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What changed in Douglas Emmett Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Douglas Emmett Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+198 added−184 removedSource: 10-K (2025-02-14) vs 10-K (2024-02-16)

Top changes in Douglas Emmett Inc's 2024 10-K

198 paragraphs added · 184 removed · 144 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

22 edited+3 added−1 removed63 unchanged
Biggest changeWe must satisfy five asset tests at the close of each quarter of our taxable year: i. 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, ii. not more than 25% of our total assets may be represented by securities other than those in the 75% asset class, iii. 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, iv. not more than 20% of the value of our total assets may be represented by securities of one or more TRS, and v. not more than 25% of the value of our total assets may be represented by nonqualified publicly offered REIT debt instruments.
Biggest changeWe must satisfy five asset tests at the close of each quarter of our taxable year: i. 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, ii. not more than 25% of our total assets may be represented by securities other than those in the 75% asset class, iii. 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, iv. not more than 20% of the value of our total assets may be represented by securities of one or more TRS, and v. not more than 25% of the value of our total assets may be represented by nonqualified publicly offered REIT debt instruments. 8 In order to qualify as a REIT, we are required to distribute dividends (other than capital gains dividends) to our stockholders equal to at least (A) the sum of (i) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the net income, if any (after tax), from foreclosure property, less (B) the sum of certain items of non-cash income.
See Note 15 to our consolidated financial statements in Item 15 of this Report for more information regarding our segments. 7 Taxation We believe that we qualify, and we intend to continue to qualify, for taxation as a REIT under the Code, although we cannot provide assurance that this has happened or will happen.
See Note 15 to our consolidated financial statements in Item 15 of this Report for more information regarding our segments. Taxation We believe that we qualify, and we intend to continue to qualify, for taxation as a REIT under the Code, although we cannot provide assurance that this has happened or will happen.
Most of the property data in this Report is presented for our Total Portfolio, which includes the properties owned by our JVs and our Fund, as we believe this presentation assists in understanding our business. Segments We operate two business segments, our office segment and our multifamily segment.
Most of the property data in this Report is presented for our Total Portfolio, which includes the properties owned by our JVs and our Fund, as we believe this presentation assists in understanding our business. 7 Segments We operate two business segments, our office segment and our multifamily segment.
As of December 31, 2023, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases): Consolidated Portfolio Total Portfolio Office Wholly-owned properties 52 52 Consolidated JV properties 16 16 Unconsolidated Fund properties — 2 Total 68 70 Multifamily Wholly-owned properties 12 12 Consolidated JV properties 2 2 Total 14 14 Total 82 84 Business Strategy We employ a focused business strategy that we have developed and implemented over the past four decades: • Concentration of High Quality Office and Multifamily Properties in Premier Submarkets.
As of December 31, 2024, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases): Consolidated Portfolio Total Portfolio Office Wholly-owned properties 52 52 Consolidated JV properties 16 16 Unconsolidated Fund properties — 2 Total 68 70 Multifamily Wholly-owned properties 12 12 Consolidated JV properties 2 2 Total 14 14 Total 82 84 Business Strategy We employ a focused business strategy that we have developed and implemented over the past four decades: • Concentration of High Quality Office and Multifamily Properties in Premier Submarkets.
See Item 1A "Risk Factors" of this Report for the risks we face regarding laws and regulations. 9 Environmental Sustainability Our approach We actively manage our operations in an environmentally sustainable manner.
See Item 1A "Risk Factors" of this Report for the risks we face regarding laws and regulations. Environmental Sustainability Our approach We actively manage our operations in an environmentally sustainable manner.
Our office tenants operate in diverse industries, including among others legal, financial services, entertainment, real estate, accounting and consulting, health services, retail, technology and insurance, reducing our dependence on any one industry. In 2021, 2022 and 2023, no tenant accounted for more than 10% of our total revenues. 6 • Disciplined Strategy of Acquiring Substantial Market Share In Each Submarket.
Our office tenants operate in diverse industries, including among others legal, financial services, entertainment, real estate, accounting and consulting, health services, retail, technology and insurance, reducing our dependence on any one industry. In 2022, 2023 and 2024, no tenant accounted for more than 10% of our total revenues. 6 • Disciplined Strategy of Acquiring Substantial Market Share In Each Submarket.
Our property management group oversees day-to-day property management of both our office and multifamily portfolios, allowing us to benefit from the operational efficiencies permitted by our submarket concentration. Corporate Structure Douglas Emmett, Inc. was formed as a Maryland corporation on June 28, 2005 to continue and expand the operations of Douglas Emmett Realty Advisors and its 9 institutional funds.
Our property management group oversees day-to-day property management of both our office and multifamily portfolios, allowing us to benefit from the operational efficiencies permitted by our submarket concentration. Corporate Structure Douglas Emmett, Inc. was formed as a Maryland corporation on June 28, 2005 to continue and expand the operations of Douglas Emmett Realty Advisors and its nine institutional funds.
We also manage and own equity interests in our unconsolidated Fund which, at December 31, 2023, owned an additional 0.4 million square feet of office space. We manage our unconsolidated Fund alongside our Consolidated Portfolio, and we therefore present the statistics for our office portfolio on a Total Portfolio basis. For more information, see Item 2 "Properties" of this Report.
We also manage and own equity interests in our unconsolidated Fund which, at December 31, 2024, owned an additional 0.4 million square feet of office space. We manage our unconsolidated Fund alongside our Consolidated Portfolio, and we therefore present the statistics for our office portfolio on a Total Portfolio basis. For more information, see Item 2 "Properties" of this Report.
We estimate the percentage of renewable energy provided by our utility providers was approximately one-third in 2021 (the most recent available data). • Water Usage We have undertaken a number of initiatives to conserve water across our portfolio. Our buildings use low flow faucets and toilets, and we have also saved water by using waterless urinals.
We estimate the percentage of renewable energy provided by our utility providers was approximately one-third in 2022 (the most recent available data). • Water Usage We have undertaken a number of initiatives to conserve water across our portfolio. Our buildings use low flow faucets and toilets, and we have also saved water by using waterless urinals.
As a result, we average approximately a 37% share of the Class A office space in our submarkets based on the square feet of exposure in our total portfolio to each submarket. See "Office Portfolio Summary" in Item 2 “Properties” of this Report. • Proactive Asset and Property Management.
As a result, we average approximately a 38% share of the Class A office space in our submarkets based on the square feet of exposure in our total portfolio to each submarket. See "Office Portfolio Summary" in Item 2 “Properties” of this Report. • Proactive Asset and Property Management.
We are entitled to (i) distributions based on invested capital as well as 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. • 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 53.8% at December 31, 2023.
We are entitled to (i) distributions based on invested capital as well as 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. • 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 74.0% at December 31, 2024.
At December 31, 2023, we owned a Consolidated Portfolio consisting of (i) a 17.6 million square foot office portfolio, (ii) 4,576 multifamily apartment units and (iii) fee interests in two parcels of land from which we receive rent under ground leases.
At December 31, 2024, we owned a Consolidated Portfolio consisting of (i) a 17.6 million square foot office portfolio, (ii) 4,472 multifamily apartment units and (iii) fee interests in two parcels of land from which we receive rent under ground leases.
Our submarkets are dominated by small, affluent tenants, whose rents are very small relative to their revenues and often not the paramount factor in their leasing decisions. At December 31, 2023, our office portfolio median size tenant was approximately 2,500 square feet.
Our submarkets are dominated by small, affluent tenants, whose rents are very small relative to their revenues and often not the paramount factor in their leasing decisions. At December 31, 2024, our office portfolio median size tenant was approximately 2,400 square feet.
As of December 31, 2023, we employed approximately 750 people. 11 We promote a culture of openness, respect and trust and bring a sense of teamwork and inclusion to all we do. We recognize that having a range of experiences, backgrounds and perspectives allows us to find new ways of doing things.
As of December 31, 2024, we employed approximately 770 people. 11 We promote a culture of openness, respect and trust and bring a sense of teamwork and inclusion to all we do. We recognize that having a range of experiences, backgrounds and perspectives allows us to find new ways of doing things.
In 2023, we provided equity compensation to more than a quarter of our approximately 750 employees. The health and safety of our employees, tenants, and vendors is of the utmost importance to us. We adhere to leading health and safety standards across our portfolio, and each year, we require all our employees to complete safety training.
In 2024, we provided equity compensation to more than a quarter of our approximately 770 employees. The health and safety of our employees, tenants, and vendors is of the utmost importance to us. We adhere to leading health and safety standards across our portfolio, and each year, we require all our employees to complete safety training.
JVs and Fund At December 31, 2023, in addition to fifty-two office properties and twelve residential properties wholly-owned by our Operating Partnership, we manage and own equity interests in: • four consolidated JVs, through which we and institutional investors own sixteen office properties in our core markets totaling 4.2 million square feet and two residential properties with 470 apartments, and in which we own a weighted average of 46% at December 31, 2023 based on square footage.
JVs and Fund At December 31, 2024, in addition to 52 office properties and 12 residential properties wholly-owned by our Operating Partnership, we manage and own equity interests in: • four consolidated JVs, through which we and institutional investors own 16 office properties in our core markets totaling 4.2 million square feet and two residential properties with 470 apartments, and in which we own a weighted average of 46% at December 31, 2024 based on square footage.
As a result of our efforts, 92% of our stabilized eligible office space as of December 31, 2022 qualified for "ENERGY STAR Certification" by the EPA as having energy efficiency in the top 25% of buildings nationwide (our 2023 ENERGY STAR scores were not yet available as of the date of this Report).
As a result of our efforts, more than 91% of our stabilized eligible office space as of December 31, 2023 qualified for "ENERGY STAR Certification" by the EPA as having energy efficiency in the top 25% of buildings nationwide (our 2024 ENERGY STAR scores were not yet available as of the date of this Report).
None of the information on or hyperlinked from our website is incorporated into this Report. For more information, please contact: Stuart McElhinney Vice President, Investor Relations 310-255-7751 smcelhinney@douglasemmett.com 12
None of the information on or hyperlinked from our website is incorporated into this Report. For more information, please contact: Stuart McElhinney Vice President, Investor Relations 310-255-7751 [email protected] 12
Furthermore, if we fail to distribute during each calendar year the sum of at least (i) 85% of our ordinary income for such year, (ii) 95% of our capital gains income for such year, and (iii) any undistributed taxable income from prior periods, we would be required to pay a 4% excise tax on the excess of such required distributions over the amounts actually distributed. 8 We own interests in various partnerships and limited liability companies.
Furthermore, if we fail to distribute during each calendar year the sum of at least (i) 85% of our ordinary income for such year, (ii) 95% of our capital gains income for such year, and (iii) any undistributed taxable income from prior periods, we would be required to pay a 4% excise tax on the excess of such required distributions over the amounts actually distributed.
Regulation Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas, fire and safety requirements, various environmental laws, the ADA, eviction moratoriums related to COVID-19, and rent control laws.
See Item 1A "Risk Factors" of this Report for the risks we face regarding competition. 9 Regulation Our properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to common areas, fire and safety requirements, various environmental laws, the ADA, eviction moratoriums related to COVID-19, and rent control laws.
See Item 2 "Properties" of this Report for more information about our properties. See Item 1A "Risk Factors" of this Report for the risks we face regarding competition.
See Item 2 "Properties" of this Report for more information about our properties.
The distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for such year, if paid on or before the first regular dividend payment date after such declaration and if we so elect and specify the dollar amount in our tax return.
At our election, a distribution will be treated as paid in a taxable year if it is declared before we timely file our tax return for such year and is paid on or before the first regular dividend payment after such declaration, provided such payment is made during the 12-month period following the close of such year.
Removed
In order to qualify as a REIT, we are required to distribute dividends (other than capital gains dividends) to our stockholders equal to at least (A) the sum of (i) 90% of our “REIT taxable income” (computed without regard to the dividends paid deduction and our net capital gain) and (ii) 90% of the net income, if any (after tax), from foreclosure property, less (B) the sum of certain items of non-cash income.
