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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Douglas Emmett Inc | NYSE:DEI | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.11 | 0.80% | 13.85 | 14.34 | 13.73 | 14.12 | 1,087,790 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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20-3073047
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock, $0.01 par value per share
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DEI
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New York Stock Exchange
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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Yes
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No
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☐
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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
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Yes
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☐
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No
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☑
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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.
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Yes
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No
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☐
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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).
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Yes
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☑
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No
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☐
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
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Yes
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☐
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No
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☑
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Table of Contents
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ADA
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Americans with Disabilities Act of 1990
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AOCI
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Accumulated Other Comprehensive Income (Loss)
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ASC
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Accounting Standards Codification
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ASU
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Accounting Standards Update
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ATM
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At-the-Market
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BOMA
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Building Owners and Managers Association
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CEO
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Chief Executive Officer
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CFO
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Chief Financial Officer
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Code
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Internal Revenue Code of 1986, as amended
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COO
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Chief Operating Officer
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DEI
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Douglas Emmett, Inc.
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EPA
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United States Environmental Protection Agency
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EPS
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Earnings Per Share
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Exchange Act
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Securities Exchange Act of 1934, as amended
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FASB
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Financial Accounting Standards Board
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FDIC
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Federal Deposit Insurance Corporation
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FFO
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Funds From Operations
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Fund X
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Douglas Emmett Fund X, LLC
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FIRPTA
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Foreign Investment in Real Property Tax Act of 1980, as amended
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Funds
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Unconsolidated institutional real estate funds
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GAAP
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Generally Accepted Accounting Principles (United States)
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IRS
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Internal Revenue Service
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IT
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Information Technology
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JV
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Joint Venture
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LIBOR
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London Interbank Offered Rate
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LTIP Units
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Long-Term Incentive Plan Units
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MGCL
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Maryland General Corporation Law
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NAREIT
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National Association of Real Estate Investment Trusts
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NYSE
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New York Stock Exchange
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OCI
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Other Comprehensive Income (Loss)
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OP Units
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Operating Partnership Units
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Operating Partnership
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Douglas Emmett Properties, LP
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Opportunity Fund
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Fund X Opportunity Fund, LLC
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OFAC
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Office of Foreign Assets Control
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Partnership X
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Douglas Emmett Partnership X, LP
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PCAOB
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Public Company Accounting Oversight Board (United States)
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QRS
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Qualified REIT subsidiary(ies)
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REIT
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Real Estate Investment Trust
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Report
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Annual Report on Form 10-K
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SEC
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Securities and Exchange Commission
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Securities Act
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Securities Act of 1933, as amended
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S&P 500
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Standard & Poor's 500 Index
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TRS
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Taxable REIT subsidiary(ies)
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US
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United States
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USD
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United States Dollar
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VIE
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Variable Interest Entity(ies)
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Annualized Rent
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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 and two single tenant buildings in Los Angeles) 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 does include rent for a health club that we own and operate in Honolulu and our corporate headquarters in Santa Monica.
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Consolidated Portfolio
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Includes all of the properties included in our consolidated results, including our consolidated JVs.
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Funds From Operations (FFO)
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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), and impairment write-downs of real estate from our net income (including adjusting for the effect of such items attributable to consolidated JVs and unconsolidated Funds, 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 for a discussion of FFO.
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Net Operating Income (NOI)
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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: general and administrative expense, depreciation and amortization expense, other income, other expenses, income from unconsolidated Funds, interest expense, gain from consolidation of JVs, gains (or losses) on sales of investments in real estate and net income 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 for a discussion of our Same Property NOI.
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Occupancy Rate
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The percentage leased, excluding signed leases not yet commenced, as of the reporting date. Management space is considered leased and occupied, while space taken out of service during a repositioning is excluded from both the numerator and denominator for calculating percentage leased and occupied.
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Recurring Capital Expenditures
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Building improvements required to maintain revenues once a property has been stabilized, and excludes capital expenditures for (i) acquired buildings being stabilized, (ii) newly developed space, (iii) upgrades to improve revenues or operating expenses or significantly change the use of the space, (iv) casualty damage and (v) bringing the property into compliance with governmental or lender requirements.
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Rentable Square Feet
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Based on the BOMA remeasurement and consists of leased square feet (including square feet with respect to signed leases not commenced as of the reporting date), available square feet, building management use square feet and square feet of the BOMA adjustment on leased space.
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Same Properties
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Our consolidated properties that have been owned and operated by us in a consistent manner, and reported in our consolidated results during the entire span of both periods being compared. We exclude from our same property subset any properties (i) acquired during the comparative periods; (ii) sold, held for sale, contributed or otherwise removed from our consolidated financial statements during the comparative periods; or (iii) that underwent a major repositioning project or were impacted by development activity that we believed significantly affected the properties' results during the comparative periods.
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Short-Term Leases
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Represents leases that expired on or before the reporting date or had a term of less than one year, including hold over tenancies, month to month leases and other short term occupancies.
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Total Portfolio
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Includes our Consolidated Portfolio plus the properties owned by our Fund.
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•
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adverse economic or real estate developments affecting Southern California or Honolulu, Hawaii;
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competition from other real estate investors in our markets;
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decreasing rental rates or increasing tenant incentive and vacancy rates;
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defaults on, early terminations of, or non-renewal of leases by tenants;
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increases in interest rates or operating costs;
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insufficient cash flows to service our outstanding debt or pay rent on ground leases;
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difficulties in raising capital;
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inability to liquidate real estate or other investments quickly;
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adverse changes to rent control laws and regulations;
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environmental uncertainties;
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natural disasters;
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insufficient insurance, or increases in insurance costs;
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inability to successfully expand into new markets and submarkets;
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difficulties in identifying properties to acquire and failure to complete acquisitions successfully;
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failure to successfully operate acquired properties;
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risks associated with property development;
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risks associated with JVs;
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conflicts of interest with our officers and reliance on key personnel;
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changes in zoning and other land use laws;
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adverse results of litigation or governmental proceedings;
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failure to comply with laws, regulations and covenants that are applicable to our business;
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possible terrorist attacks or wars;
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possible cyber attacks or intrusions;
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adverse changes to accounting rules;
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weaknesses in our internal controls over financial reporting;
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failure to maintain our REIT status under federal tax laws; and
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adverse changes to tax laws, including those related to property taxes.
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Consolidated Portfolio
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Total
Portfolio
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Office
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Wholly-owned properties
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53
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53
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Consolidated JV properties
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17
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17
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Unconsolidated Fund properties
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—
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2
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Total
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70
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72
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Rentable square feet (in thousands)
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17,960
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18,346
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Multifamily
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Wholly-owned properties
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10
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10
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Consolidated JV properties
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1
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1
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Total
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11
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11
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Units
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4,161
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4,161
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•
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Concentration of High Quality Office and Multifamily Properties in Premier Submarkets.
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Disciplined Strategy of Acquiring Substantial Market Share.
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Proactive Asset and Property Management.
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four consolidated JVs, through which we and institutional investors own seventeen office properties in our core markets totaling 4.3 million square feet and one residential property with 350 apartments, and in which we own a weighted average of 46% at December 31, 2019 based on square footage. We are entitled to (i) distributions based on invested capital as well as (in the case of three of the JVs) additional distributions based on cash net operating income, (ii) fees for property management and other services and (iii) reimbursement of certain acquisition-related expenses and certain other costs.
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one unconsolidated Fund through which we and institutional investors own two office properties in our core markets totaling 0.4 million square feet and in which we own 30% at December 31, 2019. We are entitled to (i) priority distributions, (ii) distributions based on invested capital, (iii) a carried interest if the investors’ distributions exceed a hurdle rate, (iv) fees for property management and other services and (v) reimbursement of certain costs.
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i.
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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
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ii.
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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. 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.
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i.
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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,
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ii.
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not more than 25% of our total assets may be represented by securities other than those in the 75% asset class,
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iii.
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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,
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iv.
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not more than 20% of the value of our total assets may be represented by securities of one or more TRS, and
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v.
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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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adverse changes in international, national or local economic conditions;
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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;
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adverse changes in financial conditions of actual or potential investors, buyers, sellers or tenants;
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inability to collect rent from tenants;
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competition from other real estate investors, including other real estate operating companies, publicly-traded REITs and institutional investment funds;
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reduced tenant demand for office space and residential units from matters such as (i) changes in space utilization, (ii) changes in the relative popularity of our properties, (iii) the type of space we provide or (iv) purchasing versus leasing;
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reduced demand for parking space due to the impact of technology such as self driving cars, and the increasing popularity of car ride sharing services;
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increases in the supply of office space and residential units;
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fluctuations in interest rates and the availability of credit, which could adversely affect our ability to obtain financing on favorable terms or at all;
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increases in expenses (or our reduced ability to recover expenses from our tenants), including insurance costs, labor costs (such as the unionization of our employees or the employees of any parties with whom we contract for services to our buildings), energy prices, real estate assessments and other taxes, as well as costs of compliance with laws, regulations and governmental policies;
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utility disruptions;
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the effects of rent controls, stabilization laws and other laws or covenants regulating rental rates;
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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;
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legislative uncertainty related to federal and state spending and tax policy;
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difficulty in operating properties effectively;
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acquiring undesirable properties; and
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inability to dispose of properties at appropriate times or at favorable prices.
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our cash flows may be insufficient to meet our required principal and interest payments;
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servicing our borrowings may leave us with insufficient cash to operate our properties or to pay the distributions necessary to maintain our REIT qualification;
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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;
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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;
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we may be forced to dispose of one or more of our properties, possibly on disadvantageous terms;
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we may violate any restrictive covenants in our loan documents, which could entitle the lenders to accelerate our debt obligations;
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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;
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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;
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our default under any of our indebtedness with cross default provisions could result in a default on other indebtedness;
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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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our floating rate debt and related hedges are indexed to USD-LIBOR, any regulatory changes which impact the USD-LIBOR benchmark, such as the potential transition to the Secured Overnight Financing Rate (see Item 7A - "Quantitative and Qualitative Disclosures about Market Risk" below), could impact our borrowing costs or the effectiveness of our hedges.
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Disruption to our networks and systems and thus our operations and/or those of our tenants or vendors;
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Misstated financial reports, violations of loan covenants, missed reporting deadlines and missed permitting deadlines;
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Inability to comply with laws and regulations;
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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;
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Rendering us unable to maintain the building systems relied upon by our tenants;
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The requirement of significant management attention and resources to remedy any damages that result;
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Claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; and
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Damage to our reputation among our tenants, investors, or others.
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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;
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competition from other potential acquirers may significantly increase the purchase price of a desired property;
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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;
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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;
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cash flows from the acquired properties may be insufficient to service the related debt financing;
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we may need to spend more than we budgeted to make necessary improvements or renovations to acquired properties;
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we may spend significant time and money on potential acquisitions that we do not close;
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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;
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we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations;
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occupancy and rental rates of acquired properties may be less than expected; and
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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.
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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, material shortages and price increases);
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We may be unable to lease the developed or redeveloped properties at budgeted rental rates or lease up the property within budgeted time frames;
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We may devote time and expend funds on development or redevelopment of properties that we may not complete;
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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;
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We may encounter delays, refusals and unforeseen cost increases resulting from third-party litigation or objections;
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We may fail to obtain the financial results expected from properties we develop or redevelop; and
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We have developed and redeveloped properties in the past, however only in a limited manner in recent years, which could adversely affect our ability to develop or redevelop properties or to achieve our expected returns.
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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;
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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;
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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;
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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;
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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;
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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;
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We may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers; and
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We may not be able to raise capital as needed from institutional investors or sovereign wealth funds, or on terms that are favorable.
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general market conditions;
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the market’s perception of our growth potential;
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our current debt levels;
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our current and expected future earnings;
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our cash flows and cash dividends; and
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the market price per share of our common stock.
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redemption rights of qualifying parties;
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transfer restrictions on our OP Units;
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the ability of the general partner in some cases to amend the partnership agreement without the consent of the limited partners; and
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the right of the limited partners to consent to transfers of the general partnership interest and mergers under specified circumstances.
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“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
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•
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“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.
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(i)
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permanently reducing the generally applicable corporate tax rate,
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(ii)
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generally reducing the tax rate applicable to individuals and other non-corporate taxpayers for tax years beginning after December 31, 2017 and before January 1, 2026,
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(v)
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imposes new limitations on the deduction of net operating losses, which may result in us having to make additional taxable distributions to our stockholders in order to comply with REIT distribution requirements or avoid taxes on retained income and gains.
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Region
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Number of Properties
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Our Rentable Square Feet
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Region Rentable Square Feet(1)
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Our Average Market Share(2)
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Los Angeles
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Westside(3)
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52
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9,992,932
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37,358,326
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37.6
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%
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Valley
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16
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6,790,777
|
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21,257,083
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43.4
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Honolulu(3)
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4
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1,562,235
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4,872,939
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32.1
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Total / Average
|
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72
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18,345,944
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63,488,348
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39.3
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%
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(1)
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The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2019 fourth quarter CBRE Marketview report for our submarkets in that region.
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(2)
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Our market share is calculated by dividing Rentable Square Feet by the applicable 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:
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Region
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Submarket
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Number of Properties
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Our Rentable Square Feet
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Our Market Share(2)
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Westside
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Brentwood
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15
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2,085,745
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62.5
|
%
|
|
Westwood
|
|
7
|
|
|
2,185,592
|
|
|
51.3
|
|
|
|
Olympic Corridor
|
|
5
|
|
|
1,142,885
|
|
|
33.1
|
|
|
|
Beverly Hills(3)
|
|
11
|
|
|
2,196,067
|
|
|
28.6
|
|
|
|
Santa Monica
|
|
11
|
|
|
1,425,374
|
|
|
15.4
|
|
|
|
Century City
|
|
3
|
|
|
957,269
|
|
|
9.4
|
|
|
Valley
|
|
Sherman Oaks/Encino
|
|
12
|
|
|
3,488,995
|
|
|
53.4
|
|
|
Warner Center/Woodland Hills
|
|
3
|
|
|
2,845,577
|
|
|
37.1
|
|
|
|
Burbank
|
|
1
|
|
|
456,205
|
|
|
6.5
|
|
|
Honolulu
|
|
Honolulu(3)
|
|
4
|
|
|
1,562,235
|
|
|
32.1
|
|
|
|
Total / Weighted Average
|
|
72
|
|
|
18,345,944
|
|
|
39.3
|
%
|
(3)
|
In calculating market share, we adjusted the rentable square footage by (i) removing approximately 202,000 rentable square feet of vacant space at an office building in Honolulu, which we are converting to residential apartments, from both our rentable square footage and that of the submarket and (ii) removing a 218,000 square foot property located just outside the Beverly Hills city limits from both the numerator and the denominator.
|
Region(1)
|
|
Percent
Leased
|
|
Annualized Rent(2)
|
|
Annualized Rent Per Leased Square Foot(2)
|
|
Monthly Rent Per Leased Square Foot(2)
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
Los Angeles
|
|
|
|
|
|
|
|
|
|||||||
Westside
|
|
93.7
|
%
|
|
$
|
470,576,030
|
|
|
$
|
52.58
|
|
|
$
|
4.38
|
|
Valley
|
|
92.6
|
|
|
214,855,878
|
|
|
35.55
|
|
|
2.96
|
|
|||
Honolulu
|
|
94.3
|
|
|
48,661,931
|
|
|
34.96
|
|
|
2.91
|
|
|||
Total / Weighted Average
|
|
93.3
|
%
|
|
$
|
734,093,839
|
|
|
$
|
44.80
|
|
|
$
|
3.73
|
|
(1)
|
Regional data reflects the following underlying submarket data:
|
Region
|
|
Submarket
|
|
Percent
Leased
|
|
Monthly Rent Per Leased Square Foot(2)
|
|||
|
|
|
|
|
|
|
|||
Westside
|
|
Beverly Hills
|
|
96.4
|
%
|
|
$
|
4.38
|
|
|
Brentwood
|
|
91.0
|
|
|
3.83
|
|
||
|
Century City
|
|
93.7
|
|
|
4.24
|
|
||
|
Olympic Corridor
|
|
93.6
|
|
|
3.37
|
|
||
|
Santa Monica
|
|
95.2
|
|
|
6.23
|
|
||
|
Westwood
|
|
92.5
|
|
|
4.25
|
|
||
Valley
|
|
Burbank
|
|
100.0
|
|
|
4.28
|
|
|
|
Sherman Oaks/Encino
|
|
94.3
|
|
|
3.13
|
|
||
|
Warner Center/Woodland Hills
|
|
89.4
|
|
|
2.49
|
|
||
Honolulu
|
|
Honolulu
|
|
94.3
|
|
|
2.91
|
|
|
|
|
Weighted Average
|
|
93.3
|
%
|
|
$
|
3.73
|
|
(2)
|
Does not include signed leases not yet commenced, which are included in percent leased but excluded from annualized rent.
