, and could involve a range of improvements from a complete structural renovation to a targeted remodeling of selected spaces. During the repositioning, the affected property may display depressed rental revenues and occupancy levels that impact our operating results and, therefore, comparisons of our performance from period to period.
Office Rental Rates
The table below presents the average annual rental rate per leased square foot and the annualized lease transaction costs per leased square foot for leases executed in our total office portfolio during the respective periods. Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
Average straight-line rental rate(1)(2)(4) | $44.14 | $50.50 | $42.97 | $46.78 | $44.99 | |||||||||||||||||||||||||||||||||
Annualized lease transaction costs(3)(4) | $5.91 | $5.95 | $5.53 | $5.85 | $4.77 | |||||||||||||||||||||||||||||||||
___________________________________________________
(1)These average rental rates are not directly comparable from year to year because the averages are significantly affected from period to period by factors such as the buildings, submarkets, and types of space and terms involved in the leases executed during the respective reporting period. Because straight-line rent takes into account the full economic value during the full term of each lease, including rent concessions and escalations, we believe that it may provide a better comparison than ending cash rents, which include the impact of the annual escalations over the entire term of the lease.
(2)Reflects the weighted average straight-line Annualized Rent. 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, such as retail leases.
(3)Reflects the weighted average leasing commissions and tenant improvement allowances divided by the weighted average number of years for the leases. Excludes leases substantially negotiated by the seller in the case of acquired properties, leases for tenants relocated from space at the landlord's request, and non-comparable leases, such as retail leases.
(4)Our office rental rates and lease transaction costs were impacted by a large tenant lease renewal during 2024.
43
Office Rent Roll
The table below presents the rent roll for new and renewed leases per leased square foot executed in our total office portfolio. The table below presents only our In-Service Portfolio.
| Year Ended December 31, 2025 | |||||||||||||||||||||||
Rent Roll(1)(2) | Expiring Rate(2) | New/Renewal Rate(2) | Percentage Change | ||||||||||||||||||||
| Cash Rent | $48.59 | $42.79 | (11.9)% | ||||||||||||||||||||
| Straight-line Rent | $43.38 | $44.14 | 1.8% | ||||||||||||||||||||
___________________________________________________
(1)Represents the average annual initial stabilized cash and straight-line rents per square foot on new and renewed leases signed during the year 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, such as retail leases.
(2)Our office rent roll can fluctuate from period to period as a result of changes in our submarkets, buildings and term of the expiring leases, making these metrics difficult to predict.
Multifamily Rental Rates
The table below presents the average annual rental rate per leased unit for new tenants. Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2022 | 2021 | ||||||||||||||||||||||||||||||||||
Average annual rental rate - new tenants(1) | $ | 40,917 | $ | 39,580 | $ | 36,070 | $ | 31,763 | $ | 29,837 | ||||||||||||||||||||||||||||
_____________________________________________________
(1) These average rental rates are not directly comparable from year to year because of changes in the properties and units included. For example:
(i) During 2022, the average was impacted by the acquisition of 1221 Ocean Avenue, where the rental rates were higher than the average in our portfolio.
(ii) During 2023, the average was impacted by leasing of units at our newly developed West Los Angeles property, The Landmark Los Angeles, where the rental rates were higher than the average in our portfolio. The Landmark Residences (formerly Barrington Plaza) was removed from this metric beginning with the third quarter of 2023.
(iii) During 2024, the average was impacted by leasing of units at our newly developed West Los Angeles property, The Landmark Los Angeles, where the rental rates were higher than the average in our portfolio.
Multifamily Rent Roll
The rent on leases subject to rent change during 2025 (new tenants and existing tenants undergoing annual rent review) was 2.6% higher on average than the prior rent for the same unit after adjusting for rent concessions. The rent change includes only our In-Service Portfolio.
44
Office and Multifamily Occupancy Rates
The tables below present the occupancy rates for our office portfolio and multifamily portfolio. Our Occupancy Rates may not be directly comparable from year to year, as they can be impacted by acquisitions, dispositions, and development and redevelopment projects. Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
| December 31, | ||||||||||||||||||||||||||||||||||||||
Occupancy Rates as of: | 2025 | 2024 | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| Office portfolio | 78.0 | % | 79.2 | % | 81.0 | % | 83.7 | % | 84.9 | % | ||||||||||||||||||||||||||||
Multifamily portfolio(1) | 98.0 | % | 97.4 | % | 96.7 | % | 98.1 | % | 98.0 | % | ||||||||||||||||||||||||||||
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||
Average Occupancy Rates(2): | 2025 | 2024 | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| Office portfolio | 78.2 | % | 80.1 | % | 82.6 | % | 84.2 | % | 85.7 | % | ||||||||||||||||||||||||||||
Multifamily portfolio(1) | 97.4 | % | 97.0 | % | 96.9 | % | 97.9 | % | 96.8 | % | ||||||||||||||||||||||||||||
___________________________________________________
(1)Excludes units vacated as part of removing The Landmark Residences (formerly Barrington Plaza) from the rental market until June of 2023 and excludes the impact of The Landmark Residences entirely starting in July 2023.
(2)Average occupancy rates are calculated by averaging the occupancy rates at the end of each of the quarters in the period and at the end of the quarter immediately prior to the start of the period.
Office Portfolio Lease Expirations
As of December 31, 2025, assuming non-exercise of renewal options and early termination rights, we expect to see expiring square footage for our In-Service office portfolio as follows:
_______________________________________________________________
(1) Average of the percentage of leases at December 31, 2022, 2023, and 2024 with the same remaining duration as the leases for the labeled year had at December 31, 2025.
45
Results of Operations
Comparison of 2025 to 2024
Our operating results were adversely impacted by the effects of inflation and higher interest rates during 2025 and 2024.
| Year Ended December 31, | Favorable (Unfavorable) | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % | Commentary | ||||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||||||
| Office rental revenue and tenant recoveries | $ | 686,208 | $ | 683,901 | $ | 2,307 | 0.3 | % | The increase was primarily due to: (i) rental revenues and tenant recoveries from a JV we commenced consolidating on January 1, 2025, (ii) rental revenues and tenant recoveries from an office property we acquired in January 2025, and (iii) higher tenant recoveries, partly offset by (iv) a decrease in rental revenues and tenant recoveries from an office property we commenced repositioning to a multi-tenant building during the fourth quarter of 2024, and (v) lower rental revenues due to lower occupancy. | |||||||||||||||||||||||||||||
| Office parking and other income | $ | 119,308 | $ | 112,503 | $ | 6,805 | 6.0 | % | The increase was primarily due to: (i) higher parking rates, (ii) parking and other income from a JV we commenced consolidating on January 1, 2025, and (iii) parking and other income from an office property we acquired in January 2025, partly offset by (iv) a decrease in parking and other income from an office property we commenced repositioning to a multi-tenant building during the fourth quarter of 2024. | |||||||||||||||||||||||||||||
| Multifamily revenue | $ | 198,466 | $ | 190,074 | $ | 8,392 | 4.4 | % | The increase was primarily due to higher occupancy and higher rental rates, partly offset by lower below-market lease accretion. | |||||||||||||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||||||||||||||||
| Office rental expenses | $ | 301,276 | $ | 285,352 | $ | (15,924) | (5.6) | % | The increase was primarily due to: (i) rental expenses from a JV we commenced consolidating on January 1, 2025, (ii) rental expenses from an office property we acquired in January 2025, and (iii) higher scheduled services expenses, partly offset by (iv) a decrease in rental expenses from an office property we commenced repositioning to a multi-tenant building during the fourth quarter of 2024, and (v) lower insurance expenses. | |||||||||||||||||||||||||||||
| Multifamily rental expenses | $ | 66,661 | $ | 64,906 | $ | (1,755) | (2.7) | % | The increase was primarily due to an increase in property taxes, scheduled services expenses, and repairs and maintenance expenses, partly offset by a decrease in insurance expenses and professional fees. | |||||||||||||||||||||||||||||
| General and administrative expenses | $ | 46,664 | $ | 45,356 | $ | (1,308) | (2.9) | % | The increase was primarily due to higher advocacy expenses and personnel expenses. | |||||||||||||||||||||||||||||
46
Comparison of 2024 to 2023
See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 14, 2025 for a comparison of our results of operations for 2024 compared to 2023.
47
Non-GAAP Supplemental Financial Measure: FFO
Usefulness to Investors
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 commissions 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. See "Results of Operations" above for a discussion of the items that impacted our net income (loss).
FFO Reconciliation to GAAP
The table below reconciles our FFO (the FFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership - which includes our share of our consolidated JVs and our unconsolidated Fund's FFO) to net income attributable to common stockholders (the most directly comparable GAAP measure). Our FFO was adversely impacted by the effects of inflation and higher interest rates during 2025 and 2024.
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | ||||||||||||||||||
| Net income attributable to common stockholders | $ | 16,267 | $ | 23,517 | ||||||||||||||||
| Depreciation and amortization of real estate assets | 398,932 | 384,048 | ||||||||||||||||||
| Net loss attributable to noncontrolling interests | (27,697) | (15,929) | ||||||||||||||||||
Adjustments attributable to unconsolidated Fund(1) | — | 4,579 | ||||||||||||||||||
Adjustments attributable to consolidated JVs (2) | (45,000) | (50,687) | ||||||||||||||||||
| Gain from consolidation of JV | (47,212) | — | ||||||||||||||||||
| FFO | $ | 295,290 | $ | 345,528 | ||||||||||||||||
___________________________________________________
(1)Adjusts for our share of Partnership X's depreciation and amortization of real estate assets. We commenced consolidating Partnership X on January 1, 2025. See Note 3 to our consolidated financial statements in Part IV, Item 15 of this Report.
(2)Adjusts for the net income (loss) and depreciation and amortization of real estate assets that is attributable to the noncontrolling interests in our consolidated JVs.
Comparison of 2025 to 2024
During 2025, FFO decreased by $50.2 million, or 14.5%, to $295.3 million, compared to $345.5 million for 2024. The decrease was primarily due to: (i) lower office occupancy, (ii) higher office expenses, (iii) higher interest expense, and (iv) lower interest income, which was partly offset by higher multifamily rental revenues due to higher occupancy and rental rates.
Comparison of 2024 to 2023
See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 14, 2025 for a comparison of our FFO for 2024 compared to 2023.
48
Non-GAAP Supplemental Financial Measure: Same Property NOI
Usefulness to Investors
We report Same Property NOI to facilitate a comparison of our operations between reported periods. Many investors use Same Property NOI to evaluate our operating performance and to compare our operating performance with other REITs, because it can reduce the impact of investing transactions on operating trends. Same Property NOI is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure. We report Same Property 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. Same Property 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 commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations. Other REITs may not calculate Same Property NOI in the same manner. As a result, our Same Property NOI may not be comparable to the Same Property NOI of other REITs. Same Property 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.
Comparison of 2025 to 2024:
Our Same Properties for 2025 included 66 office properties, aggregating 17.1 million Rentable Square Feet, and 13 multifamily properties with an aggregate 4,410 units. The amounts presented below reflect 100% (not our pro-rata share). Our Same Property results were adversely impacted by the effects of inflation during 2025 and 2024.
| Year Ended December 31, | Favorable (Unfavorable) | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | Change | % | Commentary | |||||||||||||||||||||||||||||||
| (In thousands) | |||||||||||||||||||||||||||||||||||
| Office revenues | $ | 767,877 | $ | 769,871 | $ | (1,994) | (0.3) | % | The decrease was primarily due to lower rental revenues due to lower occupancy, partly offset by higher tenant recoveries, and higher parking income due to higher parking rates. | ||||||||||||||||||||||||||
| Office expenses | (289,684) | (282,634) | (7,050) | (2.5) | % | The increase was primarily due to higher scheduled services expenses, utility expenses, professional fees and repairs and maintenance expenses, partly offset by lower insurance expenses. | |||||||||||||||||||||||||||||
| Office NOI | 478,193 | 487,237 | (9,044) | (1.9) | % | ||||||||||||||||||||||||||||||
| Multifamily revenues | 196,530 | 187,056 | 9,474 | 5.1 | % | The increase was primarily due to higher occupancy and higher rental rates, partly offset by lower below-market lease accretion. | |||||||||||||||||||||||||||||
| Multifamily expenses | (65,735) | (63,616) | (2,119) | (3.3) | % | The increase was primarily due to higher scheduled services expenses, property taxes, repairs and maintenance expenses and utility expenses, partly offset by lower insurance expenses. | |||||||||||||||||||||||||||||
| Multifamily NOI | 130,795 | 123,440 | 7,355 | 6.0 | % | ||||||||||||||||||||||||||||||
| Total NOI | $ | 608,988 | $ | 610,677 | $ | (1,689) | (0.3) | % | |||||||||||||||||||||||||||
49
Reconciliation to GAAP
The table below presents a reconciliation of Net income attributable to common stockholders (the most directly comparable GAAP measure) to NOI and Same Property NOI:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | |||||||||||||||
| Net income attributable to common stockholders | $ | 16,267 | $ | 23,517 | |||||||||||||
| Net loss attributable to noncontrolling interests | (27,697) | (15,929) | |||||||||||||||
| Net (loss) income | (11,430) | 7,588 | |||||||||||||||
| General and administrative expenses | 46,664 | 45,356 | |||||||||||||||
| Depreciation and amortization | 398,932 | 384,048 | |||||||||||||||
| Other income | (18,021) | (28,019) | |||||||||||||||
| Other expenses | 437 | 398 | |||||||||||||||
| Income from unconsolidated Fund | — | (2,593) | |||||||||||||||
| Interest expense | 266,675 | 229,442 | |||||||||||||||
| Impairment losses | — | — | |||||||||||||||
| Gain on sale of investment in real estate | — | — | |||||||||||||||
| Gain from consolidation of JV | (47,212) | — | |||||||||||||||
| NOI | $ | 636,045 | $ | 636,220 | |||||||||||||
| Same Property NOI by Segment | |||||||||||||||||
| Same property office revenues | $ | 767,876 | $ | 769,871 | |||||||||||||
| Same property office expenses | (289,684) | (282,634) | |||||||||||||||
| Same Property Office NOI | 478,192 | 487,237 | |||||||||||||||
| Same property multifamily revenues | 196,531 | 187,056 | |||||||||||||||
| Same property multifamily expenses | (65,735) | (63,616) | |||||||||||||||
| Same Property Multifamily NOI | 130,796 | 123,440 | |||||||||||||||
| Same Property NOI | 608,988 | 610,677 | |||||||||||||||
| Non-comparable office revenues | 37,639 | 26,533 | |||||||||||||||
| Non-comparable office expenses | (11,592) | (2,718) | |||||||||||||||
| Non-comparable multifamily revenues | 1,936 | 3,018 | |||||||||||||||
| Non-comparable multifamily expenses | (926) | (1,290) | |||||||||||||||
| NOI | $ | 636,045 | $ | 636,220 | |||||||||||||
Comparison of 2024 to 2023
See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 14, 2025 for a comparison of our same property NOI for 2024 compared to 2023.
50
Liquidity and Capital Resources
Short-term liquidity
Our short-term liquidity needs consist primarily of funds necessary for our operating activities, development, repositioning projects, debt refinancings, dividends, distributions, and discretionary share repurchases. During 2025, we generated cash from operations of $386.9 million. As of December 31, 2025, we had $340.8 million of cash and cash equivalents. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt maturities and interest rate swap expirations. Excluding acquisitions and debt refinancings, we expect to meet our short-term liquidity requirements through cash on hand and cash generated by operations.
Long-term liquidity
Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, development and debt refinancings. We do not expect to have sufficient funds on hand to cover these long-term cash requirements due to REIT federal tax rules which require that we distribute at least 90% of our income on an annual basis. We plan to meet our long-term liquidity needs through long-term secured non-recourse debt, the issuance of equity securities, including common stock and OP Units, as well as property dispositions and JV transactions.
We generally only use non-recourse debt, secured by our properties. As of the date of this report, approximately 43% of our total office portfolio was unencumbered. To mitigate the impact of changing interest rates on our cash flows from operations, we generally enter into interest rate swap agreements with respect to our loans with floating interest rates. These swap agreements generally expire two years before the maturity date of the related loan, during which time we can refinance the loan without any interest penalty. We also enter into interest rate cap agreements from time to time to cap the interest rates on our floating rate loans. See Notes 8 and 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt and derivative contracts, respectively. See Item 7A. "Quantitative and Qualitative Disclosures about Market Risk" of this Report regarding the impact of interest rate increases on our future operating results and cash flows.
Certain Contractual Obligations
See the following notes to our consolidated financial statements in Item 15 of this Report for information regarding our contractual commitments:
•Note 4 - minimum future ground lease payments;
•Note 8 - minimum future principal payments for our secured notes payable, and the interest rates that determine our future periodic interest payments; and
•Note 17 - contractual commitments and guarantees.
Off-Balance Sheet Arrangements
None
51
Cash Flows
Comparison of 2025 to 2024
Our operating cash flows were adversely impacted by the effects of interest rates on floating rate debt and inflation during 2025 and 2024.
| Year Ended December 31, | Increase (Decrease) In Cash | % | ||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||
Net cash provided by operating activities(1) | $ | 386,853 | $ | 408,693 | $ | (21,840) | (5.3) | % | ||||||||||||||||||||||||
Net cash used in investing activities(2) | $ | (265,343) | $ | (240,761) | $ | (24,582) | (10.2) | % | ||||||||||||||||||||||||
Net cash used in financing activities(3) | $ | (225,344) | $ | (246,463) | $ | 21,119 | 8.6 | % | ||||||||||||||||||||||||
___________________________________________________
(1) Our cash flows from operating activities are primarily dependent upon the occupancy and rental rates of our portfolio, the collectibility of tenant receivables, the level of our operating and general and administrative expenses, and interest expense. The decrease in cash from operating activities of $21.8 million was primarily due to: (i) lower office occupancy, (ii) higher office expenses, (iii) higher interest expense, and (iv) lower interest income, which was partly offset by a deposit we received related to a loan we paid off, and higher multifamily rental revenues due to higher occupancy and rental rates.
