Douglas Emmett Inc
For the period ended Dec 31, 2023. Filed Feb 16, 2024.
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FY2023 · Filed Feb 16, 2024
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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.
Office Portfolio Summary as of December 31, 2023
| Region | Number of Properties | Our Rentable Square Feet | Region Rentable Square Feet(1) | Our Average Market Share(2) |
|---|---|---|---|---|
| Los Angeles | ||||
| Westside(3) | 52 | 9,999,051 | 40,401,665 | 34.4% |
| Valley | 16 | 6,790,777 | 22,485,019 | 44.4 |
| Honolulu(3) | 2 | 1,190,835 | 5,267,268 | 22.6 |
| Total / Average | 70 | 17,980,663 | 68,153,952 | 37.4% |
(1) The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2023 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 in our total portfolio to each submarket as follows:
| Region | Submarket | Number of Properties | Our Rentable Square Feet | Our Market Share(2) |
|---|---|---|---|---|
| Westside | Brentwood | 15 | 2,085,745 | 60.3% |
| Westwood | 7 | 2,191,711 | 43.6 | |
| Olympic Corridor | 5 | 1,142,885 | 28.1 | |
| Beverly Hills(3) | 11 | 2,196,067 | 27.6 | |
| Santa Monica | 11 | 1,425,374 | 14.3 | |
| Century City | 3 | 957,269 | 9.0 | |
| Valley | Sherman Oaks/Encino | 12 | 3,488,995 | 55.1 |
| Warner Center/Woodland Hills | 3 | 2,845,577 | 37.4 | |
| Burbank | 1 | 456,205 | 5.3 | |
| Honolulu | Honolulu(3) | 2 | 1,190,835 | 22.6 |
| Total / Weighted Average | 70 | 17,980,663 | 37.4% |
(3) In calculating market share, we adjusted the rentable square footage by: (i) removing a 218,000 square foot property located just outside the Beverly Hills city limits from both the numerator and the denominator, and (ii) removing 77,000 rentable square feet of vacant space at an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the submarket.
Office Portfolio Percentage Leased and In-place Rents as of December 31, 2023
| Region(1) | PercentLeased | Annualized Rent(2) | Annualized Rent Per Leased Square Foot(2) | Monthly Rent Per Leased Square Foot(2) |
|---|---|---|---|---|
| Los Angeles | ||||
| Westside | 82.1% | $449,123,019 | $57.01 | $4.75 |
| Valley | 83.8 | 197,159,698 | 36.04 | 3.00 |
| Honolulu | 90.4 | 37,069,247 | 35.93 | 2.99 |
| Total / Weighted Average | 83.3% | $683,351,964 | $47.52 | $3.96 |
(1)Regional data reflects the following underlying submarket data:
| Region | Submarket | PercentLeased | Monthly Rent Per Leased Square Foot(2) |
|---|---|---|---|
| Westside | Beverly Hills | 85.7% | $4.92 |
| Brentwood | 79.9 | 4.01 | |
| Century City | 86.3 | 4.69 | |
| Olympic Corridor | 76.1 | 3.33 | |
| Santa Monica | 81.2 | 6.95 | |
| Westwood | 82.6 | 4.54 | |
| Valley | Burbank | 100.0 | 5.01 |
| Sherman Oaks/Encino | 87.1 | 3.01 | |
| Warner Center/Woodland Hills | 77.1 | 2.57 | |
| Honolulu | Honolulu | 90.4 | 2.99 |
| Weighted Average | 83.3% | $3.96 |
(2) Does not include signed leases not yet commenced, which are included in percent leased but excluded from annualized rent.
Office Lease Diversification as of December 31, 2023
| Portfolio Tenant Size | ||
|---|---|---|
| Median | Average | |
| Square feet | 2,500 | 5,300 |
| Office Leases · Rentable Square Feet · Annualized Rent | |||||||
|---|---|---|---|---|---|---|---|
| Square Feet Under Lease · Number · Percent · Amount · Percent · Amount · Percent | |||||||
| 2,500 or less | 1,356 | 50.3% | 1,956,517 | 13.6% | $86,409,633 | 12.6% | |
| 2,501-10,000 | 1,019 | 37.8 | 4,951,267 | 34.4 | 227,624,126 | 33.3 | |
| 10,001-20,000 | 209 | 7.8 | 2,879,834 | 20.0 | 138,727,510 | 20.3 | |
| 20,001-40,000 | 81 | 3.0 | 2,206,570 | 15.4 | 101,150,861 | 14.8 | |
| 40,001-100,000 | 29 | 1.0 | 1,682,300 | 11.7 | 85,820,710 | 12.6 | |
| Greater than 100,000 | 2 | 0.1 | 703,824 | 4.9 | 43,619,124 | 6.4 | |
| Total for all leases | 2,696 | 100.0% | 14,380,312 | 100.0% | $683,351,964 | 100.0% | |
Largest Office Tenants as of December 31, 2023
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 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Warner Bros. Discovery(2) | 1 | 1 | 2024 | 456,205 | 2.5% | $27,435,217 | 4.0% | ||
| William Morris Endeavor(3) | 2 | 1 | 2027 | 247,768 | 1.4 | 16,189,523 | 2.4 | ||
| UCLA(4) | 18 | 10 | 2023-2033 | 247,183 | 1.4 | 13,482,083 | 2.0 | ||
| Morgan Stanley(5) | 5 | 5 | 2025-2028 | 144,688 | 0.8 | 10,661,157 | 1.5 | ||
| Equinox Fitness(6) | 6 | 5 | 2029-2038 | 185,236 | 1.0 | 10,407,103 | 1.5 | ||
| Total | 32 | 22 | 1,281,080 | 7.1% | $78,175,083 | 11.4% | |||
(1) Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
(2) Square footage (rounded) expires as follows: 456,000 square feet in 2024.