|
Portfolio Tenant Size
|
|||
|
Median
|
|
Average
|
|
|
|
|
Square feet
|
2,700
|
|
5,600
|
|
|
Office Leases
|
|
Rentable Square Feet
|
|
Annualized Rent
|
|||||||||||||
Square Feet Under Lease
|
|
Number
|
|
Percent
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2,500 or less
|
|
1,406
|
|
|
47.9
|
%
|
|
1,961,349
|
|
|
12.0
|
%
|
|
$
|
86,387,301
|
|
|
11.8
|
%
|
2,501-10,000
|
|
1,150
|
|
|
39.2
|
|
|
5,647,365
|
|
|
34.5
|
|
|
248,326,228
|
|
|
33.8
|
|
|
10,001-20,000
|
|
243
|
|
|
8.3
|
|
|
3,357,323
|
|
|
20.5
|
|
|
144,200,267
|
|
|
19.7
|
|
|
20,001-40,000
|
|
99
|
|
|
3.4
|
|
|
2,722,556
|
|
|
16.6
|
|
|
121,979,833
|
|
|
16.6
|
|
|
40,001-100,000
|
|
32
|
|
|
1.1
|
|
|
1,789,354
|
|
|
10.9
|
|
|
89,728,037
|
|
|
12.2
|
|
|
Greater than 100,000
|
|
4
|
|
|
0.1
|
|
|
908,539
|
|
|
5.5
|
|
|
43,472,173
|
|
|
5.9
|
|
|
Total for all leases
|
|
2,934
|
|
|
100.0
|
%
|
|
16,386,486
|
|
|
100.0
|
%
|
|
$
|
734,093,839
|
|
|
100.0
|
%
|
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
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Time Warner(2)
|
|
3
|
|
|
3
|
|
|
2020-2024
|
|
468,775
|
|
|
2.5
|
%
|
|
$
|
23,892,512
|
|
|
3.2
|
%
|
UCLA(3)
|
|
26
|
|
|
10
|
|
|
2020-2027
|
|
335,996
|
|
|
1.8
|
|
|
16,964,929
|
|
|
2.3
|
|
|
William Morris Endeavor(4)
|
|
2
|
|
|
1
|
|
|
2022-2027
|
|
213,539
|
|
|
1.2
|
|
|
12,415,744
|
|
|
1.7
|
|
|
Morgan Stanley(5)
|
|
5
|
|
|
5
|
|
|
2022-2027
|
|
145,488
|
|
|
0.8
|
|
|
9,340,152
|
|
|
1.3
|
|
|
Equinox Fitness(6)
|
|
5
|
|
|
5
|
|
|
2024-2033
|
|
181,177
|
|
|
1.0
|
|
|
8,744,891
|
|
|
1.2
|
|
|
Total
|
|
41
|
|
|
24
|
|
|
|
|
1,344,975
|
|
|
7.3
|
%
|
|
$
|
71,358,228
|
|
|
9.7
|
%
|
(1)
|
Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
|
(2)
|
Square footage expires as follows: 2,000 square feet in 2020, 10,000 square feet in 2023, and 456,000 square feet in 2024.
|
(3)
|
Square footage expires as follows: 36,000 square feet in 2020, 72,000 square feet in 2021, 55,000 square feet in 2022, 46,000 square feet in 2023, 10,000 square feet in 2024, 49,000 square feet in 2025, and 67,000 square feet in 2027. Tenant has options to terminate 31,000 square feet in 2020, 16,000 square feet in 2023, and 51,000 square feet in 2025.
|
(4)
|
Square footage expires as follows: 1,000 square feet in 2022 and 213,000 square feet in 2027. Tenant has an option to terminate 2,000 square feet in 2020 and 212,000 square feet in 2022.
|
(5)
|
Square footage expires as follows: 16,000 square feet in 2022, 30,000 square feet in 2023, 26,000 square feet in 2025, and 74,000 square feet in 2027. Tenant has options to terminate 30,000 square feet in 2021, 26,000 square feet in 2022, and 32,000 square feet in 2024.
|
(6)
|
Square footage expires as follows: 34,000 square feet in 2024, 31,000 square feet in 2027, 44,000 square feet in 2028, 42,000 square feet in 2030, and 30,000 square feet in 2033.
|
Industry
|
|
Number of Leases
|
|
Annualized Rent as a Percent of Total
|
|
|
|
|
|
|
|
Legal
|
|
578
|
|
18.0
|
%
|
Financial Services
|
|
392
|
|
15.0
|
|
Entertainment
|
|
235
|
|
13.7
|
|
Real Estate
|
|
297
|
|
11.5
|
|
Accounting & Consulting
|
|
346
|
|
10.0
|
|
Health Services
|
|
371
|
|
7.4
|
|
Retail
|
|
183
|
|
5.8
|
|
Technology
|
|
123
|
|
4.9
|
|
Insurance
|
|
102
|
|
3.9
|
|
Educational Services
|
|
58
|
|
3.6
|
|
Public Administration
|
|
91
|
|
2.4
|
|
Advertising
|
|
58
|
|
1.4
|
|
Manufacturing & Distribution
|
|
55
|
|
1.2
|
|
Other
|
|
45
|
|
1.2
|
|
Total
|
|
2,934
|
|
100.0
|
%
|
Year of Lease Expiration
|
Number of
Leases |
|
Rentable
Square Feet |
|
Expiring
Square Feet as a Percent of Total |
|
Annualized Rent at December 31, 2019
|
|
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
|
90
|
|
|
388,857
|
|
|
2.1
|
%
|
|
$
|
15,542,730
|
|
|
2.1
|
%
|
|
$
|
39.97
|
|
|
$
|
40.07
|
|
2020
|
603
|
|
|
2,280,149
|
|
|
12.4
|
|
|
94,274,941
|
|
|
12.8
|
|
|
41.35
|
|
|
41.93
|
|
|||
2021
|
608
|
|
|
2,671,166
|
|
|
14.5
|
|
|
114,622,103
|
|
|
15.6
|
|
|
42.91
|
|
|
44.77
|
|
|||
2022
|
520
|
|
|
2,368,191
|
|
|
12.9
|
|
|
101,568,616
|
|
|
13.8
|
|
|
42.89
|
|
|
46.67
|
|
|||
2023
|
379
|
|
|
2,350,706
|
|
|
12.8
|
|
|
109,054,580
|
|
|
14.9
|
|
|
46.39
|
|
|
51.74
|
|
|||
2024
|
291
|
|
|
2,213,656
|
|
|
12.1
|
|
|
102,218,624
|
|
|
13.9
|
|
|
46.18
|
|
|
53.30
|
|
|||
2025
|
193
|
|
|
1,389,093
|
|
|
7.6
|
|
|
63,364,148
|
|
|
8.6
|
|
|
45.62
|
|
|
55.62
|
|
|||
2026
|
88
|
|
|
770,888
|
|
|
4.2
|
|
|
37,218,326
|
|
|
5.1
|
|
|
48.28
|
|
|
60.98
|
|
|||
2027
|
75
|
|
|
1,074,520
|
|
|
5.9
|
|
|
51,969,743
|
|
|
7.1
|
|
|
48.37
|
|
|
61.86
|
|
|||
2028
|
39
|
|
|
363,667
|
|
|
2.0
|
|
|
20,345,515
|
|
|
2.8
|
|
|
55.95
|
|
|
72.38
|
|
|||
2029
|
26
|
|
|
164,083
|
|
|
0.9
|
|
|
7,169,890
|
|
|
1.0
|
|
|
43.70
|
|
|
57.83
|
|
|||
Thereafter
|
22
|
|
|
351,510
|
|
|
1.9
|
|
|
16,744,623
|
|
|
2.3
|
|
|
47.64
|
|
|
74.12
|
|
|||
Subtotal/weighted average
|
2,934
|
|
|
16,386,486
|
|
|
89.3
|
|
|
734,093,839
|
|
|
100.0
|
|
|
44.80
|
|
|
50.87
|
|
|||
Signed leases not commenced
|
|
360,085
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|||||||||
Available
|
|
|
1,223,319
|
|
|
6.7
|
|
|
|
|
|
|
|
|
|
||||||||
Building management use
|
|
121,450
|
|
|
0.7
|
|
|
|
|
|
|
|
|
|
|||||||||
BOMA adjustment (3)
|
|
|
254,604
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
||||||||
Total/Weighted Average
|
2,934
|
|
|
18,345,944
|
|
|
100.0
|
%
|
|
$
|
734,093,839
|
|
|
100.0
|
%
|
|
$
|
44.80
|
|
|
$
|
50.87
|
|
(1)
|
Represents annualized rent at December 31, 2019 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.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Renewals
|
|
|
|
|
|
||||||
Number of leases
|
450
|
|
|
467
|
|
|
482
|
|
|||
Square feet
|
2,068,345
|
|
|
2,420,185
|
|
|
2,213,716
|
|
|||
Tenant improvement costs per square foot (1)
|
$
|
12.47
|
|
|
$
|
9.22
|
|
|
$
|
11.47
|
|
Leasing commission costs per square foot (1)
|
7.61
|
|
|
10.15
|
|
|
7.77
|
|
|||
Total costs per square foot (1)
|
$
|
20.08
|
|
|
$
|
19.37
|
|
|
$
|
19.24
|
|
|
|
|
|
|
|
||||||
New leases
|
|
|
|
|
|
|
|
|
|||
Number of leases
|
354
|
|
|
332
|
|
|
337
|
|
|||
Square feet
|
1,362,489
|
|
|
1,195,118
|
|
|
1,189,808
|
|
|||
Tenant improvement costs per square foot (1)
|
$
|
26.41
|
|
|
$
|
24.63
|
|
|
$
|
28.22
|
|
Leasing commission costs per square foot (1)
|
10.73
|
|
|
9.30
|
|
|
12.26
|
|
|||
Total costs per square foot (1)
|
$
|
37.14
|
|
|
$
|
33.93
|
|
|
$
|
40.48
|
|
|
|
|
|
|
|
||||||
Total
|
|
|
|
|
|
|
|
|
|||
Number of leases
|
804
|
|
|
799
|
|
|
819
|
|
|||
Square feet
|
3,430,834
|
|
|
3,615,303
|
|
|
3,403,524
|
|
|||
Tenant improvement costs per square foot (1)
|
$
|
17.93
|
|
|
$
|
14.31
|
|
|
$
|
17.32
|
|
Leasing commission costs per square foot (1)
|
8.84
|
|
|
9.87
|
|
|
9.34
|
|
|||
Total costs per square foot (1)
|
$
|
26.77
|
|
|
$
|
24.18
|
|
|
$
|
26.66
|
|
(1)
|
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.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Recurring capital expenditures(1)
|
$
|
4,043,540
|
|
|
$
|
3,684,483
|
|
|
$
|
3,537,175
|
|
Total square feet(1)
|
14,785,961
|
|
|
13,784,509
|
|
|
13,700,370
|
|
|||
Recurring capital expenditures per square foot(1)
|
$
|
0.27
|
|
|
$
|
0.27
|
|
|
$
|
0.26
|
|
(1)
|
For 2019, we excluded eleven properties with an aggregate 3.2 million square feet. For 2018 and 2017, we excluded ten properties with an aggregate 2.8 million square feet.
|
Submarket
|
|
Number of Properties
|
|
Number of Units
|
|
Units as a Percent of Total
|
|||||
|
|
|
|
|
|
|
|||||
Los Angeles
|
|
|
|
|
|
|
|||||
Santa Monica
|
|
2
|
|
820
|
|
|
20
|
%
|
|||
West Los Angeles
|
|
6
|
|
1,300
|
|
|
31
|
|
|||
Honolulu(1)
|
|
3
|
|
2,041
|
|
|
49
|
|
|||
Total
|
|
11
|
|
4,161
|
|
|
100
|
%
|
|||
|
|
|
|
|
|
|
|||||
Submarket
|
|
Percent Leased
|
|
Annualized Rent(2)
|
|
Monthly Rent Per Leased Unit
|
|||||
|
|
|
|
|
|
|
|||||
Los Angeles
|
|
|
|
|
|
|
|||||
Santa Monica
|
|
99.1
|
%
|
|
$
|
29,961,408
|
|
|
$
|
3,075
|
|
West Los Angeles
|
|
98.1
|
|
|
48,843,348
|
|
|
3,197
|
|
||
Honolulu(1)
|
|
97.8
|
|
|
44,281,644
|
|
|
1,852
|
|
||
Total / Weighted Average
|
|
98.1
|
%
|
|
$
|
123,086,400
|
|
|
$
|
2,516
|
|
(1)
|
Includes newly developed units just made available for rent.
|
(2)
|
The multifamily portfolio also includes 10,495 square feet of ancillary retail space generating annualized rent of $408,077, which is not included in multifamily annualized rent.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Recurring capital expenditures(1)(2)
|
$
|
3,191,162
|
|
|
$
|
2,564,003
|
|
|
$
|
1,693,466
|
|
Total units(1)(2)
|
3,324
|
|
|
3,324
|
|
|
3,380
|
|
|||
Recurring capital expenditures per unit(1)
|
$
|
960
|
|
|
$
|
772
|
|
|
$
|
507
|
|
(1)
|
Recurring capital expenditures are 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 2019, when a tenant vacated one of these units, we incurred on average $55 thousand per unit to bring the unit up to our standards. We classify these capital expenditures as non-recurring.
|
(2)
|
For 2019, we excluded two properties, one that we acquired in 2019 and another with newly developed units, with an aggregate 837 apartments.
|
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
2019
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend declared
|
|
$
|
0.26
|
|
|
$
|
0.26
|
|
|
$
|
0.26
|
|
|
$
|
0.28
|
|
|
|
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend declared
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
|
$
|
0.26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
Period Ending
|
|
||||||||||||||||
|
Index
|
|
12/31/14
|
|
12/31/15
|
|
12/31/16
|
|
12/31/17
|
|
12/31/18
|
|
12/31/19
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
DEI
|
|
100.00
|
|
|
113.05
|
|
|
136.10
|
|
|
156.57
|
|
|
133.80
|
|
|
176.56
|
|
|
|
S&P 500
|
|
100.00
|
|
|
101.38
|
|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
|
|
|
|
NAREIT Equity(1)
|
|
100.00
|
|
|
103.20
|
|
|
111.99
|
|
|
117.84
|
|
|
112.39
|
|
|
141.61
|
|
|
|
Peer group(2)
|
|
100.00
|
|
|
97.97
|
|
|
103.38
|
|
|
103.81
|
|
|
88.76
|
|
|
110.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
FTSE NAREIT Equity REITs index.
|
(2)
|
Consists of Boston Properties, Inc. (BXP), Kilroy Realty Corporation (KRC), SL Green Realty Corp. (SLG), Vornado Trust (VNO) and Hudson Pacific Properties, Inc (HPP).
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated Statements of Operations Data
(In thousands):
|
|
|
|
|
|
|
|
|
|
||||||||||
Total office revenues
|
$
|
816,755
|
|
|
$
|
777,931
|
|
|
$
|
715,546
|
|
|
$
|
645,633
|
|
|
$
|
540,975
|
|
Total multifamily revenues
|
$
|
119,927
|
|
|
$
|
103,385
|
|
|
$
|
96,506
|
|
|
$
|
96,918
|
|
|
$
|
94,799
|
|
Total revenues
|
$
|
936,682
|
|
|
$
|
881,316
|
|
|
$
|
812,052
|
|
|
$
|
742,551
|
|
|
$
|
635,774
|
|
Operating income
|
$
|
242,708
|
|
|
$
|
251,944
|
|
|
$
|
241,023
|
|
|
$
|
220,817
|
|
|
$
|
189,527
|
|
Net income attributable to common stockholders
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
$
|
94,443
|
|
|
$
|
85,397
|
|
|
$
|
58,384
|
|
Per Share Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Net income attributable to common stockholders per share - basic
|
$
|
2.09
|
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
|
$
|
0.57
|
|
|
$
|
0.40
|
|
Net income attributable to common stockholders per share - diluted
|
$
|
2.09
|
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
|
$
|
0.55
|
|
|
$
|
0.39
|
|
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Basic
|
173,358
|
|
|
169,893
|
|
|
160,905
|
|
|
149,299
|
|
|
146,089
|
|
|||||
Diluted
|
173,358
|
|
|
169,902
|
|
|
161,230
|
|
|
153,190
|
|
|
150,604
|
|
|||||
Dividends declared per common share
|
$
|
1.06
|
|
|
$
|
1.01
|
|
|
$
|
0.94
|
|
|
$
|
0.89
|
|
|
$
|
0.85
|
|
|
|||||||||||||||||||
|
|||||||||||||||||||
|
As of December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
Consolidated Balance Sheet Data (In thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total assets
|
$
|
9,349,301
|
|
|
$
|
8,261,709
|
|
|
$
|
8,292,641
|
|
|
$
|
7,613,705
|
|
|
$
|
6,066,161
|
|
Secured notes payable and revolving credit facility, net
|
$
|
4,619,058
|
|
|
$
|
4,134,030
|
|
|
$
|
4,117,390
|
|
|
$
|
4,369,537
|
|
|
$
|
3,611,276
|
|
Property Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Number of consolidated properties(1)
|
81
|
|
|
73
|
|
|
73
|
|
|
69
|
|
|
64
|
|
(1)
|
Excludes properties owned by our unconsolidated Fund(s).
|
|
|
|
|
|
|
|
|
Consolidated Portfolio(1)
|
|
Total Portfolio(2)
|
|
|
Office
|
|
|
|
|
|
Class A Properties
|
70
|
|
72
|
|
|
Rentable Square Feet (in thousands)
|
17,960
|
|
18,346
|
|
|
Leased rate
|
93.3%
|
|
93.3%
|
|
|
Occupied rate
|
91.5%
|
|
91.4%
|
|
|
|
|
|
|
|
|
Multifamily
|
|
|
|
|
|
Properties
|
11
|
|
11
|
|
|
Units
|
4,161
|
|
4,161
|
|
|
Leased rate
|
98.1%
|
|
98.1%
|
|
|
Occupied rate
|
95.2%
|
|
95.2%
|
|
|
|
|
|
|
|
(1)
|
Our Consolidated Portfolio includes the properties in our consolidated results. Through our subsidiaries, we own 100% of these properties, except for seventeen office properties totaling 4.3 million square feet and one residential property with 350 apartments, which we own through four consolidated JVs. Our Consolidated Portfolio also includes two land parcels from which we receive ground rent from ground leases to the owners of a Class A office building and a hotel.
|
(2)
|
Our Total Portfolio includes our Consolidated Portfolio as well as two properties totaling 0.4 million square feet owned by our unconsolidated Fund. See Note 6 to our consolidated financial statements in Item 15 of this Report for more information about our unconsolidated Fund.
|
•
|
During the first quarter of 2019:
|
◦
|
In March 2019, we renewed our $400.0 million revolving credit facility, releasing two previously encumbered properties, lowering the borrowing rate and unused facility fees, and extending the maturity date. The renewed facility bears interest at LIBOR + 1.15% and matures on August 21, 2023.
|
•
|
During the second quarter of 2019:
|
◦
|
We closed a secured, non-recourse $255.0 million interest-only loan scheduled to mature in June 2029. The loan bears interest at LIBOR + 0.98%, which we have effectively fixed through an interest rate swap at 3.26% until June 2027. We used the proceeds to pay off a $145.0 million loan that was scheduled to mature in October 2019.
|
◦
|
We closed a secured, non-recourse $125.0 million interest-only loan scheduled to mature in June 2029. The loan bears interest at LIBOR + 0.98%, which we have effectively fixed through interest rate swaps at 2.55% until December 2020, which then increases to 3.25% until June 2027. We used the proceeds to pay off a $115.0 million loan that was scheduled to mature in December 2025.