Added
In addition to the above four consolidated JVs, we entered into a new consolidated JV in December 2024 which acquired an office property in January 2025. See Note 18 to our consolidated financial statements in Item 15 of this Report for more information regarding subsequent events.
Added
The distributions generally must be paid in the taxable year to which they relate.
Added
We own interests in various partnerships and limited liability companies.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

38 edited+12 added−6 removed180 unchanged
Biggest changeIf we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the relief provisions under the Code in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure. 27 As a result of the above factors, our failure to qualify as a REIT could impair our ability to raise capital and expand our business, substantially reduce distributions to stockholders, result in us incurring substantial indebtedness (to the extent borrowings are feasible) or liquidating substantial investments in order to pay the resulting taxes, and adversely affect the market price of our common stock.
Biggest changeAs a result of the above factors, our failure to qualify as a REIT could impair our ability to raise capital and expand our business, substantially reduce distributions to stockholders, result in us incurring substantial indebtedness (to the extent borrowings are feasible) or liquidating substantial investments in order to pay the resulting taxes, and adversely affect the market price of our common stock.
Our properties in Los Angeles County are concentrated in certain submarkets, exposing us to risks associated with those specific areas. • Our operating performance and the market value of our securities are subject to risks associated with our investments in real estate assets and with trends in the real estate industry. • We have a substantial amount of debt, which exposes us to interest rate fluctuation risk and the risk of not being able to refinance our debt, which in turn could expose us to the risk of default under our debt obligations. • The rents we receive from new leases may be less than our asking rents, and we may experience rent roll-down from time to time. • Although we have a diverse tenant base, a large portion of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows. • In order to successfully compete against other properties, we need to maintain, repair, and renovate our properties, which reduces our cash flows. • We face intense competition, which could adversely impact the occupancy and rental rates of our properties. • Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, may adversely affect our business, financial position, results of operations, cash flows, our ability to service our debt, our ability to pay dividends to our stockholders, our REIT status, our ability to capitalize on business opportunities as they arise, our ability to raise capital, and/or the market price of our common stock. • Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance. • We may be unable to renew leases or lease vacant space. • Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants which may present greater credit risks. • Real estate investments are generally illiquid. • We may incur significant costs to comply with laws, regulations and covenants. • Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities. • Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation. • Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants. • We may be unable to complete acquisitions that would grow our business, or successfully integrate and operate acquired properties. • We may be unable to successfully expand our operations into new markets and submarkets. • We are exposed to risks associated with property development. 13 • We are exposed to certain risks when we enter into JVs or issue securities of our subsidiaries, including our Operating Partnership. • If we default on the ground lease to which one of our properties is subject, our business could be adversely affected. • We may not have sufficient cash available for distribution to stockholders at expected levels in the future. • We face risks associated with contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control. • Terrorism and war could harm our business and operating results.
Our properties in Los Angeles County are concentrated in certain submarkets, exposing us to risks associated with those specific areas. • Our operating performance and the market value of our securities are subject to risks associated with our investments in real estate assets and with trends in the real estate industry. • We have a substantial amount of debt, which exposes us to interest rate fluctuation risk and the risk of not being able to refinance our debt, which in turn could expose us to the risk of default under our debt obligations. • The rents we receive from new leases may be less than our asking rents, and we may experience rent roll-down from time to time. • Although we have a diverse tenant base, a large portion of our tenants operate in a concentrated group of industries and downturns in these industries could adversely affect our financial condition, results of operations and cash flows. • In order to successfully compete against other properties, we need to maintain, repair, and renovate our properties, which reduces our cash flows. • We face intense competition, which could adversely impact the occupancy and rental rates of our properties. • Epidemics, pandemics or other outbreaks, and restrictions intended to prevent their spread, may adversely affect our business, financial position, results of operations, cash flows, our ability to service our debt, our ability to pay dividends to our stockholders, our REIT status, our ability to capitalize on business opportunities as they arise, our ability to raise capital, and/or the market price of our common stock. • Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance. • We may be unable to renew leases or lease vacant space. • Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants which may present greater credit risks. • Real estate investments are generally illiquid. • We may incur significant costs to comply with laws, regulations and covenants. • Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities. • Our properties may contain or develop harmful mold or suffer from other air quality issues, which could lead to liability for adverse health effects and costs of remediation. • Rent control or rent stabilization legislation and other regulatory restrictions may limit our ability to increase rents and pass through new or increased operating costs to our tenants. • We may be unable to complete acquisitions that would grow our business, or successfully integrate and operate acquired properties. • We may be unable to successfully expand our operations into new markets and submarkets. • We are exposed to risks associated with property development. • We are exposed to certain risks when we enter into JVs or issue securities of our subsidiaries, including our Operating Partnership. 13 • If we default on the ground lease to which one of our properties is subject, our business could be adversely affected. • We may not have sufficient cash available for distribution to stockholders at expected levels in the future. • We face risks associated with contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control. • Terrorism and war could harm our business and operating results.
Our ability to acquire properties on favorable terms and to successfully integrate and operate them is subject to significant risks, including the following: • 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; • competition from other potential acquirers may significantly increase the purchase price of a desired property; • 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; • 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; • cash flows from the acquired properties may be insufficient to service the related debt financing; • we may need to spend more than we budgeted to make necessary improvements or renovations to acquired properties; • we may spend significant time and money on potential acquisitions that we do not close; • 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; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • occupancy and rental rates of acquired properties may be less than expected; and • 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.
Our ability to acquire properties on favorable terms and to successfully integrate and operate them is subject to significant risks, including the following: • 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; 21 • competition from other potential acquirers may significantly increase the purchase price of a desired property; • 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; • 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; • cash flows from the acquired properties may be insufficient to service the related debt financing; • we may need to spend more than we budgeted to make necessary improvements or renovations to acquired properties; • we may spend significant time and money on potential acquisitions that we do not close; • 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; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations; • occupancy and rental rates of acquired properties may be less than expected; and • 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.
If a party with whom we contract is placed on the OFAC list we may be required by the OFAC regulations to terminate the agreement, which could result in a losses or a damage claim by the other party that the termination was wrongful. Terrorism and war could harm our business and operating results.
If a party with whom we contract is placed on the OFAC list we may be required by the OFAC regulations to terminate the agreement, which could result in a losses or a damage claim by the other party that the termination was wrongful. 23 Terrorism and war could harm our business and operating results.
See Note 13 to our consolidated financial statements in Item 15 of this Report for more information regarding our stock-based compensation. Our board of directors may change significant corporate policies without stockholder approval. Our investment, financing, borrowing, dividend, operating and other policies are determined by our board of directors.
See Note 13 to our consolidated financial statements in Item 15 of this Report for more information regarding our stock-based compensation. 24 Our board of directors may change significant corporate policies without stockholder approval. Our investment, financing, borrowing, dividend, operating and other policies are determined by our board of directors.
New regulations in the submarkets in which we operate could require us to make safety improvements to our buildings, for example requiring us to retrofit our buildings to better withstand earthquakes, and we could incur significant costs complying with those regulations. 19 We may be unable to renew leases or lease vacant space.
New regulations in the submarkets in which we operate could require us to make safety improvements to our buildings, for example requiring us to retrofit our buildings to better withstand earthquakes, and we could incur significant costs complying with those regulations. We may be unable to renew leases or lease vacant space.
The issuance of preferred stock could also have the effect of delaying or preventing a change of control transaction that might otherwise be in the best interests of our stockholders. (iii) Certain provisions in the partnership agreement of our Operating Partnership may delay or prevent an unsolicited acquisition of us.
The issuance of preferred stock could also have the effect of delaying or preventing a change of control transaction that might otherwise be in the best interests of our stockholders. 25 (iii) Certain provisions in the partnership agreement of our Operating Partnership may delay or prevent an unsolicited acquisition of us.
Additionally, any distributions we make to our non-U.S. stockholders that are attributable to gain from the sale of any USRPI will also generally be subject to FIRPTA tax and applicable withholdings, unless the recipient non-U.S. stockholder has not owned more than 10% of our common stock at any time during the year preceding the distribution and our common stock is treated as being “regularly traded”. 29 General Risks Security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our IT networks and related systems could harm our business.
Additionally, any distributions we make to our non-U.S. stockholders that are attributable to gain from the sale of any USRPI will also generally be subject to FIRPTA tax and applicable withholdings, unless the recipient non-U.S. stockholder has not owned more than 10% of our common stock at any time during the year preceding the distribution and our common stock is treated as being “regularly traded”. 30 General Risks Security breaches through cyber attacks, cyber intrusions or otherwise, as well as other significant disruptions of our IT networks and related systems could harm our business.
If we lose the services of any of our executive officers or key senior personnel our business could be adversely affected. 24 Compensation awards to our management may not be tied to or correspond with improved financial results or the market price of our common stock.
If we lose the services of any of our executive officers or key senior personnel our business could be adversely affected. Compensation awards to our management may not be tied to or correspond with improved financial results or the market price of our common stock.
Our Fund, and three of our consolidated JVs, also own properties through one or more entities which are intended to qualify as REITs, and we may in the future use other structures that include REITs.
Three of our consolidated JVs also own properties through one or more entities which are intended to qualify as REITs, and we may in the future use other structures that include REITs.
Properties—Office Industry Diversification as of December 31, 2023.” An economic downturn in any of these industries, or in any industry in which a significant number of our tenants currently or may in the future operate, could negatively impact the financial condition of such tenants and cause them to fail to make timely rental payments or default on lease obligations, fail to renew their leases or renew their leases on terms less favorable to us, become bankrupt or insolvent, or otherwise become unable to satisfy their obligations to us.
Properties—Office Industry Diversification as of December 31, 2024.” An economic downturn in any of these industries, or in any industry in which a significant number of our tenants currently or may in the future operate, could negatively impact the financial condition of such tenants and cause them to fail to make timely rental payments or default on lease obligations, fail to renew their leases or renew their leases on terms less favorable to us, become bankrupt or insolvent, or otherwise become unable to satisfy their obligations to us.
Even when there is a favorable outcome, litigation may result in substantial expenses and significantly divert the attention of our management with a similar adverse effect on us. 30 If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.
Even when there is a favorable outcome, litigation may result in substantial expenses and significantly divert the attention of our management with a similar adverse effect on us. 31 If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results.
To the extent that we do so, we are subject to certain risks, including the following: • 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, permitting issues, material shortages and price increases); • We may be unable to lease the developed or redeveloped properties at budgeted rental rates or lease up the property within budgeted time frames; 22 • We may devote time and expend funds on development or redevelopment of properties that we may not complete; • 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, and our costs to comply with the conditions imposed by such permits and authorizations could increase; • We may encounter delays, refusals and unforeseen cost increases resulting from third-party litigation or objections; and • We may fail to obtain the financial results expected from properties we develop or redevelop; We are exposed to certain risks when we enter into JVs or issue securities of our subsidiaries, including our Operating Partnership.
To the extent that we do so, we are subject to certain risks, including the following: • 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, permitting issues, material shortages and price increases, including increases in the costs of building materials or construction services resulting from trade tensions, disruptions, tariffs, duties or restrictions); • We may be unable to lease the developed or redeveloped properties at budgeted rental rates or lease up the property within budgeted time frames; • We may devote time and expend funds on development or redevelopment of properties that we may not complete; • 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, and our costs to comply with the conditions imposed by such permits and authorizations could increase; • We may encounter delays, refusals and unforeseen cost increases resulting from third-party litigation or objections; and • We may fail to obtain the financial results expected from properties we develop or redevelop; 22 We are exposed to certain risks when we enter into JVs or issue securities of our subsidiaries, including our Operating Partnership.
