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Douglas Emmett (DEI)
NYSE:DEI
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Douglas Emmett
(NYSE:DEI)57Neutral
Positive Factors
Financial Performance
Douglas Emmett reported 3Q24 FFO/sh of $0.43, $0.02 above our estimate and the Street, and raised the midpoint its 2024 FFO/sh guidance by $0.02 to $1.71.
Leasing Activity
Leasing activity was a bright spot; ~1.0M SF of signed leases was 10.7% higher than the company’s trailing four quarter average and 353k SF of new leases was the highest level in eight quarters.
Negative Factors
Occupancy Challenges
DEI's occupancy reached a new low at 79.4% and will move materially lower in Q4 with the 464k SF Warner Center move out.
Douglas Emmett (DEI) vs. S&P 500 (SPY)
Market Cap
$3.36B
Dividend Yield4.58%
Average Volume (3M)1.90M
Price to Earnings (P/E)125.3
Beta (1Y)1.48
Revenue Growth-3.33%
EPS GrowthN/A
CountryUS
Employees770
SectorReal Estate
Sector Strength72
IndustryREITs
Share Statistics
EPS (TTM)0.13
Shares Outstanding167,446,350
10 Day Avg. Volume1,764,861
30 Day Avg. Volume1,904,350
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)2.81
Price to Cash Flow (P/CF)9.40
P/FCF Ratio19.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.39Price Target Upside5.81% Upside
Rating ConsensusHold
Number of Analyst Covering9
Douglas Emmett Business Overview & Revenue Model
Company DescriptionDouglas Emmett, Inc. (DEI) is a real estate investment trust (REIT) based in Santa Monica, California, focusing primarily on owning, acquiring, and managing office and multifamily properties in premier coastal submarkets of Los Angeles and Honolulu. The company's portfolio is strategically located in some of the most sought-after neighborhoods, providing high-quality office spaces and luxury apartments to a diverse range of tenants.
How the Company Makes MoneyDouglas Emmett generates revenue primarily through leasing office and multifamily properties. The company's key revenue streams include rental income from its office and residential tenants. By owning properties in high-demand areas, DEI benefits from stable occupancy rates and the ability to adjust rental rates in response to market conditions. The company's focus on Class A office buildings and luxury apartments enables it to attract premium tenants, thereby maximizing rental revenue. Additionally, Douglas Emmett engages in property management services, which further contribute to its income. Strategic acquisitions and developments in core markets also play a significant role in enhancing its revenue potential.
Douglas Emmett Financial Statement Overview
Summary
Douglas Emmett shows a mixed financial performance characterized by stable cash flows and high leverage typical of the REIT sector. While revenue and profitability metrics face challenges, the company demonstrates efficient cash flow management. The high debt level poses a risk, requiring careful financial strategy to maintain stability amidst industry pressures.Income Statement
Douglas Emmett's revenue has shown volatility, with a decline in recent years. The gross profit margin remains solid as it mirrors total revenue due to reporting structure. Net profit margin is low, impacted by fluctuating net income. EBIT and EBITDA margins have also seen pressure due to declining EBIT figures.55
Neutral
Balance Sheet
The company has a high debt-to-equity ratio, indicative of significant leverage, common in the REIT industry. However, the equity ratio remains stable, and return on equity is challenging due to low net income figures. Overall, the balance sheet reflects a stable yet highly leveraged financial position.60
Neutral
Cash Flow
Operating cash flow has been relatively stable, with minimal fluctuations. Recent free cash flow has grown, yet the ratio of free cash flow to net income highlights pressures from low profitability. The company maintains a strong operating cash flow to net income ratio, reflecting efficient cash conversion despite profitability issues.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 986.48M | 1.02B | 993.65M | 918.40M | 891.52M | Gross Profit |
| 986.48M | 198.91M | 659.83M | 615.00M | 586.11M | EBIT |
| 0.00 | 149.67M | 246.72M | 203.63M | 175.03M | EBITDA |
| 621.08M | 593.58M | 619.52M | 574.92M | 566.67M | Net Income Common Stockholders |
| 23.52M | -42.71M | -53.65M | -84.70M | -106.22M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 444.62M | 523.08M | 268.84M | 335.90M | 172.38M | Total Assets |
| 9.40B | 9.64B | 9.75B | 9.35B | 9.25B | Total Debt |
| 5.52B | 5.55B | 5.20B | 5.02B | 4.76B | Net Debt |
| 5.08B | 5.03B | 4.93B | 4.69B | 4.58B | Total Liabilities |
| 5.75B | 5.80B | 5.47B | 5.37B | 5.25B | Stockholders Equity |
| 2.06B | 2.22B | 2.56B | 2.42B | 2.44B |
| Cash Flow | Free Cash Flow | |||
| 408.69M | 237.81M | 258.77M | 153.86M | 122.62M | Operating Cash Flow |
| 408.69M | 426.96M | 496.89M | 446.95M | 420.22M | Investing Cash Flow |
| -240.76M | -233.59M | -560.95M | -288.71M | -265.18M | Financing Cash Flow |
| -246.46M | 60.87M | -3.00M | 5.25M | -136.33M |
Douglas Emmett Technical Analysis
Positive
17.38
Price Trends
17.41
Negative
18.02
Negative
16.37
Positive
Market Momentum
-0.16
Negative
53.98
Neutral
66.30
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEI, the sentiment is Positive. The current price of 17.38 is above the 20-day moving average (MA) of 16.84, below the 50-day MA of 17.41, and above the 200-day MA of 16.37, indicating a neutral trend. The MACD of -0.16 indicates Negative momentum. The RSI at 53.98 is Neutral, neither overbought nor oversold. The STOCH value of 66.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DEI.