(2) Our cash flows from investing activities is generally used to fund property acquisitions, developments and redevelopment projects, and Recurring and non-Recurring Capital Expenditures. The decrease in cash from investing activities of $24.6 million was primarily due to an increase in capital expenditures for developments of $30.4 million, and an increase in capital expenditures for improvements to real estate of $25.1 million, partly offset by $25.6 million of cash and cash equivalents from the consolidation of Partnership X on January 1, 2025, and the acquisition of an additional interest in an unconsolidated fund in February 2024, for $5.2 million.
(3) Our cash flows from financing activities are generally impacted by our borrowings and capital activities, as well as dividends and distributions paid to common stockholders and noncontrolling interests, respectively. The increase in cash from financing activities of $21.1 million was primarily due to a higher net borrowings of $66.4 million and lower distributions paid to noncontrolling interests of $3.2 million, partly offset by higher loan cost payments of $25.6 million and lower contributions from noncontrolling interests in consolidated JVs of $22.6 million.
Comparison of 2024 to 2023
See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 14, 2025 for a comparison of our cash flows for 2024 compared to 2023.
52
Critical Accounting Policies and Estimates
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with US GAAP, and which requires us to make estimates of certain items, which affect the reported amounts of our assets, liabilities, revenues and expenses. While we believe that our estimates are based upon reasonable assumptions and judgments at the time that they are made, some of our estimates could prove to be incorrect, and those differences could be material. Below is a discussion of our critical accounting policies, which are the policies we believe require the most estimate and judgment. See Note 2 to our consolidated financial statements included in Item 15 of this Report for the summary of our significant accounting policies.
Investment in Real Estate
Acquisitions and Initial Consolidation of VIEs
We account for property acquisitions as asset acquisitions. We allocate the purchase price for asset acquisitions, which includes the capitalized transaction costs, and for the properties upon the initial consolidation of VIEs not determined to be a business, on a relative fair value basis to: (i) land, (ii) buildings and improvements, (iii) tenant improvements and identifiable intangible assets such as in-place at-market leases, (iv) acquired above- and below-market ground and tenant leases, and if applicable (v) assumed debt, based upon comparable sales for land, and the income approach using our estimates of expected future cash flows and other valuation techniques, which include but are not limited to, our estimates of rental rates, revenue growth rates, capitalization rates and discount rates, for other assets and liabilities. We estimate the relative fair values of the tangible assets on an "as-if-vacant" basis. The estimated relative fair value of acquired in-place at-market leases are the estimated costs to lease the property to the occupancy level at the date of acquisition, including the fair value of leasing commissions and legal costs. We evaluate the time period over which we expect such occupancy level to be achieved and include an estimate of the net operating costs (primarily real estate taxes, insurance and utilities) incurred during the lease-up period. Above and below-market ground and tenant leases are recorded as an asset or liability based upon the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid or received pursuant to the in-place ground or tenant leases, respectively, and our estimate of fair market rental rates for the corresponding in-place leases, over the remaining non-cancelable term of the leases. Assumed debt is recorded at fair value based upon the present value of the expected future payments and current interest rates.
These estimates require judgment, involve complex calculations, and the allocations have a direct and material impact on our results of operations because, for example, (i) there would be less depreciation if we allocate more value to land (which is not depreciated), or (ii) if we allocate more value to buildings than to tenant improvements, the depreciation would be recognized over a much longer time period, because buildings are depreciated over a longer time period than tenant improvements.
Impairment of Long-Lived Assets
We assess our investment in real estate for impairment on a periodic basis, and whenever events or changes in circumstances indicate that the carrying value of our investments in real estate may not be recoverable. If the undiscounted future cash flows expected to be generated by the asset are less than the carrying value of the asset, and our evaluation indicates that we may be unable to recover the carrying value, then we would record an impairment loss to the extent that the carrying value exceeds the estimated fair value of the asset. Our estimates of future cash flows are based in part upon assumptions regarding future occupancy, rental revenues and operating costs, and could differ materially from actual results. We record real estate held for sale at the lower of carrying value or estimated fair value, less costs to sell, and similarly recognize impairment losses if we believe that we cannot recover the carrying value. Our evaluation of market conditions for assets held for sale requires judgment, and our expectations could differ materially from actual results. Impairment losses would reduce our net income and could be material. Based upon such periodic assessments we did not record any impairment losses for our long-lived assets during 2025, 2024 or 2023.
53
Revenue Recognition - Collectibility of lease payments from office tenants
In accordance with Topic 842, if collectibility of lease payments is not probable at the commencement date, then we limit the lease income to the lesser of the income recognized on a straight-line basis or cash basis. If our assessment of collectibility changes after the commencement date, we record the difference between the lease income that would have been recognized on a straight-line basis and cash basis as a current-period adjustment to rental revenues and tenant recoveries. We adopted the Topic 842 complete impairment model. Under this model, we no longer maintain a general reserve related to our receivables, and instead analyze, on a lease-by-lease basis, whether amounts due under the operating lease are deemed probable for collection. We write off tenant and deferred rent receivables as a charge against rental revenues and tenant recoveries in the period we determine the lease payments are not probable for collection. If we subsequently collect amounts that were previously written off then the amounts collected are recorded as an increase to our rental revenues and tenant recoveries in the period they are collected.
Our assessment of the collectibility of lease payments requires judgment and could have a material impact on our results of operations. This assessment involves using a methodology that requires judgment and estimates about matters that are uncertain at the time the estimates are made, including tenant specific factors, specific industry conditions, and general economic trends and conditions.
Charges for uncollectible amounts related to tenant receivables and deferred rent receivables reduced our rental revenues and tenant recoveries by $0.5 million, $1.0 million, and $0.8 million in 2025, 2024 and 2023, respectively. We restored accrual basis accounting for certain office tenants that were previously determined to be uncollectible and accounted for on a cash basis of accounting, which increased our office revenues by $1.1 million, $0.9 million, and $4.4 million in 2025, 2024, and 2023, respectively.
Revenue Recognition for Tenant Recoveries
Our tenant recovery revenues for recoverable operating expenses are recognized as revenue in the period that the recoverable expenses are incurred. Subsequent to year-end, we perform reconciliations on a lease-by-lease basis and bill or credit each tenant for any differences between the estimated expenses we billed to the tenant and the actual expenses incurred. Estimating tenant recovery revenues requires an in-depth analysis of the complex terms of each underlying lease. Examples of estimates and judgments made when determining the amounts recoverable include:
•estimating the recoverable expenses;
•estimating the impact of changes to expense and occupancy during the year;
•estimating the fixed and variable components of operating expenses for each building;
•conforming recoverable expense pools to those used in the base year for the underlying lease; and
•judging whether an expense or capital expenditure is recoverable pursuant to the terms of the underlying lease.
These estimates require judgment and involve calculations for each of our office properties. If our estimates prove to be incorrect, then our tenant recovery revenues and net income could be materially and adversely affected in future periods when we perform our reconciliations. The impact of changing our current year tenant recovery billings by 5% would result in a change to our tenant recovery revenues and net income of $2.4 million, $2.5 million and $2.6 million during 2025, 2024 and 2023, respectively.
54
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Fixed-Rate Borrowings and Hedged Borrowings
As of December 31, 2025, the interest rates for 72% of our consolidated borrowings were fixed or swap-fixed with interest rate swaps, and 21% were capped with interest rate caps. As of December 31, 2025, the maximum amount the interest expense on our capped-rate borrowings could increase by is $36.6 million per year. Higher interest rates would cause an increase in our future interest expense on our capped-rate debt, which would reduce our future net income, cash flows from operations and FFO. Our interest rate swap agreements generally expire two years before the maturity date of the related loan, during which time we can refinance the loan without any interest penalty. After the interest rate swap agreements expire the related debt will be floating rate. Higher interest rates, to the extent they are higher than our swap-fixed rates when our interest rate swaps expire, would cause our future interest expense on our debt to increase, which would reduce our future net income, cash flows from operations and FFO. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt maturities and our interest rate swap expirations.
Our use of interest rate swaps and caps also exposes us to credit risk from the potential inability of our counterparties to perform under the terms of those agreements. We attempt to minimize this credit risk by contracting with a variety of financial counterparties with investment grade ratings. See Note 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our interest rate swaps and caps.
Unhedged Floating-Rate Borrowings
As of December 31, 2025, the interest rates for 7% of our consolidated borrowings were floating with no caps. As of December 31, 2025, the interest expense for our unhedged floating-rate borrowings would increase by $3.8 million per year for every one hundred basis points increase in the related benchmark interest rate. Higher interest rates would cause an increase in our future interest expense on our floating-rate debt, which would reduce our future net income, cash flows from operations and FFO. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our floating rate debt.
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
As of December 31, 2025, the end of the period covered by this Report, we carried out an evaluation, under the supervision and with the participation of management, including our CEO and CFO, regarding the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on the foregoing, our CEO and CFO concluded, as of that time, that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports filed or submitted under the Exchange Act (i) is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to our management, including our CEO and our CFO, as appropriate, to allow for timely decisions regarding required disclosure.
There have not been any changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Report on Internal Control Over Financial Reporting and the Report of Independent Registered Public Accounting Firm thereon appear at pages F-1 and F-4, respectively, and are incorporated herein by reference.
55
Item 9B. Other Information
(a) None.
(b) During the three months ended December 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each such term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
56
PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated by reference to the information set forth under the captions “Election of Directors (Proposal 1) – Information Concerning Current Directors and Nominees”, “Information About Our Executive Officers”, “Corporate Governance”, “Board Meetings and Committees” and “Delinquent Section 16(a) Reports” (to the extent required), in our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2025.
Item 11. Executive Compensation
The information required by this item is incorporated by reference to the information set forth under the captions “Executive Compensation”, “Compensation Committee Report”, “Director Compensation”, and “Compensation Committee Interlocks and Insider Participation”, in our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2025.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Securities Authorized for Issuance Under Stock-Based Compensation Plan
The following table presents information with respect to shares of our common stock that may be issued under our existing stock incentive plan as of December 31, 2025:
| Plan Category | Number of shares of common stock to be issued upon exercise of outstanding options, warrants and rights (In thousands) | Weighted-average exercise price of outstanding options, warrants and rights | Number of shares of common stock remaining available for future issuance under stock-based compensation plans (excluding shares reflected in column (a)) (In thousands) | |||||||||||||||||
| (a) | (b) | (c) | ||||||||||||||||||
| Stock-based compensation plans approved by stockholders | (1) | 7,033 | (2) | $— | (3) | 6,220 | ||||||||||||||
___________________________________________________________
(1) For a description of our 2016 Omnibus Stock Incentive Plan, see Note 13 to our consolidated financial statements in Item 15 of this Report. We did not have any other stock-based compensation plans as of December 31, 2025.
(2) Consists of 4.5 million vested and 2.5 million unvested LTIP Units.
(3) We have no outstanding options. There are no exercise prices for LTIP Units.
The remaining information required by this item is incorporated by reference to the information set forth under the caption “Voting Securities and Principal Stockholders—Security Ownership of Certain Beneficial Owners and Management”, in our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2025.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated by reference to the information set forth under the captions “Election of Directors (Proposal 1) – Information Concerning Current Directors and Nominees”, “Corporate Governance” and “Transactions With Related Persons”, in our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2025.
Item 14. Principal Accounting Fees and Services
Our Independent Registered Public Accounting Firm is Ernst & Young LLP, Los Angeles California, PCAOB Firm ID: 42. The information required by this item is incorporated by reference to the information set forth under the caption “Independent Registered Public Accounting Firm” in our Proxy Statement for the 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after December 31, 2025.
57
PART IV
Item 15. Exhibits and Financial Statement Schedule
(a)(1) and (2) Financial Statements and Schedules
| Index | ||||||||
| Page | ||||||||
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F- 38 | ||||||||
F- 40 | ||||||||
| Note: All other schedules have been omitted because the required information is not present, or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the financial statements or notes thereto. | ||||||||
58
(a)(3) exhibits
| Number | Description | Footnote | ||||||
| 3.1 | (1) | |||||||
| 3.2 | (2) | |||||||
| 3.3 | (3) | |||||||
| 3.4 | (4) | |||||||
| 4.1 | (5) | |||||||
| 4.2 | (6) | |||||||
| 10.1 | (5) | |||||||
| 10.2 | (7) | |||||||
| 10.3 | (8) | |||||||
| 10.4 | (9) | |||||||
| 10.5 | (10) | |||||||
| 10.6 | ||||||||
| 10.7 | (11) | |||||||
| 10.8 | (11) | |||||||
| 19.1 | ||||||||
| 21.1 | ||||||||
| 23.1 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | (12) | |||||||
| 32.2 | (12) | |||||||
| 97.1 | (13) | |||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.* | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document.* | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document.* | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document.* | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document.* | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document.* | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document)* | |||||||
| * | Filed with this Annual Report on Form 10-K . | |||||||
| + | Denotes management contract or compensatory plan, contract or arrangement. | |||||||
| (1) | Filed with Amendment No. 6 to Form S-11 on October 19, 2006 and incorporated herein by this reference. (File number 333-135082) | |||||||
| (2) | Filed with Form 8-K on September 6, 2013 and incorporated herein by this reference. (File number 001-33106) | |||||||
| (3) | Filed with Form 8-K on October 30, 2006 and incorporated herein by this reference. (File number 001-33106) | |||||||
| (4) | Filed with Form 8-K on April 9, 2018 and incorporated herein by this reference. (File number 001-33106) | |||||||
59
| (5) | Filed with Amendment No. 3 to Form S-11 on October 3, 2006 and incorporated herein by this reference. (File number 333-135082) | |||||||
| (6) | Filed with Form 10-K on February 18, 2022 and incorporated herein by this reference. (File number 001-33106) | |||||||
| (7) | Filed with Form S-11 on June 16, 2006 and incorporated herein by this reference. (File number 333-135082) | |||||||
| (8) | Filed with Amendment No. 2 to Form S-11 on September 20, 2006 and incorporated herein by this reference. (File number 333-135082) | |||||||
| (9) | Filed with Definitive Proxy Statement on April 14, 2023 and incorporated herein by this reference. (File number 001-33106) | |||||||
| (10) | Filed with Form 8-K on December 12, 2016 and incorporated herein by this reference. (File number 001-33106) | |||||||
| (11) | Filed with Form 8-K on January 3, 2024 and incorporated herein by this reference. (File number 001-33106) | |||||||
| (12) | In accordance with SEC Release No. 33-8212, these exhibits are being furnished, and are not being filed as part of this Report on Form 10-K or as a separate disclosure document, and are not being incorporated by reference into any Securities Act registration statement. | |||||||
| (13) | Filed with Form 10-K on February 16, 2024 and incorporated herein by this reference. (File number 001-33106) | |||||||
Item 16. Form 10-K Summary
None.
60
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DOUGLAS EMMETT, INC. | ||||||||
| Dated: | By: | /s/ JORDAN L. KAPLAN | ||||||
| February 20, 2026 | Jordan L. Kaplan | |||||||
| Chairman of the Board and CEO | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed by the persons below, in their respective capacities, on behalf of the registrant as of February 20, 2026.
| Signature | Title | |||||||
| /s/ JORDAN L. KAPLAN | ||||||||
| Jordan L. Kaplan | Chairman of the Board and CEO (Principal Executive Officer) | |||||||
| /s/ PETER D. SEYMOUR | ||||||||
| Peter D. Seymour | CFO (Principal Financial and Accounting Officer) | |||||||
| /s/ KENNETH M. PANZER | ||||||||
| Kenneth M. Panzer | President, COO and Director | |||||||
| /s/ LESLIE E. BIDER | ||||||||
| Leslie E. Bider | Director | |||||||
| /s/ DORENE C. DOMINGUEZ | ||||||||
| Dorene C. Dominguez | Director | |||||||
| /s/ VIRGINIA A. MCFERRAN | ||||||||
| Virginia A. McFerran | Director | |||||||
| /s/ THOMAS E. O’HERN | ||||||||
| Thomas E. O’Hern | Director | |||||||
| /s/ WILLIAM E. SIMON, JR. | ||||||||
| William E. Simon, Jr. | Director | |||||||
| /s/ SHIRLEY WANG | ||||||||
| Shirley Wang | Director | |||||||
61
Report of Management on Internal Control over Financial Reporting
The management of Douglas Emmett, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.
Our system of internal control is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of our financial statements for external reporting purposes in accordance with US GAAP. Our management, including the undersigned CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In conducting its assessment, management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission on Internal Control—Integrated Framework (2013 Framework). Based on this assessment, management concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
Management, including our CEO and CFO, does not expect that our disclosure controls and procedures, or our internal controls will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefit of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.
The effectiveness of our internal control over financial reporting as of December 31, 2025, has been audited by Ernst & Young LLP, the independent registered public accounting firm that audited the consolidated financial statements included in this annual report, as stated in their report appearing on page F-4, which expresses an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2025.
| /s/ JORDAN L. KAPLAN | ||
| Jordan L. Kaplan | ||
| Chairman of the Board and CEO | ||
| /s/ PETER D. SEYMOUR | ||
| Peter D. Seymour | ||
| CFO | ||
February 20, 2026
F- 1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Douglas Emmett, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Douglas Emmett, Inc. (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 20, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F- 2
/s/ Ernst & Young LLP
We have served as the Company's auditor since 1995.