(3) Table reflects lease terms as of December 31, 2023. Subsequent to quarter end, the lease term was extended through 2037. Tenant has the option to terminate 248,000 square feet in 2033.
(4) Square footage (rounded) expires as follows: 1 lease totaling 1,000 square feet in 2023; 3 leases totaling 37,000 square feet in 2024; 4 leases totaling 89,000 square feet in 2025; 5 leases totaling 32,000 square feet in 2026; 1 lease totaling 51,000 square feet in 2027; 1 lease totaling 8,000 square feet in 2028; 1 lease totaling 15,000 square feet in 2029; and 2 leases totaling 14,000 square feet in 2033. Tenant has options to terminate 51,000 square feet in 2025.
(5) Square footage (rounded) expires as follows: 26,000 square feet in 2025; 88,000 square feet in 2027 and 30,000 square feet in 2028.
(6) Square footage (rounded) expires as follows: 34,000 square feet in 2029; 46,000 square feet in 2035; 31,000 square feet in 2037 and 74,000 square feet in 2038.
Office Industry Diversification as of December 31, 2023
| Industry | Number of Leases | Annualized Rent as a Percent of Total |
|---|---|---|
| Legal | 576 | 18.2% |
| Financial Services | 364 | 15.5 |
| Entertainment | 150 | 14.1 |
| Real Estate | 315 | 12.7 |
| Health Services | 387 | 9.2 |
| Accounting & Consulting | 298 | 8.9 |
| Technology | 101 | 4.9 |
| Retail | 154 | 4.9 |
| Insurance | 91 | 3.2 |
| Educational Services | 46 | 2.8 |
| Public Administration | 73 | 2.3 |
| Advertising | 33 | 1.0 |
| Other | 45 | 1.1 |
| Manufacturing & Distribution | 53 | 1.2 |
| Total | 2,686 | 100.0% |
Office Lease Expirations as of December 31, 2023 (assuming non-exercise of renewal options and early termination rights)
| Year of Lease Expiration · Number ofLeases · RentableSquare Feet · ExpiringSquare Feetas a Percent of Total · Annualized Rent at December 31, 2023 · AnnualizedRent as aPercent of Total · AnnualizedRent PerLeased Square Foot(1) · AnnualizedRent PerLeasedSquareFoot at Expiration(2) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Short Term Leases | 92 | 305,460 | 1.7% | $12,085,729 | 1.8% | $39.57 | $39.45 | ||||
| 2024 | 594 | 2,864,277 | 15.9 | 137,113,780 | 20.1 | 47.87 | 47.42 | ||||
| 2025 | 578 | 2,482,316 | 13.8 | 116,721,428 | 17.1 | 47.02 | 49.11 | ||||
| 2026 | 465 | 2,157,587 | 12.0 | 98,549,202 | 14.4 | 45.68 | 49.55 | ||||
| 2027 | 314 | 2,004,294 | 11.2 | 101,142,084 | 14.8 | 50.46 | 56.37 | ||||
| 2028 | 270 | 1,452,991 | 8.1 | 67,433,092 | 9.9 | 46.41 | 53.31 | ||||
| 2029 | 137 | 847,123 | 4.7 | 40,414,711 | 5.9 | 47.71 | 54.71 | ||||
| 2030 | 76 | 714,311 | 4.0 | 35,791,173 | 5.2 | 50.11 | 61.09 | ||||
| 2031 | 57 | 405,546 | 2.2 | 19,316,010 | 2.8 | 47.63 | 59.90 | ||||
| 2032 | 33 | 321,974 | 1.8 | 16,063,724 | 2.4 | 49.89 | 64.81 | ||||
| 2033 | 52 | 348,144 | 1.9 | 17,324,494 | 2.5 | 49.76 | 68.47 | ||||
| Thereafter | 28 | 476,289 | 2.7 | 21,396,537 | 3.1 | 44.92 | 63.09 | ||||
| Subtotal/weighted average | 2,696 | 14,380,312 | 80.0 | 683,351,964 | 100.0 | 47.52 | 52.58 | ||||
| Signed leases not commenced | 417,287 | 2.3 | |||||||||
| Available | 3,002,047 | 16.7 | |||||||||
| Building management use | 106,908 | 0.6 | |||||||||
| BOMA adjustment (3) | 74,109 | 0.4 | |||||||||
| Total/Weighted Average | 2,696 | 17,980,663 | 100.0% | $683,351,964 | 100.0% | $47.52 | $52.58 | ||||
(1)Represents annualized rent at December 31, 2023 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.
