Douglas Emmett (DEI) AI Stock Analysis

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Douglas Emmett

(NYSE:DEI)

Rating:60Neutral

Price Target:

$15.00

▲( 6.08% Upside)

Douglas Emmett's financial stability and successful leasing activities are strong positives. However, high leverage and challenging market conditions reflected in technical indicators and valuation metrics temper the outlook. The mixed earnings call sentiment, with notable leasing successes offset by interest rate impacts, further underscores a cautious investment stance.

Positive Factors

Acquisitions

The JV acquisition of 10900 Wilshire through a deed-in-lieu-of-foreclosure is seen as accretive after stabilization.

Financial Performance

Douglas Emmett reported 3Q24 FFO/sh of $0.43, $0.02 above estimates, and raised the midpoint its 2024 FFO/sh guidance by $0.02 to $1.71.

Negative Factors

Legal and Financial Risks

The LA Superior Court ruling against DEI’s evictions at Barrington Plaza may impact planned renovations and potentially expose the company to financial penalties.

Occupancy Challenges

DEI's L.A. office portfolio remains affected by a slow return-to-work environment and struggling media and entertainment demand.

Douglas Emmett (DEI) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$2.99B

Dividend Yield5.16%

Average Volume (3M)1.97M

Price to Earnings (P/E)46.6

Beta (1Y)1.11

Revenue Growth-1.98%

EPS GrowthN/A

CountryUS

Employees770

SectorReal Estate

Sector Strength56

IndustryREIT - Office

Share Statistics

EPS (TTM)0.24

Shares Outstanding167,446,350

10 Day Avg. Volume2,219,210

30 Day Avg. Volume1,969,027

Financial Highlights & Ratios

PEG Ratio0.31

Price to Book (P/B)1.22

Price to Sales (P/S)0.00

P/FCF Ratio15.54

Enterprise Value/Market Cap2.55

Enterprise Value/Revenue1.91

Enterprise Value/Gross Profit11.98

Enterprise Value/Ebitda3.01

Forecast

1Y Price Target

$18.00

Price Target Upside27.30% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

Douglas Emmett Business Overview & Revenue Model

Company DescriptionDouglas Emmett, Inc. (DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in the premier coastal submarkets of Los Angeles and Honolulu. Douglas Emmett focuses on owning and acquiring a substantial 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.

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 demonstrates stable revenue and profit margins, indicative of operational efficiency. The company faces high leverage, posing potential financial risks, though equity levels remain stable. Positive cash flow growth supports future investments, but debt levels require careful monitoring.

Income Statement

Positive

Douglas Emmett shows a stable gross profit margin with minor fluctuations, indicating strong cost control. The net profit margin has improved over the last year due to increasing net income, signaling enhanced profitability. Revenue growth has been positive, although the pace has varied. EBIT and EBITDA margins are stable, reflecting consistent operating efficiency.

Balance Sheet

Positive

The debt-to-equity ratio is relatively high, suggesting significant leverage, which might pose financial risks if not managed properly. However, the equity ratio remains stable, indicating a reasonable proportion of equity financing. Return on equity has improved, reflecting better profit generation from shareholder investments.

Cash Flow

Positive

Free cash flow has shown growth, supporting potential reinvestment opportunities. The operating cash flow to net income ratio is strong, indicating good conversion of income into cash. However, the free cash flow to net income ratio fluctuates due to variations in net income, suggesting potential volatility in cash conversion.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
993.04M	986.48M	1.02B	993.65M	918.40M	891.52M
	Gross Profit
636.25M	636.22M	198.91M	659.83M	615.00M	586.11M
	EBIT
204.88M	206.82M	149.67M	246.72M	203.63M	175.03M
	EBITDA
666.34M	621.08M	593.58M	619.52M	574.92M	566.67M
	Net Income Common Stockholders
54.41M	23.52M	-42.71M	-53.65M	-84.70M	-106.22M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
556.68M	444.62M	523.08M	268.84M	335.90M	172.38M
	Total Assets
9.64B	9.40B	9.64B	9.75B	9.35B	9.25B
	Total Debt
5.56B	5.51B	5.55B	5.20B	5.02B	4.76B
	Net Debt
5.00B	5.06B	5.03B	4.93B	4.69B	4.58B
	Total Liabilities
5.82B	5.75B	5.80B	5.47B	5.37B	5.25B
	Stockholders Equity
2.20B	2.06B	2.22B	2.56B	2.42B	2.44B
Cash Flow		Free Cash Flow
160.90M	169.30M	237.81M	258.77M	153.86M	122.62M
	Operating Cash Flow
402.31M	408.69M	426.96M	496.89M	446.95M	420.22M
	Investing Cash Flow
-212.26M	-240.76M	-233.59M	-560.95M	-288.71M	-265.18M
	Financing Cash Flow
-221.10M	-246.46M	60.87M	-3.00M	5.25M	-136.33M