As a result, the requirement to distribute a substantial portion of our taxable income could cause us to sell assets in adverse market conditions, borrow on unfavorable terms, make a taxable distribution of our stock as part of a distribution in which stockholders may elect to receive our stock or (subject to a limit measured as a percentage of the total distribution) cash, distribute amounts that could otherwise be used to fund our operations, capital expenditures, acquisitions or repayment of debt, or cause us to forego otherwise attractive opportunities. 28 REIT stockholders can receive taxable income without cash distributions .
As a result, the requirement to distribute a substantial portion of our taxable income could cause us to sell assets in adverse market conditions, borrow on unfavorable terms, make a taxable distribution of our stock as part of a distribution in which stockholders may elect to receive our stock or (subject to a limit measured as a percentage of the total distribution) cash, distribute amounts that could otherwise be used to fund our operations, capital expenditures, acquisitions or repayment of debt, or cause us to forego otherwise attractive opportunities.
Risks Related to Taxes and Our Status as a REIT • Our property taxes could increase due to property tax rate changes, reassessments or changes in property tax laws, which would adversely impact our cash flows. • Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions. • If the Operating Partnership, or any of its subsidiaries (other than any TRS), were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT. • Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions. • REIT distribution requirements could adversely affect our liquidity and cause us to forego otherwise attractive opportunities. • REIT stockholders can receive taxable income without cash distributions. • If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable or if we are unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis . • Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification. • Non-U.S. investors may be subject to FIRPTA, which would impose tax on certain distributions and on the sale of common stock if we are unable to qualify as a “domestically controlled” REIT or if our stock is not considered to be regularly traded on an established securities market.
Risks Related to Taxes and Our Status as a REIT • Our property taxes could increase due to property tax rate changes, reassessments or changes in property tax laws, which would adversely impact our cash flows. • Transfer taxes like those imposed by Los Angeles Measure ULA could have a negative impact on our property valuations and our ability to acquire or sell properties at favorable prices or on a timely basis. • Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions. • If the Operating Partnership, or any of its subsidiaries (other than any TRS), were treated as a regular corporation for federal income tax purposes, we could cease to qualify as a REIT. • Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions. • REIT distribution requirements could adversely affect our liquidity and cause us to forego otherwise attractive opportunities. • REIT stockholders can receive taxable income without cash distributions. • If a transaction intended to qualify as a Section 1031 Exchange is later determined to be taxable or if we are unable to identify and complete the acquisition of a suitable replacement property to effect a Section 1031 Exchange, we may face adverse consequences, and if the laws applicable to such transactions are amended or repealed, we may not be able to dispose of properties on a tax deferred basis . • Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification. • Non-U.S. investors may be subject to FIRPTA, which would impose tax on certain distributions and on the sale of common stock if we are unable to qualify as a “domestically controlled” REIT or if our stock is not considered to be regularly traded on an established securities market.
Changes to the laws could adversely affect us and our investors. New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us.
New legislation, Treasury regulations, administrative interpretations or court decisions could significantly and negatively affect our ability to qualify as a REIT, the federal income tax consequences of such qualification, or the federal income tax consequences of an investment in us.
As of December 31, 2023, we had approximately $5.6 billion of debt outstanding, of which $1.7 billion is floating rate debt, which exposes us to interest rate fluctuation risk. See Note 8 to our consolidated financial statements in Item 15 of this Report for more detail regarding our consolidated debt.
As of December 31, 2024, we had approximately $5.5 billion of debt outstanding, of which $2.3 billion is floating rate debt, which exposes us to interest rate fluctuation risk. See Note 8 to our consolidated financial statements in Item 15 of this Report for more detail regarding our consolidated debt.
If the IRS were successful in treating the Operating Partnership or other subsidiaries (other than a TRS) as entities taxable as a corporation (including a “publicly traded partnership” taxed as a corporation) for federal income tax purposes, we would likely fail to qualify as a REIT and it would significantly reduce the amount of cash available for distribution by such subsidiaries to us.
If the IRS were successful in treating the Operating Partnership or other subsidiaries (other than a TRS) as entities taxable as a corporation (including a “publicly traded partnership” taxed as a corporation) for federal income tax purposes, we would likely fail to qualify as a REIT and it would significantly reduce the amount of cash available for distribution by such subsidiaries to us. 28 Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions.
At December 31, 2023, our executive officers owned 4% of our outstanding common stock, but they would own 17% if all of their outstanding LTIPs and OP Units were converted into common stock.
At December 31, 2024, our executive officers owned 3% of our outstanding common stock, but they would own 16% if all of their outstanding LTIPs and OP Units were converted into common stock.
In addition, changes in the existing land use rules and regulations and approval process that restrict or delay our ability to develop, redevelop or use our properties (such as potential restrictions on the use and/or density of new developments, water use and other uses and activities) or that prescribe additional standards could have a material adverse effect on our financial position, results of operations, cash flows, the market price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders. 20 Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities.
In addition, changes in the existing land use rules and regulations and approval process that restrict or delay our ability to develop, redevelop or use our properties (such as potential restrictions on the use and/or density of new developments, water use and other uses and activities) or that prescribe additional standards could have a material adverse effect on our financial position, results of operations, cash flows, the market price of our common stock, and our ability to satisfy our debt service obligations and to pay dividends and distributions to our security holders.
Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance. Our business operations in Los Angeles County, California and Honolulu, Hawaii are susceptible to, and could be significantly affected by, adverse weather conditions and natural disasters such as earthquakes, tsunamis, hurricanes, volcanoes, drought, wind, floods, landslides and fires.
Our business operations in Los Angeles County, California and Honolulu, Hawaii are susceptible to, and could be significantly affected by, adverse weather conditions and natural disasters such as earthquakes, tsunamis, hurricanes, volcanoes, drought, wind, floods, landslides and fires.
As of December 31, 2023, 16.7% of the square footage in our total office portfolio was available for lease and 15.9% was scheduled to expire in 2024.
As of December 31, 2024, 18.9% of the square footage in our total office portfolio was available for lease and 12.4% was scheduled to expire in 2025.
Environmental laws regulate, and impose liability for, releases of hazardous or toxic substances into the environment. Under various provisions of these laws, a current or former owner or operator of real estate may be liable for costs related to soil or groundwater contamination on, in, or migrating to or from its property.
Under various provisions of these laws, a current or former owner or operator of real estate may be liable for costs related to soil or groundwater contamination on, in, or migrating to or from its property.
If Proposition 13 no longer limited the assessed value of our California properties, the assessed values and property taxes for those properties could increase substantially, which could have a material impact on our results of operations, cash flows and financial condition. Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions.
If Proposition 13 no longer limited the assessed value of our California properties, the assessed values and property taxes for those properties could increase substantially, which could have a material impact on our results of operations, cash flows and financial condition.
Under current California law we are able to increase rents to market rates once a tenant vacates a rent-controlled unit; however, increases in rental rates for renewing tenants are limited by California, Los Angeles and Santa Monica rent control regulations. 21 Hawaii does not have state mandated rent control, however portions of the Honolulu multifamily market are subject to low- and moderate-income housing regulations.
Under current California law we are able to increase rents to market rates once a tenant vacates a rent-controlled unit; however, increases in rental rates for renewing tenants are limited by California, Los Angeles and Santa Monica rent control regulations.
As of December 31, 2023, as a percentage of our annualized base rental revenue for the stabilized portfolio, 18.2% of our tenants operated in the legal industry, 15.5% in the financial services industry, 14.1% in the entertainment industry and 12.7% in the real estate industry.
As of December 31, 2024, as a percentage of our annualized base rental revenue for the stabilized portfolio, 19.2% of our tenants operated in the legal industry, 16.1% in the financial services industry, 13.4% in the real estate industry and 10.0% in the entertainment industry.
Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants which may present greater credit risks.
For more information see Item 2 “Properties” of this Report. 19 Our business strategy for our office portfolio focuses on leasing to smaller-sized tenants which may present greater credit risks.
Under certain circumstances, REITs are permitted to pay a portion of the required dividends in shares of their stock rather than in cash. If we were to avail ourselves of that option, our stockholders could be required to pay taxes on such stock distributions without the benefit of cash distributions to pay the resulting taxes.
If we were to avail ourselves of that option, our stockholders could be required to pay taxes on such stock distributions without the benefit of cash distributions to pay the resulting taxes.
The ownership limit contained in our charter may delay or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders. 25 (ii) Our board of directors may create and issue a class or series of preferred stock without stockholder approval.
Our board of directors, in its sole discretion, may exempt a proposed transferee from the ownership limit. The ownership limit contained in our charter may delay or prevent a transaction or a change of control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
As of December 31, 2023, 1.5% of the units in our multifamily portfolio were available for lease, and substantially all of the leases in our multifamily portfolio must be renewed within the next year. For more information see Item 2 “Properties” of this Report.
As of December 31, 2024, 0.9% of the units in our multifamily portfolio were available for lease, and substantially all of the leases in our multifamily portfolio must be renewed within the next year.
We have agreed to rent specified percentages of the units at some of our Honolulu multifamily properties to persons with income below specified levels in exchange for certain tax benefits.
Hawaii does not have state mandated rent control, however portions of the Honolulu multifamily market are subject to low- and moderate-income housing regulations. We have agreed to rent specified percentages of the units at some of our Honolulu multifamily properties to persons with income below specified levels in exchange for certain tax benefits.
It is possible that legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of real properties on a tax deferred basis.
It is possible that legislation could be enacted that could modify or repeal the laws with respect to Section 1031 Exchanges, which could make it more difficult or not possible for us to dispose of real properties on a tax deferred basis. 29 Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification.
Although most of our properties have been subjected to preliminary environmental assessments, known as Phase I assessments, by independent environmental consultants in order to identify potential environmental concerns, Phase I assessments are limited in scope, and may not identify all potential environmental liabilities or risks associated with the property.
As a result, in connection with our current or former ownership, operation, management and development of real properties, we may be potentially liable for investigation and cleanup costs, penalties, and damages under environmental laws. 20 Although most of our properties have been subjected to preliminary environmental assessments, known as Phase I assessments, by independent environmental consultants in order to identify potential environmental concerns, Phase I assessments are limited in scope, and may not identify all potential environmental liabilities or risks associated with the property.
The OFAC of the US Department of the Treasury maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”). The OFAC regulations and other laws prohibit conducting business or engaging in transactions with Prohibited Persons. Some of our agreements require us and the other party to comply with the OFAC requirements.
We face risks associated with contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control. The OFAC of the US Department of the Treasury maintains a list of persons designated as terrorists or who are otherwise blocked or banned (“Prohibited Persons”). The OFAC regulations and other laws prohibit conducting business or engaging in transactions with Prohibited Persons.
For example, we will be subject to income tax to the extent that we distribute less than 100% of our REIT taxable income (including capital gains).
Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property. For example, we will be subject to income tax to the extent that we distribute less than 100% of our REIT taxable income (including capital gains).
Legislative or other actions affecting REITs could have a negative effect on our investors or us, including our ability to maintain our qualification as a REIT or the federal income tax consequences of such qualification. Federal income tax laws are constantly under review by persons involved in the legislative process, the IRS and the U.S. Department of the Treasury.
Federal income tax laws are constantly under review by persons involved in the legislative process, the IRS and the U.S. Department of the Treasury. Changes to the laws could adversely affect us and our investors.
Our distributions could exceed our cash generated from operations. If necessary, we may fund the difference from our existing cash balances or additional borrowings.
Our distributions could exceed our cash generated from operations. If necessary, we may fund the difference from our existing cash balances or additional borrowings. If our available cash were to decline significantly below our taxable income, we could lose our REIT status unless we could borrow to make such distributions or make any required distributions in common stock.
In other cases, some of our properties have been (or may have been) impacted by contamination from past operations or from off-site sources. As a result, in connection with our current or former ownership, operation, management and development of real properties, we may be potentially liable for investigation and cleanup costs, penalties, and damages under environmental laws.
In other cases, some of our properties have been (or may have been) impacted by contamination from past operations or from off-site sources.