Office Tenant Improvements and Leasing Commissions
| Year Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| Renewal leases(1) | |||
| Number of leases | 576 | 571 | 557 |
| Square feet | 2,359,780 | 2,416,521 | 2,553,056 |
| Tenant improvement costs per square foot (2) | $11.15 | $11.06 | $8.59 |
| Leasing commission costs per square foot (2) | 5.98 | 5.86 | 5.88 |
| Total costs per square foot (2) | $17.13 | $16.92 | $14.47 |
| New leases(1) | |||
| Number of leases | 289 | 343 | 351 |
| Square feet | 792,716 | 1,225,024 | 1,105,297 |
| Tenant improvement costs per square foot (2) | $21.69 | $27.68 | $27.43 |
| Leasing commission costs per square foot (2) | 7.39 | 9.26 | 9.81 |
| Total costs per square foot (2) | $29.08 | $36.94 | $37.24 |
| Total leases(1) | |||
| Number of leases | 865 | 914 | 908 |
| Square feet | 3,152,496 | 3,641,545 | 3,658,353 |
| Tenant improvement costs per square foot (2) | $13.80 | $16.65 | $14.28 |
| Leasing commission costs per square foot (2) | 6.34 | 7.01 | 7.07 |
| Total costs per square foot (2) | $20.14 | $23.66 | $21.35 |
(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.
Office Recurring Capital Expenditures(consolidated office portfolio)
| Year Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| Recurring Capital Expenditures(1) | $3,279,814 | $4,224,496 | $3,838,453 |
| Total square feet(1) | 14,851,645 | 14,851,378 | 14,851,378 |
| Recurring Capital Expenditures per square foot(1) | $0.22 | $0.28 | $0.26 |
(1)We excluded the following properties in accordance with our definition of Recurring Capital Expenditures:
For 2023, we excluded ten properties with an aggregate 2.7 million square feet.
For 2022, we excluded eleven properties with an aggregate 2.8 million square feet.
For 2021, we excluded eleven properties with an aggregate 2.9 million square feet.
Multifamily Portfolio as of December 31, 2023
| Submarket | Number of Properties | Number of Units | Units as a Percent of Total |
|---|---|---|---|
| Los Angeles | |||
| Santa Monica | 3 | 940 | 21% |
| West Los Angeles(1) | 7 | 1,151 | 25 |
| Honolulu | 4 | 2,485 | 54 |
| Total | 14 | 4,576 | 100% |
| Submarket | Percent Leased | Annualized Rent(2) | Monthly Rent Per Leased Unit |
| Los Angeles | |||
| Santa Monica | 98.2% | $48,562,584 | $4,394 |
| West Los Angeles(3) | 97.4 | 52,768,992 | 4,754 |
| Honolulu | 99.1 | 67,367,508 | 2,286 |
| Total / Weighted Average | 98.5% | $168,699,084 | $3,268 |
(1) Excludes units vacated as part of removing Barrington Plaza from the rental market.
(2) The multifamily portfolio also includes 83,018 square feet and annualized rent of $2,992,297 consisting of ancillary retail space at three properties and remaining office space at a building undergoing conversion from office to residential, which are not included in this table.
(3) Excludes impact of Barrington Plaza.
Multifamily Recurring Capital Expenditures
| Year Ended December 31, | |||
|---|---|---|---|
| 2023 | 2022 | 2021 | |
| Recurring Capital Expenditures(1)(2) | $2,978,083 | $3,092,613 | $2,821,969 |
| Total units(1)(2) | 4,013 | 3,925 | 3,449 |
| Recurring Capital Expenditures per unit(1)(2) | $747 | $807 | $818 |
(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 2023, when a tenant vacated one of these units, we incurred on average $63 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 2023, we excluded two properties with an aggregate 563 units.
For 2022, we excluded two properties with an aggregate 1,088 units.
For 2021, we excluded two properties with an aggregate 939 units.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.