|
◦
|
We closed a secured, non-recourse $160.0 million interest-only loan scheduled to mature in June 2029. The loan bears interest at LIBOR + 0.98%, which we have effectively fixed through an interest rate swap at 3.25% until July 2027. We used the proceeds to partially fund the acquisition of The Glendon property. This loan has been assumed by the consolidated JV to which we contributed The Glendon property.
|
◦
|
We entered into a forward interest rate swap to extend the fixed-rate period for a term loan with a principal balance of $102.4 million, scheduled to mature in April 2025, for three years. We also entered into forward interest rate swaps with an initial notional amount of $75.0 million, effective as of September 2019 and scheduled to mature in August 2025, fixing one-month LIBOR at 1.97%, to hedge the $415.0 million term-loan we closed in the third quarter - see third quarter financing transactions below.
|
◦
|
We issued 4.9 million shares of our common stock under our ATM program for net proceeds of $201.0 million. We used a portion of the funds to partially fund the acquisition of The Glendon property, and a portion of the funds to pay off a $220.0 million loan in the third quarter - see third quarter financing transactions below.
|
◦
|
Other investors in the consolidated JV to which we contributed The Glendon property contributed $176.0 million to the JV to fund the acquisition of the property, and we contributed $44.0 million to the JV.
|
•
|
During the third quarter of 2019:
|
◦
|
We paid off a $220.0 million loan scheduled to mature in December 2023 and terminated the related interest rate swaps.
|
◦
|
We closed a secured, non-recourse $415.0 million interest-only loan scheduled to mature in August 2026. The loan bears interest at LIBOR + 1.10%, which we have effectively fixed through interest rate swaps at 2.58% until
|
◦
|
We closed a secured, non-recourse $400.0 million interest-only loan scheduled to mature in September 2026. The loan bears interest at LIBOR + 1.15%, which we have effectively fixed through interest rate swaps at 2.44% until September 2024. The proceeds were used to pay-off a $400.0 million loan scheduled to mature in November 2022.
|
◦
|
We closed a secured, non-recourse $200.0 million interest-only loan scheduled to mature in September 2026. The loan bears interest at LIBOR + 1.20%, which we have effectively fixed through interest rate swaps at 2.77% until July 2020, which then decreases to 2.36% until October 2024. Part of the proceeds were used to pay off a $180.0 million loan scheduled to mature in July 2022.
|
•
|
During the fourth quarter of 2019
|
◦
|
We closed a secured, non-recourse $400.0 million interest-only loan scheduled to mature in November 2026. The loan bears interest at LIBOR + 1.15%, which we have effectively fixed through interest rate swaps at 2.18% until July 2021, which increases to 2.31% until October 2024. Part of the proceeds were used to pay off a $360.0 million loan scheduled to mature in June 2023.
|
•
|
In West Los Angeles, we are building a 34 story high-rise apartment building with 376 apartments. The tower is being built on a site that is directly adjacent to an existing office building and a 712 unit residential property, both of which we own. We expect the cost of the development to be approximately $180 million to $200 million, which does not include the cost of the land which we have owned since 1997. As part of the project, we are investing additional capital to build a one-acre park on Wilshire Boulevard that will be available to the public and provide a valuable amenity to our surrounding properties and community. We expect construction to take about three years.
|
•
|
At our Moanalua Hillside Apartments in Honolulu, we completed the construction of an additional 491 new apartments on 28 acres which now join our existing 680 apartments. We also invested additional capital to upgrade the existing buildings, improve the parking and landscaping, build a new leasing and management office, and construct a new fitness center and two pools.
|
•
|
In downtown Honolulu, we are converting a 25 story, 490 thousand square foot office tower into approximately 500 apartments. We expect the conversion to occur in phases over a number of years as the office space is vacated. We currently estimate the construction costs to be approximately $80 million to $100.0 million, although the inherent uncertainties of development are compounded by the multi-year and phased nature of the conversion. Assuming timely city approvals, we expect the first units to be delivered in 2020. This project will help address the severe shortage of rental housing in Honolulu, and revitalize the central business district.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average straight-line rental rate(1)(2)
|
|
$49.65
|
|
$48.77
|
|
$44.48
|
|
$43.21
|
|
$42.65
|
|
|
Annualized lease transaction costs(3)
|
|
$6.02
|
|
$5.80
|
|
$5.68
|
|
$5.74
|
|
$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 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.
|
(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 and leases for tenants relocated from space being taken out of service.
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2019
|
|
||||
|
|
|
|
|
|
|
|
|
Rent Roll(1)(2)
|
Expiring
Rate(2)
|
|
New/Renewal Rate(2)
|
|
Percentage Change
|
|
|
|
|
|
|
|
|
|
|
Cash Rent
|
$42.91
|
|
$47.25
|
|
10.1%
|
|
|
Straight-line Rent
|
$38.92
|
|
$49.65
|
|
27.6%
|
|
|
|
|
|
|
|
|
|
(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 Short Term Leases, leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated from space being taken out of service, and leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe base rent reflects other off-market inducements to the tenant that are not reflected in the prior lease document.
|
(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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Year Ended December 31,
|
|
||||||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Average annual rental rate - new tenants(1)
|
|
$
|
28,350
|
|
|
$
|
27,542
|
|
|
$
|
28,501
|
|
|
$
|
28,435
|
|
|
$
|
27,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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) the average for 2018 decreased from 2017 because we added a significant number of units at our Moanalua Hillside Apartments development in Honolulu, where the rental rates are lower than the average in our portfolio, and (ii) the average for 2019 increased from 2018 because we acquired The Glendon where higher rental rates offset the effect of adding additional units at our Moanalua Hillside Apartments development.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
December 31,
|
|
|||||||||||||
|
Occupancy Rates(1) as of:
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Office portfolio
|
|
91.4
|
%
|
|
90.3
|
%
|
|
89.8
|
%
|
|
90.4
|
%
|
|
91.2
|
%
|
|
|
Multifamily portfolio(2)
|
|
95.2
|
%
|
|
97.0
|
%
|
|
96.4
|
%
|
|
97.9
|
%
|
|
98.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
Year Ended December 31,
|
|
|||||||||||||
|
Average Occupancy Rates(1)(3):
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Office portfolio
|
|
90.7
|
%
|
|
89.4
|
%
|
|
89.5
|
%
|
|
90.6
|
%
|
|
90.9
|
%
|
|
|
Multifamily portfolio(2)
|
|
96.5
|
%
|
|
96.6
|
%
|
|
97.2
|
%
|
|
97.6
|
%
|
|
98.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Occupancy rates include the impact of property acquisitions, most of whose occupancy rates at the time of acquisition were below that of our existing portfolio.
|
(2)
|
The Occupancy Rate for our multifamily portfolio was impacted by an acquisition in 2019 and by new units at our Moanalua Hillside Apartments development in Honolulu in 2019 and 2018 - see "Acquisitions, Financings, Developments and Repositionings" above.
|
(3)
|
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.
|
|
|
|
|
|
|
|
||||
|
|
|
Year Ended December 31,
|
|
||||||
|
(In thousands)
|
|
2019
|
|
2018
|
|
||||
|
|
|
|
|
|
|
||||
|
Net income attributable to common stockholders
|
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
|
Depreciation and amortization of real estate assets
|
|
357,743
|
|
|
309,864
|
|
|
||
|
Net income attributable to noncontrolling interests
|
|
54,985
|
|
|
12,526
|
|
|
||
|
Adjustments attributable to unconsolidated Funds (1)
|
|
15,815
|
|
|
16,702
|
|
|
||
|
Adjustments attributable to consolidated JVs (2)
|
|
(59,505
|
)
|
|
(55,448
|
)
|
|
||
|
Gain from consolidation of JV
|
|
(307,938
|
)
|
|
—
|
|
|
||
|
FFO
|
|
$
|
424,813
|
|
|
$
|
399,730
|
|
|
|
|
|
|
|
|
|
(1)
|
Adjusts for our share of our unconsolidated Funds depreciation and amortization of real estate assets.
|
(2)
|
Adjusts for the net income and depreciation and amortization of real estate assets that is attributable to the noncontrolling interests in our consolidated JVs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
Year Ended December 31,
|
|
Favorable
|
|
|
|
|
|
|||||||||
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
%
|
|
Commentary
|
|
|||||||
|
|
(In thousands)
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Office revenues
|
$
|
760,616
|
|
|
$
|
726,096
|
|
|
$
|
34,520
|
|
|
4.8
|
%
|
|
The increase was primarily due to (i) an increase in rental revenues due to an increase in rental and occupancy rates, (ii) an increase in tenant recoveries due to an increase in recoverable operating costs and (iii) an increase in parking and other income.
|
|
|
Office expenses
|
(241,130
|
)
|
|
(232,377
|
)
|
|
(8,753
|
)
|
|
(3.8
|
)%
|
|
The increase was primarily due to an increase in property taxes, insurance, utility expenses, personnel expenses and repairs and maintenance expenses.
|
|
|||
|
Office NOI
|
519,486
|
|
|
493,719
|
|
|
25,767
|
|
|
5.2
|
%
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Multifamily revenues
|
85,716
|
|
|
84,601
|
|
|
1,115
|
|
|
1.3
|
%
|
|
The increase was primarily due to (i) an increase in rental revenues due to an increase in rental rates and (ii) parking and other income.
|
|
|||
|
Multifamily expenses
|
(21,997
|
)
|
|
(21,522
|
)
|
|
(475
|
)
|
|
(2.2
|
)%
|
|
The increase was primarily due to an increase in personnel expenses, repairs and maintenance expenses and utility expenses.
|
|
|||
|
Multifamily NOI
|
63,719
|
|
|
63,079
|
|
|
640
|
|
|
1.0
|
%
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Total NOI
|
$
|
583,205
|
|
|
$
|
556,798
|
|
|
$
|
26,407
|
|
|
4.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Year Ended December 31,
|
|
||||||
|
(In thousands)
|
2019
|
|
2018
|
|
||||
|
|
|
|
|
|
||||
|
Same Property NOI
|
$
|
583,205
|
|
|
$
|
556,798
|
|
|
|
Non-comparable office revenues
|
56,139
|
|
|
51,835
|
|
|
||
|
Non-comparable office expenses
|
(23,352
|
)
|
|
(20,374
|
)
|
|
||
|
Non-comparable multifamily revenues
|
34,211
|
|
|
18,784
|
|
|
||
|
Non-comparable multifamily expenses
|
(11,684
|
)
|
|
(6,594
|
)
|
|
||
|
NOI
|
638,519
|
|
|
600,449
|
|
|
||
|
General and administrative expenses
|
(38,068
|
)
|
|
(38,641
|
)
|
|
||
|
Depreciation and amortization
|
(357,743
|
)
|
|
(309,864
|
)
|
|
||
|
Operating income
|
242,708
|
|
|
251,944
|
|
|
||
|
Other income
|
11,653
|
|
|
11,414
|
|
|
||
|
Other expenses
|
(7,216
|
)
|
|
(7,744
|
)
|
|
||
|
Income from unconsolidated Funds
|
6,923
|
|
|
6,400
|
|
|
||
|
Interest expense
|
(143,308
|
)
|
|
(133,402
|
)
|
|
||
|
Gain from consolidation of JV
|
307,938
|
|
|
—
|
|
|
||
|
Net income
|
418,698
|
|
|
128,612
|
|
|
||
|
Less: Net income attributable to noncontrolling interests
|
(54,985
|
)
|
|
(12,526
|
)
|
|
||
|
Net income attributable to common stockholders
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
Payment due by period
|
|
||||||||||||||||||
|
(In thousands)
|
|
Total
|
|
Less than
1 year
|
|
2-3
years
|
|
4-5
years
|
|
Thereafter
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Term loan principal payments(1)
|
|
$
|
4,653,264
|
|
|
$
|
752
|
|
|
$
|
301,610
|
|
|
$
|
1,716,764
|
|
|
$
|
2,634,138
|
|
|
|
Term loan interest payments(2)
|
|
828,601
|
|
|
140,779
|
|
|
281,923
|
|
|
205,247
|
|
|
200,652
|
|
|
|||||
|
Ground lease payments(3)
|
|
49,110
|
|
|
733
|
|
|
1,466
|
|
|
1,466
|
|
|
45,445
|
|
|
|||||
|
Development commitments(4)
|
|
233,374
|
|
|
122,623
|
|
|
110,750
|
|
|
—
|
|
|
—
|
|
|
|||||
|
Capital expenditures and tenant improvements commitments(5)
|
|
24,600
|
|
|
24,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|||||
|
Total
|
|
$
|
5,788,949
|
|
|
$
|
289,487
|
|
|
$
|
695,749
|
|
|
$
|
1,923,477
|
|
|
$
|
2,880,235
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Reflects the future principal payments due on our consolidated secured notes payable and revolving credit facility, excluding any maturity extension options. See Note 8 to our consolidated financial statements in Item 15 of this Report.
|
(2)
|
Reflects the future interest payments due on our consolidated secured notes payable and revolving credit facility, excluding any maturity extension options. The interest payments include the effect of interest rate swaps when relevant, and are based on the USD one-month LIBOR rate as of December 31, 2019 when floating. Future interest payments on our revolving credit facility are based on the balance as of December 31, 2019. See Note 8 to our consolidated financial statements in Item 15 of this Report.
|
(3)
|
Reflects the future minimum ground lease payments. See Note 4 to our consolidated financial statements in Item 15 of this Report.
|
(4)
|
See "Acquisitions, Financings, Developments and Repositionings" for a discussion of our developments.
|
(5)
|
Reflects the aggregate remaining contractual commitment for capital expenditure projects and repositionings, as well as tenant improvements. See "Acquisitions, Financings, Developments and Repositionings" for a discussion of our repositionings.
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
2019
|
|
2018
|
|
Increase (Decrease)
|
|
%
|
|
|||||||
|
|
|
(In thousands)
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Net cash provided by operating activities(1)
|
|
$
|
469,586
|
|
|
$
|
432,982
|
|
|
$
|
36,604
|
|
|
8.5
|
%
|
|
|
Net cash used in investing activities(2)
|
|
$
|
(649,668
|
)
|
|
$
|
(249,551
|
)
|
|
$
|
400,117
|
|
|
160.3
|
%
|
|
|
Cash provided by (used in) financing activities(3)
|
|
$
|
187,538
|
|
|
$
|
(213,849
|
)
|
|
$
|
401,387
|
|
|
187.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Our cash flows provided by operating activities are primarily dependent upon the occupancy and rental rates of our portfolio, the collectability of rent and recoveries from our tenants, and the level of our operating expenses and general and administrative expenses, and interest expense. The increase was primarily due to: (i) an increase in operating income from our office portfolio due to an increase in occupancy and rental rates, and operating income from retail space at The Glendon residential community we acquired in June 2019, and (ii) an increase in operating income from our residential portfolio due to operating income from apartments at The Glendon residential community and leasing of new units at our Moanalua Hillside Apartments development.
|
(2)
|
Our cash flows used in investing activities are generally used to fund property acquisitions, developments and redevelopment projects, and Recurring and non-Recurring Capital Expenditures. The increase is primarily due to $365.9 million paid for The Glendon residential community in 2019 and an increase of $81.4 million paid for additional interests in unconsolidated Funds in 2019, partially offset by $39.2 million of cash assumed from the consolidation of a JV.
|
(3)
|
Our cash flows provided by 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 is primarily due to (i) $201.0 million of net proceeds from the issuance of common stock, (ii) $163.6 million of contributions from noncontrolling interests in consolidated JVs, and (iii) an increase of $77.6 million in net borrowings, partially offset by (a) an increase in loan cost payments of $18.4 million, (b) an increase in distributions to noncontrolling interests of $12.4 million, and (c) an increase in dividends paid to common stockholders of $9.8 million.
|
•
|
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.
|
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)
|
1,723
|
(2)
|
$—
|
(3)
|
105
|
(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, 2019.
|
(2)
|
Consists of 0.8 million vested and 0.9 million unvested LTIP Units.
|
(3)
|
We have no outstanding options. There are no exercise prices for LTIP Units.
|
Index
|
||
|
|
|
|
Page
|
|
|
||
|
|
|
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.
|
|
Number
|
Description
|
Footnote
|
|
|
|
1.1
|
(1)
|
|
1.2
|
(2)
|
|
3.1
|
(3)
|
|
3.2
|
(4)
|
|
3.3
|
(5)
|
|
3.4
|
(6)
|
|
4.1
|
(7)
|
|
4.2
|
|
|
10.1
|
(7)
|
|
10.2
|
(8)
|
|
10.3
|
(9)
|
|
10.4
|
(10)
|
|
10.5
|
(11)
|
|
10.6
|
(11)
|
|
10.7
|
(12)
|
|
10.8
|
(12)
|
|
10.9
|
(12)
|
|
21.1
|
|
|
23.1
|
|
|
31.1
|
|
|
31.2
|
|
|
32.1
|
(13)
|
|
32.2
|
(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
|
|
|
101.DEF
|
|
|
101.LAB
|
|
|
101.PRE
|
|
|
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 Form 8-K on August 7, 2017 and incorporated herein by this reference. (File number 001-33106)
|
|
(2)
|
Filed with Form 8-K on November 22, 2017 and incorporated herein by this reference. (File number 001-33106)
|
|
(3)
|
Filed with Amendment No. 6 to Form S-11 on October 19, 2006 and incorporated herein by this reference. (File number 333-135082)
|
|
(4)
|
Filed with Form 8-K on September 6, 2013 and incorporated herein by this reference. (File number 001-33106)
|
|
(5)
|
Filed with Form 8-K on October 30, 2006 and incorporated herein by this reference. (File number 001-33106)
|
|
(6)
|
Filed with Form 8-K on April 9, 2018 and incorporated herein by this reference. (File number 001-33106)
|
|
(7)
|
Filed with Amendment No. 3 to Form S-11 on October 3, 2006 and incorporated herein by this reference. (File number 333-135082)
|
|
(8)
|
Filed with Form S-11 on June 16, 2006 and incorporated herein by this reference. (File number 333-135082)
|
|
(9)
|
Filed with Amendment No. 2 to Form S-11 on September 20, 2006 and incorporated herein by this reference. (File number 333-135082)
|
|
(10)
|
Filed with Form 8-K on June 3, 2016 and incorporated herein by this reference. (File number 001-33106)
|
|
(11)
|
Filed with Form 8-K on December 12, 2016 and incorporated herein by this reference. (File number 001-33106)
|
|
(12)
|
Filed with Form 8-K on December 21, 2018 and incorporated herein by this reference. (File number 001-33106)
|
|
(13)
|
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.
|
|
|
DOUGLAS EMMETT, INC.
|
|
|
|
|
Dated:
|
By:
|
/s/ JORDAN L. KAPLAN
|
February 14, 2020
|
|
Jordan L. Kaplan
|
|
|
President and CEO
|
Signature
|
|
Title
|
|
|
|
/s/ JORDAN L. KAPLAN
|
|
|
Jordan L. Kaplan
|
|
President, CEO and Director
(Principal Executive Officer)
|
|
|
|
/s/ PETER D. SEYMOUR
|
|
|
Peter D. Seymour
|
|
CFO
(Principal Financial and Accounting Officer)
|
|
|
|
/s/ DAN A. EMMETT
|
|
|
Dan A. Emmett
|
|
Chairman of the Board
|
|
|
|
/s/ KENNETH M. PANZER
|
|
|
Kenneth M. Panzer
|
|
COO and Director
|
|
|
|
/s/ CHRISTOPHER H. ANDERSON
|
|
|
Christopher H. Anderson
|
|
Director
|
|
|
|
/s/ LESLIE E. BIDER
|
|
|
Leslie E. Bider
|
|
Director
|
|
|
|
/s/ DR. DAVID T. FEINBERG
|
|
|
Dr. David T. Feinberg
|
|
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/ JOHNESE SPISSO
|
|
|
Johnese Spisso
|
|
Director
|
/s/ JORDAN L. KAPLAN
|
Jordan L. Kaplan
|
President and CEO
|
|
/s/ PETER D. SEYMOUR
|
Peter D. Seymour
|
CFO
|
|
|
Consolidation of Douglas Emmett Fund X, LLC
|
Description of the Matter
|
|
As explained in Note 3 to the consolidated financial statements, the Company and the remaining non-controlling interest holder purchased additional interests in Douglas Emmett Fund X, LLC ("Fund X"). Upon completing the transaction including amending the operating agreement, Fund X was determined to be a variable interest entity (“VIE”) and the Company was determined to be its primary beneficiary. Accordingly, the Company began consolidating the VIE and recorded a $307.9 million gain on revaluing Fund X's assets and liabilities upon consolidation.