Los Angeles, California
February 20, 2026
F- 3
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Douglas Emmett, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Douglas Emmett, Inc.’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Douglas Emmett, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) and our report dated February 20, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Los Angeles, California
February 20, 2026
F- 4
| December 31, 2025 | December 31, 2024 | ||||||||||
| Assets | |||||||||||
| Investment in real estate, gross | $ | 12,798,047 | $ | 12,495,252 | |||||||
| Less: accumulated depreciation and amortization | (4,054,696) | (3,916,625) | |||||||||
| Investment in real estate, net | 8,743,351 | 8,578,627 | |||||||||
| Ground lease right-of-use asset | 7,428 | 7,438 | |||||||||
| Cash and cash equivalents | 340,789 | 444,623 | |||||||||
| Tenant receivables | 1,990 | 4,242 | |||||||||
| Deferred rent receivables | 123,619 | 117,570 | |||||||||
| Acquired lease intangible assets, net | 4,731 | 2,487 | |||||||||
| Interest rate contract assets | 22,310 | 77,620 | |||||||||
| Investment in unconsolidated Fund | — | 23,770 | |||||||||
| Other assets | 43,963 | 147,323 | |||||||||
| Total Assets | $ | 9,288,181 | $ | 9,403,700 | |||||||
| Liabilities | |||||||||||
| Secured notes payable, net | $ | 5,548,870 | $ | 5,498,022 | |||||||
| Ground lease liability | 10,808 | 10,822 | |||||||||
| Interest payable, accounts payable and deferred revenue | 139,959 | 131,011 | |||||||||
| Security deposits | 67,069 | 62,449 | |||||||||
| Acquired lease intangible liabilities, net | 8,276 | 11,331 | |||||||||
| Interest rate contract liabilities | 6,437 | — | |||||||||
| Dividends payable | 31,831 | 31,825 | |||||||||
| Total Liabilities | 5,813,250 | 5,745,460 | |||||||||
| Equity | |||||||||||
| Douglas Emmett, Inc. stockholders' equity: | |||||||||||
Common Stock, $0.01 par value, 750,000,000 authorized, 167,462,215 and 167,435,259 outstanding at December 31, 2025 and December 31, 2024, respectively | 1,675 | 1,674 | |||||||||
| Additional paid-in capital | 3,396,820 | 3,396,452 | |||||||||
| Accumulated other comprehensive income | 11,452 | 54,917 | |||||||||
| Accumulated deficit | (1,505,390) | (1,394,394) | |||||||||
| Total Douglas Emmett, Inc. stockholders' equity | 1,904,557 | 2,058,649 | |||||||||
| Noncontrolling interests | 1,570,374 | 1,599,591 | |||||||||
| Total Equity | 3,474,931 | 3,658,240 | |||||||||
| Total Liabilities and Equity | $ | 9,288,181 | $ | 9,403,700 | |||||||
See accompanying notes to the consolidated financial statements.
F- 5
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Revenues | |||||||||||||||||
| Office rental | |||||||||||||||||
| Rental revenues and tenant recoveries | $ | 686,208 | $ | 683,901 | $ | 714,742 | |||||||||||
| Parking and other income | 119,308 | 112,503 | 115,203 | ||||||||||||||
| Total office revenues | 805,516 | 796,404 | 829,945 | ||||||||||||||
| Multifamily rental | |||||||||||||||||
| Rental revenues | 181,205 | 174,278 | 174,296 | ||||||||||||||
| Parking and other income | 17,261 | 15,796 | 16,247 | ||||||||||||||
| Total multifamily revenues | 198,466 | 190,074 | 190,543 | ||||||||||||||
| Total revenues | 1,003,982 | 986,478 | 1,020,488 | ||||||||||||||
| Operating Expenses | |||||||||||||||||
| Office expenses | 301,276 | 285,352 | 294,310 | ||||||||||||||
| Multifamily expenses | 66,661 | 64,906 | 67,323 | ||||||||||||||
| General and administrative expenses | 46,664 | 45,356 | 49,236 | ||||||||||||||
| Depreciation and amortization | 398,932 | 384,048 | 459,949 | ||||||||||||||
| Total operating expenses | 813,533 | 779,662 | 870,818 | ||||||||||||||
| Other income | 18,021 | 28,019 | 19,633 | ||||||||||||||
| Other expenses | (437) | (398) | (1,032) | ||||||||||||||
| Income (loss) from unconsolidated Fund | — | 2,593 | (34,643) | ||||||||||||||
| Interest expense | (266,675) | (229,442) | (209,468) | ||||||||||||||
| Gain from consolidation of JV | 47,212 | — | — | ||||||||||||||
| Net (loss) income | (11,430) | 7,588 | (75,840) | ||||||||||||||
| Net loss attributable to noncontrolling interests | 27,697 | 15,929 | 33,134 | ||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 16,267 | $ | 23,517 | $ | (42,706) | |||||||||||
| Net income (loss) per common share – basic and diluted | $ | 0.09 | $ | 0.13 | $ | (0.26) | |||||||||||
See accompanying notes to the consolidated financial statements.
F- 6
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net (loss) income | $ | (11,430) | $ | 7,588 | $ | (75,840) | |||||||||||
| Other comprehensive loss: cash flow hedges | (68,733) | (90,965) | (100,031) | ||||||||||||||
| Comprehensive loss | (80,163) | (83,377) | (175,871) | ||||||||||||||
| Comprehensive loss attributable to noncontrolling interests | 52,965 | 45,894 | 62,019 | ||||||||||||||
| Comprehensive loss attributable to common stockholders | $ | (27,198) | $ | (37,483) | $ | (113,852) | |||||||||||
See accompanying notes to the consolidated financial statements.
F- 7
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Shares of Common Stock | Beginning balance | 167,435 | 167,206 | 175,810 | ||||||||||||||||
| Exchange of OP Units for common stock | 27 | 229 | 468 | |||||||||||||||||
| Repurchases of common stock | — | — | (9,072) | |||||||||||||||||
| Ending balance | 167,462 | 167,435 | 167,206 | |||||||||||||||||
| Common Stock | Beginning balance | $ | 1,674 | $ | 1,672 | $ | 1,758 | |||||||||||||
| Exchange of OP Units for common stock | 1 | 2 | 5 | |||||||||||||||||
| Repurchases of common stock | — | — | (91) | |||||||||||||||||
| Ending balance | $ | 1,675 | $ | 1,674 | $ | 1,672 | ||||||||||||||
| Additional Paid-in Capital | Beginning balance | $ | 3,396,452 | $ | 3,392,955 | $ | 3,493,307 | |||||||||||||
| Exchange of OP Units for common stock | 378 | 3,501 | 7,736 | |||||||||||||||||
| Repurchases of OP Units with cash | (10) | (4) | 1,054 | |||||||||||||||||
| Repurchases of common stock | — | — | (109,142) | |||||||||||||||||
| Ending balance | $ | 3,396,820 | $ | 3,396,452 | $ | 3,392,955 | ||||||||||||||
| Accumulated Other Comprehensive Income (Loss) | Beginning balance | $ | 54,917 | $ | 115,917 | $ | 187,063 | |||||||||||||
| Cash flow hedge adjustments | (43,465) | (61,000) | (71,146) | |||||||||||||||||
| Ending balance | $ | 11,452 | $ | 54,917 | $ | 115,917 | ||||||||||||||
| Accumulated Deficit | Beginning balance | $ | (1,394,394) | $ | (1,290,682) | $ | (1,119,714) | |||||||||||||
| Net income (loss) attributable to common stockholders | 16,267 | 23,517 | (42,706) | |||||||||||||||||
| Dividends | (127,263) | (127,229) | (128,262) | |||||||||||||||||
| Ending balance | $ | (1,505,390) | $ | (1,394,394) | $ | (1,290,682) | ||||||||||||||
| Noncontrolling Interests | Beginning balance | $ | 1,599,591 | $ | 1,625,535 | $ | 1,713,369 | |||||||||||||
| Net loss attributable to noncontrolling interests | (27,697) | (15,929) | (33,134) | |||||||||||||||||
| Cash flow hedge adjustments | (25,268) | (29,965) | (28,885) | |||||||||||||||||
| Contributions | 5,400 | 28,000 | 125 | |||||||||||||||||
| Consolidation of JV | 20,246 | — | — | |||||||||||||||||
| Distributions | (28,408) | (31,590) | (40,589) | |||||||||||||||||
| Exchange of OP Units for common stock | (379) | (3,503) | (7,741) | |||||||||||||||||
| Repurchases of OP Units with cash | (341) | (134) | (3,460) | |||||||||||||||||
| Stock-based compensation | 27,230 | 27,177 | 25,850 | |||||||||||||||||
| Ending balance | $ | 1,570,374 | $ | 1,599,591 | $ | 1,625,535 | ||||||||||||||
| Statement continues on the following page. | ||||||||||||||||||||
F- 8
| Year Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Total Equity | Beginning balance | $ | 3,658,240 | $ | 3,845,397 | $ | 4,275,783 | |||||||||||||
| Net (loss) income | (11,430) | 7,588 | (75,840) | |||||||||||||||||
| Cash flow hedge adjustments | (68,733) | (90,965) | (100,031) | |||||||||||||||||
| Consolidation of JV | 20,246 | — | — | |||||||||||||||||
| Repurchases of OP Units with cash | (351) | (138) | (2,406) | |||||||||||||||||
| Repurchases of common stock | — | — | (109,233) | |||||||||||||||||
| Contributions | 5,400 | 28,000 | 125 | |||||||||||||||||
| Dividends | (127,263) | (127,229) | (128,262) | |||||||||||||||||
| Distributions | (28,408) | (31,590) | (40,589) | |||||||||||||||||
| Stock-based compensation | 27,230 | 27,177 | 25,850 | |||||||||||||||||
| Ending balance | $ | 3,474,931 | $ | 3,658,240 | $ | 3,845,397 | ||||||||||||||
| Dividends declared per common share | $ | 0.76 | $ | 0.76 | $ | 0.76 | ||||||||||||||
See accompanying notes to the consolidated financial statements.
F- 9
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating Activities | |||||||||||||||||
| Net (loss) income | $ | (11,430) | $ | 7,588 | $ | (75,840) | |||||||||||
| Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||||||||
| (Income) loss from unconsolidated Fund | — | (2,593) | 34,643 | ||||||||||||||
| Gain from consolidation of JV | (47,212) | — | — | ||||||||||||||
| Depreciation and amortization | 398,932 | 384,048 | 459,949 | ||||||||||||||
| Net accretion of acquired lease intangibles | (4,827) | (8,023) | (10,961) | ||||||||||||||
| Straight-line rent | (6,049) | (2,248) | (342) | ||||||||||||||
| Loan premium/discount amortized/accreted and written off | 336 | (333) | (460) | ||||||||||||||
| Deferred loan costs amortized and written off | 11,896 | 9,335 | 8,858 | ||||||||||||||
| Amortization of stock-based compensation | 21,208 | 21,038 | 19,834 | ||||||||||||||
| Operating distributions from unconsolidated Fund | — | 1,224 | 1,288 | ||||||||||||||
| Purchase of interest rate caps | — | — | (1,622) | ||||||||||||||
| Change in working capital components: | |||||||||||||||||
| Tenant receivables | 2,245 | 1,854 | 783 | ||||||||||||||
| Interest payable, accounts payable and deferred revenue | 11,444 | (4) | 6,248 | ||||||||||||||
| Security deposits | 3,162 | 491 | 529 | ||||||||||||||
| Other assets | 7,148 | (3,684) | (15,943) | ||||||||||||||
| Net cash provided by operating activities | 386,853 | 408,693 | 426,964 | ||||||||||||||
| Investing Activities | |||||||||||||||||
| Capital expenditures for improvements to real estate | (192,397) | (167,337) | (189,157) | ||||||||||||||
| Capital expenditures for developments and purchase of note receivable secured by real estate | (102,461) | (72,052) | (41,480) | ||||||||||||||
| Insurance recoveries for damage to real estate | 3,926 | 3,573 | 2,181 | ||||||||||||||
| Cash assumed from consolidation of JV | 25,589 | — | — | ||||||||||||||
| Acquisition of additional interests in unconsolidated Fund | — | (5,214) | (5,214) | ||||||||||||||
| Capital distributions from unconsolidated Fund | — | 269 | 80 | ||||||||||||||
| Net cash used in investing activities | (265,343) | (240,761) | (233,590) | ||||||||||||||
| Financing Activities | |||||||||||||||||
| Proceeds from borrowings | 1,322,657 | 325,000 | 505,000 | ||||||||||||||
| Repayment of borrowings | (1,366,178) | (434,902) | (155,862) | ||||||||||||||
| Loan cost payments | (31,207) | (5,648) | (6,269) | ||||||||||||||
| Contributions from noncontrolling interests in consolidated JVs | 5,400 | 28,000 | 125 | ||||||||||||||
| Distributions paid to noncontrolling interests | (28,408) | (31,590) | (40,589) | ||||||||||||||
| Dividends paid to common stockholders | (127,257) | (127,185) | (129,895) | ||||||||||||||
| Repurchases of OP Units | (351) | (138) | (2,406) | ||||||||||||||
| Repurchases of common stock | — | — | (109,233) | ||||||||||||||
| Net cash (used in) provided by financing activities | (225,344) | (246,463) | 60,871 | ||||||||||||||
| (Decrease) increase in cash and cash equivalents and restricted cash | (103,834) | (78,531) | 254,245 | ||||||||||||||
| Cash and cash equivalents and restricted cash - beginning balance | 444,652 | 523,183 | 268,938 | ||||||||||||||
| Cash and cash equivalents and restricted cash - ending balance | $ | 340,818 | $ | 444,652 | $ | 523,183 | |||||||||||
| Reconciliation of Ending Cash Balance | |||||||||||||||||
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash and cash equivalents | $ | 340,789 | $ | 444,623 | $ | 523,082 | |||||||||||
| Restricted cash (included in Other assets on our consolidated balance sheets) | 29 | 29 | 101 | ||||||||||||||
| Cash and cash equivalents and restricted cash | $ | 340,818 | $ | 444,652 | $ | 523,183 | |||||||||||
Supplemental Cash Flows Information
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Cash paid for interest, net of capitalized interest | $ | 237,376 | $ | 219,503 | $ | 195,952 | |||||||||||
| Capitalized interest paid | $ | 11,239 | $ | 8,724 | $ | 1,474 | |||||||||||
| Non-cash Investing Transactions | |||||||||||||||||
| Accrual for real estate and development capital expenditures | $ | 16,771 | $ | 15,831 | $ | 16,540 | |||||||||||
| Capitalized stock-based compensation for improvements to real estate and developments | $ | 6,022 | $ | 6,139 | $ | 6,016 | |||||||||||
| Removal of fully depreciated and amortized buildings, building improvements, tenant improvements and lease intangibles | $ | 253,460 | $ | 114,158 | $ | 102,114 | |||||||||||
| Removal of fully amortized acquired lease intangible assets | $ | 1,741 | $ | 203 | $ | 427 | |||||||||||
| Removal of fully accreted acquired lease intangible liabilities | $ | 10,314 | $ | 13,304 | $ | 16,843 | |||||||||||
| Non-cash Financing Transactions | |||||||||||||||||
| (Loss) Gains recorded in AOCI - consolidated derivatives | $ | (7,650) | $ | 47,896 | $ | 45,364 | |||||||||||
| Gains recorded in AOCI - unconsolidated Fund's derivatives (our share) | $ | — | $ | 5,417 | $ | 585 | |||||||||||
| Dividends declared | $ | 127,263 | $ | 127,229 | $ | 128,262 | |||||||||||
| Exchange of OP Units for common stock | $ | 379 | $ | 3,503 | $ | 7,741 | |||||||||||
| Seller financing of note receivable purchase | $ | — | $ | 61,750 | $ | — | |||||||||||
See accompanying notes to the consolidated financial statements.
F- 10
1. Overview
Organization and Business Description
Douglas Emmett, Inc. is a fully integrated, self-administered and self-managed REIT. We are one of the largest owners and operators of high-quality office and multifamily properties in Los Angeles County, California and Honolulu, Hawaii. Through our interest in our Operating Partnership, its subsidiaries, and our consolidated JVs, we focus on owning, acquiring, developing and managing a substantial market share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities. The terms "us," "we" and "our" as used in the consolidated financial statements refer to Douglas Emmett, Inc. and its subsidiaries on a consolidated basis.
At December 31, 2025, our Total Portfolio consisted of (i) an 18.0 million square foot office portfolio, which included a 456 thousand square foot office property under development, (ii) 5,445 multifamily apartment units, which included 1,035 apartment units under development, and (iii) fee interests in two parcels of land from which we receive rent under ground leases. As of December 31, 2025, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases):
| Total Portfolio | |||||
| Office | |||||
| Wholly-owned properties | 52 | ||||
| Consolidated JV properties | 18 | ||||
| 70 | |||||
| Multifamily | |||||
| Wholly-owned properties | 12 | ||||
| Consolidated JV properties | 3 | ||||
| 15 | |||||
| Total | 85 | ||||
Basis of Presentation
The accompanying consolidated financial statements are the consolidated financial statements of Douglas Emmett, Inc. and its subsidiaries, including our Operating Partnership and our consolidated JVs. All significant intercompany balances and transactions have been eliminated in our consolidated financial statements.
We consolidate entities in which we are considered to be the primary beneficiary of a VIE or have a majority of the voting interest of the entity. We are deemed to be the primary beneficiary of a VIE when we have (i) the power to direct the activities of that VIE that most significantly impact its economic performance, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We do not consolidate entities in which the other parties have substantive kick-out rights to remove our power to direct the activities, most significantly impacting the economic performance, of that VIE. In determining whether we are the primary beneficiary, we consider factors such as ownership interest, management representation, authority to control decisions, and contractual and substantive participating rights of each party.
We consolidate our Operating Partnership through which we conduct substantially all of our business, and own, directly and through subsidiaries, substantially all of our assets, and are obligated to repay substantially all of our liabilities. The consolidated debt, excluding our consolidated JVs, was $3.81 billion and $3.73 billion as of December 31, 2025 and December 31, 2024. See Note 8. We also consolidate six JVs through our Operating Partnership. We consolidate our Operating Partnership and our six JVs because they are VIEs and we or our Operating Partnership are the primary beneficiary for each. On January 1, 2025, we commenced consolidating one of our JVs which was previously unconsolidated and accounted for using the equity method. The JV owns two Class A office properties totaling 0.4 million square feet.
