Douglas Emmett Inc (DEI) Reports Q3 2023 Earnings: Revenues Increase by 0.7% Amidst Net Loss
Revenues increased by 0.7% to $255.4 million in Q3 2023 compared to Q3 2022.
Net income attributable to common stockholders decreased by 158.2% to a net loss of $13.4 million.
FFO decreased by 15.0% to $89.4 million, primarily due to higher interest expense on floating rate debt.
AFFO decreased by 24.0% to $68.7 million.
On October 31, 2023, Douglas Emmett Inc (NYSE:DEI) released its earnings report for the quarter ended September 30, 2023. The report shows a 0.7% increase in revenues to $255.4 million, primarily due to higher tenant recoveries and parking revenues from the office portfolio and new units in the multifamily portfolio. However, the company reported a net loss attributable to common stockholders of $13.4 million, a decrease of 158.2% compared to the same quarter in the previous year.
Financial Performance
The decrease in net income was primarily due to accelerated depreciation and higher interest expense. The company's FFO decreased by 15.0% to $89.4 million, primarily as a result of higher interest expense on floating rate debt. Additionally, the AFFO decreased by 24.0% to $68.7 million, as DEI built out more square footage this quarter due to higher leasing volume.
Leasing and Dividends
During the third quarter, DEI signed 225 office leases covering approximately 934,000 square feet, including 267,000 square feet of new leases. The company's multifamily portfolio remains essentially fully leased at 98.9%. On October 17, 2023, DEI paid a quarterly cash dividend of $0.19 per common share, or $0.76 per common share on an annualized basis.
Balance Sheet and Guidance
As of the end of the quarter, DEI had cash and cash equivalents of $526.2 million. The company adjusted its assumptions for occupancy and same property cash NOI growth but the positive impact from these changes was not enough to increase its guidance for FFO outside of the range reported last quarter. As a result, DEI still expects Net Loss Per Common Share - Diluted to be between $(0.13) and $(0.09), and FFO per fully diluted share to be between $1.81 and $1.85.
Key Financial Tables
The report includes detailed financial tables, including Consolidated Balance Sheets, Consolidated Operating Results, Funds from Operations & Adjusted Funds From Operations, Same Property Statistics & Net Operating Income, and Reconciliation of Same Property NOI to Net (Loss) Income. These tables provide a comprehensive overview of DEI's financial performance for the quarter.
Conclusion
Despite the increase in revenues, Douglas Emmett Inc (NYSE:DEI) reported a net loss for the third quarter of 2023. The company continues to focus on its leasing activities and maintaining a strong balance sheet. However, the decrease in net income and FFO indicates challenges that the company needs to address moving forward.
Explore the complete 8-K earnings release (here) from Douglas Emmett Inc for further details.
This article first appeared on GuruFocus.