Auditing management’s application of the variable interest entity consolidation model to this transaction, and the resulting gain upon consolidation, was complex and required significant judgment. In particular, significant judgment was required in determining the fair value of each of Fund X’s six properties which utilized a combination of market and income valuation approaches. The significant assumptions for the market approach included assumptions of transactions of comparable size and location. The significant assumptions for the income approach related to the assumptions underlying the cash flow projections and included market rental rates, market growth rates and market discount rates. Changes in these assumptions may have materially affected the Company’s determination of the fair value of Fund X’s net assets which, in turn, would have impacted the gain on consolidation.
|
|
|
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over management’s accounting for the consolidation of Fund X, including controls over management’s review of the significant assumptions mentioned above that were used to estimate fair value. This included management’s consideration of corroborative and contrary evidence from current industry and economic trends, prevailing market conditions, internally available information and other relevant factors.
To evaluate the Company’s consolidation analysis of the transaction, we performed audit procedures that included, among others, reviewing the amended and restated Fund X operating agreement and testing the fair value of Fund X’s assets and liabilities. Our audit procedures in testing the fair value of Fund X’s assets and liabilities included, among others, (i) evaluating the methods and significant assumptions used in the valuation of Fund X’s assets, (ii) assessing the reasonableness of the resulting fair values utilizing comparable market transactions, (iii) testing the completeness and accuracy of the valuation model and underlying data supporting the significant assumptions and estimates, and (iv) comparing the fair value of Fund X’s resulting net assets to the price paid by the Company and the unrelated non-managing member to acquire the other Fund X non-managing member interests. We also involved a valuation specialist to assist in the assessment of the methodology utilized by the Company, and to test the significant assumptions mentioned above in the cash flow projections.
|
|
|
|
|
|
|
|
|
Purchase price accounting
|
Description of the Matter
|
|
During the year ended December 31, 2019, the Company acquired The Glendon, a residential property in Westwood consisting of apartments and retail space, for $365.9 million and consolidated a previously owned equity method accounted for investment in Douglas Emmett Fund X, LLC (“Fund X”) on a relative fair value basis. As explained in Note 3 to the consolidated financial statements, the Glendon transaction was accounted for as an asset acquisition, and as such, is recorded at the price to acquire the real estate property, including acquisition costs. In addition, as discussed in Note 3 to the consolidated financial statements, the Company consolidated Fund X’s six office properties and related identifiable assets and liabilities on a relative fair value basis.
For both of these transactions, the purchase price/consideration are allocated to land, building and intangible lease assets and liabilities based upon the relative fair value of the acquired assets and liabilities. The fair value of the acquired assets and liabilities were determined by the Company utilizing the sales comparison approach as it relates to land and the income approach which utilized discounted cash flows as it relates the other acquired assets and liabilities. Both approaches used market information available to the Company as inputs.
Auditing the Company’s accounting for its Glendon acquisition and Fund X consolidation was complex due to the significant estimation required by management in determining the fair value assigned to the acquired land, building and intangible lease assets and liabilities. The significant estimation was primarily due to the judgmental nature of the inputs to the valuation models used to measure the fair value of the assets and liabilities as well as the sensitivity of the respective fair values to the significant underlying assumptions. The Company utilized the sales comparison approach to measure the fair value of the acquired land and the discounted cash flow method to measure the fair value of the remaining acquired assets and liabilities. The more significant assumptions utilized included comparable land sales, revenue growth rates, discount rates, market rental rates and capitalization rates. These significant assumptions are forward-looking and could be affected by future economic and market conditions.
|
|
|
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s accounting for the Glendon property acquisition and Fund X consolidation, including controls over the Company’s review of the assumptions underlying the purchase price allocation, the cash flow projections and the accuracy of the underlying data used. For example, we tested controls over the determination of the fair value of the land, building and intangible lease assets and liabilities, including the controls over the review of the valuation models and the underlying assumptions used to develop such estimates.
For the Company’s Glendon property acquisition and Fund X consolidation, we read the respective transaction agreements, and evaluated whether the Company had appropriately determined whether the transactions were accounted for as business combinations or asset acquisitions. For both transactions, we also evaluated the significant assumptions and methods used in developing the fair value estimates of the tangible assets and intangible lease assets and liabilities. To test the estimated fair value of the land, building and intangible lease assets and liabilities, we performed audit procedures that included, among other procedures, evaluating the Company’s use of the sales comparison and income approaches and testing the significant assumptions used in the discounted cash flow model, and testing the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. For example, we agreed the contractual rents used in the cash flow projections to in-place tenant leases and compared certain property operating expenses, such as real estate property taxes, to historical operating results adjusted for the transaction. We involved our valuation specialists to assist in evaluating the methodologies utilized by the Company as compared to standard valuation practices, performing procedures to corroborate the reasonableness of the significant assumptions utilized in developing the fair value estimates of the acquired land, building, and intangible lease assets and liabilities, and performing corroborative calculations to assess the reasonableness of the acquired building asset. For example, our valuation specialists (i) used independently identified data sources to evaluate the appropriateness of management’s selected comparable land sales, (ii) obtained market specific information (i.e. revenue growth rates, discount rates, market rental rates and capitalization rates) and compared it to the market information utilized by the Company, and (iii) for a sample of properties, performed comparative calculations using the cost approach to validate the amount allocated to the building asset.
|
|
|
|
|
|
|
|
|
Real Estate Investments - Impairment Assessment of 1132 Bishop Street
|
Description of the Matter
|
|
As explained in Note 2 to the consolidated financial statements, the Company finalized plans to convert 1132 Bishop Street, a commercial office property located in Honolulu, Hawaii into a residential property. Due to the change in planned use of the property, the Company assessed whether the property was potentially impaired by comparing 1132 Bishop Street’s expected cash flows on an undiscounted basis to the property’s net book value plus expected development costs.
Auditing the Company's accounting for potential impairment and its tests for recoverability involved a high degree of subjectivity as estimates underlying the determination of the undiscounted cash flows were based on assumptions about future market rental rates, operating expenses and capitalization rates. These assumptions are forward-looking and could be affected by future economic and market conditions, and are dependent, in part, on the completion of the planned redevelopment.
|
|
|
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's processes to determine indicators of impairment and to conduct tests for recoverability if indicators of impairment are present. This included controls over management's review of the significant assumptions underlying the undiscounted cash flows.
Our testing of the Company's impairment assessment included, among other procedures, evaluating the significant assumptions and operating data used to estimate the property’s undiscounted cash flows. For example, we compared the significant assumptions, namely market rental rates, operating expenses and capitalization rates, used to estimate future cash flows to current market rental rates and capitalization rates for similar properties published in multiple third-party market studies. We also performed a sensitivity analysis on the Company’s inputs, namely expected net operating income, capitalization rates and expected construction costs to assess whether changes to certain assumptions would result in a materially different outcome. We also recalculated management's undiscounted cash flows.
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
|
|
||
Investment in real estate:
|
|
|
|
|
|
||
Land
|
$
|
1,152,684
|
|
|
$
|
1,065,099
|
|
Buildings and improvements
|
9,308,481
|
|
|
7,995,203
|
|
||
Tenant improvements and lease intangibles
|
905,753
|
|
|
840,653
|
|
||
Property under development
|
111,715
|
|
|
129,753
|
|
||
Investment in real estate, gross
|
11,478,633
|
|
|
10,030,708
|
|
||
Less: accumulated depreciation and amortization
|
(2,518,415
|
)
|
|
(2,246,887
|
)
|
||
Investment in real estate, net
|
8,960,218
|
|
|
7,783,821
|
|
||
Ground lease right-of-use asset
|
7,479
|
|
|
—
|
|
||
Cash and cash equivalents
|
153,683
|
|
|
146,227
|
|
||
Tenant receivables
|
5,302
|
|
|
4,371
|
|
||
Deferred rent receivables
|
134,968
|
|
|
124,834
|
|
||
Acquired lease intangible assets, net
|
6,407
|
|
|
3,251
|
|
||
Interest rate contract assets
|
22,381
|
|
|
73,414
|
|
||
Investment in unconsolidated Funds
|
42,442
|
|
|
111,032
|
|
||
Other assets
|
16,421
|
|
|
14,759
|
|
||
Total Assets
|
$
|
9,349,301
|
|
|
$
|
8,261,709
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Secured notes payable and revolving credit facility, net
|
$
|
4,619,058
|
|
|
$
|
4,134,030
|
|
Ground lease liability
|
10,882
|
|
|
—
|
|
||
Interest payable, accounts payable and deferred revenue
|
131,410
|
|
|
130,154
|
|
||
Security deposits
|
60,923
|
|
|
50,733
|
|
||
Acquired lease intangible liabilities, net
|
52,367
|
|
|
52,569
|
|
||
Interest rate contract liabilities
|
54,616
|
|
|
1,530
|
|
||
Dividends payable
|
49,111
|
|
|
44,263
|
|
||
Total liabilities
|
4,978,367
|
|
|
4,413,279
|
|
||
|
|
|
|
||||
Equity
|
|
|
|
||||
Douglas Emmett, Inc. stockholders' equity:
|
|
|
|
||||
Common Stock, $0.01 par value, 750,000,000 authorized, 175,369,746 and 170,214,809 outstanding at December 31, 2019 and December 31, 2018, respectively
|
1,754
|
|
|
1,702
|
|
||
Additional paid-in capital
|
3,486,356
|
|
|
3,282,316
|
|
||
Accumulated other comprehensive (loss) income
|
(17,462
|
)
|
|
53,944
|
|
||
Accumulated deficit
|
(758,576
|
)
|
|
(935,630
|
)
|
||
Total Douglas Emmett, Inc. stockholders' equity
|
2,712,072
|
|
|
2,402,332
|
|
||
Noncontrolling interests
|
1,658,862
|
|
|
1,446,098
|
|
||
Total equity
|
4,370,934
|
|
|
3,848,430
|
|
||
Total Liabilities and Equity
|
$
|
9,349,301
|
|
|
$
|
8,261,709
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues
|
|
|
|
|
|
|
|||||
Office rental
|
|
|
|
|
|
|
|||||
Rental revenues and tenant recoveries
|
$
|
694,315
|
|
|
$
|
661,147
|
|
|
$
|
606,852
|
|
Parking and other income
|
122,440
|
|
|
116,784
|
|
|
108,694
|
|
|||
Total office revenues
|
816,755
|
|
|
777,931
|
|
|
715,546
|
|
|||
|
|
|
|
|
|
|
|
||||
Multifamily rental
|
|
|
|
|
|
||||||
Rental revenues
|
110,697
|
|
|
95,423
|
|
|
89,039
|
|
|||
Parking and other income
|
9,230
|
|
|
7,962
|
|
|
7,467
|
|
|||
Total multifamily revenues
|
119,927
|
|
|
103,385
|
|
|
96,506
|
|
|||
|
|
|
|
|
|
||||||
Total revenues
|
936,682
|
|
|
881,316
|
|
|
812,052
|
|
|||
|
|
|
|
|
|
|
|
||||
Operating Expenses
|
|
|
|
|
|
||||||
Office expenses
|
264,482
|
|
|
252,751
|
|
|
233,633
|
|
|||
Multifamily expenses
|
33,681
|
|
|
28,116
|
|
|
24,401
|
|
|||
General and administrative expenses
|
38,068
|
|
|
38,641
|
|
|
36,234
|
|
|||
Depreciation and amortization
|
357,743
|
|
|
309,864
|
|
|
276,761
|
|
|||
Total operating expenses
|
693,974
|
|
|
629,372
|
|
|
571,029
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
242,708
|
|
|
251,944
|
|
|
241,023
|
|
|||
|
|
|
|
|
|
||||||
Other income
|
11,653
|
|
|
11,414
|
|
|
9,712
|
|
|||
Other expenses
|
(7,216
|
)
|
|
(7,744
|
)
|
|
(7,037
|
)
|
|||
Income from unconsolidated Funds
|
6,923
|
|
|
6,400
|
|
|
5,905
|
|
|||
Interest expense
|
(143,308
|
)
|
|
(133,402
|
)
|
|
(145,176
|
)
|
|||
Gain from consolidation of JV
|
307,938
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
418,698
|
|
|
128,612
|
|
|
104,427
|
|
|||
Less: Net income attributable to noncontrolling interests
|
(54,985
|
)
|
|
(12,526
|
)
|
|
(9,984
|
)
|
|||
Net income attributable to common stockholders
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
$
|
94,443
|
|
|
|
|
|
|
|
||||||
Net income per common share – basic
|
$
|
2.09
|
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
Net income per common share – diluted
|
$
|
2.09
|
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
418,698
|
|
|
$
|
128,612
|
|
|
$
|
104,427
|
|
Other comprehensive (loss) income: cash flow hedges
|
(107,292
|
)
|
|
15,070
|
|
|
34,290
|
|
|||
Comprehensive income
|
311,406
|
|
|
143,682
|
|
|
138,717
|
|
|||
Less: Comprehensive income attributable to noncontrolling interests
|
(19,099
|
)
|
|
(16,751
|
)
|
|
(16,331
|
)
|
|||
Comprehensive income attributable to common stockholders
|
$
|
292,307
|
|
|
$
|
126,931
|
|
|
$
|
122,386
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
||||||
Shares of Common Stock
|
Beginning balance
|
170,215
|
|
|
169,565
|
|
|
151,530
|
|
|||
Exchange of OP units for common stock
|
222
|
|
|
629
|
|
|
1,059
|
|
||||
Issuance of common stock
|
4,933
|
|
|
—
|
|
|
15,687
|
|
||||
Exercise of stock options
|
—
|
|
|
21
|
|
|
1,289
|
|
||||
Ending balance
|
175,370
|
|
|
170,215
|
|
|
169,565
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Common Stock