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As of December 31, 2025, our consolidated VIE entities, excluding our Operating Partnership, had:
•aggregate consolidated assets of $3.76 billion (of which $3.55 billion related to investment in real estate), and
•aggregate consolidated liabilities of $1.84 billion (of which $1.78 billion related to debt).
As of December 31, 2024, our consolidated VIE entities, excluding our Operating Partnership, had:
•aggregate consolidated assets of $3.77 billion (of which $3.38 billion related to investment in real estate), and
•aggregate consolidated liabilities of $1.86 billion (of which $1.80 billion related to debt).
The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC in conformity with US GAAP as established by the FASB in the ASC. The accompanying consolidated financial statements include, in our opinion, all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial information set forth therein. Any references to the number or class of properties, square footage, per square footage amounts, apartment units and geography, are unaudited and outside the scope of our independent registered public accounting firm’s audit of our consolidated financial statements in accordance with the standards of the PCAOB.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of consolidated financial statements in conformity with US GAAP requires management to make certain estimates that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
Investment in Real Estate
Acquisitions and Initial Consolidation of VIEs
Acquisitions of properties generally do not meet the definition of a business and are accounted for as asset acquisitions, as substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. We include the acquired properties' results of operations in our results of operations from the respective acquisition date. We allocate the purchase price for asset acquisitions, which includes the capitalized transaction costs, and for the properties upon the initial consolidation of VIEs not determined to be a business, on a relative fair value basis to: (i) land, (ii) buildings and improvements, (iii) tenant improvements and identifiable intangible assets such as in-place at-market leases, (iv) acquired above- and below-market ground and tenant leases (including for renewal options), and if applicable (v) assumed debt and (vi) assumed interest rate swaps. The fair values are based upon comparable sales for land, and the income approach using our estimates of expected future cash flows and other valuation techniques, which include but are not limited to, our estimates of rental rates, revenue growth rates, capitalization rates and discount rates, for other assets and liabilities. We estimate the relative fair values of the tangible assets on an "as-if-vacant" basis. The estimated relative fair value of acquired in-place at-market leases are the estimated costs to lease the property to the occupancy level at the date of acquisition, including the fair value of leasing commissions and legal costs. We evaluate the time period over which we expect such occupancy level to be achieved and include an estimate of the net operating costs (primarily real estate taxes, insurance and utilities) incurred during the lease-up period. Above- and below-market ground and tenant leases are recorded as an asset or liability based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between the contractual amounts to be paid or received pursuant to the in-place ground or tenant leases, respectively, and our estimate of the fair market rental rates for the corresponding in-place leases, over the remaining non-cancelable term of the lease. Assumed debt is recorded at fair value based upon the present value of the expected future payments and current interest rates. See Note 3 for our property acquisition disclosures.
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Depreciation and Amortization
The assets and liabilities listed below are carried on our consolidated balance sheets net of the related accumulated depreciation or amortization/accretion, and any impairment charges. We accelerate depreciation for affected assets when we renovate our buildings or our buildings are impacted by new developments. When assets are sold or retired, their cost and related accumulated depreciation or amortization are removed from our consolidated balance sheets with the resulting gains or losses, if any, reflected in our results of operations for the respective period.
•Buildings and improvements are depreciated on a straight-line basis using an estimated life of to forty years for buildings and fifteen years for improvements.
•Tenant improvements are depreciated on a straight-line basis over the life of the related lease, with any remaining balance depreciated in the period of any early lease termination.
•Acquired in-place leases are amortized on a straight-line basis over the weighted average remaining term of the acquired in-place leases.
•Acquired lease intangibles are amortized on a straight-line basis over the related lease term, with any remaining balance amortized in the period of any early lease termination.
•Acquired above- and below-market tenant leases are amortized/accreted on a straight-line basis over the life of the related lease and recorded as either an increase (for below-market leases) or a decrease (for above-market leases) to rental revenue.
•Acquired above- and below-market ground leases, from which we earn ground rent income, are amortized/accreted on a straight-line basis over the life of the related lease and recorded either as an increase (for below-market leases) or a decrease (for above-market leases) to rental revenue.
•Acquired above- and below-market ground leases, for which we incur ground rent expense, are accreted/ amortized over the life of the related lease and recorded either as an increase (for below-market leases) or a decrease (for above-market leases) to expense.
Real Estate Held for Sale
Properties are classified as held for sale on our consolidated balance sheets when they meet certain requirements, including the approval of the sale of the property, the marketing of the property for sale, and our expectation that the sale will likely occur within the next 12 months. Properties classified as held for sale are carried at the lower of their carrying value or fair value less costs to sell, and we also cease to depreciate the property. As of December 31, 2025 and 2024, we did not have any properties held for sale.
Dispositions
Recognition of gains or losses from sales of investments in real estate requires that we meet certain revenue recognition criteria and transfer control of the real estate to the buyer. The gain or loss recorded is measured as the difference between the sales price, less costs to sell, and the carrying value of the real estate when we sell it. We did not sell any properties during 2025, 2024 and 2023.
Cost Capitalization
Costs incurred during the period of construction of real estate are capitalized. Cost capitalization of development and redevelopment activities begins during the predevelopment period, which we define as the activities that are necessary to begin the development of the property. We cease capitalization upon substantial completion of the project, but no later than one year from cessation of major construction activity. We also cease capitalization when activities necessary to prepare the property for its intended use have been suspended. Capitalized costs are included in Investment in real estate, gross, on our consolidated balance sheets. Demolition expenses and repairs and maintenance are recorded as expense when incurred. During 2025, 2024 and 2023, we capitalized $104.1 million, $43.2 million and $38.0 million of costs related to our developments, respectively, which included $11.2 million, $8.7 million and $1.5 million of capitalized interest, respectively.
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Ground Lease
We account for our ground lease, for which we are the lessee, in accordance with Topic 842 "Leases". We classify the ground lease as an operating lease, and we recognize a right-of-use asset for the land and a lease liability for the future lease payments. We recognize the lease payments as expense, which is included in Office expenses in our consolidated statements of operations. See Note 4 for more information regarding this ground lease. See Note 14 for the fair value disclosures related to the ground lease liability.
Investment in Unconsolidated Fund
As of December 31, 2025, we did not have any unconsolidated entities. See Notes 3 and 6. As of December 31, 2024, we managed and owned an equity interest in one unconsolidated Fund. We accounted for our investment in the unconsolidated Fund using the equity method because we had significant influence but not control over the Fund. Under the equity method, we initially recorded our investment in our Fund at cost, which includes acquisition basis difference and additional basis for capital raising costs, and subsequently adjusted the investment balance for: (i) our share of the Fund's net income or losses, (ii) our share of the Fund's other comprehensive income or losses, (iii) our cash contributions to the Fund and (iv) our distributions received from the Fund.
Our investment in the unconsolidated Fund is included in Investment in unconsolidated Fund on the consolidated balance sheets. Our share of our Fund's accumulated other comprehensive income or losses is included in Accumulated other comprehensive income (loss) on our consolidated balance sheets. As of December 31, 2024, the total investment basis difference included in our investment balance in the unconsolidated Fund was $4.0 million. Our share of the net income or losses from the Fund is included in Income (loss) from unconsolidated Fund in our consolidated statements of operations.
We periodically assessed whether there had been any impairment that was other than temporary in our investment in the unconsolidated Fund. An impairment charge would be recorded if events or changes in circumstances indicate that a decline in the fair value below the carrying value had occurred and the decline is other-than-temporary. Based upon such periodic assessments, we recorded an impairment charge of $36.2 million during 2023. The impairment charge we recorded during 2023 is included in Income (loss) from unconsolidated Fund on our consolidated statement of operations. We did not record any impairment charges during 2025 and 2024.
On January 1, 2025, we amended the Fund's operating agreement such that the Fund became a VIE, and as the primary beneficiary of the VIE we commenced consolidating the JV on January 1, 2025. The results of the consolidated JV are included in our operating results from January 1, 2025 and we no longer account for this investment using the equity method. See Notes 3 and 6.
Impairment of Long-Lived Assets
We periodically assess whether there has been any impairment in the carrying value of our properties and whenever events or changes in circumstances indicate that the carrying value of a property may not be recoverable. An impairment charge would be recorded if events or changes in circumstances indicate that a decline in the fair value below the carrying value has occurred and the carrying value is not recoverable. Recoverability of the carrying value of our properties is measured by a comparison of the carrying value to the undiscounted future cash flows expected to be generated by the property. If the carrying value exceeds the estimated undiscounted future cash flows, an impairment loss is recorded equal to the difference between the property's carrying value and its fair value based on the estimated discounted future cash flows. Based upon such periodic assessments, no impairments occurred during 2025, 2024 or 2023.
Cash and Cash Equivalents
We consider short-term investments with maturities of three months or less when purchased to be cash equivalents.
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Revenue Recognition
Rental Revenues and Tenant Recoveries
We account for our rental revenues, and variable lease payments such as tenant recoveries and parking revenues, in accordance with Topic 842. We adopted a practical expedient which allows us to account for our rental revenues, tenant recoveries and certain parking revenues on a combined basis. Rental revenues and tenant recoveries from tenant leases are included in Rental revenues and tenant recoveries on our consolidated statements of operations. Parking revenues are included in office Parking and other income on our consolidated statements of operations. See "Office parking revenues" disclosure further below. All of our tenant leases are classified as operating leases. For lease terms exceeding one year, rental income is recognized on a straight-line basis over the lease term. Rental revenue from month-to-month leases or leases with no scheduled rent increases or other adjustments is recognized on a monthly basis when earned.
Estimated tenant recoveries for real estate taxes, common area maintenance and other recoverable operating expenses, which are included in Rental revenues and tenant recoveries on our consolidated statements of operations, are recognized as revenue on a gross basis in the period that the recoverable expenses are incurred. Subsequent to year-end, in accordance with our policy, we perform reconciliations on a lease-by-lease basis and bill or credit each tenant for any differences between the estimated expenses we billed to the tenant and the actual expenses incurred. The amounts billed to tenants as a result of these reconciliations during 2025, 2024 and 2023 were not material. Tenant recoveries were $51.3 million, $50.1 million and $61.6 million in 2025, 2024 and 2023, respectively.
Tenant receivables consist primarily of amounts due for contractual lease payments and reimbursements of common area maintenance expenses, property taxes, and other costs recoverable from tenants. Deferred rent receivables represent the amount by which the cumulative straight-line rental revenue recorded to date exceeds the cumulative cash rents billed to date under the lease agreement.
Lease Terminations
Lease termination fees, which are included in Rental revenues and tenant recoveries on our consolidated statements of operations, are recognized on a straight line basis over the new remaining lease term when the related lease is canceled. We recognized lease termination revenue of $2.8 million, $2.6 million and $5.2 million during 2025, 2024 and 2023, respectively.
Tenant Improvements
Tenant improvements constructed, and owned by us, and reimbursed by tenants are recorded as our assets, and the related revenue, which is included in Rental revenues and tenant recoveries on our consolidated statements of operations, is recognized over the related lease term. We recognized revenue for reimbursement of tenant improvements of $7.5 million, $7.0 million and $5.8 million during 2025, 2024 and 2023, respectively.
Collectibility
In accordance with Topic 842, we perform an assessment as to whether or not substantially all of the amounts due under a tenant’s lease agreement is deemed probable of collection. This assessment involves using a methodology that requires judgment and estimates about matters that are uncertain at the time the estimates are made, including tenant specific factors, specific industry conditions, and general economic trends and conditions.
For leases where we have concluded it is probable that we will collect substantially all the lease payments due under those leases, we continue to record lease income on a straight-line basis over the lease term. For leases where we have concluded that it is not probable that we will collect substantially all the lease payments due under those leases, we limit the lease income to the lesser of the income recognized on a straight-line basis or cash basis. We write-off tenant receivables and deferred rent receivables as a charge against rental revenues and tenant recoveries in the period we conclude that substantially all of the lease payments are not probable of collection. If we subsequently collect amounts that were previously written off then the amounts collected are recorded as an increase to our rental revenues and tenant recoveries in the period they are collected. If our conclusion of collectibility changes, we will record the difference between the lease income that would have been recognized on a straight-line basis and cash basis as a current-period adjustment to rental revenues and tenant recoveries.
F- 15
Parking and Other Income
Office Parking Revenues
Our lease contracts generally make a specified number of parking spaces available to the tenant, and we bill and recognize parking revenues on a monthly basis in accordance with the lease agreements, generally using the monthly parking rates in effect at the time of billing. Office parking revenues were $100.4 million, $94.2 million and $92.2 million in 2025, 2024 and 2023, respectively, and are included in office Parking and other income on our consolidated statements of operations. Office parking receivables were $1.1 million and $1.2 million as of December 31, 2025 and 2024, respectively, and are included in Tenant receivables on our consolidated balance sheets.
Ground Lease Revenues
We own two parcels of land from which we receive rent under ground leases. We account for our ground lease revenues as operating leases in accordance with Topic 842. Ground lease revenues were $3.3 million, $3.4 million and $7.9 million in 2025, 2024 and 2023, respectively, and are included in on our consolidated statements of operations.
Insurance Recoveries
The amount by which insurance recoveries related to property damage exceed any losses recognized from that damage are recorded as Other income on our consolidated statements of operations when payment has been received or confirmation of the amount of proceeds has been received.
Interest Income
Interest income from our short-term money market fund investments is recognized on an accrual basis. Interest income is included in Other income on our consolidated statements of operations.
Leasing Costs
We account for our leasing costs in accordance with Topic 842. In accordance with Topic 842, we capitalize initial direct costs of a lease, which are costs that would not have been incurred had the lease not been executed. Costs to negotiate a lease that would have been incurred regardless of whether the lease was executed, such as employee salaries, are not considered to be initial direct costs, and are expensed as incurred.
Loan Costs
Loan costs incurred directly with the issuance of secured notes payable are deferred and amortized to interest expense over the respective loan or credit facility term. Any unamortized amounts are written off upon early repayment of the secured notes payable, and the related cost and accumulated amortization are removed from our consolidated balance sheets.
To the extent that a refinancing is considered an exchange of debt with the same lender, we account for loan costs based upon whether the old debt is determined to be modified or extinguished for accounting purposes. If the old debt is determined to be modified then we (i) continue to defer and amortize any unamortized deferred loan costs associated with the old debt at the time of the modification over the new term of the modified debt, (ii) defer and amortize the lender costs incurred in connection with the modification over the new term of the modified debt, and (iii) expense all other costs associated with the modification. If the old debt is determined to be extinguished then we (i) write off any unamortized deferred loan costs associated with the extinguished debt at the time of the extinguishment and remove the related cost and accumulated amortization from our consolidated balance sheets, (ii) expense all lender costs associated with the extinguishment, and (iii) defer and amortize all other costs incurred directly in connection with the extinguishment over the term of the new debt.
Deferred loan costs are presented on the consolidated balance sheets as a deduction from the carrying amount of our secured notes payable. All loan costs expensed and deferred loan costs amortized are included in interest expense in our consolidated statements of operations. See Note 8 for our loan cost disclosures.
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Debt Discounts and Premiums
Debt discounts and premiums related to recording debt assumed in connection with property acquisitions at fair value are generally amortized and accreted, respectively, over the remaining term of the related loan, which approximates the effective interest method. The amortization/accretion is included in interest expense in our consolidated statements of operations.
Derivative Contracts
We make use of interest rate swap and cap contracts to manage the risk associated with changes in interest rates on our floating-rate debt and to satisfy certain lender requirements. When we enter into a floating-rate term loan, we generally enter into an interest rate swap agreement for the equivalent principal amount, for a period covering the majority of the loan term, which effectively converts our floating-rate debt to a fixed-rate basis during that time. We also enter into interest rate cap agreements from time to time to cap the interest rates on our floating rate loans. We may enter into derivative contracts that are intended to hedge certain economics risks, even though hedge accounting does not apply or we elect to not apply hedge accounting. We do not speculate in derivatives and we do not make use of any other derivative instruments.
When entering into derivative agreements, we generally elect to designate them as cash flow hedges for accounting purposes. Changes in fair value of hedging instruments designated as cash flow hedges are recorded in accumulated other comprehensive income (loss) (AOCI), which is a component of equity outside of earnings. For our Fund's hedging instruments designated as cash flow hedges, we record our share of the changes in fair value of the hedging instrument in AOCI. Amounts recorded in AOCI related to our designated hedges are reclassified to Interest expense as interest payments are made on the hedged floating rate debt. Amounts reported in AOCI related to our Fund's hedges are reclassified to Income (loss) from unconsolidated Fund, as interest payments are made by our Fund on its hedged floating rate debt.
Our derivatives are included in Interest rate contract assets and Interest rate contract liabilities on our consolidated balance sheets at fair value, on a gross basis, excluding accrued interest. The accrued interest is included in Interest Payable, accounts payable and deferred revenue on our consolidated balance sheets. Our share of the fair value of our Fund's derivatives is included in Investment in unconsolidated Fund on our consolidated balance sheets. See Note 10 for our derivative disclosures.
Stock-Based Compensation
We account for stock-based compensation, which includes grants of LTIP Units to certain employees and non-employee directors, using the fair value method of accounting. The estimated fair value of the awards is based upon the market value of our common stock on the grant date and a discount for post-vesting restrictions. The estimated fair value of LTIP Units granted, net of estimated forfeitures, is amortized over the vesting period, which is based upon service. See Note 13 for our stock-based compensation disclosures.
EPS
We calculate basic EPS by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common shares outstanding during the respective period. We calculate diluted EPS by dividing the net income (loss) attributable to common stockholders for the period by the weighted average number of common shares and dilutive instruments outstanding during the respective period using the treasury stock method. Unvested LTIP Units contain non-forfeitable rights to dividends and we account for them as participating securities and include them in the computation of basic and diluted EPS using the two-class method. See Note 12 for our EPS disclosures.