Douglas Emmett Technical Analysis

Technical Analysis Sentiment

Negative

Last Price14.14

Price Trends

50DMA

14.75

Negative

100DMA

15.94

Negative

200DMA

16.53

Negative

Market Momentum

MACD

0.03

Negative

RSI

44.20

Neutral

STOCH

37.05

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DEI, the sentiment is Negative. The current price of 14.14 is below the 20-day moving average (MA) of 14.43, below the 50-day MA of 14.75, and below the 200-day MA of 16.53, indicating a bearish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 44.20 is Neutral, neither overbought nor oversold. The STOCH value of 37.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 1 New Risks

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. Q4, 2024

Douglas Emmett Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PGRE	72 Outperform	$1.34B	―	-2.11%	2.49%	1.67%	73.75%
KRC	70 Neutral	$7.75B	19.51	3.69%	6.59%	1.11%	-3.07%
HIW	65 Neutral	$3.23B	18.77	7.21%	6.67%	-2.01%	31.64%
CUZ	64 Neutral	$4.63B	82.44	1.15%	4.64%	10.93%	-31.07%
Sector *	60 Neutral	$2.82B	10.38	0.33%	8508.19%	5.98%	-17.49%
DEI	60 Neutral	$2.99B	46.60	2.49%	5.16%	-1.98%	―
SLG	58 Neutral	$4.43B	663.10	-0.13%	5.20%	13.36%	94.82%

* Real Estate Sector Average

Performance Comparison

DEI

Douglas Emmett

14.14

1.36

10.64%

CUZ

Cousins Properties

26.94

5.12

23.46%

HIW

Highwoods Properties

29.14

5.42

22.85%

KRC

Kilroy Realty

31.52

0.95

3.11%

SLG

SL Green Realty

55.56

7.78

16.28%

PGRE

Paramount Group

5.76

1.32

29.73%

Douglas Emmett Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: 0.86%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a mixed sentiment with significant leasing successes and strong multifamily performance, contrasted by challenges from rising interest rates, flat NOI, and economic uncertainties. The highlights and lowlights are relatively balanced, indicating a cautious outlook with some positive achievements.

Q1-2025 Updates

Positive Updates

Successful Leasing Activity

Leasing during the first quarter of 2025 was successful with positive absorption across the total office portfolio. Over 300,000 square feet of new leases were signed, with new leasing to tenants over 10,000 square feet well above historical averages.

Strong Multifamily Portfolio Performance

The multifamily portfolio maintained very high occupancy at 99.1% and experienced robust revenue growth, reflecting strong demand in coastal submarkets.

Positive Developments in Studio Plaza

Leasing at the Studio Plaza exceeded expectations as it was converted to a multi-tenant office building, with strong demand and leasing activities.

Progress in Investment Activities

Progress in developing a new residential building in Westwood, with JV's total investment expected to be $150 million to $200 million over a three to four year period.

Strategic Debt Refinancing

Closed a non-recourse $127.2 million loan for a residential property and refinanced a $335 million secured office loan at favorable rates.

Negative Updates

Interest Rate Impact on Income

Higher interest rates remain a drag on income, with the expectation that the cost of debt will increase by 100 to 200 basis points from the pre-COVID average of 3%.

Decreased FFO and AFFO

FFO decreased to $0.40 per share and AFFO decreased to $62.3 million compared to the same quarter in the previous year.

Flat Same Property NOI

Same property cash NOI remained essentially flat, indicating challenges in growing net operating income from existing properties.

Volatility and Economic Concerns

Concerns about broader economic volatility and national policy impacts on public markets, which could affect future office leasing and potentially lead to a recession.

Downward Pressure on Cash Spreads

Overall value of new leases increased by 0.9%, but cash spreads were down 12.6% due to larger tenants skewing the averages.

Company Guidance

During Douglas Emmett's quarterly earnings call for the first fiscal quarter of 2025, the company provided guidance on several key financial metrics. President and CEO Jordan Kaplan highlighted that leasing activities were strong, with over 300,000 square feet of new leases signed, and noted positive absorption across the total office portfolio. The company maintained stable in-place and asking rental rates despite a higher vacancy environment, and leasing at Studio Plaza exceeded expectations. The multifamily portfolio achieved nearly full occupancy with robust revenue growth. CFO Peter Seymour reported a 2.7% increase in revenue compared to the first quarter of 2024, though funds from operations (FFO) decreased to $0.40 per share, and adjusted funds from operations (AFFO) dropped to $62.3 million. Same-property cash net operating income (NOI) was essentially flat. For 2025, Douglas Emmett expects net income per common share diluted to be between $0.07 and $0.13, with FFO per fully diluted share projected between $1.42 and $1.48. The company's capital strategy includes refinancing existing debt, with anticipated increases in the cost of debt between 100 and 200 basis points above pre-COVID levels.

Douglas Emmett Corporate Events

Executive/Board ChangesShareholder Meetings

Douglas Emmett Announces Board Members’ Retirement

Neutral

Apr 21, 2025

On April 17, 2025, Douglas Emmett, Inc. announced that its Chairman, Dan A. Emmett, and Board member, Ray C. Leonard, will retire from the Board at the end of their current terms and will not stand for reelection at the 2025 annual meeting of stockholders. Following their retirement, the Board will reduce its size to eight directors. The decision by both Mr. Emmett and Mr. Leonard to retire was not due to any disagreements with the company, and the company expressed gratitude for their service.

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.