|
Beginning balance
|
$
|
1,702
|
|
|
$
|
1,696
|
|
|
$
|
1,515
|
|
Exchange of OP units for common stock
|
2
|
|
|
6
|
|
|
11
|
|
||||
Issuance of common stock
|
50
|
|
|
—
|
|
|
157
|
|
||||
Exercise of stock options
|
—
|
|
|
—
|
|
|
13
|
|
||||
Ending balance
|
$
|
1,754
|
|
|
$
|
1,702
|
|
|
$
|
1,696
|
|
|
|
|
|
|
|
|
|
|
|
||||
Additional Paid-in Capital
|
Beginning balance
|
$
|
3,282,316
|
|
|
$
|
3,272,539
|
|
|
$
|
2,725,157
|
|
Exchange of OP units for common stock
|
3,538
|
|
|
10,286
|
|
|
14,231
|
|
||||
Repurchase of OP Units with cash
|
(431
|
)
|
|
(59
|
)
|
|
(6,763
|
)
|
||||
Issuance of common stock, net
|
200,933
|
|
|
—
|
|
|
593,011
|
|
||||
Taxes paid on exercise of stock options
|
—
|
|
|
(450
|
)
|
|
(53,097
|
)
|
||||
Ending balance
|
$
|
3,486,356
|
|
|
$
|
3,282,316
|
|
|
$
|
3,272,539
|
|
|
|
|
|
|
|
|
|
|
|
||||
AOCI
|
Beginning balance
|
$
|
53,944
|
|
|
$
|
43,099
|
|
|
$
|
15,156
|
|
ASU 2017-12 adoption
|
—
|
|
|
211
|
|
|
—
|
|
||||
Cash flow hedge adjustments
|
(71,406
|
)
|
|
10,634
|
|
|
27,943
|
|
||||
Ending balance
|
$
|
(17,462
|
)
|
|
$
|
53,944
|
|
|
$
|
43,099
|
|
|
|
|
|
|
|
|
|
|
|
||||
Accumulated Deficit
|
Beginning balance
|
$
|
(935,630
|
)
|
|
$
|
(879,810
|
)
|
|
$
|
(820,685
|
)
|
ASU 2016-02 adoption
|
(2,144
|
)
|
|
—
|
|
|
—
|
|
||||
ASU 2017-12 adoption
|
—
|
|
|
(211
|
)
|
|
—
|
|
||||
Net income attributable to common stockholders
|
363,713
|
|
|
116,086
|
|
|
94,443
|
|
||||
Dividends
|
(184,515
|
)
|
|
(171,695
|
)
|
|
(153,568
|
)
|
||||
Ending balance
|
$
|
(758,576
|
)
|
|
$
|
(935,630
|
)
|
|
$
|
(879,810
|
)
|
|
|
|
|
|
|
|
|
||||||
Noncontrolling Interests
|
Beginning balance
|
$
|
1,446,098
|
|
|
$
|
1,464,525
|
|
|
$
|
1,092,928
|
|
ASU 2016-02 adoption
|
(355
|
)
|
|
—
|
|
|
—
|
|
||||
Net income attributable to noncontrolling interests
|
54,985
|
|
|
12,526
|
|
|
9,984
|
|
||||
Cash flow hedge adjustments
|
(35,886
|
)
|
|
4,225
|
|
|
6,347
|
|
||||
Contributions
|
176,000
|
|
|
—
|
|
|
284,248
|
|
||||
Consolidation of JV
|
61,394
|
|
|
—
|
|
|
—
|
|
||||
Distributions
|
(76,978
|
)
|
|
(52,142
|
)
|
|
(38,101
|
)
|
||||
Issuance of OP Units for acquisition of additional interest in unconsolidated Fund
|
14,390
|
|
|
—
|
|
|
—
|
|
||||
Issuance of OP Units for acquisition of real estate
|
—
|
|
|
—
|
|
|
105,687
|
|
||||
Exchange of OP units for common stock
|
(3,540
|
)
|
|
(10,292
|
)
|
|
(14,242
|
)
|
||||
Repurchase of OP Units with cash
|
(303
|
)
|
|
(49
|
)
|
|
(3,341
|
)
|
||||
Stock-based compensation
|
23,057
|
|
|
27,305
|
|
|
21,015
|
|
||||
Ending balance
|
$
|
1,658,862
|
|
|
$
|
1,446,098
|
|
|
$
|
1,464,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
||||||
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
|
|
|
||||
Total Equity
|
Beginning balance
|
$
|
3,848,430
|
|
|
$
|
3,902,049
|
|
|
$
|
3,014,071
|
|
ASU 2016-02 adoption
|
(2,499
|
)
|
|
—
|
|
|
—
|
|
||||
Net income
|
418,698
|
|
|
128,612
|
|
|
104,427
|
|
||||
Cash flow hedge adjustments
|
(107,292
|
)
|
|
14,859
|
|
|
34,290
|
|
||||
Consolidation of JV
|
61,394
|
|
|
—
|
|
|
—
|
|
||||
Issuance of common stock, net
|
200,983
|
|
|
—
|
|
|
593,168
|
|
||||
Issuance of OP Units for acquisition of additional interest in unconsolidated Fund
|
14,390
|
|
|
—
|
|
|
—
|
|
||||
Issuance of OP Units for acquisition of real estate
|
—
|
|
|
—
|
|
|
105,687
|
|
||||
Repurchase of OP Units with cash
|
(734
|
)
|
|
(108
|
)
|
|
(10,104
|
)
|
||||
Taxes paid on exercise of stock options
|
—
|
|
|
(450
|
)
|
|
(53,084
|
)
|
||||
Contributions
|
176,000
|
|
|
—
|
|
|
284,248
|
|
||||
Dividends
|
(184,515
|
)
|
|
(171,695
|
)
|
|
(153,568
|
)
|
||||
Distributions
|
(76,978
|
)
|
|
(52,142
|
)
|
|
(38,101
|
)
|
||||
Stock-based compensation
|
23,057
|
|
|
27,305
|
|
|
21,015
|
|
||||
Ending balance
|
$
|
4,370,934
|
|
|
$
|
3,848,430
|
|
|
$
|
3,902,049
|
|
|
|
|
|
|
|
|
|
||||||
|
Dividends declared per common share
|
$
|
1.06
|
|
|
$
|
1.01
|
|
|
$
|
0.94
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating Activities
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
418,698
|
|
|
$
|
128,612
|
|
|
$
|
104,427
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Income from unconsolidated Funds
|
(6,923
|
)
|
|
(6,400
|
)
|
|
(5,905
|
)
|
|||
Gain from consolidation of JV
|
(307,938
|
)
|
|
—
|
|
|
—
|
|
|||
Depreciation and amortization
|
357,743
|
|
|
309,864
|
|
|
276,761
|
|
|||
Net accretion of acquired lease intangibles
|
(16,264
|
)
|
|
(22,025
|
)
|
|
(18,006
|
)
|
|||
Straight-line rent
|
(10,134
|
)
|
|
(18,813
|
)
|
|
(12,855
|
)
|
|||
Write-off of uncollectible amounts
|
4,103
|
|
|
2,154
|
|
|
406
|
|
|||
Deferred loan costs amortized and written off
|
14,314
|
|
|
8,292
|
|
|
10,834
|
|
|||
Amortization of loan premium
|
(261
|
)
|
|
(205
|
)
|
|
—
|
|
|||
Derivative non-cash adjustments
|
—
|
|
|
—
|
|
|
51
|
|
|||
Amortization of stock-based compensation
|
18,359
|
|
|
22,299
|
|
|
18,478
|
|
|||
Operating distributions from unconsolidated Funds
|
6,820
|
|
|
6,400
|
|
|
5,905
|
|
|||
Change in working capital components:
|
|
|
|
|
|
||||||
Tenant receivables
|
(4,712
|
)
|
|
(3,545
|
)
|
|
(1,221
|
)
|
|||
Interest payable, accounts payable and deferred revenue
|
(6,844
|
)
|
|
1,376
|
|
|
24,942
|
|
|||
Security deposits
|
1,919
|
|
|
319
|
|
|
4,424
|
|
|||
Other assets
|
706
|
|
|
4,654
|
|
|
(5,544
|
)
|
|||
Net cash provided by operating activities
|
469,586
|
|
|
432,982
|
|
|
402,697
|
|
|||
|
|
|
|
|
|
||||||
Investing Activities
|
|
|
|
|
|
||||||
Capital expenditures for improvements to real estate
|
(176,448
|
)
|
|
(179,062
|
)
|
|
(108,326
|
)
|
|||
Capital expenditures for developments
|
(61,660
|
)
|
|
(68,459
|
)
|
|
(63,018
|
)
|
|||
Property acquisitions
|
(365,885
|
)
|
|
—
|
|
|
(537,669
|
)
|
|||
Cash assumed from consolidation of JV
|
39,226
|
|
|
—
|
|
|
—
|
|
|||
Acquisition of additional interests in unconsolidated Funds
|
(90,754
|
)
|
|
(9,379
|
)
|
|
(4,142
|
)
|
|||
Capital distributions from unconsolidated Funds
|
5,853
|
|
|
7,349
|
|
|
43,560
|
|
|||
Net cash used in investing activities
|
(649,668
|
)
|
|
(249,551
|
)
|
|
(669,595
|
)
|
|||
|
|
|
|
|
|
||||||
Financing Activities
|
|
|
|
|
|
||||||
Proceeds from borrowings
|
2,185,000
|
|
|
667,000
|
|
|
1,410,500
|
|
|||
Repayment of borrowings
|
(2,095,718
|
)
|
|
(655,326
|
)
|
|
(1,698,544
|
)
|
|||
Loan cost payments
|
(21,348
|
)
|
|
(2,992
|
)
|
|
(11,442
|
)
|
|||
Contributions from noncontrolling interests in consolidated JVs
|
163,556
|
|
|
—
|
|
|
284,248
|
|
|||
Distributions paid to noncontrolling interests
|
(64,534
|
)
|
|
(52,142
|
)
|
|
(38,101
|
)
|
|||
Dividends paid to common stockholders
|
(179,667
|
)
|
|
(169,831
|
)
|
|
(146,026
|
)
|
|||
Taxes paid on exercise of stock options
|
—
|
|
|
(450
|
)
|
|
(53,084
|
)
|
|||
Repurchase of OP Units
|
(734
|
)
|
|
(108
|
)
|
|
(10,104
|
)
|
|||
Proceeds from issuance of common stock, net
|
200,983
|
|
|
—
|
|
|
593,169
|
|
|||
Net cash provided by (used in) financing activities
|
187,538
|
|
|
(213,849
|
)
|
|
330,616
|
|
|||
|
|
|
|
|
|
||||||
Increase (decrease) in cash and cash equivalents and restricted cash
|
7,456
|
|
|
(30,418
|
)
|
|
63,718
|
|
|||
Cash and cash equivalents and restricted cash - beginning balance
|
146,348
|
|
|
176,766
|
|
|
113,048
|
|
|||
Cash and cash equivalents and restricted cash - ending balance
|
$
|
153,804
|
|
|
$
|
146,348
|
|
|
$
|
176,766
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating Activities
|
|
|
|
|
|
||||||
Cash paid for interest, net of capitalized interest
|
$
|
128,205
|
|
|
$
|
124,487
|
|
|
$
|
135,824
|
|
Capitalized interest paid
|
$
|
3,782
|
|
|
$
|
3,520
|
|
|
$
|
2,745
|
|
|
|
|
|
|
|
||||||
Non-cash Investing Transactions
|
|
|
|
|
|
||||||
Accrual for real estate and development capital expenditures
|
$
|
35,398
|
|
|
$
|
24,702
|
|
|
$
|
3,776
|
|
Capitalized stock-based compensation for improvements to real estate and developments
|
$
|
4,698
|
|
|
$
|
5,006
|
|
|
$
|
2,537
|
|
Removal of fully depreciated and amortized tenant improvements and lease intangibles
|
$
|
88,205
|
|
|
$
|
75,729
|
|
|
$
|
53,687
|
|
Removal of fully amortized acquired lease intangible assets
|
$
|
2,132
|
|
|
$
|
1,582
|
|
|
$
|
414
|
|
Removal of fully accreted acquired lease intangible liabilities
|
$
|
29,660
|
|
|
$
|
15,431
|
|
|
$
|
5,057
|
|
Recognition of ground lease right-of-use asset - Adoption of ASU 2016-02
|
$
|
10,885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Above-market ground lease intangible liability offset against right-of-use asset - Adoption of ASU 2016-02
|
$
|
3,408
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Recognition of ground lease liability - Adoption of ASU 2016-02
|
$
|
10,885
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
||||||
Non-cash Financing Transactions
|
|
|
|
|
|
||||||
Gain recorded in AOCI - Adoption of ASU 2017-12 - consolidated derivatives
|
$
|
—
|
|
|
$
|
211
|
|
|
$
|
—
|
|
(Loss) gain recorded in AOCI - consolidated derivatives
|
$
|
(76,273
|
)
|
|
$
|
22,723
|
|
|
$
|
16,512
|
|
(Loss) gain recorded in AOCI - unconsolidated Funds' derivatives (our share)
|
$
|
(5,023
|
)
|
|
$
|
3,052
|
|
|
$
|
3,275
|
|
Accrual for deferred loan costs
|
$
|
1,416
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Assumption of term loan for acquisition of real estate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
36,460
|
|
Non-cash contributions from noncontrolling interests in consolidated JVs
|
$
|
12,444
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-cash distributions to noncontrolling interests
|
$
|
12,444
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Dividends declared
|
$
|
184,515
|
|
|
$
|
171,695
|
|
|
$
|
153,568
|
|
Exchange of OP units for common stock
|
$
|
3,540
|
|
|
$
|
10,292
|
|
|
$
|
14,242
|
|
Issuance of OP Units for acquisition of real estate
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
105,687
|
|
OP Units issued for acquisition of additional interest in unconsolidated Fund
|
$
|
14,390
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Consolidated Portfolio
|
|
Total Portfolio
|
Office
|
|
|
|
Wholly-owned properties
|
53
|
|
53
|
Consolidated JV properties
|
17
|
|
17
|
Unconsolidated Fund properties
|
—
|
|
2
|
|
70
|
|
72
|
|
|
|
|
Multifamily
|
|
|
|
Wholly-owned properties
|
10
|
|
10
|
Consolidated JV properties
|
1
|
|
1
|
|
11
|
|
11
|
|
|
|
|
Total
|
81
|
|
83
|
(In thousands)
|
December 31, 2018
|
||
|
|
||
Allowance for tenant receivables
|
$
|
5,215
|
|
Allowance for deferred rent receivables
|
$
|
2,849
|
|
Letters of credit from our tenants
|
$
|
27,749
|
|
Cash security deposits from our tenants
|
$
|
50,733
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
2018
|
|
2017
|
||||
|
|
|
|
||||
Tenant receivables allowance - decrease in net income
|
$
|
(2,154
|
)
|
|
$
|
(406
|
)
|
Deferred rent receivables allowance - increase in net income
|
$
|
556
|
|
|
$
|
1,739
|
|
(In thousands, except number of units)
|
The Glendon
|
||
|
|
||
Submarket
|
West Los Angeles
|
||
Acquisition date
|
June 7, 2019
|
||
Contract price
|
$
|
365,100
|
|
Number of multifamily units
|
350
|
|
|
Retail square footage
|
50
|
|
|
|
|
||
Land
|
$
|
32,773
|
|
Buildings and improvements
|
333,624
|
|
|
Tenant improvements and lease intangibles
|
2,301
|
|
|
Acquired above- and below-market leases, net
|
(2,114
|
)
|
|
Net assets and liabilities acquired
|
$
|
366,584
|
|
(In thousands)
|
JV Consolidation
|
||
|
|
||
Consolidation date
|
November 21, 2019
|
||
Square footage
|
1,454
|
|
|
|
|
||
Land
|
$
|
52,272
|
|
Buildings and improvements
|
831,416
|
|
|
Tenant improvements and lease intangibles
|
40,890
|
|
|
Acquired above- and below-market leases, net
|
(14,198
|
)
|
|
JV interest in unconsolidated Fund
|
28,783
|
|
|
Assumed debt
|
(403,016
|
)
|
|
Assumed interest rate swaps
|
(4,147
|
)
|
|
Other assets and liabilities, net
|
26,256
|
|
|
Net assets acquired and liabilities assumed
|
$
|
558,256
|
|
(1)
|
We issued OP Units to the seller in connection with the acquisition of 9401 Wilshire. See Note 11 for more information.
|
(2)
|
We assumed a loan from the seller in connection with the acquisition of 9401 Wilshire. At the date of acquisition, the loan had a fair value of $36.5 million and a principal balance of $32.3 million. See Note 8 for more information.
|
Year ending December 31:
|
(In thousands)
|
||
|
|
||
2020
|
$
|
733
|
|
2021
|
733
|
|
|
2022
|
733
|
|
|
2023
|
733
|
|
|
2024
|
733
|
|
|
Thereafter
|
45,445
|
|
|
Total future minimum lease payments
|
$
|
49,110
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Above-market tenant leases
|
|
$
|
7,220
|
|
|
$
|
5,595
|
|
Above-market tenant leases - accumulated amortization
|
|
(1,741
|
)
|
|
(3,289
|
)
|
||
Above-market ground lease where we are the lessor
|
|
1,152
|
|
|
1,152
|
|
||
Above-market ground lease - accumulated amortization
|
|
(224
|
)
|
|
(207
|
)
|
||
Acquired lease intangible assets, net
|
|
$
|
6,407
|
|
|
$
|
3,251
|
|
|
|
|
|
|
||||
Below-market tenant leases
|
|
$
|
102,583
|
|
|
$
|
112,175
|
|
Below-market tenant leases - accumulated accretion
|
|
(50,216
|
)
|
|
(63,013
|
)
|
||
Above-market ground lease where we are the tenant(1)
|
|
—
|
|
|
4,017
|
|
||
Above-market ground lease - accumulated accretion(1)
|
|
—
|
|
|
(610
|
)
|
||
Acquired lease intangible liabilities, net
|
|
$
|
52,367
|
|
|
$
|
52,569
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net accretion of above- and below-market tenant lease assets and liabilities(1)
|
$
|
16,282
|
|
|
$
|
21,992
|
|
|
$
|
17,973
|
|
Amortization of an above-market ground lease asset(2)
|
(18
|
)
|
|
(17
|
)
|
|
(17
|
)
|
|||
Accretion of an above-market ground lease liability(3)
|
—
|
|
|
50
|
|
|
50
|
|
|||
Total
|
$
|
16,264
|
|
|
$
|
22,025
|
|
|
$
|
18,006
|
|
(1)
|
Recorded as a net increase to office and multifamily rental revenues.
|
(2)
|
Recorded as a decrease to office parking and other income.
|
(3)
|
Recorded as a decrease to office expense. Upon adoption of ASU 2016-02 on January 1, 2019 we adjusted the ground lease right-of-use asset carrying value with the carrying value of the above-market ground lease - see Notes 2 and 4.
|
Year ending December 31:
|
|
Net increase to revenues
|
||
|
|
|
||
|
|
(In thousands)
|
||
2020
|
|
$
|
15,339
|
|
2021
|
|
9,371
|
|
|
2022
|
|
6,674
|
|
|
2023
|
|
4,576
|
|
|
2024
|
|
3,702
|
|
|
Thereafter
|
|
6,298
|
|
|
Total
|
|
$
|
45,960
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Operating distributions received(1)
|
$
|
6,820
|
|
|
$
|
6,400
|
|
|
$
|
5,905
|
|
Capital distributions received(1)
|
5,853
|
|
|
7,349
|
|
|
43,560
|
|
|||
Total distributions received(1)
|
$
|
12,673
|
|
|
$
|
13,749
|
|
|
$
|
49,465
|
|
(1)
|
The balances reflect the combined balances for Partnership X, Fund X and the Opportunity Fund through November 20, 2019 and the balances for Partnership X from November 21, 2019 through December 31, 2019.