Segment Information
Segment information is prepared on the same basis that our chief operating decision maker (CODM) reviews information to assess performance and make resource allocation decisions. We operate two business segments: the acquisition, development, ownership and management of office real estate, and the acquisition, development, ownership and management of multifamily real estate. The services for our office segment include primarily rental of office space and other tenant services, including parking and storage space rental. The services for our multifamily segment include primarily rental of apartments and other tenant services, including parking and storage space rental. See Note 15 for our segment disclosures.
F- 17
Income Taxes
We have elected to be taxed as a REIT under the Code, commencing with our initial taxable year ended December 31, 2006. To qualify as a REIT, we are required (among other things) to distribute at least 90% of our REIT taxable income to our stockholders and meet various other requirements imposed by the Code relating to matters such as operating results, asset holdings, distribution levels and diversity of stock ownership. Provided that we qualify for taxation as a REIT, we are generally not subject to corporate-level income tax on the earnings distributed currently to our stockholders that we derive from our REIT qualifying activities. If we fail to qualify as a REIT in any taxable year, and are unable to avail ourselves of certain savings provisions set forth in the Code, all of our taxable income would be subject to federal income tax at the regular corporate rate.
We have elected to treat one of our subsidiaries as a TRS, which generally may engage in any business, including the provision of customary or non-customary services to our tenants. A TRS is treated as a regular corporation and is subject to federal income tax and applicable state income and franchise taxes at regular corporate rates. Our TRS did not have significant tax provision or deferred income tax items for 2025, 2024 or 2023. Our subsidiaries (other than our TRS), including our Operating Partnership, are partnerships, disregarded entities, QRSs or REITs, as applicable, for federal income tax purposes. Under applicable federal and state income tax rules, the allocated share of net income or loss from disregarded entities or flow-through entities is reportable in the income tax returns of the respective owners. Accordingly, no income tax provision is included in our consolidated financial statements for these entities.
New Accounting Pronouncements
Changes to US GAAP are implemented by the FASB in the form of ASUs. We consider the applicability and impact of all ASUs. Other than the ASUs discussed below, the FASB has not issued any other ASUs that we expect to be applicable and have a material impact on our consolidated financial statements.
ASUs Adopted
We did not adopt any new ASUs in 2025.
ASUs Not Yet Adopted
ASU 2024-03 "Disaggregation of Income Statement Expenses" (Subtopic 220-40 "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures)
In November 2024, the FASB issued ASU No. 2024-03, which provides guidance on disaggregation of income statement expenses. The ASU is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. The requirements in the ASU should be applied on a prospective or retrospective basis. We expect to provide additional disclosures regarding our expenses in our future financial statement disclosures when we adopt the ASU.
ASU 2025-09 "Hedge Accounting Improvements" (Topic 815 "Derivatives and Hedging")
In November 2025, the FASB issued ASU No. 2025-09, which provides guidance on improvements to hedge accounting. The ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within that fiscal year. The requirements in the ASU should be applied on a prospective basis. We do not expect the ASU to have a material impact on our financial statements.
ASU 2025-11 "Narrow-Scope Improvements" (Topic 270 "Interim Reporting")
In December 2025, the FASB issued ASU No. 2025-11, which provides guidance on improvements to interim reporting disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements in the ASU should be applied on a prospective or retrospective basis. We do not expect the ASU to have a material impact on our financial statements.
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3. Investment in Real Estate
The table below summarizes our investment in real estate:
| (In thousands) | December 31, 2025 | December 31, 2024 | |||||||||
| Land | $ | 1,199,291 | $ | 1,185,977 | |||||||
Buildings and improvements(1)(2) | 10,343,113 | 10,190,502 | |||||||||
| Tenant improvements and lease intangibles | 1,060,108 | 1,032,373 | |||||||||
Property under development(1)(2) | 195,535 | 86,400 | |||||||||
| Investment in real estate, gross | $ | 12,798,047 | $ | 12,495,252 | |||||||
__________________________________________________________________________________
(1) Net balances transferred from Building and improvements to Property under development for development projects was $13.9 million during 2025.
(2) Property under development balances transferred to Building and improvements for real estate placed into service were $9.6 million and $13.3 million during 2025 and 2024, respectively.
Consolidation of Partnership X
Partnership X is a JV through which we and another investor own two Class A office properties totaling 0.4 million square feet in the Los Angeles submarkets of Brentwood and Beverly Hills. On January 1, 2025, we amended the operating agreement of Partnership X resulting in Partnership X becoming a VIE, and we became the primary beneficiary and commenced consolidating Partnership X on January 1, 2025. The results of the Partnership X are included in our operating results from January 1, 2025. Before January 1, 2025, Partnership X was accounted for using the equity method, and our share of Partnership X's net income was included in our statements of operations in Income from unconsolidated Fund.
The consolidation of Partnership X required us to recognize the JV's identifiable assets and liabilities at fair value in our consolidated financial statements, along with the fair value of the non-controlling interest of $20.2 million. We recognized a gain of $47.2 million to adjust the carrying value of our existing investment in the JV to its estimated fair value upon consolidation. The gain was determined by taking the difference between: (a) the fair value of Partnership X’s assets less its liabilities and (b) the sum of the fair value of the noncontrolling interest, the carrying value of our investment in Partnership X, and our share of Partnership X's other comprehensive income.
We determined the fair value of Partnership X’s assets and liabilities upon initial consolidation using our estimates of expected future cash flows and other valuation techniques. We estimated the fair values of Partnership X’s properties by using the income and sales comparison valuation approaches which included, but are not limited to, our estimates of rental rates, comparable sales, revenue growth rates, capitalization rates and discount rates. Assumed debt was recorded at fair value based upon the present value of the expected future payments and current interest rates. Other acquired assets, including cash and assumed liabilities were recorded at cost due to the short-term nature of the balances. The table below summarizes the adjusted relative purchase price allocation for the initial consolidation of the JV.
| (In thousands) | JV Consolidation | ||||
| Land | $ | 4,286 | |||
| Buildings and improvements | 157,956 | ||||
| Tenant improvements and lease intangibles | 7,861 | ||||
| Acquired lease intangible assets and liabilities, net | (602) | ||||
| Interest rate contract assets | 6,459 | ||||
| Secured note payable, net | (112,995) | ||||
| Other assets and liabilities, net | 23,501 | ||||
| Net assets and liabilities consolidated | $ | 86,466 | |||
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Acquisition of 10900 Wilshire
On January 2, 2025, a consolidated JV that we manage, and in which we own a 30% interest, acquired a 17-story, 247,000 square foot office building at 10900 Wilshire Boulevard in Westwood. Title to the property was transferred following the purchase of a secured note by the JV in 2024, which was partially financed by a $61.8 million loan. See Note 8 for our debt disclosures. We accounted for the acquisition as an asset acquisition and the acquired property's operating results are included in our consolidated operating results from the date of acquisition. The table below summarizes the relative fair values of the assets acquired and liabilities assumed.
| (In thousands) | 10900 Wilshire | ||||
| Land | $ | 9,029 | |||
| Buildings and improvements | $ | 80,865 | |||
| Tenant improvements and lease intangibles | $ | 4,035 | |||
| Acquired lease intangible assets and liabilities, net | $ | 1,074 | |||
The Landmark Residences (Formerly Barrington Plaza)
During the second quarter of 2023, we removed The Landmark Residences (formerly Barrington Plaza) residential property in Los Angeles from the rental market. In connection with the removal of the property from the rental market, we accelerated and recorded additional depreciation expense of $82.1 million during 2023, which is included in Depreciation and amortization on our consolidated statements of operations.
4. Ground Lease
We pay rent under a ground lease located in Honolulu, Hawaii, which expires on December 31, 2086. The rent is fixed at $733 thousand per year until February 28, 2029, after which it will reset to the greater of the existing ground rent or the market rent at that time.
As of December 31, 2025, the ground lease right-of-use asset carrying value was $7.4 million, and the ground lease liability was $10.8 million. Ground rent expense, which is included in Office expenses on our consolidated statements of operations, was $733 thousand during 2025, 2024 and 2023.
The table below, which assumes that the ground rent payments will continue to be $733 thousand per year after February 28, 2029, presents the future minimum ground lease payments as of December 31, 2025:
| Year ending December 31, | (In thousands) | ||||
| 2026 | $ | 733 | |||
| 2027 | 733 | ||||
| 2028 | 733 | ||||
| 2029 | 733 | ||||
| 2030 | 733 | ||||
| Thereafter | 41,047 | ||||
| Total future minimum ground lease payments | $ | 44,712 | |||
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5. Acquired Lease Intangibles
Summary of our Acquired Lease Intangibles
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Above-market tenant leases | $ | 6,775 | $ | 4,338 | ||||||||||
| Above-market tenant leases - accumulated amortization | (2,870) | (2,694) | ||||||||||||
| Above-market ground lease where we are the lessor | 1,152 | 1,152 | ||||||||||||
| Above-market ground lease - accumulated amortization | (326) | (309) | ||||||||||||
| Acquired lease intangible assets, net | $ | 4,731 | $ | 2,487 | ||||||||||
| Below-market tenant leases | $ | 28,095 | $ | 34,704 | ||||||||||
| Below-market tenant leases - accumulated accretion | (19,819) | (23,373) | ||||||||||||
| Acquired lease intangible liabilities, net | $ | 8,276 | $ | 11,331 | ||||||||||
Impact on the Consolidated Statements of Operations
The table below summarizes the net amortization/accretion related to our above- and below-market leases:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
Net accretion of above- and below-market tenant lease assets and liabilities(1) | $ | 4,844 | $ | 8,040 | $ | 10,978 | |||||||||||
Amortization of an above-market ground lease asset(2) | (17) | (17) | (17) | ||||||||||||||
| Total | $ | 4,827 | $ | 8,023 | $ | 10,961 | |||||||||||
_______________________________________________________________________________________
(1) Recorded as a net increase to office and multifamily rental revenues.
(2) Recorded as a decrease to office parking and other income.
The table below presents the future net accretion related to our above- and below-market leases at December 31, 2025.
| Year ending December 31, | Net increase (decrease) to revenues | |||||||
| (In thousands) | ||||||||
| 2026 | $ | 2,709 | ||||||
| 2027 | 1,392 | |||||||
| 2028 | 603 | |||||||
| 2029 | 60 | |||||||
| 2030 | (25) | |||||||
| Thereafter | (1,194) | |||||||
| Total | $ | 3,545 | ||||||
F- 21
6. Investment in Unconsolidated Fund
Partnership X, a JV through which we and another investor own two Class A office properties totaling 0.4 million square feet, was consolidated on January 1, 2025. See Note 3. Before January 1, 2025, Partnership X was accounted for using the equity method. On December 31, 2023, we purchased an additional 20.2% equity interest in Partnership X, which increased our equity interest to 53.8%. On February 29, 2024, we purchased an additional 20.2% equity interest in Partnership X, which increased our equity interest to 74.0%.
Partnership X pays us fees and reimburses us for certain expenses related to property management and other services we provide. For the year ended December 31, 2025, the respective transactions are eliminated in consolidation. For the years ended December 31, 2024 and December 31, 2023, when we accounted for our investment in Partnership X using the equity method, those amounts are included in Other income on our consolidated statements of operations.
We also receive distributions based on invested capital and on any profits that exceed certain specified cash returns to the investors. For the year ended December 31, 2025, the respective transactions are eliminated in consolidation. The table below presents the cash distributions we received from Partnership X:
| Year Ended December 31, | |||||||||||
| (In thousands) | 2024 | 2023 | |||||||||
| Operating distributions received | $ | 1,224 | $ | 1,288 | |||||||
| Capital distributions received | 269 | 80 | |||||||||
| Total distributions received | $ | 1,493 | $ | 1,368 | |||||||
Summarized Financial Information for Partnership X
The tables below present selected financial information for Partnership X before January 1, 2025 (when we accounted for our investment in Partnership X using the equity method). The amounts presented reflect 100% (not our pro-rata share) of the amounts related to the Fund, and are based upon historical book value:
| (In thousands) | December 31, 2024 | |||||||
| Total assets | $ | 145,626 | ||||||
| Total liabilities | $ | 118,825 | ||||||
| Total equity | $ | 26,801 | ||||||
| Year Ended December 31, | ||||||||||||||
| (In thousands) | 2024 | 2023 | ||||||||||||
| Total revenues | $ | 18,016 | $ | 19,879 | ||||||||||
| Operating income | $ | 4,519 | $ | 6,224 | ||||||||||
| Net income | $ | 2,800 | $ | 4,190 | ||||||||||
F- 22
7. Other Assets
| (In thousands) | December 31, 2025 | December 31, 2024 | |||||||||
Prepaid expenses, note receivable and other(1) | $ | 34,998 | $ | 124,430 | |||||||
Deposit with lender(2) | — | 14,072 | |||||||||
| Furniture, fixtures and equipment, net | 6,977 | 6,833 | |||||||||
| Indefinite-lived intangibles | 1,988 | 1,988 | |||||||||
| Total other assets | $ | 43,963 | $ | 147,323 | |||||||
_______________________________________________________________________
(1) As of December 31, 2024, includes a note receivable that we purchased during December 2024 through a consolidated JV. The note receivable was secured by a property. In January 2025, the respective JV received the title to the property. See "Acquisition of 10900 Wilshire" in Note 3.
(2) In connection with The Landmark Residences (formerly Barrington Plaza) loan, we deposited cash into an interest-bearing collateral account with the lender. During August 2025, we paid off the loan and the lender refunded the deposit.
F- 23
8. Secured Notes Payable, Net
Description | Maturity Date(1) | Principal Balance as of December 31, 2025 | Principal Balance as of December 31, 2024 | Variable Interest Rate(2) | Fixed Interest Rate(3) | Swap Maturity Date | ||||||||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||||||||||||||
| Consolidated Wholly-Owned Subsidiaries | ||||||||||||||||||||||||||||||||||||||
Fannie Mae loan(4) | N/A | $ | — | $ | 102,400 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||
Term loan(5) | N/A | — | 200,000 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Fannie Mae loan(6) | N/A | — | 550,000 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Fannie Mae loan(6) | N/A | — | 255,000 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Fannie Mae loan(6) | N/A | — | 125,000 | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
Term loan(7) | 8/15/2026 | 415,000 | 415,000 | SOFR + 1.20% | N/A | N/A | ||||||||||||||||||||||||||||||||
| Term loan | 9/19/2026 | 366,000 | 366,000 | SOFR + 1.25% | N/A | N/A | ||||||||||||||||||||||||||||||||
| Term loan | 11/1/2026 | 400,000 | 400,000 | SOFR + 1.25% | N/A | N/A | ||||||||||||||||||||||||||||||||
| Term loan | 5/18/2028 | 300,000 | 300,000 | SOFR + 1.51% | 2.21% | 6/1/2026 | ||||||||||||||||||||||||||||||||
| Term loan | 1/1/2029 | 300,000 | 300,000 | SOFR + 1.56% | 2.66% | 1/1/2027 | ||||||||||||||||||||||||||||||||
Fannie Mae loan(4) | 4/1/2030 | 127,200 | — | N/A | 4.99% | N/A | ||||||||||||||||||||||||||||||||
Fannie Mae loans(6) | 9/1/2030 | 941,477 | — | N/A | 4.80% | N/A | ||||||||||||||||||||||||||||||||
Construction loan(8) | 12/10/2030 | 49,506 | — | SOFR + 2.45% | N/A | N/A | ||||||||||||||||||||||||||||||||
Term loan(9) | 3/3/2032 | 336,639 | 335,000 | N/A | 4.57% | N/A | ||||||||||||||||||||||||||||||||
Term loan(5) | 7/29/2032 | 200,000 | — | SOFR + 2.00% | 5.60% | 8/1/2030 | ||||||||||||||||||||||||||||||||
Fannie Mae loan(10) | 8/1/2033 | 350,000 | 350,000 | SOFR + 1.37% | 3.65% | 6/1/2027 | ||||||||||||||||||||||||||||||||
Term loan(11) | 6/1/2038 | 25,795 | 26,739 | N/A | 4.55% | N/A | ||||||||||||||||||||||||||||||||
| Total Wholly-Owned Subsidiary Debt | 3,811,617 | 3,725,139 | ||||||||||||||||||||||||||||||||||||
| Consolidated JVs | ||||||||||||||||||||||||||||||||||||||
Term loan(12) | 5/15/2027 | 380,000 | 450,000 | SOFR + 1.45% | N/A | N/A | ||||||||||||||||||||||||||||||||
Term loan(13) | 8/19/2028 | 565,000 | 625,000 | SOFR + 1.45% | 4.79% | 12/5/2027 | ||||||||||||||||||||||||||||||||
Term loan(14) | 9/14/2028 | 115,000 | — | SOFR + 1.46% | 2.19% | 10/1/2026 | ||||||||||||||||||||||||||||||||
Term loan(15) | 12/11/2028 | 325,000 | 325,000 | SOFR + 2.50% | 6.36% | 1/5/2028 | ||||||||||||||||||||||||||||||||
Term loan(16) | 4/26/2029 | 175,000 | 175,000 | SOFR + 1.25% | 3.90% | 5/1/2026 | ||||||||||||||||||||||||||||||||
| Fannie Mae loan | 6/1/2029 | 160,000 | 160,000 | SOFR + 1.09% | 3.25% | 7/1/2027 | ||||||||||||||||||||||||||||||||
Term loan(17) | 1/9/2030 | 61,750 | 61,750 | N/A | 6.00% | N/A | ||||||||||||||||||||||||||||||||
Total Consolidated Debt(18) | 5,593,367 | 5,521,889 | ||||||||||||||||||||||||||||||||||||
Unamortized loan premium/discount, net(19) | 1,085 | 2,754 | ||||||||||||||||||||||||||||||||||||
Unamortized deferred loan costs, net(20) | (45,582) | (26,621) | ||||||||||||||||||||||||||||||||||||
| Total Consolidated Debt, net | $ | 5,548,870 | $ | 5,498,022 | ||||||||||||||||||||||||||||||||||
_____________________________________________________
Except as noted below, our loans: (i) are non-recourse, (ii) are secured by separate collateral pools consisting of one or more properties, (iii) require interest-only monthly payments with the outstanding principal due upon maturity, and (iv) contain certain financial covenants which could require us to deposit excess cash flow with the lender under certain circumstances unless we (at our option) either provide a guarantee or additional collateral or pay down the loan within certain parameters set forth in the loan documents. Certain loans with maturity date extension options require us to meet minimum financial thresholds in order to extend the loan maturity date.