Douglas Emmett Risk Analysis
Douglas Emmett disclosed 50 risk factors in its most recent earnings report. Douglas Emmett reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Douglas Emmett Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $1.42B | 29.99 | 5.12% | 1.65% | 3.83% | -5.55% | |
64 Neutral | $14.58B | 907.36 | 1.32% | 1.94% | -1.30% | -80.81% | |
63 Neutral | $4.06B | 19.22 | 3.87% | 6.54% | 0.53% | -1.38% | |
61 Neutral | $4.91B | 18.99 | -3.12% | 7.77% | 6.71% | -19.69% | |
60 Neutral | $11.60B | 737.50 | 0.23% | 5.88% | 4.10% | -92.47% | |
57 Neutral | $3.36B | 125.32 | 1.03% | 4.58% | -3.33% | ― | |
54 Neutral | $4.52B | 760.94 | 0.71% | 4.85% | 5.12% | ― |
* Real Estate Sector Average
Performance Comparison
DEI
Douglas Emmett
17.38
4.35
33.38%
BXP
Boston Properties
69.00
8.76
14.54%
KRC
Kilroy Realty
33.32
-0.13
-0.39%
SLG
SL Green Realty
61.96
13.98
29.14%
VNO
Vornado Realty
39.75
14.48
57.30%
ESRT
Empire State Realty
8.54
-1.14
-11.78%
Douglas Emmett Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -2.91% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call reflected mixed results for Douglas Emmett. While there were significant achievements in leasing activity and strategic acquisitions, challenges such as decreased revenue, the impact of a major tenant's departure, and negative income guidance for 2025 balanced the positive aspects. The company is optimistic about future growth projects and a rebound in office demand.Highlights
New Joint Venture in Westwood
Formed a new joint venture to acquire a 17-story, 247,000 square foot office building and adjoining residential development site in Westwood. The total investment is estimated to be $150 million to $200 million over a three to four year period.
Record Office Leasing Activity
Signed 876 office leases totaling a record 3.8 million square feet for 2024, averaging 945,000 square feet per quarter.
Strong Residential Portfolio Performance
Residential portfolio remained essentially fully leased at 99.1% with good demand.
Rebound in Demand from Larger Office Tenants
New leasing demand from tenants over 10,000 square feet improved in Q4 and is now back to pre-pandemic levels.
Lowlights
Impact of Warner Bros. Departure
Warner Bros. departure adversely affected the fourth quarter. Lower office occupancy and higher interest rates negatively impacted revenues and FFO for 2024.
Decrease in Revenue and FFO
Revenue decreased by 5.5% compared to Q4 2023. Higher interest expense lowered FFO to $0.38 per share and AFFO to $58.7 million.
Challenges in Office Segment
Same-property cash NOI decreased by 4.5% due to lower office revenues, partly offset by 6% multifamily growth.
Guidance for Negative Net Income in 2025
2025 net income per common share diluted is expected to be between negative $0.17 and negative $0.11.
Company Guidance
During Douglas Emmett's quarterly earnings call, management provided guidance for 2025 with several key metrics highlighted. The company expects net income per common share diluted to be between negative $0.17 and negative $0.11, and FFO per fully diluted share to range from $1.42 to $1.48. While the year is anticipated to see lower lease expirations—25% less than the previous year's record high—positive absorption is expected due to a rebound in demand from larger office tenants. The guidance also includes the consolidation of a new joint venture, though significant FFO contributions from this venture are not anticipated for 2025 due to ongoing construction. Additionally, the company forecasted stable office rental rates and robust performance across residential assets, with 2024's residential portfolio almost fully leased at 99.1%.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.