|
(In thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
Total assets(1)
|
$
|
136,479
|
|
|
$
|
694,713
|
|
Total liabilities(1)
|
$
|
113,330
|
|
|
$
|
525,483
|
|
Total equity(1)
|
$
|
23,149
|
|
|
$
|
169,230
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Total revenues(1)
|
$
|
75,952
|
|
|
$
|
79,590
|
|
|
$
|
75,896
|
|
Operating income(1)
|
$
|
22,269
|
|
|
$
|
22,959
|
|
|
$
|
20,640
|
|
Net income(1)
|
$
|
7,350
|
|
|
$
|
6,260
|
|
|
$
|
5,085
|
|
(1)
|
The balances reflect the combined balances for Partnership X, Fund X and the Opportunity Fund through November 20, 2019 and the balances for Partnership X from November 21, 2019 through December 31, 2019.
|
(In thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
Restricted cash
|
$
|
121
|
|
|
$
|
121
|
|
Prepaid expenses
|
8,711
|
|
|
7,830
|
|
||
Other indefinite-lived intangibles
|
1,988
|
|
|
1,988
|
|
||
Furniture, fixtures and equipment, net
|
2,368
|
|
|
1,101
|
|
||
Other
|
3,233
|
|
|
3,719
|
|
||
Total other assets
|
$
|
16,421
|
|
|
$
|
14,759
|
|
Description
|
|
Maturity
Date (1)
|
|
Principal Balance as of December 31, 2019
|
|
Principal Balance as of December 31, 2018
|
|
Variable Interest Rate
|
|
Fixed Interest
Rate (2)
|
|
Swap Maturity Date
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Wholly-Owned Subsidiaries
|
||||||||||||||||
Fannie Mae loan(3)
|
|
—
|
|
$
|
—
|
|
|
$
|
145,000
|
|
|
—
|
|
—
|
|
—
|
Fannie Mae loan(3)
|
|
—
|
|
—
|
|
|
115,000
|
|
|
—
|
|
—
|
|
—
|
||
Term loan(3)
|
|
—
|
|
—
|
|
|
220,000
|
|
|
—
|
|
—
|
|
—
|
||
Term loan(3)
|
|
—
|
|
—
|
|
|
340,000
|
|
|
—
|
|
—
|
|
—
|
||
Term loan(3)
|
|
—
|
|
—
|
|
|
400,000
|
|
|
—
|
|
—
|
|
—
|
||
Term loan(3)
|
|
—
|
|
—
|
|
|
180,000
|
|
|
—
|
|
—
|
|
—
|
||
Term loan(3)
|
|
—
|
|
—
|
|
|
360,000
|
|
|
—
|
|
—
|
|
—
|
||
Term loan(4)
|
|
1/1/2024
|
|
300,000
|
|
|
300,000
|
|
|
LIBOR + 1.55%
|
|
3.46%
|
|
1/1/2022
|
||
Term loan(4)
|
|
3/3/2025
|
|
335,000
|
|
|
335,000
|
|
|
LIBOR + 1.30%
|
|
3.84%
|
|
3/1/2023
|
||
Fannie Mae loan(4)(5)
|
|
4/1/2025
|
|
102,400
|
|
|
102,400
|
|
|
LIBOR + 1.25%
|
|
2.84%
|
|
3/1/2023
|
||
Term loan(4)(6)(7)
|
|
8/15/2026
|
|
415,000
|
|
|
—
|
|
|
LIBOR + 1.10%
|
|
2.58%
|
|
8/1/2025
|
||
Term loan(4)(6)
|
|
9/19/2026
|
|
400,000
|
|
|
—
|
|
|
LIBOR + 1.15%
|
|
2.44%
|
|
9/1/2024
|
||
Term loan(4)(6)(8)
|
|
9/26/2026
|
|
200,000
|
|
|
—
|
|
|
LIBOR + 1.20%
|
|
2.77%
|
|
10/1/2024
|
||
Term loan(4)(6)(9)
|
|
11/1/2026
|
|
400,000
|
|
|
—
|
|
|
LIBOR + 1.15%
|
|
2.18%
|
|
10/1/2024
|
||
Fannie Mae loan(4)
|
|
6/1/2027
|
|
550,000
|
|
|
550,000
|
|
|
LIBOR + 1.37%
|
|
3.16%
|
|
6/1/2022
|
||
Fannie Mae loan(4)(6)
|
|
6/1/2029
|
|
255,000
|
|
|
—
|
|
|
LIBOR + 0.98%
|
|
3.26%
|
|
6/1/2027
|
||
Fannie Mae loan(4)(6)(10)
|
|
6/1/2029
|
|
125,000
|
|
|
—
|
|
|
LIBOR + 0.98%
|
|
2.55%
|
|
6/1/2027
|
||
Term loan(11)
|
|
6/1/2038
|
|
30,864
|
|
|
31,582
|
|
|
N/A
|
|
4.55%
|
|
N/A
|
||
Revolving credit facility(12)
|
|
8/21/2023
|
|
—
|
|
|
105,000
|
|
|
LIBOR + 1.15%
|
|
N/A
|
|
N/A
|
||
Total Wholly-Owned Subsidiary Debt
|
|
3,113,264
|
|
|
3,183,982
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Consolidated JVs
|
||||||||||||||||
Term loan(4)
|
|
2/28/2023
|
|
580,000
|
|
|
580,000
|
|
|
LIBOR + 1.40%
|
|
2.37%
|
|
3/1/2021
|
||
Term loan(4)(13)
|
|
7/1/2024
|
|
400,000
|
|
|
—
|
|
|
LIBOR + 1.65%
|
|
3.44%
|
|
7/1/2022
|
||
Term loan(4)
|
|
12/19/2024
|
|
400,000
|
|
|
400,000
|
|
|
LIBOR + 1.30%
|
|
3.47%
|
|
1/1/2023
|
||
Term loan(4)(6)
|
|
6/1/2029
|
|
160,000
|
|
|
—
|
|
|
LIBOR + 0.98%
|
|
3.25%
|
|
7/1/2027
|
||
Total Consolidated Debt(14)
|
|
4,653,264
|
|
|
4,163,982
|
|
|
|
|
|
|
|
||||
Unamortized loan premium, net
|
|
6,741
|
|
|
3,986
|
|
|
|
|
|
|
|
||||
Unamortized deferred loan costs, net
|
|
(40,947
|
)
|
|
(33,938
|
)
|
|
|
|
|
|
|
||||
Total Consolidated Debt, net
|
|
$
|
4,619,058
|
|
|
$
|
4,134,030
|
|
|
|
|
|
|
|
(1)
|
Maturity dates include the effect of extension options.
|
(2)
|
Includes the effect of interest rate swaps and excludes the effect of prepaid loan fees. See Note 10 for details of our interest rate swaps. See below for details of our loan costs.
|
(3)
|
At December 31, 2019, these loans have been paid off.
|
(4)
|
Loan agreement includes a zero-percent LIBOR floor. The corresponding swaps do not include such a floor.
|
(5)
|
The effective rate will decrease to 2.76% on March 2, 2020.
|
(6)
|
These loans were closed during the twelve months ended December 31, 2019.
|
(7)
|
Effective rate will increase to 3.07% on April 1, 2020.
|
(8)
|
Effective rate will decrease to 2.36% on July 1, 2020.
|
(9)
|
Effective rate will increase to 2.31% on July 1, 2021.
|
(10)
|
Effective rate will increase to 3.25% on December 1, 2020.
|
(11)
|
Requires monthly payments of principal and interest. Principal amortization is based upon a 30-year amortization schedule.
|
(12)
|
In March 2019, we renewed our $400.0 million revolving credit facility, releasing two previously encumbered properties, lowering the borrowing rate and unused facility fees, and extending the maturity date. Unused commitment fees range from 0.10% to 0.15% . The loan agreement includes a zero-percent LIBOR floor.
|
(13)
|
A previously unconsolidated Fund is now treated as a consolidated JV. See Note 3.
|
(14)
|
The table does not include our unconsolidated Funds' loans - see Note 17. See Note 14 for our fair value disclosures.
|
(In thousands)
|
|
Principal Balance as of December 31, 2019
|
|
Principal Balance as of December 31, 2018
|
||||
|
|
|
|
|
||||
Aggregate swapped to fixed rate loans
|
|
$
|
4,622,400
|
|
|
$
|
3,882,400
|
|
Aggregate fixed rate loans
|
|
30,864
|
|
|
31,582
|
|
||
Aggregate floating rate loans
|
|
—
|
|
|
250,000
|
|
||
Total Debt
|
|
$
|
4,653,264
|
|
|
$
|
4,163,982
|
|
Year ending December 31:
|
|
Excluding Maturity Extension Options
|
|
Including Maturity Extension Options(1)
|
||||
|
|
|
|
|
||||
|
|
(In thousands)
|
||||||
|
|
|
|
|
||||
2020
|
|
$
|
752
|
|
|
$
|
752
|
|
2021
|
|
787
|
|
|
787
|
|
||
2022
|
|
300,823
|
|
|
823
|
|
||
2023
|
|
915,862
|
|
|
580,862
|
|
||
2024
|
|
800,902
|
|
|
1,100,902
|
|
||
Thereafter
|
|
2,634,138
|
|
|
2,969,138
|
|
||
Total future principal payments
|
|
$
|
4,653,264
|
|
|
$
|
4,653,264
|
|
(1)
|
Some of our loan agreements require that we meet certain minimum financial thresholds to be able to extend the loan maturity.
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Loan costs expensed
|
$
|
1,318
|
|
|
$
|
58
|
|
|
$
|
557
|
|
Deferred loan costs written off
|
6,865
|
|
|
360
|
|
|
1,802
|
|
|||
Deferred loan cost amortization
|
7,449
|
|
|
7,874
|
|
|
9,033
|
|
|||
Total
|
$
|
15,632
|
|
|
$
|
8,292
|
|
|
$
|
11,392
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Interest payable
|
|
$
|
11,707
|
|
|
$
|
10,657
|
|
Accounts payable and accrued liabilities
|
|
66,437
|
|
|
75,111
|
|
||
Deferred revenue
|
|
53,266
|
|
|
44,386
|
|
||
Total interest payable, accounts payable and deferred revenue
|
|
$
|
131,410
|
|
|
$
|
130,154
|
|
|
|
Number of Interest Rate Swaps
|
|
Notional (In thousands)
|
||
|
|
|
|
|
||
Consolidated derivatives(1)(2)(4)(5)
|
|
43
|
|
$
|
5,124,800
|
|
Unconsolidated Fund's derivative(3)(4)(5)
|
|
1
|
|
$
|
110,000
|
|
(1)
|
The notional amount reflects 100%, not our pro-rata share, of our consolidated JVs' derivatives.
|
(2)
|
Includes forward swaps with a total notional of $502.4 million.
|
(3)
|
The notional amount reflects 100%, not our pro-rata share, of our unconsolidated Fund's derivatives.
|
(4)
|
Our derivative contracts do not provide for right of offset between derivative contracts.
|
(5)
|
See Note 14 for our derivative fair value disclosures.
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Consolidated derivatives(1)
|
|
$
|
56,896
|
|
|
$
|
1,681
|
|
Unconsolidated Fund's derivatives(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Includes 100%, not our pro-rata share, of our consolidated JVs' derivatives.
|
(2)
|
Our unconsolidated Fund did not have any derivatives in a liability position.
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Consolidated derivatives(1)
|
|
$
|
23,275
|
|
|
$
|
76,021
|
|
Unconsolidated Fund's derivative(2)
|
|
$
|
963
|
|
|
$
|
12,576
|
|
(1)
|
Includes 100%, not our pro-rata share, of our consolidated JVs' derivatives.
|
(2)
|
The amounts reflect 100%, not our pro-rata share, of our unconsolidated Fund's derivative.
|
(In thousands)
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Derivatives Designated as Cash Flow Hedges:
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Consolidated derivatives:
|
|
|
|
|
|
||||||
Gain recorded in AOCI - adoption of ASU 2017-12(1)
|
$
|
—
|
|
|
$
|
211
|
|
|
$
|
—
|
|
(Loss) gain recorded in AOCI before reclassifications(1)
|
$
|
(76,273
|
)
|
|
$
|
22,723
|
|
|
$
|
16,512
|
|
(Gain) loss reclassified from AOCI to Interest Expense(1)
|
$
|
(24,298
|
)
|
|
$
|
(10,103
|
)
|
|
$
|
13,976
|
|
Interest Expense presented in the consolidated statements of operations
|
$
|
(143,308
|
)
|
|
$
|
(133,402
|
)
|
|
$
|
(145,176
|
)
|
Loss (gain) related to ineffectiveness recorded in Interest Expense
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
51
|
|
Unconsolidated Funds' derivatives (our share)(2):
|
|
|
|
|
|
|
|
||||
(Loss) gain recorded in AOCI before reclassifications(1)
|
$
|
(5,023
|
)
|
|
$
|
3,052
|
|
|
$
|
3,275
|
|
(Gain) loss reclassified from AOCI to Income from unconsolidated Funds(1)
|
$
|
(1,698
|
)
|
|
$
|
(813
|
)
|
|
$
|
527
|
|
Income from unconsolidated Funds presented in the consolidated statements of operations
|
$
|
6,923
|
|
|
$
|
6,400
|
|
|
$
|
5,905
|
|
(1)
|
See Note 11 for our AOCI reconciliation.
|
(2)
|
We calculate our share by multiplying the total amount for each Fund by our equity interest in the respective Fund.
|
|
(In thousands)
|
||
|
|
||
Consolidated derivatives:
|
|
||
Losses to be reclassified from AOCI to Interest Expense
|
$
|
(2,461
|
)
|
Unconsolidated Fund's derivatives (our share):
|
|
||
Gains to be reclassified from AOCI to Income from unconsolidated Funds
|
$
|
235
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net income attributable to common stockholders
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
$
|
94,443
|
|
|
|
|
|
|
|
||||||
Transfers from noncontrolling interests:
|
|
|
|
|
|
||||||
Exchange of OP Units with noncontrolling interests
|
3,540
|
|
|
10,292
|
|
|
14,242
|
|
|||
Repurchase of OP Units from noncontrolling interests
|
(431
|
)
|
|
(59
|
)
|
|
(6,764
|
)
|
|||
Net transfers from noncontrolling interests
|
3,109
|
|
|
10,233
|
|
|
7,478
|
|
|||
|
|
|
|
|
|
||||||
Change from net income attributable to common stockholders and transfers from noncontrolling interests
|
$
|
366,822
|
|
|
$
|
126,319
|
|
|
$
|
101,921
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
53,944
|
|
|
$
|
43,099
|
|
|
$
|
15,156
|
|
Adoption of ASU 2017-12 - cumulative opening balance adjustment
|
—
|
|
|
211
|
|
|
—
|
|
|||
Consolidated derivatives:
|
|
|
|
|
|
||||||
Other comprehensive (loss) gain before reclassifications
|
(76,273
|
)
|
|
22,723
|
|
|
16,512
|
|
|||
Reclassification of (gain) loss from AOCI to Interest Expense
|
(24,298
|
)
|
|
(10,103
|
)
|
|
13,976
|
|
|||
Unconsolidated Funds' derivatives (our share)(2):
|
|
|
|
|
|
||||||
Other comprehensive (loss) gain before reclassifications
|
(5,023
|
)
|
|
3,052
|
|
|
3,275
|
|
|||
Reclassification of (gain) loss from AOCI to Income from unconsolidated Funds
|
(1,698
|
)
|
|
(813
|
)
|
|
527
|
|
|||
Net current period OCI
|
(107,292
|
)
|
|
15,070
|
|
|
34,290
|
|
|||
OCI attributable to noncontrolling interests
|
35,886
|
|
|
(4,225
|
)
|
|
(6,347
|
)
|
|||
OCI attributable to common stockholders
|
(71,406
|
)
|
|
10,845
|
|
|
27,943
|
|
|||
|
|
|
|
|
|
||||||
Ending balance
|
$
|
(17,462
|
)
|
|
$
|
53,944
|
|
|
$
|
43,099
|
|
(1)
|
See Note 10 for the details of our derivatives and Note 14 for our derivative fair value disclosures.
|
(2)
|
We calculate our share by multiplying the total amount for each Fund by our equity interest in the respective Fund.
