Douglas Emmett, Inc.

Second-quarter revenue increased from $252 million to $257 million year over year. FFO increased but still rounded to $0.37 per share, and AFFO increased from $54 million to $56 million. Same-property cash NOI decreased 1.2% for the quarter, while residential same-property cash NOI increased 2% year over year. Office leasing totaled 34 leases and just under 960,000 square feet, including 903 new leases totaling over 375,000 square feet and 141 renewals totaling over 584,000 square feet. Lease transaction costs averaged $5.35 per square foot per year, and G&A was approximately 4.9% of revenue. For 2026, management now expects diluted net income per common share of between -$0.20 and -$0.16 and fully diluted FFO per share of between $1.39 and $1.43. Office occupancy guidance was lowered to 75% to 77% solely because Studio Plaza is now included in the full-year assumption. Management said operating income expectations improved versus prior projections, but that improvement is more than offset by higher market interest rates.

Jordan Kaplan struck an upbeat tone on operations, saying the company made real progress across its four priorities: leasing, acquisitions, redevelopment, and refinancing. He repeatedly emphasized that leasing momentum is building, that demand is broadening to include larger tenants again, and that the company sees an unusually attractive buying environment for real estate. At the same time, he was candid that higher interest expense is clouding performance and is something management is actively trying to address.

Peter Seymour focused on the quarter’s financial bridge and guidance changes. He noted revenue of $257 million versus $252 million a year ago, FFO rounded to $0.37 per share, AFFO of $56 million versus $54 million, and same-property cash NOI down 1.2% for the quarter. He also highlighted that G&A was about 4.9% of revenue, described as the lowest among their benchmark group, and explained that Studio Plaza’s inclusion in the full-year occupancy assumption lowers office occupancy guidance to 75% to 77%. He said improved operating income is being outweighed by higher market interest rates, which is why 2026 FFO guidance is $1.39 to $1.43 per share.

Analysts focused on leasing momentum, debt and swaps, acquisition opportunities, UCLA and Jordan Stanley tenant exposure, and whether residential development might slow in favor of office buys. Management said leasing has been strong for three consecutive quarters, that the latest quarter was less reliant on unusually large deals, and that momentum should continue in the second half of the year. On debt, management said they do not want to stay floating and are looking at refinancing solutions; Kaplan said higher rates are a real cost but do not jeopardize the assets or ownership. On tenants, Stuart McElhinney said conversations with UCLA and Jordan Stanley are productive and they feel good about upcoming expirations.