(1)Maturity dates include extension options.
(2)All of our floating rate debt agreements include a zero-percent SOFR floor. If the loan is swap-fixed then the related swaps do not include such a floor.
F- 24
(3)Effective rate as of December 31, 2025. Includes the effect of interest rate swaps (if applicable) and excludes the effect of points and prepaid loan fees, and loan premiums/discounts. See Note 10 for details of our interest rate swaps. See further below for details of our loan costs and loan premiums/discounts.
(4)During March 2025, we closed a $127.2 million term loan and used part of the proceeds to pay off a $102.4 million term loan. We paid upfront points totaling 125 basis points when we closed the loan.
(5)During July 2025, we refinanced a $200.0 million term loan.
(6)During August 2025, we closed eight loans with an aggregate principal amount of $941.5 million. These loans are aggregated in the table for reporting purposes due to their identical terms. We used part of the proceeds from the new loans to pay off three loans with an aggregate principal amount of $930.0 million. We paid upfront points totaling 125 basis points when we closed the loan.
(7)The interest rate swaps related to this loan expired on August 1, 2025.
(8)In December 2025, we closed a construction loan for up to $375.0 million for The Landmark Residences (formerly Barrington Plaza). The loan has a floating interest rate. We entered into accreting swaps starting January 2, 2026 that mature January 1, 2030 to effectively fix the interest rate on 75% of the increasing estimated balance outstanding under this loan at 5.80%. We made certain guarantees related to the loan, including the completion of the development project.
(9)We modified and extended the loan for seven years, effective March 3, 2025. The loan consists of a $200.0 million note that bears interest at 4.5%, of which 2.825% is accrued, and a $135.0 million note that accrues interest at 6.0%. The accrued interest for both notes is due at maturity and is not subject to compounding. See Note 9 regarding the accrued interest on the loan. The weighted average face rate on the principal balance is 5.10%, and the effective rate as a result of the non-compounding is 4.57%. The loan includes a revolving credit facility of $12.5 million, which accrues interest at 5.5%. As of December 31, 2025, the outstanding balance on the revolving credit facility was $1.6 million.
(10)The loan has a lender-required out-of-the-money interest rate cap at an interest rate of 7.84% until August 2026. $380.0 million of swaps were previously associated with other debt that we paid off in August 2025. They continue to hedge our remaining floating rate debt. For purposes of this table we have applied $350.0 million to this loan and the remaining $30.0 million has been applied to our pool of floating rate debt.
(11)The loan requires monthly payments of principal and interest. The principal amortization is based upon a 30-year amortization schedule.
(12)In May 2025, the JV made a $70.0 million loan principal payment to extend the loan for up to two years. The related interest rate swaps expired in April 2025, and in May 2025, the JV purchased an interest rate cap which capped the interest rate at 7.45% until May 2026.
(13)The interest rate swaps related to this loan expired on June 1, 2025. In November 2025, the JV made a $60.0 million loan principal payment and entered into a new interest rate swap agreement.
(14)The loan for a fund that we commenced consolidating on January 1, 2025. See Note 3.
(15)The loan requires monthly payments of principal and interest for twelve months commencing on January 5, 2028 based upon a 25-year principal amortization schedule.
(16)We guaranteed the portion of the loan principal that would need to be paid down in order to meet the minimum debt yield in the loan agreement. See "Guarantees" in Note 17.
(17) The interest rate is fixed at 6% until July 8, 2027 and then increases to 6.25% for the remaining loan term.
(18)See Note 14 for our debt fair value disclosures.
(19)Balances are net of accumulated amortization/accretion of $1.1 million and $1.4 million at December 31, 2025 and December 31, 2024, respectively.
(20)Balances are net of accumulated amortization of $55.8 million and $56.9 million at December 31, 2025 and December 31, 2024, respectively.
F- 25
The table below summarizes our consolidated fixed and floating rate debt. The statistics include the impact of $30.0 million of swaps and $472.0 million of caps that are not assigned to loans in the debt table at the beginning of this footnote.
| (In thousands) | Principal Balance as of December 31, 2025 | Principal Balance as of December 31, 2024 | ||||||||||||
| Aggregate swap-fixed rate loans | $ | 2,520,000 | $ | 3,130,000 | ||||||||||
| Aggregate fixed rate loans | 1,492,861 | 88,489 | ||||||||||||
| Aggregate capped rate loans | 1,202,000 | 822,000 | ||||||||||||
| Aggregate floating rate loans | 378,506 | 1,481,400 | ||||||||||||
| Total Debt | $ | 5,593,367 | $ | 5,521,889 | ||||||||||
The table below summarizes certain consolidated debt statistics as of December 31, 2025. The statistics include the impact of $30.0 million of swaps (maturing June 1, 2027) that are not assigned to loans in the debt table at the beginning of this footnote.
Future Principal Payments
At December 31, 2025, the minimum future principal payments due on our consolidated secured notes payable were as follows:
| Year ending December 31: | Including Maturity Extension Options(1) | |||||||
| (In thousands) | ||||||||
| 2026 | $ | 1,181,987 | ||||||
| 2027 | 381,033 | |||||||
| 2028 | 1,306,081 | |||||||
| 2029 | 636,131 | |||||||
| 2030 | 1,181,117 | |||||||
| Thereafter | 907,018 | |||||||
| Total future principal payments | $ | 5,593,367 | ||||||
____________________________________________
(1) Some of our loan agreements require that we meet certain minimum financial thresholds to be able to extend the loan maturity.
F- 26
Loan Premium and Loan Costs
The table below presents loan premium and loan costs, which are included in Interest expense on our consolidated statements of operations:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Loan premium/discount (amortized)/accreted and written off, net | $ | 336 | $ | (333) | $ | (460) | |||||||||||
| Deferred loan costs amortized and written off | 11,896 | 9,335 | 8,858 | ||||||||||||||
| Loan costs expensed | 1,922 | 168 | 210 | ||||||||||||||
| Total | $ | 14,154 | $ | 9,170 | $ | 8,608 | |||||||||||
9. Interest Payable, Accounts Payable and Deferred Revenue
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
Interest payable(1) | $ | 32,416 | $ | 19,584 | ||||||||||
| Accounts payable and accrued liabilities | 56,708 | 60,131 | ||||||||||||
| Deferred revenue | 50,835 | 51,296 | ||||||||||||
| Total interest payable, accounts payable and deferred revenue | $ | 139,959 | $ | 131,011 | ||||||||||
________________________________________________
(1) At December 31, 2025, includes accrued interest of $11.5 million for a term loan that matures in March 2032. The accrued interest is due at maturity and is not subject to compounding. See Note 8 for more information regarding our debt.
F- 27
10. Derivative Contracts
Derivative Summary
The table below summarizes our derivative contracts as of December 31, 2025:
| Number of Interest Rate Swaps | Notional (In thousands) | |||||||||||||
| Derivatives Designated as Cash Flow Hedges: | ||||||||||||||
Consolidated derivatives - swaps(1)(2)(3) | 21 | $ | 2,520,000 | |||||||||||
| Derivatives Not Designated as Cash Flow Hedges: | ||||||||||||||
Consolidated derivatives - caps(1)(2)(3) | 6 | $ | 1,202,000 | |||||||||||
___________________________________________________
(1)The notional amount reflects 100%, not our pro-rata share, of our consolidated JVs' derivatives. See Note 8 for more information about our hedged consolidated debt.
(2)Our derivative contracts do not provide for right of offset between derivative contracts.
(3)See Note 14 for our derivative fair value disclosures.
Counterparty Credit Risk
We are subject to credit risk from the counterparties on our interest rate swap and cap contract assets because we do not receive collateral. We seek to minimize that risk by entering into agreements with a variety of counterparties with investment grade ratings.
The fair value of our interest rate swap and cap contract assets, including accrued interest and excluding credit risk adjustments, was as follows:
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
Consolidated derivatives(1) | $ | 25,187 | $ | 85,420 | ||||||||||
Unconsolidated Fund's derivatives(2) | $ | — | $ | 6,839 | ||||||||||
___________________________________________________
(1)The amounts reflect 100%, not our pro-rata share, of our consolidated JVs' derivatives.
(2)We consolidated Partnership X commencing on January 1, 2025. See Note 3. The amount in the comparable period reflect 100%, not our pro-rata share, of Partnership X's derivatives. For more information about Partnership X, including our equity interest percentage, see Note 6.
F- 28
Credit-risk-related Contingent Features
Certain of our swaps include credit-risk related contingent features. For example, we have agreements with certain of our interest rate swap counterparties that contain a provision under which we could be declared in default on our derivative obligations if repayment of the underlying indebtedness that we are hedging is accelerated by the lender due to our default on the indebtedness. As of December 31, 2025, there have been no events of default with respect to our interest rate swaps or our consolidated JVs' interest rate swaps. We do not post collateral for our interest rate swap contract liabilities.
The fair value of our interest rate swap contract liabilities, including accrued interest and excluding credit risk adjustments, was as follows:
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
Consolidated derivatives(1)(2) | $ | 6,338 | $ | — | ||||||||||
___________________________________________________
(1)The amounts include 100%, not our pro-rata share, of our consolidated JVs' derivatives.
(2)We did not have any consolidated swaps in a liability position as of December 31, 2024.
Impact of Hedges on AOCI and the Consolidated Statements of Operations
The table below presents the effect of our derivatives on our AOCI and the consolidated statements of operations:
| (In thousands) | Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Derivatives Designated as Cash Flow Hedges: | |||||||||||||||||
| Consolidated derivatives: | |||||||||||||||||
(Loss) gains recorded in AOCI before reclassifications(1) | $ | (7,650) | $ | 47,896 | $ | 45,364 | |||||||||||
Gains reclassified from AOCI to Interest expense(1) | $ | (56,321) | $ | (140,615) | $ | (144,318) | |||||||||||
| Interest expense presented on the consolidated statements of operations | $ | (266,675) | $ | (229,442) | $ | (209,468) | |||||||||||
Unconsolidated Fund's derivatives (our share)(2)(3): | |||||||||||||||||
Gains recorded in AOCI before reclassifications(1) | $ | — | $ | 5,417 | $ | 585 | |||||||||||
Gains reclassified from AOCI to Income (loss) from unconsolidated Fund(1) | $ | — | $ | (3,663) | $ | (1,662) | |||||||||||
| Income (loss) from unconsolidated Fund presented on the consolidated statements of operations | $ | — | $ | 2,593 | $ | (34,643) | |||||||||||
Gain reclassified from AOCI to Gain from consolidation of JV(3) | $ | (4,762) | $ | — | $ | — | |||||||||||
Gain from consolidation of JV presented on the consolidated statements of operations(3) | $ | 47,212 | $ | — | $ | — | |||||||||||
| Derivatives Not Designated as Cash Flow Hedges: | |||||||||||||||||
| Consolidated derivatives: | |||||||||||||||||
| Loss recorded as interest expense | $ | 3 | $ | — | $ | — | |||||||||||
__________________________________________________
(1)See Note 11 for our AOCI reconciliation.
(2)We did not have any unconsolidated entities during the year ended December 31, 2025. For the comparable period, we calculate our share by multiplying the total amount for the Fund by our equity interest in the Fund. For more information about the Fund, including our equity interest percentage, see Note 6.
(3)We consolidated Partnership X commencing on January 1, 2025. See Note 3. Our share of the Partnership X's OCI on January 1, 2025 was reclassified to the gain from consolidation we recorded.
Future Reclassifications from AOCI
At December 31, 2025, we estimate that $15.3 million of gains in AOCI related to derivatives designated as cash flow hedges will be reclassified to interest expense during the next year.
F- 29
11. Equity
Transactions
During 2025:
•We acquired 27 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.
•We acquired 24 thousand OP Units for $351 thousand in cash.
•In June 2025, one of our consolidated JVs raised $12.0 million of additional capital. We contributed $6.6 million of cash to the JV and another investor contributed $5.4 million of cash to the JV.
During 2024:
•We entered into a new consolidated JV in December 2024 that we manage and in which we own a 30% interest.
•We acquired 229 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.
•We acquired 9 thousand OP Units for $138 thousand in cash.
During 2023:
•We repurchased 9.1 million shares of our common stock for $109.1 million in cash, excluding transaction costs, in open market transactions. The average purchase price was $12.03 per share.
•We acquired 468 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.
•We acquired 209 thousand OP Units for $2.4 million in cash.
Noncontrolling Interests
Our noncontrolling interests consist of interests in our Operating Partnership and consolidated JVs which are not owned by us. See Note 3 regarding the noncontrolling interest in the Partnership X JV we consolidated on January 1, 2025. As of December 31, 2025, noncontrolling interests in our Operating Partnership owned 38.2 million OP Units and fully-vested LTIP Units, which represented approximately 18.6% of our Operating Partnership's total outstanding interests, and we owned 167.5 million OP Units (to match our 167.5 million shares of outstanding common stock), which represented approximately 81.4% of our Operating Partnership's total outstanding interests.
A share of our common stock, an OP Unit and an LTIP Unit (once vested and booked up) have essentially the same economic characteristics, sharing equally in the distributions from our Operating Partnership. Investors who own OP Units have the right to cause our Operating Partnership to acquire their OP Units for an amount of cash per unit equal to the market value of one share of our common stock at the date of acquisition, or, at our election, exchange their OP Units for shares of our common stock on a one-for-one basis. LTIP Units have been granted to our employees and non-employee directors as part of their compensation. These awards generally vest over a service period and once vested can generally be converted to OP Units provided our stock price increases by more than a specified hurdle.
F- 30
Changes in our Ownership Interest in our Operating Partnership
The table below presents the effect on our equity from net income (loss) attributable to common stockholders and changes in our ownership interest in our Operating Partnership:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 16,267 | $ | 23,517 | $ | (42,706) | |||||||||||
| Transfers from noncontrolling interests: | |||||||||||||||||
| Exchange of OP Units with noncontrolling interests | 379 | 3,503 | 7,741 | ||||||||||||||
| Repurchases of OP Units from noncontrolling interests | (10) | (4) | 1,054 | ||||||||||||||
| Net transfers from noncontrolling interests | 369 | 3,499 | 8,795 | ||||||||||||||
| Change from net income (loss) attributable to common stockholders and transfers from noncontrolling interests | $ | 16,636 | $ | 27,016 | $ | (33,911) | |||||||||||
AOCI Reconciliation(1)
The table below presents a reconciliation of our AOCI, which consists solely of adjustments related to derivatives designated as cash flow hedges:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Accumulated Other Comprehensive Income - Beginning balance | $ | 54,917 | $ | 115,917 | $ | 187,063 | |||||||||||
| Consolidated derivatives: | |||||||||||||||||
| Other comprehensive (loss) income before reclassifications | (7,650) | 47,896 | 45,364 | ||||||||||||||
| Reclassification of gains from AOCI to Interest Expense | (56,321) | (140,615) | (144,318) | ||||||||||||||
Unconsolidated Fund's derivatives (our share)(2)(3): | |||||||||||||||||
| Other comprehensive income before reclassifications | — | 5,417 | 585 | ||||||||||||||
| Reclassification of gains from AOCI to Income from unconsolidated Fund | — | (3,663) | (1,662) | ||||||||||||||
Consolidation of unconsolidated Fund(3) | (4,762) | — | — | ||||||||||||||
| Net current period OCI | (68,733) | (90,965) | (100,031) | ||||||||||||||
| OCI attributable to noncontrolling interests | 25,268 | 29,965 | 28,885 | ||||||||||||||
| OCI attributable to common stockholders | (43,465) | (61,000) | (71,146) | ||||||||||||||
| Accumulated Other Comprehensive Income - Ending balance | $ | 11,452 | $ | 54,917 | $ | 115,917 | |||||||||||
__________________________________________________
(1)See Note 10 for the details of our derivatives and Note 14 for our derivative fair value disclosures.
(2)We did not have any unconsolidated entities during the year ended December 31, 2025. For the comparable periods, we calculate our share by multiplying the total amount for our Fund by our equity interest in the Fund. For more information about our Fund, including our equity interest percentage, see Note 6.
(3)We consolidated Partnership X commencing on January 1, 2025. See Note 3. Our share of Partnership X's OCI on January 1, 2025 was reclassified to the gain from consolidation we recorded.