|
Record Date
|
|
Paid Date
|
|
Dividend Per Share
|
|
Ordinary Income %
|
|
Capital Gain %
|
|
Return of Capital %
|
|
Section 199A Dividend %
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
12/31/2018
|
|
1/15/2019
|
|
$
|
0.26
|
|
|
51.8
|
%
|
|
—
|
%
|
|
48.2
|
%
|
|
51.8
|
%
|
3/29/2019
|
|
4/16/2019
|
|
0.26
|
|
|
51.8
|
%
|
|
—
|
%
|
|
48.2
|
%
|
|
51.8
|
%
|
|
6/28/2019
|
|
7/12/2019
|
|
0.26
|
|
|
51.8
|
%
|
|
—
|
%
|
|
48.2
|
%
|
|
51.8
|
%
|
|
9/30/2019
|
|
10/16/2019
|
|
0.26
|
|
|
51.8
|
%
|
|
—
|
%
|
|
48.2
|
%
|
|
51.8
|
%
|
|
Total / Weighted Average
|
|
$
|
1.04
|
|
|
51.8
|
%
|
|
—
|
%
|
|
48.2
|
%
|
|
51.8
|
%
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator (In thousands):
|
|
|
|
|
|
||||||
Net income attributable to common stockholders
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
$
|
94,443
|
|
Allocation to participating securities: Unvested LTIP Units
|
(1,594
|
)
|
|
(546
|
)
|
|
(626
|
)
|
|||
Net income attributable to common stockholders - basic and diluted
|
$
|
362,119
|
|
|
$
|
115,540
|
|
|
$
|
93,817
|
|
|
|
|
|
|
|
||||||
Denominator (In thousands):
|
|
|
|
|
|
||||||
Weighted average shares of common stock outstanding - basic
|
173,358
|
|
|
169,893
|
|
|
160,905
|
|
|||
Effect of dilutive securities: Stock options(1)
|
—
|
|
|
9
|
|
|
325
|
|
|||
Weighted average shares of common stock and common stock equivalents outstanding - diluted
|
173,358
|
|
|
169,902
|
|
|
161,230
|
|
|||
|
|
|
|
|
|
||||||
Net income per common share - basic
|
$
|
2.09
|
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
|
|
|
|
|
|
||||||
Net income per common share - diluted
|
$
|
2.09
|
|
|
$
|
0.68
|
|
|
$
|
0.58
|
|
(1)
|
There were no outstanding options during the year ended December 31, 2019. 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 (equal on a per unit basis to the Net income per common share - diluted) was already deducted in calculating Net income attributable to common stockholders. Accordingly, any exchange would not have any effect on diluted EPS. The following table presents the OP Units and vested LTIP Units outstanding for the respective periods:
|
|
Year Ended December 31,
|
|||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
|||
|
|
|
|
|
|
|||
OP Units
|
26,465
|
|
|
26,661
|
|
|
24,810
|
|
Vested LTIP Units
|
1,652
|
|
|
813
|
|
|
274
|
|
|
Year Ended December 31,
|
||||||||||
(In thousands)
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Stock-based compensation expense, net
|
$
|
18,359
|
|
|
$
|
22,299
|
|
|
$
|
18,478
|
|
Capitalized stock-based compensation
|
$
|
4,698
|
|
|
$
|
5,006
|
|
|
$
|
2,537
|
|
Intrinsic value of options exercised
|
$
|
—
|
|
|
$
|
1,196
|
|
|
$
|
102,963
|
|
Fully Vested Stock Options:
|
|
Number of Stock Options (Thousands)
|
|
Weighted Average Exercise Price
|
|
Weighted Average
Remaining Contract Life (Months)
|
|
Total
Intrinsic Value (Thousands)
|
|
Intrinsic Value of Options Exercised (Thousands)
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||
Outstanding at December 31, 2016
|
|
3,969
|
|
|
$
|
12.43
|
|
|
27
|
|
$
|
95,770
|
|
|
|
||
Exercised
|
|
(3,920
|
)
|
|
$
|
12.43
|
|
|
|
|
|
|
$
|
102,963
|
|
||
Outstanding at December 31, 2017
|
|
49
|
|
|
$
|
12.66
|
|
|
16
|
|
$
|
1,375
|
|
|
|
||
Exercised
|
|
(49
|
)
|
|
$
|
12.66
|
|
|
|
|
|
|
$
|
1,196
|
|
||
Outstanding at December 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
0
|
|
$
|
—
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Unvested LTIP Units:
|
|
Number of Units (Thousands)
|
|
Weighted Average Grant Date Fair Value
|
|
Grant Date Fair Value (Thousands)
|
|||||
|
|
|
|
|
|
|
|||||
Outstanding at December 31, 2016
|
|
1,040
|
|
|
$
|
23.46
|
|
|
|
||
Granted
|
|
828
|
|
|
$
|
29.89
|
|
|
$
|
24,745
|
|
Vested
|
|
(807
|
)
|
|
$
|
25.40
|
|
|
$
|
20,497
|
|
Forfeited
|
|
(5
|
)
|
|
$
|
31.36
|
|
|
$
|
172
|
|
Outstanding at December 31, 2017
|
|
1,056
|
|
|
$
|
26.98
|
|
|
|
||
Granted
|
|
935
|
|
|
$
|
27.01
|
|
|
$
|
25,247
|
|
Vested
|
|
(1,036
|
)
|
|
$
|
25.82
|
|
|
$
|
26,740
|
|
Forfeited
|
|
(10
|
)
|
|
$
|
34.18
|
|
|
$
|
333
|
|
Outstanding at December 31, 2018
|
|
945
|
|
|
$
|
28.20
|
|
|
|
||
Granted
|
|
840
|
|
|
$
|
31.92
|
|
|
$
|
26,821
|
|
Vested
|
|
(826
|
)
|
|
$
|
29.13
|
|
|
$
|
24,061
|
|
Forfeited
|
|
(35
|
)
|
|
$
|
35.41
|
|
|
$
|
1,234
|
|
Outstanding at December 31, 2019
|
|
924
|
|
|
$
|
30.48
|
|
|
|
(In thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
|
||||
Fair value
|
|
$
|
4,678,623
|
|
|
$
|
4,087,979
|
|
Carrying value
|
|
$
|
4,653,264
|
|
|
$
|
4,062,968
|
|
(In thousands)
|
December 31, 2019
|
||
|
|
||
Fair value
|
$
|
12,218
|
|
Carrying value
|
$
|
10,882
|
|
(In thousands)
|
December 31, 2019
|
|
December 31, 2018
|
||||
Derivative Assets:
|
|
|
|
||||
Fair value - consolidated derivatives(1)
|
$
|
22,381
|
|
|
$
|
73,414
|
|
Fair value - unconsolidated Funds' derivatives(2)
|
$
|
889
|
|
|
$
|
12,228
|
|
|
|
|
|
||||
Derivative Liabilities:
|
|
|
|
||||
Fair value - consolidated derivatives(1)
|
$
|
54,616
|
|
|
$
|
1,530
|
|
Fair value - unconsolidated Funds' derivatives(2)
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Consolidated derivatives, which include 100%, not our pro-rata share, of our consolidated JVs' derivatives, are included in interest rate contracts in our consolidated balance sheets. The fair values exclude accrued interest which is included in interest payable in the consolidated balance sheets.
|
(2)
|
Reflects 100%, not our pro-rata share, of our unconsolidated Funds' derivatives. Our pro-rata share of the amounts related to the unconsolidated Funds' derivatives is included in our Investment in unconsolidated Funds in our consolidated balance sheets. See Note 17 regarding our unconsolidated Funds debt and derivatives. Our unconsolidated Funds' did not have any derivatives in a liability position for the periods presented.
|
(In thousands)
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Office Segment
|
|
|
|
|
|
||||||
Total office revenues
|
$
|
816,755
|
|
|
$
|
777,931
|
|
|
$
|
715,546
|
|
Office expenses
|
(264,482
|
)
|
|
(252,751
|
)
|
|
(233,633
|
)
|
|||
Office segment profit
|
552,273
|
|
|
525,180
|
|
|
481,913
|
|
|||
|
|
|
|
|
|
||||||
Multifamily Segment
|
|
|
|
|
|
||||||
Total multifamily revenues
|
119,927
|
|
|
103,385
|
|
|
96,506
|
|
|||
Multifamily expenses
|
(33,681
|
)
|
|
(28,116
|
)
|
|
(24,401
|
)
|
|||
Multifamily segment profit
|
86,246
|
|
|
75,269
|
|
|
72,105
|
|
|||
|
|
|
|
|
|
||||||
Total profit from all segments
|
$
|
638,519
|
|
|
$
|
600,449
|
|
|
$
|
554,018
|
|
(In thousands)
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Total profit from all segments
|
$
|
638,519
|
|
|
$
|
600,449
|
|
|
$
|
554,018
|
|
General and administrative expenses
|
(38,068
|
)
|
|
(38,641
|
)
|
|
(36,234
|
)
|
|||
Depreciation and amortization
|
(357,743
|
)
|
|
(309,864
|
)
|
|
(276,761
|
)
|
|||
Other income
|
11,653
|
|
|
11,414
|
|
|
9,712
|
|
|||
Other expenses
|
(7,216
|
)
|
|
(7,744
|
)
|
|
(7,037
|
)
|
|||
Income from unconsolidated Funds
|
6,923
|
|
|
6,400
|
|
|
5,905
|
|
|||
Interest expense
|
(143,308
|
)
|
|
(133,402
|
)
|
|
(145,176
|
)
|
|||
Gain from consolidation of JV
|
307,938
|
|
|
—
|
|
|
—
|
|
|||
Net income
|
418,698
|
|
|
128,612
|
|
|
104,427
|
|
|||
Less: Net income attributable to noncontrolling interests
|
(54,985
|
)
|
|
(12,526
|
)
|
|
(9,984
|
)
|
|||
Net income attributable to common stockholders
|
$
|
363,713
|
|
|
$
|
116,086
|
|
|
$
|
94,443
|
|
Year Ending December 31,
|
(In thousands)
|
||
|
|
||
2020
|
$
|
658,016
|
|
2021
|
572,372
|
|
|
2022
|
484,611
|
|
|
2023
|
384,866
|
|
|
2024
|
294,137
|
|
|
Thereafter
|
691,145
|
|
|
Total future minimum base rentals(1)
|
$
|
3,085,147
|
|
(1)
|
Does not include (i) residential leases, which typically have a term of one year or less, (ii) holdover rent, (ii) 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 are not exercised.
|
Fund(1)
|
|
Loan Maturity Date
|
|
Principal Balance
(In thousands)
|
|
Variable Interest Rate
|
|
Swap Fixed Interest Rate
|
|
Swap Maturity Date
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Partnership X(2)(3)
|
|
3/1/2023
|
|
$
|
110,000
|
|
|
LIBOR + 1.40%
|
|
2.30%
|
|
3/1/2021
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
See Note 6 for more information regarding our unconsolidated Fund.
|
(2)
|
Floating rate term loan, swapped to fixed, which is secured by two properties and requires monthly payments of interest only, with the outstanding principal due upon maturity. As of December 31, 2019, assuming a zero-percent LIBOR interest rate during the remaining life of the swap, the maximum future payments under the swap agreement were $1.2 million.
|
(3)
|
Loan agreement includes a zero-percent LIBOR floor. The corresponding swap does not include such a floor.
|
|
Three Months Ended
|
||||||||||||||
(In thousands, except per share amounts)
|
March 31,
2019 |
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
224,186
|
|
|
$
|
230,534
|
|
|
$
|
238,069
|
|
|
$
|
243,893
|
|
Net income before noncontrolling interests
|
$
|
32,788
|
|
|
$
|
39,860
|
|
|
$
|
23,421
|
|
|
$
|
322,629
|
|
Net income attributable to common stockholders
|
$
|
28,701
|
|
|
$
|
33,966
|
|
|
$
|
22,488
|
|
|
$
|
278,558
|
|
Net income per common share - basic
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
$
|
0.13
|
|
|
$
|
1.58
|
|
Net income per common share - diluted
|
$
|
0.17
|
|
|
$
|
0.20
|
|
|
$
|
0.13
|
|
|
$
|
1.58
|
|
Weighted average shares of common stock outstanding - basic
|
170,221
|
|
|
172,498
|
|
|
175,278
|
|
|
175,356
|
|
||||
Weighted average shares of common stock and common stock equivalents outstanding - diluted
|
170,221
|
|
|
172,498
|
|
|
175,278
|
|
|
175,356
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
||||||||||||||
(In thousands, except per share amounts)
|
March 31,
2018 |
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Total revenue
|
$
|
212,247
|
|
|
$
|
219,469
|
|
|
$
|
223,308
|
|
|
$
|
226,292
|
|
Net income before noncontrolling interests
|
$
|
32,631
|
|
|
$
|
37,033
|
|
|
$
|
35,416
|
|
|
$
|
23,532
|
|
Net income attributable to common stockholders
|
$
|
28,206
|
|
|
$
|
31,684
|
|
|
$
|
30,561
|
|
|
$
|
25,635
|
|
Net income per common share - basic
|
$
|
0.17
|
|
|
$
|
0.19
|
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
Net income per common share - diluted
|
$
|
0.17
|
|
|
$
|
0.19
|
|
|
$
|
0.18
|
|
|
$
|
0.15
|
|
Weighted average shares of common stock outstanding - basic
|
169,601
|
|
|
169,916
|
|
|
169,926
|
|
|
170,121
|
|
||||
Weighted average shares of common stock and common stock equivalents outstanding - diluted
|
169,625
|
|
|
169,926
|
|
|
169,931
|
|
|
170,121
|
|
|
|
|
|
Initial Cost
|
|
Cost Capitalized Subsequent to Acquisition
|
|
Gross Carrying Amount
|
|
|
|
|
|
|
||||||||||||||||||||||
Property Name
|
|
Encumb-rances
|
|
Land
|
|
Building & Improve-ments(2)
|
|
Improve-ments(2)(3)
|
|
Land
|
|
Building & Improve-ments(2)
|
|
Total(5)
|
|
Accumulated Depreciation & Amortization
|
|
Year Built / Renovated
|
|
Year Acquired
|
||||||||||||||||
Office Properties
|
||||||||||||||||||||||||||||||||||||
100 Wilshire
|
|
$
|
252,034
|
|
|
$
|
12,769
|
|
|
$
|
78,447
|
|
|
$
|
151,175
|
|
|
$
|
27,108
|
|
|
$
|
215,283
|
|
|
$
|
242,391
|
|
|
$
|
73,429
|
|
|
1968/2002/2019
|
|
1999
|
233 Wilshire
|
|
62,962
|
|
|
9,263
|
|
|
130,426
|
|
|
3,549
|
|
|
9,263
|
|
|
133,975
|
|
|
143,238
|
|
|
14,268
|
|
|
1975/2008-2009
|
|
2016
|
||||||||
401 Wilshire
|
|
—
|
|
|
9,989
|
|
|
29,187
|
|
|
129,932
|
|
|
21,787
|
|
|
147,321
|
|
|
169,108
|
|
|
47,259
|
|
|
1981/2000/2019
|
|
1996
|
||||||||
429 Santa Monica
|
|
33,691
|
|
|
4,949
|
|
|
72,534
|
|
|
3,086
|
|
|
4,949
|
|
|
75,620
|
|
|
80,569
|
|
|
6,978
|
|
|
1982/2016
|
|
2017
|
||||||||
1132 Bishop Street
|
|
—
|
|
|
8,317
|
|
|
105,651
|
|
|
55,172
|
|
|
8,833
|
|
|
160,307
|
|
|
169,140
|
|
|
87,669
|
|
|
1992
|
|
2004
|
||||||||
1299 Ocean
|
|
124,699
|
|
|
22,748
|
|
|
265,198
|
|
|
15,300
|
|
|
22,748
|
|
|
280,498
|
|
|
303,246
|
|
|
22,015
|
|
|
1980/2006/2019
|
|
2017
|
||||||||
1901 Avenue of the Stars
|
|
—
|
|
|
18,514
|
|
|
131,752
|
|
|
114,260
|
|
|
26,163
|
|
|
238,363
|
|
|
264,526
|
|
|
86,611
|
|
|
1968/2001
|
|
2001
|
||||||||
2001 Wilshire(4)
|
|
36,000
|
|
|
5,711
|
|
|
81,622
|
|
|
151
|
|
|
5,711
|
|
|
81,773
|
|
|
87,484
|
|
|
273
|
|
|
1980/2013
|
|
2008
|
||||||||
8383 Wilshire(4)
|
|
138,000
|
|
|
18,005
|
|
|
328,118
|
|
|
695
|
|
|
18,005
|
|
|
328,813
|
|
|
346,818
|
|
|
1,076
|
|
|
1971/2009
|
|
2008
|
||||||||
8484 Wilshire(1)
|
|
—
|
|
|
8,846
|
|
|
77,780
|
|
|
16,101
|
|
|
8,846
|
|
|
93,881
|
|
|
102,727
|
|
|
21,021
|
|
|
1972/2013
|
|
2013
|
||||||||
9100 Wilshire(4)
|
|
115,000