Removed
We may experience significant impacts to our business as a result of any economic impact of an outbreak, including any resulting economic recession.
Added
The economic impact of an outbreak, including any resulting economic recession, could significantly impact our business, for example: (i) lower occupancy levels, (ii) reduced attendance in our buildings and lower parking income, (iii) tenants inability to pay rent in full or on a timely basis, (iv) government moratoriums that could affect our ability to collect rents, (v) disruptions to our operations, and (vi) increases in the cost or availability of insurance.
Removed
Some of the potential impacts from an outbreak could include: • Government actions, including but not limited to lease enforcement moratoriums, that reduce or otherwise hinder our ability to collect rent promptly or at all, adversely affect tenant demand, increase our costs or otherwise reduce our collections; 18 • Supply chain, governmental or other disruptions that adversely affect construction or our operations and/or those of our tenants; • Economic pressure on our tenants, which could lead to lower collections or defaults; • Reduced or different tenant demand, leading to lower occupancy and/or rental rates in our buildings; • Reduced attendance in our buildings, resulting in lower parking revenues; • Increases in expenses and/or capital investments or decreases in tenant demand as a result of safety concerns; • Increased risks of IT disruptions and/or cyber attacks as a result of our employees or tenants working remotely; • Disruption of our operations as a result of the illness or social distancing of our employees or tenants; • Impact on the labor market, which could lead to higher employee turnover and increased labor costs; • Changes in the financial markets, the value of our properties and/or our cash flows which adversely affect our stock price and/or our tenants' access to needed debt or equity capital on reasonable or any terms; and/or • Increases in the cost or availability, or changes to the terms, of insurance.
Added
The impacts to our business could impact our financial condition, results of operations, cash flows, liquidity and our ability to meet our debt service obligations. 18 Potential losses, including from adverse weather conditions, natural disasters and title claims, may not be covered by insurance.
Removed
If our available cash were to decline significantly below our taxable income, we could lose our REIT status unless we could borrow to make such distributions or make any required distributions in common stock. 23 We face risks associated with contractual counterparties being designated “Prohibited Persons” by the Office of Foreign Assets Control.
Added
Because we own real property, we are subject to extensive environmental regulations, which create uncertainty regarding future environmental expenditures and liabilities. Environmental laws regulate, and impose liability for, releases of hazardous or toxic substances into the environment.
Removed
Our board of directors, in its sole discretion, may exempt a proposed transferee from the ownership limit.
Added
Some of our agreements require us and the other party to comply with the OFAC requirements.
Removed
Even if we qualify as a REIT, we will be required to pay some taxes which would reduce cash available for distributions. Even if we qualify as a REIT for federal income tax purposes, we will be required to pay certain federal, state and local taxes on our income and property.
Added
(ii) Our board of directors may create and issue a class or series of preferred stock without stockholder approval.
Removed
For example, for taxable years prior to 2018, a TRS is limited in its ability to deduct interest payments made to an affiliated REIT and, for taxable years after 2017, a TRS is subject to more general limitations on its ability to deduct interest payments to any lender.
Added
Transfer taxes like those imposed by Los Angeles Measure ULA could have a negative impact on our property valuations and our ability to acquire or sell properties at favorable prices or on a timely basis.
Added
During 2022, voters in the City of Los Angeles approved Measure ULA, which imposes an additional transfer tax as much as 5.5% on real estate sales and transfers valued at over $5 million. This tax applies in addition to existing documentary transfer taxes levied by the City and County of Los Angeles.
Added
Transfer taxes like Measure ULA may have adverse effects on our business in the cities in which they are imposed. The increased transaction costs associated with the transfer tax may negatively impact our ability to buy or sell properties at favorable prices or in a timely manner.
Added
The tax could deter investors and developers from engaging in large-scale transactions in Los Angeles, potentially reducing demand for office and multifamily properties. If transaction volume declines due to the increased cost of transfers, property values in the affected price ranges may experience downward pressure, which could adversely impact our balance sheet and borrowing capacity.
Added
Given the evolving regulatory and legal landscape, any future challenges to Measure ULA or modifications to its implementation could also introduce additional uncertainty regarding our Los Angeles-based properties. Other cities in which we operate could adopt similar transfer taxes. 27 Failure to qualify as a REIT would subject us to corporate taxation and potentially reduce cash available for distributions.
Added
If we fail to qualify as a REIT for federal income tax purposes and are able to avail ourselves of one or more of the relief provisions under the Code in order to maintain our REIT status, we would nevertheless be required to pay penalty taxes of $50,000 or more for each such failure.
Added
REIT stockholders can receive taxable income without cash distributions . Under certain circumstances, REITs are permitted to pay a portion of the required dividends in shares of their stock rather than in cash.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+0 added−0 removed9 unchanged
Biggest changeItem 1C. Cybersecurity Risk Management and Strategy We are developing a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. Our program is based on frameworks provided by the Center for Internet Security Controls.
Biggest changeItem 1C. Cybersecurity Risk Management and Strategy We have developed a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. Our program is based on frameworks provided by the Center for Internet Security Controls.
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. 31 We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations or financial condition.
There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems and information. 32 We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations or financial condition.
Our CIO supports the management team in staying informed about and monitoring efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources; and alerts and reports produced by security tools deployed in the IT environment. 32
Our CIO supports the management team in staying informed about and monitoring efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources; and alerts and reports produced by security tools deployed in the IT environment. 33

Item 2. Properties

Properties — owned and leased real estate

10 edited+7 added−7 removed1 unchanged
Biggest changeOffice Industry Diversification as of December 31, 2023 Industry Number of Leases Annualized Rent as a Percent of Total Legal 576 18.2 % Financial Services 364 15.5 Entertainment 150 14.1 Real Estate 315 12.7 Health Services 387 9.2 Accounting & Consulting 298 8.9 Technology 101 4.9 Retail 154 4.9 Insurance 91 3.2 Educational Services 46 2.8 Public Administration 73 2.3 Advertising 33 1.0 Other 45 1.1 Manufacturing & Distribution 53 1.2 Total 2,686 100.0 % 35 Office Lease Expirations as of December 31, 2023 (assuming non-exercise of renewal options and early termination rights) Year of Lease Expiration Number of Leases Rentable Square Feet Expiring Square Feet as a Percent of Total Annualized Rent at December 31, 2023 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 92 305,460 1.7 % $ 12,085,729 1.8 % $ 39.57 $ 39.45 2024 594 2,864,277 15.9 137,113,780 20.1 47.87 47.42 2025 578 2,482,316 13.8 116,721,428 17.1 47.02 49.11 2026 465 2,157,587 12.0 98,549,202 14.4 45.68 49.55 2027 314 2,004,294 11.2 101,142,084 14.8 50.46 56.37 2028 270 1,452,991 8.1 67,433,092 9.9 46.41 53.31 2029 137 847,123 4.7 40,414,711 5.9 47.71 54.71 2030 76 714,311 4.0 35,791,173 5.2 50.11 61.09 2031 57 405,546 2.2 19,316,010 2.8 47.63 59.90 2032 33 321,974 1.8 16,063,724 2.4 49.89 64.81 2033 52 348,144 1.9 17,324,494 2.5 49.76 68.47 Thereafter 28 476,289 2.7 21,396,537 3.1 44.92 63.09 Subtotal/weighted average 2,696 14,380,312 80.0 683,351,964 100.0 47.52 52.58 Signed leases not commenced 417,287 2.3 Available 3,002,047 16.7 Building management use 106,908 0.6 BOMA adjustment (3) 74,109 0.4 Total/Weighted Average 2,696 17,980,663 100.0 % $ 683,351,964 100.0 % $ 47.52 $ 52.58 _____________________________________________________ (1) Represents annualized rent at December 31, 2023 divided by leased square feet.
Biggest changeIn-Service Office Portfolio Industry Diversification as of December 31, 2024 Industry Number of Leases Annualized Rent as a Percent of Total Legal 565 19.2 % Financial Services 364 16.1 % Real Estate 317 13.4 % Entertainment 136 10.0 % Health Services 398 9.9 % Accounting & Consulting 296 9.0 % Retail 163 5.6 % Technology 93 5.0 % Insurance 89 3.1 % Public Administration 76 2.7 % Educational Services 38 2.6 % Manufacturing & Distribution 56 1.3 % Advertising 32 0.9 % Other 58 1.2 % Total 2,681 100.0 % 35 In-Service Office Portfolio Lease Expirations as of December 31, 2024 (assuming non-exercise of renewal options and early termination rights) Year of Lease Expiration Number of Leases Rentable Square Feet Expiring Square Feet as a Percent of Total Annualized Rent at December 31, 2024 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 78 276,441 1.6 % $ 10,634,698 1.6 % $ 38.47 $ 38.47 2025 588 2,175,630 12.4 103,472,304 15.9 47.56 48.25 2026 541 2,296,875 13.1 106,651,942 16.5 46.43 48.73 2027 458 2,134,512 12.2 101,348,084 15.6 47.48 51.39 2028 360 1,682,178 9.6 78,718,502 12.1 46.80 51.97 2029 234 1,289,692 7.3 57,825,703 8.9 44.84 51.43 2030 147 1,180,015 6.7 58,829,972 9.1 49.86 55.93 2031 90 630,104 3.6 30,061,478 4.6 47.71 57.02 2032 52 490,897 2.8 22,927,465 3.5 46.71 58.31 2033 53 389,428 2.2 20,247,403 3.1 51.99 68.86 2034 34 276,705 1.6 12,387,505 1.9 44.77 62.25 Thereafter 46 888,826 5.1 46,956,297 7.2 52.83 74.73 Subtotal/weighted average 2,681 13,711,303 78.2 650,061,353 100.0 47.41 53.39 Signed leases not commenced 329,125 1.9 Available 3,316,355 18.9 Building management use 107,145 0.6 BOMA adjustment (3) 60,530 0.4 Total/Weighted Average 2,681 17,524,458 100.0 % $ 650,061,353 100.0 % $ 47.41 $ 53.39 _____________________________________________________ (1) Represents Annualized Rent at December 31, 2024 divided by leased square feet.
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 2023, when a tenant vacated one of these units, we incurred on average $63 thousand per unit to bring the unit up to our standards. We classify these capital expenditures as non-recurring.
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 2024, when a tenant vacated one of these units, we incurred on average $61 thousand per unit to bring the unit up to our standards. We classify these capital expenditures as non-recurring.
(2) We excluded the following properties in accordance with our definition of Recurring Capital Expenditures: • For 2023, we excluded two properties with an aggregate 563 units. • For 2022, we excluded two properties with an aggregate 1,088 units. • For 2021, we excluded two properties with an aggregate 939 units. 38
(2) We excluded the following properties in accordance with our definition of Recurring Capital Expenditures: • For 2024, we excluded two properties with an aggregate 457 units. • For 2023, we excluded two properties with an aggregate 563 units. • For 2022, we excluded two properties with an aggregate 1,088 units. 38
Multifamily Recurring Capital Expenditures Year Ended December 31, 2023 2022 2021 Recurring Capital Expenditures (1)(2) $ 2,978,083 $ 3,092,613 $ 2,821,969 Total units (1)(2) 4,013 3,925 3,449 Recurring Capital Expenditures per unit (1)(2) $ 747 $ 807 $ 818 ____________________________________________________ (1) Recurring Capital Expenditures include costs associated with the turnover of units.
Year Ended December 31, 2024 2023 2022 Recurring Capital Expenditures (1)(2) $ 3,342,407 $ 2,978,083 $ 3,092,613 Total units (1)(2) 4,015 4,013 3,925 Recurring Capital Expenditures per unit (1)(2) $ 832 $ 747 $ 807 ____________________________________________________ (1) Recurring Capital Expenditures include costs associated with the turnover of units.
Item 2. Properties We present property level data for our Total Portfolio, except that we present historical capital expenditures for our Consolidated Portfolio.