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Dividends (unaudited)
Our common stock dividends paid during 2025 are classified for federal income tax purposes as follows:
| Record Date | Paid Date | Dividend Per Share | Ordinary Income % | Capital Gain % | Return of Capital % | Section 199A Dividend % | ||||||||||||||||||||||||||||||||
| 12/31/2024 | 1/15/2025 | $ | 0.19 | — | % | — | % | 100.0 | % | — | % | |||||||||||||||||||||||||||
| 3/31/2025 | 4/15/2025 | 0.19 | — | % | — | % | 100.0 | % | — | % | ||||||||||||||||||||||||||||
| 6/30/2025 | 7/15/2025 | 0.19 | — | % | — | % | 100.0 | % | — | % | ||||||||||||||||||||||||||||
| 9/30/2025 | 10/15/2025 | 0.19 | — | % | — | % | 100.0 | % | — | % | ||||||||||||||||||||||||||||
| Total / Weighted Average | $ | 0.76 | — | % | — | % | 100.0 | % | — | % | ||||||||||||||||||||||||||||
12. EPS
The table below presents the calculation of basic and diluted EPS:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Numerator (In thousands): | |||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 16,267 | $ | 23,517 | $ | (42,706) | |||||||||||
| Allocation to participating securities: Unvested LTIP Units | (1,468) | (1,377) | (1,191) | ||||||||||||||
| Net income (loss) attributable to common stockholders - basic and diluted | $ | 14,799 | $ | 22,140 | $ | (43,897) | |||||||||||
| Denominator (In thousands): | |||||||||||||||||
Weighted average shares of common stock outstanding - basic and diluted(1) | 167,449 | 167,389 | 169,597 | ||||||||||||||
| Net income (loss) per common share - basic and diluted | $ | 0.09 | $ | 0.13 | $ | (0.26) | |||||||||||
____________________________________________________
(1) Outstanding OP Units and vested LTIP Units are not included in the denominator in calculating diluted EPS, even though they may be exchanged under certain conditions for common stock on a one-for-one basis, because their associated net income or loss (equal on a per unit basis to the Net income or loss per common share - diluted) was already deducted in calculating Net income (loss) attributable to common stockholders. Accordingly, any exchange would not have any effect on diluted EPS. The table below presents the weighted average OP Units and vested LTIP Units outstanding for the respective periods:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| OP Units | 32,832 | 31,452 | 30,931 | ||||||||||||||
| Vested LTIP Units | 2,702 | 2,237 | 1,585 | ||||||||||||||
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13. Stock-Based Compensation
Stock Incentive Plan
Plan description
The Douglas Emmett, Inc. 2016 Omnibus Stock Incentive Plan, as amended, our stock incentive plan (our "2016 Plan"), permits us to make grants of incentive stock options, non-qualified stock options, stock appreciation rights, deferred stock awards, restricted stock awards, dividend equivalent rights and other stock-based awards. On May 24, 2023, our stockholders approved an amendment to the 2016 Plan to, among other things, increase the number of common shares for future awards by 19.0 million. We had an aggregate of 6.2 million shares available for grant as of December 31, 2025. Awards such as LTIP Units, deferred stock and restricted stock, which deliver the full value of the underlying shares, are counted against the Plan limits as two shares. Awards such as stock options and stock appreciation rights are counted as one share. The number of shares reserved under our 2016 Plan is also subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. Shares of stock underlying any awards that are forfeited, canceled or otherwise terminated (other than by exercise) are added back to the shares of stock available for future issuance under the 2016 Plan. For options exercised, our policy is to issue common stock on a net settlement basis - net of the exercise price and related taxes.
Plan administration
Our 2016 Plan is administered by the compensation committee of our board of directors. The compensation committee may interpret our Plan and make all determinations necessary or desirable for the administration of our Plan. The committee has full power and authority to select the participants to whom awards will be granted, to make any combination of awards to participants, to accelerate the exercisability or vesting of any award and to determine the specific terms and conditions of each award, subject to the provisions of our Plan. All officers, employees, directors and other key personnel (including consultants and prospective employees) are eligible to participate in our 2016 Plan.
LTIP Units
We have made certain awards in the form of a separate series of units of limited partnership interests in our Operating Partnership called LTIP Units, which can be granted either as free-standing awards or in tandem with other awards under our 2016 Plan. Our LTIP Units are valued by reference to the value of our common stock at the time of grant, and are subject to such conditions and restrictions as the compensation committee may determine, including continued employment or service, and/or achievement of pre-established performance goals, financial metrics and other objectives. Once vested, LTIP Units can generally be converted to OP Units on a one for one basis, provided our stock price increases by more than a specified hurdle.
Employee Awards
We grant stock-based compensation in the form of LTIP Units as a part of our annual incentive compensation to various employees each year, a portion which vests at the date of grant, and the remainder which vests in three equal annual installments over the three calendar years following the grant date. Compensation expense for LTIP Units which are not vested at the grant date is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. We have also made long-term grants in the form of LTIP Units to certain employees, which generally vest in equal annual installments over to calendar years following the grant date, and some of these grants include a portion which vests at the date of grant. In aggregate, we granted 3.2 million, 1.9 million, and 2.2 million LTIP Units to employees during 2025, 2024 and 2023, respectively.
Non-Employee Director Awards
As annual fees for their services, each of our non-employee directors receives a grant of LTIP Units that vests on a quarterly basis during the year the services are rendered, which is the calendar year following the grant date. In aggregate, we granted 127 thousand, 94 thousand, and 146 thousand LTIP Units to our non-employee directors during 2025, 2024 and 2023, respectively.
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Compensation Expense
See Note 2 regarding our accounting policy for stock based compensation. At December 31, 2025, the total unrecognized stock-based compensation expense for unvested LTIP Unit awards was $19.5 million, which will be recognized over a weighted-average term of 2 years. The table below presents our stock-based compensation expense:
| Year Ended December 31, | |||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Stock-based compensation expense, net | $ | 21,208 | $ | 21,038 | $ | 19,834 | |||||||||||
| Capitalized stock-based compensation | $ | 6,022 | $ | 6,139 | $ | 6,016 | |||||||||||
Stock-Based Award Activity
The table below presents our unvested LTIP Units activity:
| Unvested LTIP Units: | Number of Units (Thousands) | Weighted Average Grant Date Fair Value | Grant Date Fair Value (Thousands) | |||||||||||||||||
| Outstanding at December 31, 2022 | 1,600 | $ | 15.73 | |||||||||||||||||
| Granted | 2,384 | $ | 10.89 | $ | 25,959 | |||||||||||||||
| Vested | (1,970) | $ | 12.97 | $ | 25,555 | |||||||||||||||
| Forfeited | (17) | $ | 18.70 | $ | 327 | |||||||||||||||
| Outstanding at December 31, 2023 | 1,997 | $ | 12.64 | |||||||||||||||||
| Granted | 1,945 | $ | 14.38 | $ | 27,970 | |||||||||||||||
| Vested | (1,948) | $ | 13.85 | $ | 26,991 | |||||||||||||||
| Forfeited | (49) | $ | 14.65 | $ | 714 | |||||||||||||||
| Outstanding at December 31, 2024 | 1,945 | $ | 13.12 | |||||||||||||||||
| Granted | 3,291 | $ | 8.54 | $ | 28,096 | |||||||||||||||
| Vested | (2,721) | $ | 9.94 | $ | 27,051 | |||||||||||||||
| Forfeited | (27) | $ | 15.39 | $ | 423 | |||||||||||||||
| Outstanding at December 31, 2025 | 2,488 | $ | 10.50 | |||||||||||||||||
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14. Fair Value of Financial Instruments
Our estimates of the fair value of financial instruments were determined using available market information and widely used valuation methods. Considerable judgment is necessary to interpret market data and determine an estimated fair value. The use of different market assumptions or valuation methods may have a material effect on the estimated fair values. The FASB fair value framework hierarchy distinguishes between assumptions based on market data obtained from sources independent of the reporting entity, and the reporting entity’s own assumptions about market-based inputs. The hierarchy is as follows:
Level 1 - inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 - inputs are observable either directly or indirectly for similar assets and liabilities in active markets.
Level 3 - inputs are unobservable assumptions generated by the reporting entity.
As of December 31, 2025, we did not have any fair value estimates of financial instruments using Level 3 inputs.
Financial instruments disclosed at fair value
Short term financial instruments
The carrying amounts for cash and cash equivalents, tenant receivables, interest payable, accounts payable, security deposits and dividends payable approximate fair value because of the short-term nature of these instruments.
Secured notes payable
See Note 8 for the details of our secured notes payable. We estimate the fair value of our consolidated secured notes payable by calculating the credit-adjusted present value of the principal and interest payments for each secured note payable. The calculation incorporates observable market interest rates which we consider to be Level 2 inputs, assumes that the loans will be outstanding through maturity, and includes any maturity extension options. The table below presents the estimated fair value and carrying value of our secured notes payable, the carrying value includes unamortized loan premium/discount and excludes unamortized deferred loan fees:
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Fair value | $ | 5,566,229 | $ | 5,429,586 | ||||||||||
| Carrying value | $ | 5,594,452 | $ | 5,524,643 | ||||||||||
Ground lease liability
See Note 4 for the details of our ground lease. We estimate the fair value of our ground lease liability by calculating the present value of the future lease payments disclosed in Note 4 using our incremental borrowing rate. The calculation incorporates observable market interest rates which we consider to be Level 2 inputs. The table below presents the estimated fair value and carrying value of our ground lease liability:
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Fair value | $ | 4,301 | $ | 3,764 | ||||||||||
| Carrying value | $ | 10,808 | $ | 10,822 | ||||||||||
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Financial instruments measured at fair value on a recurring basis
Derivative instruments
See Note 10 for the details of our derivatives. We present our derivatives on our consolidated balance sheets at fair value, on a gross basis, excluding accrued interest. We estimate the fair value of our derivative instruments by calculating the credit-adjusted present value of the expected future cash flows of each derivative. The calculation incorporates the contractual terms of the derivatives, observable market interest rates which we consider to be Level 2 inputs, and credit risk adjustments to reflect the counterparty's as well as our own non-performance risk. Our derivatives are not subject to master netting arrangements. See Note 2 for our accounting policy for derivative instruments regarding the impact of the changes in fair value measurements on our financial statements.
The table below presents the estimated fair value of our derivatives.
| (In thousands) | December 31, 2025 | December 31, 2024 | ||||||||||||
| Derivative Assets: | ||||||||||||||
Fair value - consolidated derivatives(1) | $ | 22,310 | $ | 77,620 | ||||||||||
Fair value - unconsolidated Fund's derivatives(2) | $ | — | $ | 6,459 | ||||||||||
| Derivatives Liabilities: | ||||||||||||||
| Fair value - consolidated derivatives | $ | 6,437 | $ | — | ||||||||||
___________________________________________________________________________________
(1) Consolidated derivatives, which reflect 100%, not our pro-rata share, of our consolidated JVs' derivatives, are included in interest rate contracts on our consolidated balance sheets. The fair values exclude accrued interest which is included in interest payable on our consolidated balance sheets.
(2) We consolidated Partnership X commencing on January 1, 2025. See Note 3. For the comparable period, the unconsolidated Fund's derivatives, reflect 100%, not our pro-rata share, of our unconsolidated Fund's derivatives. Our pro-rata share of the amounts related to the unconsolidated Fund's derivatives is included in our Investment in unconsolidated Fund on our consolidated balance sheets. See Note 6 for more information about Partnership X, including our equity interest percentage.
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15. Segment Reporting
Segment information is prepared on the same basis that our chief operating decision maker (CODM) reviews information to assess performance and make resource allocation decisions. Our CODM is our CEO. We operate in two business segments: (i) the acquisition, development, ownership and management of office real estate and (ii) the acquisition, development, ownership and management of multifamily real estate. The services for our office segment primarily include rental of office space and other tenant services, including parking and storage space rental. The services for our multifamily segment include rental of apartments and other tenant services, including parking and storage space rental. Asset information by segment is not reported because we do not use this measure to assess performance or make decisions to allocate resources. Therefore, depreciation and amortization expense is not allocated among segments. General and administrative expenses and interest expense are not included in segment profit as our internal reporting addresses these items on a corporate level. The table below presents the operating activity of our reportable segments:
| (In thousands) | Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Office Segment | |||||||||||||||||
| Total office revenues | $ | 805,516 | $ | 796,404 | $ | 829,945 | |||||||||||
| Office expenses | (301,276) | (285,352) | (294,310) | ||||||||||||||
| Office segment profit | $ | 504,240 | $ | 511,052 | $ | 535,635 | |||||||||||
| Multifamily Segment | |||||||||||||||||
| Total multifamily revenues | $ | 198,466 | $ | 190,074 | $ | 190,543 | |||||||||||
| Multifamily expenses | (66,661) | (64,906) | (67,323) | ||||||||||||||
| Multifamily segment profit | $ | 131,805 | $ | 125,168 | $ | 123,220 | |||||||||||
| Total profit from all segments | $ | 636,045 | $ | 636,220 | $ | 658,855 | |||||||||||
The table below presents a reconciliation of the net income (loss) attributable to common stockholders to the total profit from all segments:
| (In thousands) | Year Ended December 31, | ||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 16,267 | $ | 23,517 | $ | (42,706) | |||||||||||
| Net loss attributable to noncontrolling interests | (27,697) | (15,929) | (33,134) | ||||||||||||||
| Net (loss) income | (11,430) | 7,588 | (75,840) | ||||||||||||||
| General and administrative expenses | 46,664 | 45,356 | 49,236 | ||||||||||||||
| Depreciation and amortization | 398,932 | 384,048 | 459,949 | ||||||||||||||
| Other income | (18,021) | (28,019) | (19,633) | ||||||||||||||
| Other expenses | 437 | 398 | 1,032 | ||||||||||||||
| (Income) loss from unconsolidated Fund | — | (2,593) | 34,643 | ||||||||||||||
| Interest expense | 266,675 | 229,442 | 209,468 | ||||||||||||||
| Gain from consolidation of JV | (47,212) | — | — | ||||||||||||||
| Total profit from all segments | $ | 636,045 | $ | 636,220 | $ | 658,855 | |||||||||||
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16. Future Minimum Lease Rental Receipts
We lease space to tenants primarily under non-cancelable operating leases that generally contain provisions for a base rent plus reimbursement of certain operating expenses, and we own fee interests in two parcels of land from which we receive rent under ground leases. The table below presents the future minimum base rentals on our non-cancelable office tenant and ground leases for our consolidated properties at December 31, 2025:
| Year ending December 31: | (In thousands) | ||||
| 2026 | $ | 590,286 | |||
| 2027 | 517,013 | ||||
| 2028 | 428,593 | ||||
| 2029 | 338,999 | ||||
| 2030 | 284,261 | ||||
| Thereafter | 1,014,549 | ||||
Total future minimum base rentals(1) | $ | 3,173,701 | |||
_____________________________________________________
(1) Does not include (i) residential leases, which typically have a term of one year or less, (ii) holdover rent, (iii) other types of rent such as storage and antenna rent, (iv) tenant reimbursements, (v) straight line rent, (vi) amortization/accretion of acquired above/below-market lease intangibles, and (vii) percentage rents. The amounts assume that early termination options held by tenants will not be exercised.
17. Commitments, Contingencies and Guarantees
Legal Proceedings
From time to time, we are party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of our business. Excluding ordinary, routine litigation incidental to our business, we are not currently a party to any legal proceedings that we believe would reasonably be expected to have a materially adverse effect on our business, financial condition or results of operations.
The Landmark Residences (Formerly Barrington Plaza)
In May 2023, we used a state law, the Ellis Act, to begin moving tenants out of the buildings in order to complete fire and life safety retrofits. We are appealing a ruling by a trial court in Santa Monica that the Ellis Act wasn’t the proper avenue for removing those tenants. We do not expect the ruling to have a meaningful impact on the anticipated timing, cost, or ultimate plans for The Landmark Residences property, and continue to coordinate with the City of Los Angeles to comply with its order to sprinkler The Landmark Residences property and to complete other fire life safety work. We are currently in litigation with the insurance providers in 2020 for The Landmark Residences to recover certain costs associated with reconstruction.
Concentration of Risk
Tenant Receivables
We are subject to credit risk with respect to our tenant receivables and deferred rent receivables related to our tenant leases. Our tenants' ability to honor the terms of their respective leases remains dependent upon economic, regulatory and social factors. We seek to minimize our credit risk from our tenant leases by: (i) targeting smaller, more affluent office tenants, from a diverse mix of industries, (ii) performing credit evaluations of prospective tenants, and (iii) obtaining security deposits or letters of credit from our tenants. During 2025, 2024 and 2023, no tenant accounted for more than 10% of our total revenues.
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Geographic Risk
All of our properties, including our consolidated JVs' properties, are located in Los Angeles County, California and Honolulu, Hawaii, and we are therefore susceptible to adverse economic and regulatory developments, as well as natural disasters, in those markets.
Derivative Counterparty Credit Risk
We are subject to credit risk with respect to our derivative counterparties. We do not post or receive collateral with respect to our derivative transactions. Our derivative contracts do not provide for right of offset between derivative contracts. See Note 10 for the details of our derivative contracts. We seek to minimize our credit risk by entering into agreements with a variety of counterparties with investment grade ratings.
Cash Balances
We have significant cash balances invested in a variety of short-term money market funds that are intended to preserve principal value and maintain a high degree of liquidity while providing current income. These investments are not insured against loss of principal and there is no guarantee that our investments in these funds will be redeemable at par value. We also have significant cash balances in bank accounts with high quality financial institutions with investment grade ratings. Interest bearing bank accounts at each U.S. banking institution are insured by the FDIC up to $250 thousand.
Asset Retirement Obligations
Conditional asset retirement obligations represent a legal obligation to perform an asset retirement activity in which the timing and/or method of settlement is conditional on a future event that may or may not be within our control. A liability for a conditional asset retirement obligation must be recorded if the fair value of the obligation can be reasonably estimated. Environmental site assessments have identified thirty-three buildings in our Total Portfolio which contain asbestos, and would have to be removed in compliance with applicable environmental regulations if these properties are demolished or undergo major renovations. As of December 31, 2025, the obligations to remove the asbestos from properties which are currently undergoing major renovations, or that we plan to renovate in the future, are not material to our consolidated financial statements. As of December 31, 2025, the obligations to remove the asbestos from our other properties have indeterminable settlement dates, and we are unable to reasonably estimate the fair value of the associated conditional asset retirement obligations.
Contractual Commitments
As of December 31, 2025, we had an aggregate remaining contractual commitment for development projects, repositioning projects, capital expenditure projects and tenant improvements of approximately $277.2 million.
Loan Guarantees
During 2023, we signed a guarantee for the $175.0 million consolidated JV loan which guarantees the portion of the loan principal that would need to be paid down to meet the minimum debt yield in the loan agreement. The loan matures on April 26, 2029. The guarantee will remain in effect until either the guarantee obligation or the loan is paid in full. As of December 31, 2025, we estimate the risk of loss for this guarantee to be low. See Note 8 for more information regarding our debt.
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Douglas Emmett, Inc.