|
|
|
13,455
|
|
|
258,329
|
|
|
518
|
|
|
13,455
|
|
|
258,847
|
|
|
272,302
|
|
|
807
|
|
|
1971/2016
|
|
2008
|
||||||||
9401 Wilshire
|
|
30,864
|
|
|
6,740
|
|
|
152,310
|
|
|
12,743
|
|
|
6,740
|
|
|
165,053
|
|
|
171,793
|
|
|
10,617
|
|
|
1971/2019
|
|
2017
|
||||||||
9601 Wilshire
|
|
—
|
|
|
16,597
|
|
|
54,774
|
|
|
105,395
|
|
|
17,658
|
|
|
159,108
|
|
|
176,766
|
|
|
57,708
|
|
|
1962/2004
|
|
2001
|
||||||||
9665 Wilshire
|
|
77,445
|
|
|
5,568
|
|
|
177,072
|
|
|
18,550
|
|
|
5,568
|
|
|
195,622
|
|
|
201,190
|
|
|
12,887
|
|
|
1971/2019
|
|
2017
|
||||||||
10880 Wilshire
|
|
198,794
|
|
|
29,995
|
|
|
437,514
|
|
|
31,763
|
|
|
29,988
|
|
|
469,284
|
|
|
499,272
|
|
|
53,543
|
|
|
1970/2009/2019
|
|
2016
|
||||||||
10960 Wilshire
|
|
201,893
|
|
|
45,844
|
|
|
429,769
|
|
|
27,072
|
|
|
45,852
|
|
|
456,833
|
|
|
502,685
|
|
|
54,210
|
|
|
1971/2006
|
|
2016
|
||||||||
11777 San Vicente
|
|
44,412
|
|
|
5,032
|
|
|
15,768
|
|
|
29,600
|
|
|
6,714
|
|
|
43,686
|
|
|
50,400
|
|
|
16,119
|
|
|
1974/1998
|
|
1999
|
||||||||
12100 Wilshire
|
|
101,203
|
|
|
20,164
|
|
|
208,755
|
|
|
8,255
|
|
|
20,164
|
|
|
217,010
|
|
|
237,174
|
|
|
26,206
|
|
|
1985
|
|
2016
|
||||||||
12400 Wilshire
|
|
—
|
|
|
5,013
|
|
|
34,283
|
|
|
76,442
|
|
|
8,828
|
|
|
106,910
|
|
|
115,738
|
|
|
38,680
|
|
|
1985
|
|
1996
|
||||||||
15250 Ventura(4)
|
|
26,000
|
|
|
2,130
|
|
|
48,907
|
|
|
139
|
|
|
2,130
|
|
|
49,046
|
|
|
51,176
|
|
|
211
|
|
|
1970/2012
|
|
2008
|
||||||||
16000 Ventura(4)
|
|
42,000
|
|
|
1,936
|
|
|
89,531
|
|
|
301
|
|
|
1,936
|
|
|
89,832
|
|
|
91,768
|
|
|
325
|
|
|
1980/2011
|
|
2008
|
||||||||
16501 Ventura
|
|
42,944
|
|
|
6,759
|
|
|
53,112
|
|
|
11,387
|
|
|
6,759
|
|
|
64,499
|
|
|
71,258
|
|
|
15,359
|
|
|
1986/2012
|
|
2013
|
||||||||
Beverly Hills Medical Center
|
|
—
|
|
|
4,955
|
|
|
27,766
|
|
|
28,814
|
|
|
6,435
|
|
|
55,100
|
|
|
61,535
|
|
|
20,186
|
|
|
1964/2004
|
|
2004
|
||||||||
Bishop Square
|
|
200,000
|
|
|
16,273
|
|
|
213,793
|
|
|
31,072
|
|
|
16,273
|
|
|
244,865
|
|
|
261,138
|
|
|
70,903
|
|
|
1972/1983
|
|
2010
|
||||||||
Brentwood Court
|
|
—
|
|
|
2,564
|
|
|
8,872
|
|
|
524
|
|
|
2,563
|
|
|
9,397
|
|
|
11,960
|
|
|
3,653
|
|
|
1984
|
|
2006
|
||||||||
Brentwood Executive Plaza
|
|
—
|
|
|
3,255
|
|
|
9,654
|
|
|
32,710
|
|
|
5,921
|
|
|
39,698
|
|
|
45,619
|
|
|
14,519
|
|
|
1983/1996
|
|
1995
|
||||||||
Brentwood Medical Plaza
|
|
—
|
|
|
5,934
|
|
|
27,836
|
|
|
1,285
|
|
|
5,933
|
|
|
29,122
|
|
|
35,055
|
|
|
11,088
|
|
|
1975
|
|
2006
|
||||||||
Brentwood San Vicente Medical
|
|
—
|
|
|
5,557
|
|
|
16,457
|
|
|
1,180
|
|
|
5,557
|
|
|
17,637
|
|
|
23,194
|
|
|
6,782
|
|
|
1957/1985
|
|
2006
|
||||||||
Brentwood/Saltair
|
|
—
|
|
|
4,468
|
|
|
11,615
|
|
|
11,766
|
|
|
4,775
|
|
|
23,074
|
|
|
27,849
|
|
|
8,845
|
|
|
1986
|
|
2000
|
||||||||
Bundy/Olympic
|
|
—
|
|
|
4,201
|
|
|
11,860
|
|
|
29,078
|
|
|
6,030
|
|
|
39,109
|
|
|
45,139
|
|
|
14,450
|
|
|
1991/1998
|
|
1994
|
||||||||
Camden Medical Arts
|
|
42,276
|
|
|
3,102
|
|
|
12,221
|
|
|
27,853
|
|
|
5,298
|
|
|
37,878
|
|
|
43,176
|
|
|
13,704
|
|
|
1972/1992
|
|
1995
|
||||||||
Carthay Campus
|
|
—
|
|
|
6,595
|
|
|
70,454
|
|
|
6,241
|
|
|
6,594
|
|
|
76,696
|
|
|
83,290
|
|
|
15,396
|
|
|
1965/2008
|
|
2014
|
||||||||
Century Park Plaza
|
|
173,000
|
|
|
10,275
|
|
|
70,761
|
|
|
132,532
|
|
|
16,153
|
|
|
197,415
|
|
|
213,568
|
|
|
60,946
|
|
|
1972/1987/2019
|
|
1999
|
||||||||
Century Park West(1)
|
|
—
|
|
|
3,717
|
|
|
29,099
|
|
|
(1,050
|
)
|
|
3,667
|
|
|
28,099
|
|
|
31,766
|
|
|
10,038
|
|
|
1971
|
|
2007
|
||||||||
Columbus Center
|
|
—
|
|
|
2,096
|
|
|
10,396
|
|
|
9,569
|
|
|
2,333
|
|
|
19,728
|
|
|
22,061
|
|
|
7,439
|
|
|
1987
|
|
2001
|
||||||||
Coral Plaza
|
|
—
|
|
|
4,028
|
|
|
15,019
|
|
|
18,918
|
|
|
5,366
|
|
|
32,599
|
|
|
37,965
|
|
|
12,051
|
|
|
1981
|
|
1998
|
||||||||
Cornerstone Plaza(1)
|
|
—
|
|
|
8,245
|
|
|
80,633
|
|
|
7,135
|
|
|
8,263
|
|
|
87,750
|
|
|
96,013
|
|
|
30,052
|
|
|
1986
|
|
2007
|
||||||||
Encino Gateway
|
|
—
|
|
|
8,475
|
|
|
48,525
|
|
|
55,246
|
|
|
15,653
|
|
|
96,593
|
|
|
112,246
|
|
|
35,614
|
|
|
1974/1998
|
|
2000
|
||||||||
Encino Plaza
|
|
—
|
|
|
5,293
|
|
|
23,125
|
|
|
47,991
|
|
|
6,165
|
|
|
70,244
|
|
|
76,409
|
|
|
26,809
|
|
|
1971/1992
|
|
2000
|
||||||||
Encino Terrace
|
|
105,565
|
|
|
12,535
|
|
|
59,554
|
|
|
94,108
|
|
|
15,533
|
|
|
150,664
|
|
|
166,197
|
|
|
53,418
|
|
|
1986
|
|
1999
|
||||||||
Executive Tower(1)
|
|
—
|
|
|
6,660
|
|
|
32,045
|
|
|
59,549
|
|
|
9,471
|
|
|
88,783
|
|
|
98,254
|
|
|
34,753
|
|
|
1989
|
|
1995
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
Cost Capitalized Subsequent to Acquisition
|
|
Gross Carrying Amount
|
|
|
|
|
|
|
||||||||||||||||||||||
Property Name
|
|
Encumb-rances
|
|
Land
|
|
Building & Improve-ments(2)
|
|
Improve-
ments(2)(3) |
|
Land
|
|
Building & Improve-ments(2)
|
|
Total(5)
|
|
Accumulated Depreciation & Amortization
|
|
Year Built / Renovated
|
|
Year Acquired
|
||||||||||||||||
Office Properties (continued)
|
||||||||||||||||||||||||||||||||||||
First Financial Plaza
|
|
54,077
|
|
|
12,092
|
|
|
81,104
|
|
|
3,635
|
|
|
12,092
|
|
|
84,739
|
|
|
96,831
|
|
|
13,474
|
|
|
1986
|
|
2015
|
||||||||
Gateway Los Angeles
|
|
—
|
|
|
2,376
|
|
|
15,302
|
|
|
49,327
|
|
|
5,119
|
|
|
61,886
|
|
|
67,005
|
|
|
23,283
|
|
|
1987
|
|
1994
|
||||||||
Harbor Court
|
|
—
|
|
|
51
|
|
|
41,001
|
|
|
48,087
|
|
|
12,060
|
|
|
77,079
|
|
|
89,139
|
|
|
24,518
|
|
|
1994
|
|
2004
|
||||||||
Honolulu Club
|
|
—
|
|
|
1,863
|
|
|
16,766
|
|
|
5,896
|
|
|
1,863
|
|
|
22,662
|
|
|
24,525
|
|
|
9,089
|
|
|
1980
|
|
2008
|
||||||||
Landmark II
|
|
—
|
|
|
6,086
|
|
|
109,259
|
|
|
67,669
|
|
|
13,070
|
|
|
169,944
|
|
|
183,014
|
|
|
61,622
|
|
|
1989
|
|
1997
|
||||||||
Lincoln/Wilshire
|
|
—
|
|
|
3,833
|
|
|
12,484
|
|
|
23,598
|
|
|
7,475
|
|
|
32,440
|
|
|
39,915
|
|
|
10,883
|
|
|
1996
|
|
2000
|
||||||||
MB Plaza
|
|
—
|
|
|
4,533
|
|
|
22,024
|
|
|
33,600
|
|
|
7,503
|
|
|
52,654
|
|
|
60,157
|
|
|
18,784
|
|
|
1971/1996
|
|
1998
|
||||||||
Olympic Center
|
|
52,000
|
|
|
5,473
|
|
|
22,850
|
|
|
34,804
|
|
|
8,247
|
|
|
54,880
|
|
|
63,127
|
|
|
19,807
|
|
|
1985/1996
|
|
1997
|
||||||||
One Westwood(1)
|
|
—
|
|
|
10,350
|
|
|
29,784
|
|
|
63,393
|
|
|
9,194
|
|
|
94,333
|
|
|
103,527
|
|
|
34,093
|
|
|
1987/2004
|
|
1999
|
||||||||
Palisades Promenade
|
|
—
|
|
|
5,253
|
|
|
15,547
|
|
|
54,541
|
|
|
9,664
|
|
|
65,677
|
|
|
75,341
|
|
|
23,435
|
|
|
1990
|
|
1995
|
||||||||
Saltair/San Vicente
|
|
21,533
|
|
|
5,075
|
|
|
6,946
|
|
|
16,739
|
|
|
7,557
|
|
|
21,203
|
|
|
28,760
|
|
|
8,044
|
|
|
1964/1992
|
|
1997
|
||||||||
San Vicente Plaza
|
|
—
|
|
|
7,055
|
|
|
12,035
|
|
|
(61
|
)
|
|
7,055
|
|
|
11,974
|
|
|
19,029
|
|
|
4,798
|
|
|
1985
|
|
2006
|
||||||||
Santa Monica Square
|
|
48,500
|
|
|
5,366
|
|
|
18,025
|
|
|
21,723
|
|
|
6,863
|
|
|
38,251
|
|
|
45,114
|
|
|
13,974
|
|
|
1983/2004
|
|
2001
|
||||||||
Second Street Plaza
|
|
—
|
|
|
4,377
|
|
|
15,277
|
|
|
36,308
|
|
|
7,421
|
|
|
48,541
|
|
|
55,962
|
|
|
17,963
|
|
|
1991
|
|
1997
|
||||||||
Sherman Oaks Galleria
|
|
300,000
|
|
|
33,213
|
|
|
17,820
|
|
|
410,836
|
|
|
48,328
|
|
|
413,541
|
|
|
461,869
|
|
|
150,971
|
|
|
1981/2002
|
|
1997
|
||||||||
Studio Plaza
|
|
—
|
|
|
9,347
|
|
|
73,358
|
|
|
122,044
|
|
|
15,015
|
|
|
189,734
|
|
|
204,749
|
|
|
68,366
|
|
|
1988/2004
|
|
1995
|
||||||||
The Tower
|
|
65,969
|
|
|
9,643
|
|
|
160,602
|
|
|
4,196
|
|
|
9,643
|
|
|
164,798
|
|
|
174,441
|
|
|
20,889
|
|
|
1988/1998
|
|
2016
|
||||||||
The Trillium(1)
|
|
—
|
|
|
20,688
|
|
|
143,263
|
|
|
85,509
|
|
|
21,989
|
|
|
227,471
|
|
|
249,460
|
|
|
80,180
|
|
|
1988
|
|
2005
|
||||||||
Valley Executive Tower
|
|
104,000
|
|
|
8,446
|
|
|
67,672
|
|
|
104,500
|
|
|
11,737
|
|
|
168,881
|
|
|
180,618
|
|
|
60,805
|
|
|
1984
|
|
1998
|
||||||||
Valley Office Plaza
|
|
—
|
|
|
5,731
|
|
|
24,329
|
|
|
46,172
|
|
|
8,957
|
|
|
67,275
|
|
|
76,232
|
|
|
24,902
|
|
|
1966/2002
|
|
1998
|
||||||||
Verona
|
|
—
|
|
|
2,574
|
|
|
7,111
|
|
|
15,131
|
|
|
5,111
|
|
|
19,705
|
|
|
24,816
|
|
|
7,106
|
|
|
1991
|
|
1997
|
||||||||
Village on Canon
|
|
61,745
|
|
|
5,933
|
|
|
11,389
|
|
|
50,012
|
|
|
13,303
|
|
|
54,031
|
|
|
67,334
|
|
|
19,444
|
|
|
1989/1995
|
|
1994
|
||||||||
Warner Center Towers
|
|
335,000
|
|
|
43,110
|
|
|
292,147
|
|
|
421,607
|
|
|
59,418
|
|
|
697,446
|
|
|
756,864
|
|
|
256,107
|
|
|
1982-1993/2004
|
|
2002
|
||||||||
Warner Corporate Center(4)
|
|
43,000
|
|
|
11,035
|
|
|
65,799
|
|
|
335
|
|
|
11,035
|
|
|
66,134
|
|
|
77,169
|
|
|
298
|
|
|
1988/2015
|
|
2008
|
||||||||
Westside Towers
|
|
141,915
|
|
|
8,506
|
|
|
79,532
|
|
|
82,034
|
|
|
14,568
|
|
|
155,504
|
|
|
170,072
|
|
|
56,383
|
|
|
1985
|
|
1998
|
||||||||
Westwood Center
|
|
113,343
|
|
|
9,512
|
|
|
259,341
|
|
|
12,344
|
|
|
9,513
|
|
|
271,684
|
|
|
281,197
|
|
|
33,966
|
|
|
1965/2000
|
|
2016
|
||||||||
Westwood Place
|
|
71,000
|
|
|
8,542
|
|
|
44,419
|
|
|
52,040
|
|
|
11,448
|
|
|
93,553
|
|
|
105,001
|
|
|
33,866
|
|
|
1987
|
|
1999
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Multifamily Properties
|
||||||||||||||||||||||||||||||||||||
555 Barrington
|
|
50,000
|
|
|
6,461
|
|
|
27,639
|
|
|
40,435
|
|
|
14,903
|
|
|
59,632
|
|
|
74,535
|
|
|
21,850
|
|
|
1989
|
|
1999
|
||||||||
Barrington Plaza
|
|
210,000
|
|
|
28,568
|
|
|
81,485
|
|
|
153,858
|
|
|
58,208
|
|
|
205,703
|
|
|
263,911
|
|
|
75,202
|
|
|
1963/1998
|
|
1998
|
||||||||
Barrington/Kiowa
|
|
13,940
|
|
|
5,720
|
|
|
10,052
|
|
|
656
|
|
|
5,720
|
|
|
10,708
|
|
|
16,428
|
|
|
3,979
|
|
|
1974
|
|
2006
|
||||||||
Barry
|
|
11,370
|
|
|
6,426
|
|
|
8,179
|
|
|
549
|
|
|
6,426
|
|
|
8,728
|
|
|
15,154
|
|
|
3,340
|
|
|
1973
|
|
2006
|
||||||||
Kiowa
|
|
5,470
|
|
|
2,605
|
|
|
3,263
|
|
|
421
|
|
|
2,605
|
|
|
3,684
|
|
|
6,289
|
|
|
1,378
|
|
|
1972
|
|
2006
|
||||||||
Moanalua Hillside Apartments
|
|
255,000
|
|
|
24,791
|
|
|
157,353
|
|
|
119,348
|
|
|
35,365
|
|
|
266,127
|
|
|
301,492
|
|
|
47,725
|
|
|
1968/2004/2019
|
|
2005
|
||||||||
Pacific Plaza
|
|
78,000
|
|
|
10,091
|
|
|
16,159
|
|
|
74,021
|
|
|
27,816
|
|
|
72,455
|
|
|
100,271
|
|
|
25,820
|
|
|
1963/1998
|
|
1999
|
||||||||
The Glendon
|
|
160,000
|
|
|
32,773
|
|
|
335,925
|
|
|
467
|
|
|
32,775
|
|
|
336,390
|
|
|
369,165
|
|
|
6,028
|
|
|
2008
|
|
2019
|
||||||||
The Shores
|
|
212,000
|
|
|
20,809
|
|
|
74,191
|
|
|
199,491
|
|
|
60,555
|
|
|
233,936
|
|
|
294,491
|
|
|
82,309
|
|
|
1965-67/2002
|
|
1999
|
||||||||
Villas at Royal Kunia
|
|
94,220
|
|
|
42,887
|
|
|
71,376
|
|
|
14,961
|
|
|
35,163
|
|
|
94,061
|
|
|
129,224
|
|
|
38,965
|
|
|
1990/1995
|
|
2006
|
||||||||
Waena Apartments
|
|
102,400
|
|
|
26,864
|
|
|
119,273
|
|
|
1,502
|
|
|
26,864
|
|
|
120,775
|
|
|
147,639
|
|
|
16,852
|
|
|
1970/2009-2014
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These properties are encumbered by our revolving credit facility, which had a zero balance as of December 31, 2019.
|
(2)
|
Includes tenant improvements and lease intangibles.
|
(3)
|
Net of fully depreciated and amortized tenant improvements and lease intangibles removed from our books.
|
(4)
|
A previously unconsolidated Fund is now treated as a consolidated JV.
|
(5)
|
At December 31, 2019, the aggregate federal income tax cost basis for consolidated real estate was $7.91 billion (unaudited).
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Investment in real estate, gross
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
10,030,708
|
|
|
$
|
9,829,208
|
|
|
$
|
8,998,120
|
|
Property acquisitions
|
368,698
|
|
|
—
|
|
|
707,120
|
|
|||
Consolidation of JV
|
924,578
|
|
|
—
|
|
|
—
|
|
|||
Improvements and developments
|
242,854
|
|
|
277,229
|
|
|
177,655
|
|
|||
Removal of fully depreciated and amortized tenant improvements and lease intangibles
|
(88,205
|
)
|
|
(75,729
|
)
|
|
(53,687
|
)
|
|||
Ending balance
|
$
|
11,478,633
|
|
|
$
|
10,030,708
|
|
|
$
|
9,829,208
|
|
|
|
|
|
|
|
||||||
Accumulated depreciation and amortization
|
|
|
|
|
|
||||||
Beginning balance
|
$
|
(2,246,887
|
)
|
|
$
|
(2,012,752
|
)
|
|
$
|
(1,789,678
|
)
|
Depreciation and amortization
|
(357,743
|
)
|
|
(309,864
|
)
|
|
(276,761
|
)
|
|||
Other accumulated depreciation and amortization
|
(1,990
|
)
|
|
—
|
|
|
—
|
|
|||
Removal of fully depreciated and amortized tenant improvements and lease intangibles
|
88,205
|
|
|
75,729
|
|
|
53,687
|
|
|||
Ending balance
|
$
|
(2,518,415
|
)
|
|
$
|
(2,246,887
|
)
|
|
$
|
(2,012,752
|
)
|
|
|
|
|
|
|
||||||
Investment in real estate, net
|
$
|
8,960,218
|
|
|
$
|
7,783,821
|
|
|
$
|
7,816,456
|
|
1 Year Douglas Emmett Chart |
1 Month Douglas Emmett Chart |
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