Item 2. Properties We present property level data for our Total Portfolio, except that we present historical capital expenditures for our Consolidated Portfolio. Commencing with the fourth quarter of 2024, we present the data for our In-Service Portfolio.
(6) Square footage (rounded) expires as follows: 34,000 square feet in 2029; 46,000 square feet in 2035; 31,000 square feet in 2037 and 74,000 square feet in 2038.
(4) Square footage (rounded) expires as follows: 89,000 square feet in 2027 and 30,000 square feet in 2028, and 26,000 square feet in 2030. (5) Square footage (rounded) expires as follows: 34,000 square feet in 2029; 46,000 square feet in 2035; 31,000 square feet in 2037 and 74,000 square feet in 2038.
(3) Represents the square footage adjustments for leases that do not reflect BOMA remeasurement. 36 Office Tenant Improvements and Leasing Commissions Year Ended December 31, 2023 2022 2021 Renewal leases (1) Number of leases 576 571 557 Square feet 2,359,780 2,416,521 2,553,056 Tenant improvement costs per square foot (2) $ 11.15 $ 11.06 $ 8.59 Leasing commission costs per square foot (2) 5.98 5.86 5.88 Total costs per square foot (2) $ 17.13 $ 16.92 $ 14.47 New leases (1) Number of leases 289 343 351 Square feet 792,716 1,225,024 1,105,297 Tenant improvement costs per square foot (2) $ 21.69 $ 27.68 $ 27.43 Leasing commission costs per square foot (2) 7.39 9.26 9.81 Total costs per square foot (2) $ 29.08 $ 36.94 $ 37.24 Total leases (1) Number of leases 865 914 908 Square feet 3,152,496 3,641,545 3,658,353 Tenant improvement costs per square foot (2) $ 13.80 $ 16.65 $ 14.28 Leasing commission costs per square foot (2) 6.34 7.01 7.07 Total costs per square foot (2) $ 20.14 $ 23.66 $ 21.35 ______________________________________________________ (1) Excludes square feet for ancillary retail space.
Year Ended December 31, 2024 2023 2022 Renewal leases (1) Number of leases 556 576 571 Square feet 2,763,902 2,359,780 2,416,521 Tenant improvement costs per square foot (2) $ 16.37 $ 11.15 $ 11.06 Leasing commission costs per square foot (2) 9.71 5.98 5.86 Total costs per square foot (2) $ 26.08 $ 17.13 $ 16.92 New leases (1) Number of leases 298 289 343 Square feet 881,884 792,716 1,225,024 Tenant improvement costs per square foot (2) $ 20.17 $ 21.69 $ 27.68 Leasing commission costs per square foot (2) 8.46 7.39 9.26 Total costs per square foot (2) $ 28.63 $ 29.08 $ 36.94 Total leases (1) Number of leases 854 865 914 Square feet 3,645,786 3,152,496 3,641,545 Tenant improvement costs per square foot (2) $ 17.29 $ 13.80 $ 16.65 Leasing commission costs per square foot (2) 9.41 6.34 7.01 Total costs per square foot (2) $ 26.70 $ 20.14 $ 23.66 ______________________________________________________ (1) Excludes square feet for ancillary retail space.
(4) Square footage (rounded) expires as follows: 1 lease totaling 1,000 square feet in 2023; 3 leases totaling 37,000 square feet in 2024; 4 leases totaling 89,000 square feet in 2025; 5 leases totaling 32,000 square feet in 2026; 1 lease totaling 51,000 square feet in 2027; 1 lease totaling 8,000 square feet in 2028; 1 lease totaling 15,000 square feet in 2029; and 2 leases totaling 14,000 square feet in 2033.
(2) Tenant has the option to terminate its lease in 2033. (3) Square footage (rounded) expires as follows: 4 leases totaling 119,000 square feet in 2025; 5 leases totaling 32,000 square feet in 2026; 1 lease totaling 8,000 square feet in 2028; 2 leases totaling 28,000 square feet in 2029; and 2 leases totaling 14,000 square feet in 2033.
Office Recurring Capital Expenditures (consolidated office portfolio) Year Ended December 31, 2023 2022 2021 Recurring Capital Expenditures (1) $ 3,279,814 $ 4,224,496 $ 3,838,453 Total square feet (1) 14,851,645 14,851,378 14,851,378 Recurring Capital Expenditures per square foot (1) $ 0.22 $ 0.28 $ 0.26 ____________________________________________________ (1) We excluded the following properties in accordance with our definition of Recurring Capital Expenditures: • For 2023, we excluded ten properties with an aggregate 2.7 million square feet. • For 2022, we excluded eleven properties with an aggregate 2.8 million square feet. • For 2021, we excluded eleven properties with an aggregate 2.9 million square feet. 37 Multifamily Portfolio as of December 31, 2023 Submarket Number of Properties Number of Units Units as a Percent of Total Los Angeles Santa Monica 3 940 21 % West Los Angeles (1) 7 1,151 25 Honolulu 4 2,485 54 Total 14 4,576 100 % Submarket Percent Leased Annualized Rent (2) Monthly Rent Per Leased Unit Los Angeles Santa Monica 98.2 % $ 48,562,584 $ 4,394 West Los Angeles (3) 97.4 52,768,992 4,754 Honolulu 99.1 67,367,508 2,286 Total / Weighted Average 98.5 % $ 168,699,084 $ 3,268 _______________________________________________________ (1) Excludes units vacated as part of removing Barrington Plaza from the rental market.
Year Ended December 31, 2024 2023 2022 Recurring Capital Expenditures (1) $ 3,324,572 $ 3,279,814 $ 4,224,496 Total square feet (1) 14,851,645 14,851,645 14,851,378 Recurring Capital Expenditures per square foot (1) $ 0.22 $ 0.22 $ 0.28 ____________________________________________________ (1) We excluded the following properties in accordance with our definition of Recurring Capital Expenditures: • For 2024, we excluded ten properties with an aggregate 2.7 million square feet. • For 2023, we excluded ten properties with an aggregate 2.7 million square feet. • For 2022, we excluded eleven properties with an aggregate 2.8 million square feet. 37 In-Service Multifamily Portfolio Summary as of December 31, 2024 Submarket Number of Properties Number of Units Units as a Percent of Total Los Angeles Santa Monica 3 940 21 % West Los Angeles 6 964 22 % Honolulu 4 2,487 57 Total 13 4,391 100 % Submarket Percent Leased Annualized Rent (1) Monthly Rent Per Leased Unit Los Angeles Santa Monica 98.8 % $ 50,410,704 $ 4,532 West Los Angeles 98.7 54,535,128 4,799 Honolulu 99.3 69,549,132 2,352 Total / Weighted Average 99.1 % $ 174,494,964 $ 3,352 _______________________________________________________ (1) The multifamily portfolio also includes: (i) 72,613 square feet consisting of ancillary retail space at three properties and the remaining office space at a building undergoing conversion from office to residential, and (ii) 712 apartment units at Barrington Plaza which is undergoing redevelopment.
Office Portfolio Summary as of December 31, 2023 Region Number of Properties Our Rentable Square Feet Region Rentable Square Feet (1) Our Average Market Share (2) Los Angeles Westside (3) 52 9,999,051 40,401,665 34.4 % Valley 16 6,790,777 22,485,019 44.4 Honolulu (3) 2 1,190,835 5,267,268 22.6 Total / Average 70 17,980,663 68,153,952 37.4 % ________________________________________________ (1) The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2023 fourth quarter CBRE Marketview report for our submarkets in that region.
In-Service Office Portfolio Summary as of December 31, 2024 Region Westside Valley Honolulu Total / Weighted Average Number of Office Properties 52 15 2 69 Our Rentable Square Feet 9,999,051 6,334,572 1,190,835 17,524,458 Region Rentable Square Feet (1) 40,389,795 13,969,773 5,333,142 59,692,710 Our Market Share (2) 34.6 % 47.1 % 22.3 % 38.3 % Our Percent Leased 81.3 % 78.7 % 91.2 % 81.1 % Our Annualized Rent $ 445,878,182 $ 165,255,005 $ 38,928,166 $ 650,061,353 Annualized Rent Per Leased Square Foot (3) $ 57.29 $ 33.97 $ 36.58 $ 47.41 Monthly Rent Per Leased Square Foot (3) $ 4.77 $ 2.83 $ 3.05 $ 3.95 _______________________________________________ (1) The rentable square feet in each region is based on the Rentable Square Feet as reported in the 2024 fourth quarter CBRE Marketview report for our submarkets in that region.
Removed
(2) Our market share is calculated by dividing our Rentable Square Feet by the applicable Region's 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: Region Submarket Number of Properties Our Rentable Square Feet Our Market Share (2) Westside Brentwood 15 2,085,745 60.3 % Westwood 7 2,191,711 43.6 Olympic Corridor 5 1,142,885 28.1 Beverly Hills (3) 11 2,196,067 27.6 Santa Monica 11 1,425,374 14.3 Century City 3 957,269 9.0 Valley Sherman Oaks/Encino 12 3,488,995 55.1 Warner Center/Woodland Hills 3 2,845,577 37.4 Burbank 1 456,205 5.3 Honolulu Honolulu (3) 2 1,190,835 22.6 Total / Weighted Average 70 17,980,663 37.4 % ________________________________________________ (3) In calculating market share, we adjusted the rentable square footage by: (i) removing a 218,000 square foot property located just outside the Beverly Hills city limits from both the numerator and the denominator, and (ii) removing 77,000 rentable square feet of vacant space at an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the submarket. 33 Office Portfolio Percentage Leased and In-place Rents as of December 31, 2023 Region (1) Percent Leased Annualized Rent (2) Annualized Rent Per Leased Square Foot (2) Monthly Rent Per Leased Square Foot (2) Los Angeles Westside 82.1 % $ 449,123,019 $ 57.01 $ 4.75 Valley 83.8 197,159,698 36.04 3.00 Honolulu 90.4 37,069,247 35.93 2.99 Total / Weighted Average 83.3 % $ 683,351,964 $ 47.52 $ 3.96 _____________________________________________ (1) Regional data reflects the following underlying submarket data: Region Submarket Percent Leased Monthly Rent Per Leased Square Foot (2) Westside Beverly Hills 85.7 % $ 4.92 Brentwood 79.9 4.01 Century City 86.3 4.69 Olympic Corridor 76.1 3.33 Santa Monica 81.2 6.95 Westwood 82.6 4.54 Valley Burbank 100.0 5.01 Sherman Oaks/Encino 87.1 3.01 Warner Center/Woodland Hills 77.1 2.57 Honolulu Honolulu 90.4 2.99 Weighted Average 83.3 % $ 3.96 ____________________________________ (2) Does not include signed leases not yet commenced, which are included in percent leased but excluded from annualized rent.
Added
(2) Our market share is calculated by dividing our Rentable Square Feet by the applicable Region's Rentable Square Feet, weighted in the case of averages based on the square feet of exposure to our submarkets in each region.
Removed
Office Lease Diversification as of December 31, 2023 Portfolio Tenant Size Median Average Square feet 2,500 5,300 Office Leases Rentable Square Feet Annualized Rent Square Feet Under Lease Number Percent Amount Percent Amount Percent 2,500 or less 1,356 50.3 % 1,956,517 13.6 % $ 86,409,633 12.6 % 2,501-10,000 1,019 37.8 4,951,267 34.4 227,624,126 33.3 10,001-20,000 209 7.8 2,879,834 20.0 138,727,510 20.3 20,001-40,000 81 3.0 2,206,570 15.4 101,150,861 14.8 40,001-100,000 29 1.0 1,682,300 11.7 85,820,710 12.6 Greater than 100,000 2 0.1 703,824 4.9 43,619,124 6.4 Total for all leases 2,696 100.0 % 14,380,312 100.0 % $ 683,351,964 100.0 % 34 Largest Office Tenants as of December 31, 2023 The table below presents tenants paying 1% or more of our aggregate Annualized Rent: 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 Warner Bros.