Schedule III - Consolidated Real Estate and Accumulated Depreciation and Amortization
As of December 31, 2025
(In thousands)
| Initial Cost | Cost Capitalized Subsequent to Acquisition | Gross Carrying Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property Name | Encumb-rances | Land | Building & Improve-ments(1) | Improve-ments(1)(2) | Land | Building & Improve-ments(1)(2) | Total(3) | Accumulated Depreciation & Amortization(2) (4) | Year Built / Renovated | Year Acquired | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 100 Wilshire | $ | 252,034 | $ | 12,769 | $ | 78,447 | $ | 161,587 | $ | 27,111 | $ | 225,692 | $ | 252,803 | $ | 105,982 | 1968/2002/2019 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||
| 150 S Rodeo | 32,555 | 2,344 | 52,121 | 3,220 | 2,343 | 55,342 | 57,685 | 1,961 | 1991/2012 | 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 233 Wilshire | 50,331 | 9,263 | 130,426 | 3,857 | 9,263 | 134,283 | 143,546 | 34,162 | 1975/2008-2009 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 401 Wilshire | — | 9,989 | 29,187 | 131,504 | 21,787 | 148,893 | 170,680 | 70,005 | 1981/2000/2020 | 1996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 429 Santa Monica | 25,662 | 4,949 | 72,534 | 3,813 | 4,949 | 76,347 | 81,296 | 19,669 | 1982/2016 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1132 Bishop Place | — | 8,317 | 105,651 | (57,107) | 8,833 | 48,028 | 56,861 | 26,853 | 1992 | 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1299 Ocean | 113,135 | 22,748 | 265,198 | 27,616 | 22,748 | 292,814 | 315,562 | 72,474 | 1980/2006/2020 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1901 Avenue of the Stars | 193,502 | 18,514 | 131,752 | 123,944 | 26,163 | 248,047 | 274,210 | 119,403 | 1968/2001 | 2001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2001 Wilshire | 31,592 | 5,711 | 81,622 | 7,794 | 5,711 | 89,416 | 95,127 | 15,822 | 1980/2013 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8383 Wilshire | 148,043 | 18,004 | 328,118 | 9,425 | 18,005 | 337,542 | 355,547 | 63,468 | 1971/2009 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 8484 Wilshire | — | 8,846 | 77,780 | 21,548 | 8,846 | 99,328 | 108,174 | 34,936 | 1972/2013 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9100 Wilshire | 120,134 | 13,455 | 258,329 | 12,878 | 13,455 | 271,207 | 284,662 | 51,168 | 1971/2016 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9401 Wilshire | 25,795 | 6,740 | 152,310 | 21,148 | 6,740 | 173,458 | 180,198 | 41,089 | 1971/2020 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9601 Wilshire | — | 16,597 | 54,774 | 128,797 | 17,658 | 182,510 | 200,168 | 84,862 | 1962/2004 | 2001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 9665 Wilshire | 81,126 | 5,568 | 177,072 | 20,679 | 5,568 | 197,751 | 203,319 | 45,959 | 1971/2020 | 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10880 Wilshire | 187,772 | 29,995 | 437,514 | 54,144 | 29,988 | 491,665 | 521,653 | 129,683 | 1970/2009/2020 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10900 Wilshire | 61,750 | 9,029 | 84,900 | (175) | 9,029 | 84,725 | 93,754 | 3,018 | 1981/2016 | 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 10960 Wilshire | 189,456 | 45,844 | 429,769 | 19,304 | 45,852 | 449,065 | 494,917 | 124,928 | 1971/2006 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 11777 San Vicente | 44,412 | 5,032 | 15,768 | 31,144 | 6,714 | 45,230 | 51,944 | 21,197 | 1974/1998 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12100 Wilshire | 54,746 | 20,164 | 208,755 | 9,602 | 20,164 | 218,357 | 238,521 | 58,535 | 1985 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 12400 Wilshire | — | 5,013 | 34,283 | 77,087 | 8,828 | 107,555 | 116,383 | 52,284 | 1985 | 1996 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 15250 Ventura | 18,889 | 2,130 | 48,908 | 3,744 | 2,130 | 52,652 | 54,782 | 10,319 | 1970/2012 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16000 Ventura | 32,064 | 1,936 | 89,531 | 4,003 | 1,936 | 93,534 | 95,470 | 18,155 | 1980/2011 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 16501 Ventura | 42,944 | 6,759 | 53,112 | 14,914 | 6,759 | 68,026 | 74,785 | 24,298 | 1986/2012 | 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Beverly Hills Medical Center | 46,180 | 4,955 | 27,766 | 31,892 | 6,435 | 58,178 | 64,613 | 29,570 | 1964/2004 | 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bishop Square | 172,291 | 16,273 | 213,793 | 68,673 | 16,273 | 282,466 | 298,739 | 111,415 | 1972/1983 | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brentwood Court | — | 2,564 | 8,872 | 992 | 2,563 | 9,865 | 12,428 | 5,228 | 1984 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brentwood Executive Plaza | — | 3,255 | 9,654 | 36,133 | 5,921 | 43,121 | 49,042 | 21,521 | 1983/1996 | 1995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brentwood Medical Plaza | — | 5,934 | 27,836 | 3,105 | 5,933 | 30,942 | 36,875 | 15,488 | 1975 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brentwood San Vicente Medical | — | 5,557 | 16,457 | 3,458 | 5,557 | 19,915 | 25,472 | 9,486 | 1957/1985 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Brentwood/Saltair | — | 4,468 | 11,615 | 11,786 | 4,775 | 23,094 | 27,869 | 11,368 | 1986 | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Bundy/Olympic | — | 4,201 | 11,860 | 30,300 | 6,030 | 40,331 | 46,361 | 19,608 | 1991/1998 | 1994 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Camden Medical Arts | 38,682 | 3,102 | 12,221 | 30,569 | 5,298 | 40,594 | 45,892 | 20,045 | 1972/1992 | 1995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Carthay Campus | — | 6,595 | 70,454 | 10,295 | 6,594 | 80,750 | 87,344 | 26,071 | 1965/2008 | 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Century Park Plaza | 173,000 | 10,275 | 70,761 | 145,040 | 16,153 | 209,923 | 226,076 | 96,195 | 1972/1987/2020 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Century Park West | — | 3,717 | 29,099 | 3,892 | 3,667 | 33,041 | 36,708 | 14,710 | 1971 | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Columbus Center | — | 2,096 | 10,396 | 11,189 | 2,333 | 21,348 | 23,681 | 10,778 | 1987 | 2001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Coral Plaza | — | 4,028 | 15,019 | 19,652 | 5,366 | 33,333 | 38,699 | 16,486 | 1981 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cornerstone Plaza | — | 8,245 | 80,633 | 7,973 | 8,263 | 88,588 | 96,851 | 41,762 | 1986 | 2007 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Encino Gateway | — | 8,475 | 48,525 | 57,670 | 15,653 | 99,017 | 114,670 | 47,941 | 1974/1998 | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Encino Plaza | — | 5,293 | 23,125 | 48,938 | 6,165 | 71,191 | 77,356 | 36,077 | 1971/1992 | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Encino Terrace | 96,592 | 12,535 | 59,554 | 101,134 | 15,533 | 157,690 | 173,223 | 79,340 | 1986 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
F- 40
Douglas Emmett, Inc.
Schedule III - Consolidated Real Estate and Accumulated Depreciation and Amortization
As of December 31, 2025
(In thousands)
| Initial Cost | Cost Capitalized Subsequent to Acquisition | Gross Carrying Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property Name | Encumb-rances | Land | Building & Improve-ments(1) | Improve-ments(1)(2) | Land | Building & Improve-ments(1)(2) | Total(3) | Accumulated Depreciation & Amortization(2) (4) | Year Built / Renovated | Year Acquired | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Office Properties (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Executive Tower | — | 6,660 | 32,045 | 58,240 | 9,471 | 87,474 | 96,945 | 44,376 | 1989 | 1995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Financial Plaza | 54,077 | 12,092 | 81,104 | 7,147 | 12,092 | 88,251 | 100,343 | 28,584 | 1986 | 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Gateway Los Angeles | — | 2,376 | 15,302 | 63,355 | 5,119 | 75,914 | 81,033 | 32,564 | 1987/2022 | 1994 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Harbor Court | 27,709 | 51 | 41,001 | 55,486 | 12,060 | 84,478 | 96,538 | 38,948 | 1994 | 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Landmark II | — | 6,086 | 109,259 | 73,459 | 13,070 | 175,734 | 188,804 | 82,022 | 1989 | 1997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lincoln/Wilshire | — | 3,833 | 12,484 | 26,583 | 7,475 | 35,425 | 42,900 | 15,549 | 1996 | 2000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| MB Plaza | — | 4,533 | 22,024 | 33,745 | 7,503 | 52,799 | 60,302 | 27,006 | 1971/1996 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Olympic Center | 52,000 | 5,473 | 22,850 | 34,872 | 8,247 | 54,948 | 63,195 | 27,649 | 1985/1996 | 1997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| One Westwood | — | 10,350 | 29,784 | 64,416 | 9,194 | 95,356 | 104,550 | 47,355 | 1987/2004 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Palisades Promenade | 60,318 | 5,253 | 15,547 | 52,987 | 9,664 | 64,123 | 73,787 | 32,915 | 1990 | 1995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Saltair/San Vicente | 21,533 | 5,075 | 6,946 | 17,741 | 7,557 | 22,205 | 29,762 | 11,478 | 1964/1992 | 1997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| San Vicente Plaza | — | 7,055 | 12,035 | 796 | 7,055 | 12,831 | 19,886 | 6,692 | 1985 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Santa Monica Square | 44,377 | 5,366 | 18,025 | 21,711 | 6,863 | 38,239 | 45,102 | 19,631 | 1983/2004 | 2001 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Second Street Plaza | — | 4,377 | 15,277 | 35,186 | 7,421 | 47,419 | 54,840 | 23,877 | 1991 | 1997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Sherman Oaks Galleria | 300,000 | 33,213 | 17,820 | 425,879 | 48,328 | 428,584 | 476,912 | 213,428 | 1981/2002 | 1997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Studio Plaza(5) | — | 9,347 | 73,358 | 119,525 | 15,015 | 187,215 | 202,230 | 83,386 | 1988/2004 | 1995 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Tower | 60,626 | 9,643 | 160,602 | 8,164 | 9,643 | 168,766 | 178,409 | 45,526 | 1988/1998 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The Trillium(6) | — | 20,688 | 143,263 | 96,918 | 21,989 | 238,880 | 260,869 | 112,979 | 1988/2021 | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Valley Executive Tower | 104,000 | 8,446 | 67,672 | 113,019 | 11,737 | 177,400 | 189,137 | 89,982 | 1984 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Valley Office Plaza | — | 5,731 | 24,329 | 49,868 | 8,957 | 70,971 | 79,928 | 37,540 | 1966/2002 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Verona | — | 2,574 | 7,111 | 15,813 | 5,111 | 20,387 | 25,498 | 10,237 | 1991 | 1997 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Village on Canon | 56,497 | 5,933 | 11,389 | 51,843 | 13,303 | 55,862 | 69,165 | 27,562 | 1989/1995 | 1994 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warner Center Towers | 336,639 | 43,110 | 292,147 | 414,274 | 59,418 | 690,113 | 749,531 | 345,791 | 1982-1993/2004 | 2002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warner Corporate Center | 29,278 | 11,035 | 65,799 | 4,994 | 11,035 | 70,793 | 81,828 | 13,759 | 1988/2015 | 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Westside Towers | 129,852 | 8,506 | 79,532 | 80,859 | 14,568 | 154,329 | 168,897 | 77,539 | 1985 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Westwood Center | 127,146 | 9,512 | 259,341 | 23,220 | 9,513 | 282,560 | 292,073 | 77,456 | 1965/2000 | 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Westwood Place | 71,000 | 8,542 | 44,419 | 70,268 | 11,448 | 111,781 | 123,229 | 48,773 | 1987/2023 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wilshire Bundy Plaza | 82,445 | 1,942 | 113,696 | (438) | 1,942 | 113,258 | 115,200 | 4,151 | 1984/1998 | 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multifamily Properties | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 555 Barrington | 69,022 | 6,461 | 27,639 | 46,071 | 14,903 | 65,268 | 80,171 | 31,352 | 1989 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1221 Ocean Avenue | 175,000 | 22,086 | 328,545 | 6,194 | 22,085 | 334,740 | 356,825 | 36,948 | 1971/2000 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Barrington/Kiowa | 16,358 | 5,720 | 10,052 | 1,559 | 5,720 | 11,611 | 17,331 | 5,914 | 1974 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Barry | 11,261 | 6,426 | 8,179 | 1,066 | 6,426 | 9,245 | 15,671 | 4,802 | 1973 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Kiowa | 5,781 | 2,605 | 3,263 | 1,064 | 2,605 | 4,327 | 6,932 | 2,137 | 1972 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Moanalua Hillside Apartments | 328,264 | 24,791 | 157,353 | 130,749 | 35,365 | 277,528 | 312,893 | 92,468 | 1968/2004/2019 | 2005 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Residences at Bishop Place | 110,000 | — | — | 189,954 | — | 189,954 | 189,954 | 29,703 | 2020-2022 | 2004 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pacific Plaza | 96,460 | 10,091 | 16,159 | 82,351 | 27,816 | 80,785 | 108,601 | 37,417 | 1963/1998 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Glendon | 160,000 | 32,773 | 335,925 | 1,558 | 32,773 | 337,483 | 370,256 | 57,508 | 2008 | 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Landmark Los Angeles | 240,000 | — | — | 331,139 | 13,070 | 318,069 | 331,139 | 30,798 | 2018-2022 | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||
The Landmark Residences(7) | 49,506 | 28,568 | 81,485 | 6,244 | 58,208 | 58,089 | 116,297 | 48,183 | 1963/1998 | 1998 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| The Shores | 270,855 | 20,809 | 74,191 | 219,637 | 60,555 | 254,082 | 314,637 | 118,106 | 1965-67/2002 | 1999 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
F- 41
Douglas Emmett, Inc.
Schedule III - Consolidated Real Estate and Accumulated Depreciation and Amortization
As of December 31, 2025
(In thousands)
| Initial Cost | Cost Capitalized Subsequent to Acquisition | Gross Carrying Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property Name | Encumb-rances | Land | Building & Improve-ments(1) | Improve-ments(1)(2) | Land | Building & Improve-ments(1)(2) | Total(3) | Accumulated Depreciation & Amortization(2) (4) | Year Built / Renovated | Year Acquired | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Multifamily Properties (continued) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Villas at Royal Kunia | 143,476 | 42,887 | 71,376 | 18,602 | 35,163 | 97,702 | 132,865 | 53,062 | 1990/1995 | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Waena Apartments | 127,200 | 26,864 | 119,273 | 2,138 | 26,864 | 121,411 | 148,275 | 35,247 | 1970/2009-2014 | 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ground Lease | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Owensmouth/Warner(6) | — | 23,848 | — | 1,978 | 23,848 | 1,978 | 25,826 | 977 | N/A | 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Operating Properties | $ | 5,593,367 | $ | 912,015 | $ | 7,173,102 | $ | 4,517,395 | $ | 1,199,291 | $ | 11,403,221 | $ | 12,602,512 | $ | 4,054,696 | ||||||||||||||||||||||||||||||||||||||||||||||
| Property Under Development | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Development Projects | — | — | — | 195,535 | — | 195,535 | 195,535 | — | N/A | N/A | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 5,593,367 | $ | 912,015 | $ | 7,173,102 | $ | 4,712,930 | $ | 1,199,291 | $ | 11,598,756 | $ | 12,798,047 | $ | 4,054,696 | ||||||||||||||||||||||||||||||||||||||||||||||
_____________________________________________________
(1)Includes tenant improvements and lease intangibles.
(2)Net of: (i) fully depreciated and amortized buildings, building improvements, tenant improvements and lease intangibles removed from our books and (ii) balances transferred to Property Under Development.
(3)At December 31, 2025, the aggregate federal income tax cost basis for consolidated real estate was $9.23 billion (unaudited).
(4)See our depreciation and amortization policy in Note 2 to our consolidated financial statements.
(5)During 2024, following the move-out of a long-term single tenant, we converted the property into a multi-tenant building. The construction of new tenant suites is ongoing. Development balances related to the conversion project are included in "Development Projects" in "Property Under Development" in Schedule III above.
(6)The property includes a parcel of land from which we receive rent under a ground lease.
(7)During 2023, we removed The Landmark Residences (formerly Barrington Plaza) residential property from the rental market. A reconstruction of the property is currently underway. Development balances related to the reconstruction project are included in "Development Projects" in "Property Under Development" in Schedule III above.
The table below presents a reconciliation of our investment in real estate:
| (In thousands) | Year Ended December 31, | |||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Investment in real estate, gross | ||||||||||||||||||||
| Beginning balance | $ | 12,495,252 | $ | 12,405,814 | $ | 12,292,973 | ||||||||||||||
| Property acquisitions | 93,929 | — | — | |||||||||||||||||
| Consolidation of JV | 170,103 | — | — | |||||||||||||||||
| Improvements and developments | 292,223 | 203,596 | 214,955 | |||||||||||||||||
| Removal of fully depreciated and amortized buildings, building improvements, tenant improvements and lease intangibles | (253,460) | (114,158) | (102,114) | |||||||||||||||||
| Ending balance | $ | 12,798,047 | $ | 12,495,252 | $ | 12,405,814 | ||||||||||||||
| Accumulated depreciation and amortization | ||||||||||||||||||||
| Beginning balance | $ | (3,916,625) | $ | (3,652,630) | $ | (3,299,365) | ||||||||||||||
| Depreciation and amortization | (398,932) | (384,048) | (459,949) | |||||||||||||||||
| Other accumulated depreciation and amortization | 7,401 | 5,895 | 4,570 | |||||||||||||||||
| Removal of fully depreciated and amortized buildings, building improvements, tenant improvements and lease intangibles | 253,460 | 114,158 | 102,114 | |||||||||||||||||
| Ending balance | $ | (4,054,696) | $ | (3,916,625) | $ | (3,652,630) | ||||||||||||||
| Investment in real estate, net | $ | 8,743,351 | $ | 8,578,627 | $ | 8,753,184 | ||||||||||||||
F- 42