Added
In calculating market share, we adjusted the rentable square footage by: (i) removing 67,000 rentable square feet for an office building in Honolulu that we are converting to residential apartments from both our rentable square footage and that of the region, and (ii) to add a 218,000 square foot property located just outside the Beverly Hills city limits to both the numerator and the denominator.
Removed
Discovery (2) 1 1 2024 456,205 2.5 % $ 27,435,217 4.0 % William Morris Endeavor (3) 2 1 2027 247,768 1.4 16,189,523 2.4 UCLA (4) 18 10 2023-2033 247,183 1.4 13,482,083 2.0 Morgan Stanley (5) 5 5 2025-2028 144,688 0.8 10,661,157 1.5 Equinox Fitness (6) 6 5 2029-2038 185,236 1.0 10,407,103 1.5 Total 32 22 1,281,080 7.1 % $ 78,175,083 11.4 % ______________________________________________________ (1) Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
Added
(3) Does not include signed leases not yet commenced, which are included in percent leased but excluded from Annualized Rent.
Removed
(2) Square footage (rounded) expires as follows: 456,000 square feet in 2024. (3) Table reflects lease terms as of December 31, 2023. Subsequent to quarter end, the lease term was extended through 2037. Tenant has the option to terminate 248,000 square feet in 2033.
Added
In-Service Office Portfolio Lease Diversification as of December 31, 2024 Portfolio Tenant Size Median Average Square feet 2,400 5,100 Office Leases Rentable Square Feet Annualized Rent Square Feet Under Lease Number Percent Amount Percent Amount Percent 2,500 or less 1,368 51.0 % 1,976,618 14.4 % $ 87,595,970 13.5 % 2,501-10,000 998 37.3 4,874,114 35.6 225,471,220 34.7 10,001-20,000 205 7.7 2,811,564 20.5 134,560,315 20.7 20,001-40,000 81 3.0 2,196,685 16.0 103,913,375 16.0 40,001-100,000 28 1.0 1,599,921 11.7 81,512,424 12.5 Greater than 100,000 1 — 252,401 1.8 17,008,049 2.6 Total for all leases 2,681 100.0 % 13,711,303 100.0 % $ 650,061,353 100.0 % 34 In-Service Office Portfolio Largest Tenants as of December 31, 2024 The table below presents tenants paying 1% or more of our aggregate Annualized Rent: 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 William Morris Endeavor (2) 1 1 2037 252,401 1.4 $ 17,008,049 2.6 UCLA (3) 14 8 2025-2033 200,854 1.1 11,823,902 1.8 Morgan Stanley (4) 5 5 2027-2030 144,688 0.8 11,059,917 1.7 Equinox Fitness (5) 6 5 2029-2038 185,236 1.0 10,681,307 1.6 NKSFB 2 2 2030 135,066 0.8 6,950,547 1.1 Total 28 21 918,245 5.1 % $ 57,523,722 8.8 % ______________________________________________________ (1) Expiration dates are per lease (expiration dates do not reflect storage and similar leases).
Removed
Tenant has options to terminate 51,000 square feet in 2025. (5) Square footage (rounded) expires as follows: 26,000 square feet in 2025; 88,000 square feet in 2027 and 30,000 square feet in 2028.
Added
(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. 36 Office Portfolio Tenant Improvements and Leasing Commissions Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
Removed
(2) Represents annualized rent at expiration divided by leased square feet.
Added
Consolidated Office Portfolio Recurring Capital Expenditures Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
Removed
(2) The multifamily portfolio also includes 83,018 square feet and annualized rent of $2,992,297 consisting of ancillary retail space at three properties and remaining office space at a building undergoing conversion from office to residential, which are not included in this table. (3) Excludes impact of Barrington Plaza.
Added
These items are not included in this table. Multifamily Portfolio Recurring Capital Expenditures Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed3 unchanged
Biggest changePeriod Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 DEI 100.00 131.96 91.24 108.35 53.21 52.22 S&P 500 100.00 131.49 155.68 200.37 164.08 207.21 NAREIT Equity (1) 100.00 126.00 115.92 166.04 125.58 142.83 Peer group (2) 100.00 124.68 84.99 103.24 58.49 69.54 _____________________________________________ (1) FTSE NAREIT Equity REITs index. (2) Consists of Boston Properties, Inc.
Biggest changePeriod Ending Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 DEI 100.00 69.14 82.11 40.33 39.57 53.26 S&P 500 100.00 118.40 152.39 124.79 157.59 197.02 NAREIT Equity (1) 100.00 92.00 131.78 99.67 113.35 123.25 Peer group (2) 100.00 68.17 82.81 46.91 55.78 67.46 _____________________________________________ (1) FTSE NAREIT Equity REITs index. (2) Consists of BXP, Inc.
(BXP), Kilroy Realty Corporation (KRC), SL Green Realty Corp. (SLG), Vornado Trust (VNO) and Hudson Pacific Properties, Inc (HPP).
(BXP), Hudson Pacific Properties (HPP), Kilroy Realty Corporation (KRC), SL Green Realty Corp. (SLG), and Vornado Realty Trust (VNO).
The graph below compares the cumulative total return on our common stock from December 31, 2018 to December 31, 2023 to the cumulative total return of the S&P 500, NAREIT Equity and an appropriate “peer group” index (assuming a $100 investment in our common stock and in each of the indexes on December 31, 2018, and that all dividends were reinvested into additional shares of common stock at the frequency with which dividends are paid on the common stock during the applicable fiscal year).
The graph below compares the cumulative total return on our common stock from December 31, 2019 to December 31, 2024 to the cumulative total return of the S&P 500, NAREIT Equity and an appropriate “peer group” index (assuming a $100 investment in our common stock and in each of the indexes on December 31, 2019, and that all dividends were reinvested into additional shares of common stock at the frequency with which dividends are paid on the common stock during the applicable fiscal year).
The table below presents the dividends declared for our common stock as reported by the NYSE: First Quarter Second Quarter Third Quarter Fourth Quarter 2023 Dividend declared $ 0.19 $ 0.19 $ 0.19 $ 0.19 2022 Dividend declared $ 0.28 $ 0.28 $ 0.28 $ 0.19 Holders of Record We had 7 holders of record of our common stock on February 9, 2024.
The table below presents the dividends declared for our common stock as reported by the NYSE: First Quarter Second Quarter Third Quarter Fourth Quarter 2024 Dividend declared $ 0.19 $ 0.19 $ 0.19 $ 0.19 2023 Dividend declared $ 0.19 $ 0.19 $ 0.19 $ 0.19 Holders of Record We had seven holders of record of our common stock on February 7, 2025.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Stock; Dividends Our common stock is traded on the NYSE under the symbol “DEI”. On December 29, 2023, the closing price of our common stock was $14.50.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market for Common Stock; Dividends Our common stock is traded on the NYSE under the symbol “DEI”. On December 31, 2024, the closing price of our common stock was $18.56.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

60 edited+30 added−24 removed41 unchanged
Biggest changeRevenues by Segment and Location During 2023, revenues from our Consolidated Portfolio were derived as follows: ____ 41 Debt and Equity Transactions, Development and Repositioning Projects, and Other Transactions Debt and Equity Transactions During the first quarter of 2023 : • Interest rate swaps, which fixed the interest rate on a $400.0 million interest-only, floating-rate term loan that matures in December 2024 for one of our consolidated JVs, expired on January 1, 2023, and the interest rate on the respective loan is now floating. • Interest rate swaps, which fixed the interest rate on a $335.0 million interest-only, floating-rate term loan that matures in March 2025 for one of our wholly-owned subsidiaries, expired on March 1, 2023, and the interest rate on the respective loan is now floating. • An interest rate swap that fixed the interest rate on a $102.4 million interest-only, floating-rate term loan that matures in April 2025 for one of our wholly-owned subsidiaries, expired on March 1, 2023, and the interest rate on the respective loan is now floating. • We repurchased 1.4 million shares of common stock for $16.5 million in cash, excluding transaction costs, in open market transactions.
Biggest changeDuring the fourth quarter of 2024 : • We acquired 17 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units. • We acquired 872 OP Units for $17 thousand in cash. • Interest rate swaps, which fixed the interest rate on a $200.0 million interest-only, floating-rate loan that matures in September 2026 for one of our wholly-owned subsidiaries, expired during October 2024, and the interest rate on the respective loan is now floating. • Interest rate swaps, which fixed the interest rate on a $400.0 million interest-only, floating-rate loan that matures in November 2026 for one of our wholly-owned subsidiaries, expired during October 2024, and the interest rate on the respective loan is now floating. • During December 2024, we closed a new $325.0 million loan for one of our JVs.
FFO Reconciliation to GAAP The table below reconciles our FFO (the FFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership - which includes our share of our consolidated JVs and our unconsolidated Fund's FFO) to net (loss) income attributable to common stockholders (the most directly comparable GAAP measure).
FFO Reconciliation to GAAP The table below reconciles our FFO (the FFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership - which includes our share of our consolidated JVs and our unconsolidated Fund's FFO) to net income (loss) attributable to common stockholders (the most directly comparable GAAP measure).
Certain Contractual Obligations See the following notes to our consolidated financial statements in Item 15 of this Report for information regarding our contractual commitments: • Note 4 - minimum future ground lease payments; • Note 8 - minimum future principal payments for our secured notes payable, and the interest rates that determine our future periodic interest payments; and • Note 17 - contractual commitments.
Certain Contractual Obligations See the following notes to our consolidated financial statements in Item 15 of this Report for information regarding our contractual commitments: • Note 4 - minimum future ground lease payments; • Note 8 - minimum future principal payments for our secured notes payable, and the interest rates that determine our future periodic interest payments; and • Note 17 - contractual commitments and guarantees.
Same Property NOI should be considered only as a supplement to net income as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
Same Property NOI should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
FFO should be considered only as a supplement to net income as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.
Based upon such periodic assessments we did not record any impairment losses for our long-lived assets during 2023, 2022 or 2021. 53 Revenue Recognition - Collectibility of lease payments from office tenants In accordance with Topic 842, if collectibility of lease payments is not probable at the commencement date, then we limit the lease income to the lesser of the income recognized on a straight-line basis or cash basis.
Based upon such periodic assessments we did not record any impairment losses for our long-lived assets during 2024, 2023 or 2022. 53 Revenue Recognition - Collectibility of lease payments from office tenants In accordance with Topic 842, if collectibility of lease payments is not probable at the commencement date, then we limit the lease income to the lesser of the income recognized on a straight-line basis or cash basis.
Partnership X has agreed to indemnify us for any amounts that we would be required to pay under these agreements. As of December 31, 2023, all of the obligations under the respective loan and swap agreements have been performed in accordance with the terms of those agreements.
Partnership X has agreed to indemnify us for any amounts that we would be required to pay under these agreements. As of December 31, 2024, all of the obligations under the respective loan and swap agreements have been performed in accordance with the terms of those agreements.
Comparison of 2022 to 2021 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 17, 2023 for a comparison of our results of operations for 2022 compared to 2021. 47 Non-GAAP Supplemental Financial Measure: FFO Usefulness to Investors We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding the impacts from changes in the value of our real estate, and to compare our performance with other REITs.
Comparison of 2023 to 2022 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024 for a comparison of our results of operations for 2023 compared to 2022. 47 Non-GAAP Supplemental Financial Measure: FFO Usefulness to Investors We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding impacts from changes in the value of our real estate, and to compare our performance with other REITs.
Comparison of 2022 to 2021 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 17, 2023 for a comparison of our cash flows for 2022 compared to 2021. 52 Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP, which requires us to make estimates of certain items which affect the reported amounts of our assets, liabilities, revenues and expenses.
Comparison of 2023 to 2022 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024 for a comparison of our cash flows for 2023 compared to 2022. 52 Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with US GAAP, and which requires us to make estimates of certain items, which affect the reported amounts of our assets, liabilities, revenues and expenses.
Excludes leases with a term of twelve months or less, leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated at the landlord's request, leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe the base rent reflects other off-market inducements to the tenant, and other non-comparable leases.
Excludes leases with a term of twelve months or less, leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated at the landlord's request, leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe the base rent reflects other off-market inducements to the tenant, and other non-comparable leases, such as retail leases.
During 2023, our results of operations were impacted by various transactions - see "Debt and Equity Transactions, Development and Repositioning Projects, and Other Transactions" further below. Overview Douglas Emmett, Inc. is a fully integrated, self-administered and self-managed REIT.
During 2024, our results of operations were impacted by various transactions - see "Debt and Equity Transactions, Development and Repositioning Projects, and Other Transactions" further below. Overview Douglas Emmett, Inc. is a fully integrated, self-administered and self-managed REIT.
We plan to meet our long-term liquidity needs through long-term secured non-recourse debt, the issuance of equity securities, including common stock and OP Units, as well as property dispositions and JV transactions. We only use non-recourse debt, secured by our properties. As of the date of this report, approximately 45% of our total office portfolio was unencumbered.
We plan to meet our long-term liquidity needs through long-term secured non-recourse debt, the issuance of equity securities, including common stock and OP Units, as well as property dispositions and JV transactions. We generally only use non-recourse debt, secured by our properties. As of the date of this report, approximately 44% of our total office portfolio was unencumbered.
The impact of changing our current year tenant recovery billings by 5% would result in a change to our tenant recovery revenues and net income of $2.6 million, $2.2 million and $2.4 million during 2023, 2022 and 2021, respectively. Stock-Based Compensation We award stock-based compensation to certain employees and non-employee directors in the form of LTIP Units.
The impact of changing our current year tenant recovery billings by 5% would result in a change to our tenant recovery revenues and net income of $2.5 million, $2.6 million and $2.2 million during 2024, 2023 and 2022, respectively. Stock-Based Compensation We award stock-based compensation to certain employees and non-employee directors in the form of LTIP Units.
Comparison of 2022 to 2021 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 17, 2023 for a comparison of our FFO for 2022 compared to 2021. 48 Non-GAAP Supplemental Financial Measure: Same Property NOI Usefulness to Investors We report Same Property NOI to facilitate a comparison of our operations between reported periods.
Comparison of 2023 to 2022 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024 for a comparison of our FFO for 2023 compared to 2022. 48 Non-GAAP Supplemental Financial Measure: Same Property NOI Usefulness to Investors We report Same Property NOI to facilitate a comparison of our operations between reported periods.
(4) 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. (5) Our multifamily occupancy rates were adversely impacted by the COVID-19 pandemic during 2020 but recovered during 2021 and 2022.
Our multifamily occupancy rates were adversely impacted by the COVID-19 pandemic during 2020 but recovered during 2021 and 2022. (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.
We restored accrual basis accounting for certain office tenants that were previously determined to be uncollectible and accounted for on a cash basis of accounting, which increased our office revenues by $4.4 million and $3.6 million in 2023 and 2022, respectively.
We restored accrual basis accounting for certain office tenants that were previously determined to be uncollectible and accounted for on a cash basis of accounting, which increased our office revenues by $0.9 million, $4.4 million, and $3.6 million in 2024, 2023, and 2022, respectively.
Office Lease Expirations As of December 31, 2023, assuming non-exercise of renewal options and early termination rights, we expect to see expiring square footage in our total office portfolio as follows: _______________________________________________________________ (1) Average of the percentage of leases at December 31, 2020, 2021, and 2022 with the same remaining duration as the leases for the labeled year had at December 31, 2023.
In-Service Office Portfolio Lease Expirations As of December 31, 2024, assuming non-exercise of renewal options and early termination rights, we expect to see expiring square footage for our In-Service office portfolio as follows: _______________________________________________________________ (1) Average of the percentage of leases at December 31, 2021, 2022, and 2023 with the same remaining duration as the leases for the labeled year had at December 31, 2024.
Stock-based compensation expense was $19.8 million, $21.0 million and $20.9 million for 2023, 2022 and 2021, respectively. The impact of changing the discount rate by 5% would result in a change to our stock-based compensation expense and net income of $1.0 million, $1.1 million and $1.0 million during 2023, 2022 and 2021, respectively. 54
Stock-based compensation expense was $21.0 million, $19.8 million and $21.0 million for 2024, 2023 and 2022, respectively. The impact of changing the discount rate by 5% would result in a change to our stock-based compensation expense and net income of $1.1 million, $1.0 million and $1.1 million during 2024, 2023 and 2022, respectively. 54
See "Guarantees" in Note 17 to our consolidated financial statements in Item 15 of this Report for more information about our Fund's debt and swaps, and the respective guarantees. 51 Cash Flows Comparison of 2023 to 2022 Our operating cash flows were adversely impacted by the effects of inflation and higher interest rates during 2023 and by the COVID-19 pandemic during 2022.
See "Guarantees" in Note 17 to our consolidated financial statements in Item 15 of this Report for more information about our Fund's debt and swaps, and the respective guarantees. 51 Cash Flows Comparison of 2024 to 2023 Our operating cash flows were adversely impacted by the effects of inflation and higher interest rates during 2024 and 2023.
(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 at the landlord's request.
(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, leases for tenants relocated from space at the landlord's request, and non-comparable leases, such as retail leases.
Acquisitions are included in the prior year average commencing in the quarter after the acquisition. 45 Results of Operations Comparison of 2023 to 2022 Our operating results were adversely impacted by the effects of inflation and higher interest rates during 2023 , and by the COVID-19 pandemic during 2022 .
Acquisitions are included in the prior year average commencing in the quarter after the acquisition. 45 Results of Operations Comparison of 2024 to 2023 Our operating results were adversely impacted by the effects of inflation and higher interest rates during 2024 and 2023 .
Charges for uncollectible amounts related to tenant receivables and deferred rent receivables reduced our rental revenues and tenant recoveries by $0.8 million, $0.6 million, and $3.0 million in 2023, 2022 and 2021, respectively.
Charges for uncollectible amounts related to tenant receivables and deferred rent receivables reduced our rental revenues and tenant recoveries by $1.0 million, $0.8 million, and $0.6 million in 2024, 2023 and 2022, respectively.
In connection with the removal of the property from the rental market, we accelerated and re corded additional depreciation expense of $82.1 million for the year ended December 31, 2023, which is included in Depreciation and amortization on our consolidated stateme nts of operations.
We accelerated and re corded additional depreciation expense of $82.1 million for the year ended December 31, 2023 , which is included in Depreciation and amortization on our consolidated stateme nts of operations.
In addition, we may reposition properties already in our portfolio. The work we undertake to reposition a building typically takes months or even years, and could involve a range of improvements from a complete structural renovation to a targeted remodeling of selected spaces.
The work we undertake to reposition a building typically takes months or even years, and could involve a range of improvements from a complete structural renovation to a targeted remodeling of selected spaces.
Comparison of 2023 to 2022: Our Same Properties for 2023 included 67 office properties, aggregating 17.6 million Rentable Square Feet, and 10 multifamily properties with an aggregate 3,449 units. The amounts presented below reflect 100% (not our pro-rata share). Our Same Property results were adversely impacted by the effects of inflation during 2023 and by the COVID-19 pandemic during 2022.
Comparison of 2024 to 2023: Our Same Properties for 2024 included 66 office properties, aggregating 17.1 million Rentable Square Feet, and 11 multifamily properties with an aggregate 3,569 units. The amounts presented below reflect 100% (not our pro-rata share). Our Same Property results were adversely impacted by the effects of inflation during 2024 and 2023.
Our FFO was adversely impacted by the effects of inflation and higher interest rates during 2023 , and by the COVID-19 pandemic during 2022 .
Our FFO was adversely impacted by the effects of inflation and higher interest rates during 2024 and 2023 .
(3) Adjusts for the net income (loss) and depreciation and amortization of real estate assets that is attributable to the noncontrolling interests in our consolidated JVs. Comparison of 2023 to 2022 During 2023, FFO decreased by $42.4 million, or 10.1%, to $377.3 million, compared to $419.7 million for 2022.
(3) Adjusts for the net income (loss) and depreciation and amortization of real estate assets that is attributable to the noncontrolling interests in our consolidated JVs. Comparison of 2024 to 2023 During 2024, FFO decreased by $31.8 million, or 8.4%, to $345.5 million, compared to $377.3 million for 2023 .
Multifamily Rental Rates The table below presents the average annual rental rate per leased unit for new tenants: Year Ended December 31, 2023 2022 2021 2020 2019 Average annual rental rate - new tenants (1)(2) $ 36,070 $ 31,763 $ 29,837 $ 28,416 $ 28,350 _____________________________________________________ (1) These average rental rates are not directly comparable from year to year because of changes in the properties and units included.
Year Ended December 31, 2024 2023 2022 2021 2020 Average annual rental rate - new tenants (1)(2) $ 39,580 $ 36,070 $ 31,763 $ 29,837 $ 28,416 _____________________________________________________ (1) These average rental rates are not directly comparable from year to year because of changes in the properties and units included.
Rental Rate Trends - Total Portfolio Office Rental Rates The table below presents the average annual rental rate per leased square foot and the annualized lease transaction costs per leased square foot for leases executed in our total office portfolio during the respective periods: Year Ended December 31, 2023 2022 2021 2020 2019 Average straight-line rental rate (1)(2)(4) $42.97 $46.78 $44.99 $45.26 $49.65 Annualized lease transaction costs (3)(4) $5.53 $5.85 $4.77 $5.11 $6.02 ___________________________________________________ (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.
Year Ended December 31, 2024 2023 2022 2021 2020 Average straight-line rental rate (1)(2)(4)(5) $50.50 $42.97 $46.78 $44.99 $45.26 Annualized lease transaction costs (3)(4)(5) $5.95 $5.53 $5.85 $4.77 $5.11 ___________________________________________________ (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.
We do not expect to have sufficient funds on hand to cover these long-term cash requirements due to REIT federal tax rules which require that we distribute at least 90% of our income on an annual basis.
Long-term liquidity Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, development and debt refinancings. We do not expect to have sufficient funds on hand to cover these long-term cash requirements due to REIT federal tax rules which require that we distribute at least 90% of our income on an annual basis.
Year Ended December 31, (In thousands) 2023 2022 Net (loss) income attributable to common stockholders (1) $ (42,706) $ 97,145 Depreciation and amortization of real estate assets 459,949 372,798 Net loss attributable to noncontrolling interests (33,134) (605) Adjustments attributable to unconsolidated Fund (1)(2) 39,194 2,848 Adjustments attributable to consolidated JVs (3) (46,012) (52,503) FFO $ 377,291 $ 419,683 ___________________________________________________ (1) Our net loss for the year ended December 31, 2023 includes a $36.2 million impairment charge related to our investment in our unconsolidated Fund.
Year Ended December 31, (In thousands) 2024 2023 Net income (loss) attributable to common stockholders (1) $ 23,517 $ (42,706) Depreciation and amortization of real estate assets 384,048 459,949 Net loss attributable to noncontrolling interests (15,929) (33,134) Adjustments attributable to unconsolidated Fund (1)(2) 4,579 39,194 Adjustments attributable to consolidated JVs (3) (50,687) (46,012) FFO $ 345,528 $ 377,291 ___________________________________________________ (1) Our net loss for the year ended December 31, 2023 includes a $36.2 million impairment charge related to our investment in our unconsolidated Fund.
We focus on owning, acquiring, developing and managing a substantial market share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.
We focus on owning, acquiring, developing and managing a substantial market share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities. For the purpose of reporting key operating metrics, commencing with the fourth quarter of 2024, we are focused on the properties in our In-Service Portfolio.
This assessment involves using a methodology that requires judgment and estimates about matters that are uncertain at the time the estimates are made, including tenant specific factors, specific industry conditions, and general economic trends and conditions. During 2022 and 2021, our results of operations were materially impacted by the COVID-19 pandemic.
This assessment involves using a methodology that requires judgment and estimates about matters that are uncertain at the time the estimates are made, including tenant specific factors, specific industry conditions, and general economic trends and conditions.
During 2023, we generated cash from operations of $427.0 million. As of December 31, 2023, we had $523.1 million of cash and cash equivalents. Our earliest term loan maturity is December 2024. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt.
During 2024, we generated cash from operations of $408.7 million. As of December 31, 2024, we had $444.6 million of cash and cash equivalents. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt maturities and interest rate swap expirations.
Year Ended December 31, Increase (Decrease) In Cash % 2023 2022 (In thousands) Net cash provided by operating activities (1) $ 426,964 $ 496,888 $ (69,924) (14.1) % Net cash used in investing activities (2) $ (233,590) $ (560,953) $ 327,363 58.4 % Cash provided by (used in) financing activities (3) $ 60,871 $ (3,003) $ 63,874 (2,127.0) % ___________________________________________________ (1) Our cash flows from operating activities are primarily dependent upon the occupancy and rental rates of our portfolio, the collectibility of tenant receivables, the level of our operating and general and administrative expenses, and interest expense.
Year Ended December 31, Increase (Decrease) In Cash % 2024 2023 (In thousands) Net cash provided by operating activities (1) $ 408,693 $ 426,964 $ (18,271) (4.3) % Net cash used in investing activities (2) $ (240,761) $ (233,590) $ (7,171) (3.1) % Net cash (used in) provided by financing activities (3) $ (246,463) $ 60,871 $ (307,334) (504.9) % ___________________________________________________ (1) Our cash flows from operating activities are primarily dependent upon the occupancy and rental rates of our portfolio, the collectibility of tenant receivables, the level of our operating and general and administrative expenses, and interest expense.
Office parking and other income $ 115,203 $ 100,442 $ 14,761 14.7 % The increase was primarily due to an increase in parking income due to higher parking activity and higher ground lease income due to a one-time catch-up payment related to a ground lease reset dispute.
Office parking and other income $ 112,503 $ 115,203 $ (2,700) (2.3) % The decrease was primarily due to a one-time catch-up payment related to a ground lease reset dispute in 2023, partly offset by an increase in parking income due to higher parking rates.
(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.
(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. (3) Our office cash rent and straight-line rent roll were impacted by a large tenant lease renewal during the three months ended March 31, 2024.
The conversion will continue in phases through 2025 as the remaining office space is vacated, therefore, the expected timing of the remaining spending is uncertain. Repositionings We often strategically purchase properties with large vacancies or expected near-term lease roll-over and use our knowledge of the property and submarket to reposition the property for the optimal use and tenant mix.
Repositionings We often strategically purchase properties with large vacancies or expected near-term lease roll-over and use our knowledge of the property and submarket to reposition the property for the optimal use and tenant mix. In addition, we may reposition properties already in our portfolio.
Depreciation and amortization $ 459,949 $ 372,798 $ (87,151) (23.4) % The increase was primarily due to accelerated depreciation related to removing units from service at our Barrington Plaza property commencing during the second quarter of 2023. 46 Year Ended December 31, Favorable (Unfavorable) 2023 2022 Change % Commentary (In thousands) Non-Operating Income and Expenses Other income $ 19,633 $ 4,587 $ 15,046 328.0 % The increase was primarily due to an increase in interest income due to higher interest rates and higher cash and cash equivalent balances.
Depreciation and amortization $ 384,048 $ 459,949 $ 75,901 16.5 % The decrease was primarily due to accelerated depreciation during 2023 related to removing units from service at our Barrington Plaza property. 46 Year Ended December 31, Favorable (Unfavorable) 2024 2023 Change % Commentary (In thousands) Non-Operating Income and Expenses Other income $ 28,019 $ 19,633 $ 8,386 42.7 % The increase was primarily due to an increase in interest income due to higher cash and cash equivalent balances during the year.
Excludes units vacated as part of removing Barrington Plaza from the rental market until June of 2023 and excludes the impact of Barrington Plaza entirely starting in July 2023.
Our office occupancy rates were adversely impacted by the COVID-19 pandemic during 2020, 2021 and 2022. (2) Excludes units vacated as part of removing Barrington Plaza from the rental market until June of 2023 and excludes the impact of Barrington Plaza entirely starting in July 2023.
During the repositioning, the affected property may display depressed rental revenue and occupancy levels that impact our results and, therefore, comparisons of our performance from period to period. Property to be Removed from Service During the second quarter of 2023, we removed our Barrington Plaza Apartments property in Los Angeles from the rental market.
During the repositioning, the affected property may display depressed rental revenues and occupancy levels that impact our operating results and, therefore, comparisons of our performance from period to period.
See Notes 6, 8, 10 and 11 to our consolidated financial statements in Item 15 of this Report for more information regarding our unconsolidated Fund, debt, derivatives and equity, respectively. 42 Development • 1132 Bishop Street, Honolulu, Hawaii - "The Residences at Bishop Place" In downtown Honolulu, we are converting a 25-story, 493 thousand square foot office tower into 493 rental apartments.
See Notes 6, 8, 10 and 11 to our consolidated financial statements in Item 15 of this Report for more information regarding our unconsolidated Fund, debt, derivatives and equity, respectively. 42 Development Portfolio Studio Plaza Studio Plaza is a 456,000 square foot office property located in Burbank.
Excluding acquisitions and debt refinancings, we expect to meet our short-term liquidity requirements through cash on hand and cash generated by operations. Long-term liquidity Our long-term liquidity needs consist primarily of funds necessary to pay for acquisitions, development and debt refinancings.
Excluding acquisitions and debt refinancings, we expect to meet our short-term liquidity requirements through cash on hand and cash generated by operations. With respect to our short-term debt maturities, we expect to refinance or extend them prior to maturity.
(2) Our cash flows from investing activities is generally used to fund property acquisitions, developments and redevelopment projects, and Recurring and non-Recurring Capital Expenditures.
(2) Our cash flows from investing activities is generally used to fund property acquisitions, developments and redevelopment projects, and Recurring and non-Recurring Capital Expenditures. The decrease in cash from investing activities of $7.2 million was primarily due to the purchase of a note receivable partly offset by a decrease in capital expenditures for improvements to real estate.
(2) Our multifamily rental rates were adversely impacted by the COVID-19 pandemic in 2020 but improved in 2021 and 2022.
(iv) During 2024, the average was impacted by leasing of units at our newly developed West Los Angeles property, where the rental rates were higher than the average in our portfolio. (2) Our multifamily rental rates were adversely impacted by the COVID-19 pandemic in 2020 but improved in 2021 and 2022.
Year Ended December 31, Favorable (Unfavorable) 2023 2022 Change % Commentary (In thousands) Revenues Office rental revenue and tenant recoveries $ 714,742 $ 724,131 $ (9,389) (1.3) % The decrease was primarily due to lower occupancy, lower collections, lower accretion from below-market leases and our office to residential conversion project at Bishop Place.
Year Ended December 31, Favorable (Unfavorable) 2024 2023 Change % Commentary (In thousands) Revenues Office rental revenue and tenant recoveries $ 683,901 $ 714,742 $ (30,841) (4.3) % The decrease was primarily due to a decrease in rental revenues due to lower occupancy, and lower tenant recoveries. The lower tenant recoveries were primarily due to lower property taxes.
Multifamily NOI 82,400 80,055 2,345 2.9 % Total NOI $ 608,645 $ 614,486 $ (5,841) (1.0) % 49 Reconciliation to GAAP The table below presents a reconciliation of Net (loss) income attributable to common stockholders (the most directly comparable GAAP measure) to Same Property NOI: Year Ended December 31, (In thousands) 2023 2022 Net (loss) income attributable to common stockholders $ (42,706) $ 97,145 Net loss attributable to noncontrolling interests (33,134) (605) Net (loss) income (75,840) 96,540 General and administrative expenses 49,236 45,405 Depreciation and amortization 459,949 372,798 Other income (19,633) (4,587) Other expenses 1,032 714 Loss (income) from unconsolidated Fund 34,643 (1,224) Interest expense 209,468 150,185 NOI $ 658,855 $ 659,831 Same Property NOI by Segment Same property office revenues $ 819,931 $ 814,084 Same property office expenses (293,686) (279,653) Same Property Office NOI 526,245 534,431 Same property multifamily revenues 119,718 114,688 Same property multifamily expenses (37,318) (34,633) Same Property Multifamily NOI 82,400 80,055 Same Property NOI 608,645 614,486 Non-comparable office revenues 10,014 10,489 Non-comparable office expenses (624) (4,869) Non-comparable multifamily revenues 70,825 54,391 Non-comparable multifamily expenses (30,005) (14,666) NOI $ 658,855 $ 659,831 Comparison of 2022 to 2021 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 17, 2023 for a comparison of our same property NOI for 2022 compared to 2021. 50 Liquidity and Capital Resources Short-term liquidity Our short-term liquidity needs consist primarily of funds necessary for our operating activities, development, repositioning projects, dividends, distributions, and discretionary share repurchases.
Multifamily NOI 99,190 97,093 2,097 2.2 % Total NOI $ 586,438 $ 601,800 $ (15,362) (2.6) % 49 Reconciliation to GAAP The table below presents a reconciliation of Net income (loss) attributable to common stockholders (the most directly comparable GAAP measure) to NOI and Same Property NOI: Year Ended December 31, (In thousands) 2024 2023 Net income (loss) attributable to common stockholders $ 23,517 $ (42,706) Net loss attributable to noncontrolling interests (15,929) (33,134) Net income (loss) 7,588 (75,840) General and administrative expenses 45,356 49,236 Depreciation and amortization 384,048 459,949 Other income (28,019) (19,633) Other expenses 398 1,032 (Income) loss from unconsolidated Fund (2,593) 34,643 Interest expense 229,442 209,468 NOI $ 636,220 $ 658,855 Same Property NOI by Segment Same property office revenues $ 769,882 $ 795,768 Same property office expenses (282,634) (291,061) Same Property Office NOI 487,248 504,707 Same property multifamily revenues 144,084 141,640 Same property multifamily expenses (44,894) (44,547) Same Property Multifamily NOI 99,190 97,093 Same Property NOI 586,438 601,800 Non-comparable office revenues 26,522 34,177 Non-comparable office expenses (2,718) (3,249) Non-comparable multifamily revenues 45,990 48,903 Non-comparable multifamily expenses (20,012) (22,776) NOI $ 636,220 $ 658,855 Comparison of 2023 to 2022 See Item 7 of Part II in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 16, 2024 for a comparison of our same property NOI for 2023 compared to 2022. 50 Liquidity and Capital Resources Short-term liquidity Our short-term liquidity needs consist primarily of funds necessary for our operating activities, development, repositioning projects, dividends, distributions, and discretionary share repurchases.
General and administrative expenses $ 49,236 $ 45,405 $ (3,831) (8.4) % The increase was primarily due to higher legal expenses, partly offset by a decrease in advocacy expenses.
General and administrative expenses $ 45,356 $ 49,236 $ 3,880 7.9 % The decrease was primarily due to lower advocacy, legal and personnel expenses.
The increase was partly offset by a decrease in revenues from units removed from service at our Barrington Plaza property commencing during the second quarter of 2023. Operating expenses Office rental expenses $ 294,310 $ 284,522 $ (9,788) (3.4) % The increase was primarily due to an increase in utility, security, janitorial and insurance expenses.
Multifamily rental expenses $ 64,906 $ 67,323 $ 2,417 3.6 % The decrease was primarily due to a decrease in multifamily expenses at our Barrington Plaza property, which we removed from service during the second quarter of 2023, partly offset by an increase in multifamily expenses from new units at our Residences at Bishop Place conversion project.
A reconstruction of this property is expected to take a number of years at a cost of several hundred million dollars. We are currently in litigation with the insurance providers in 2020 for Barrington Plaza to recover certain costs associated with reconstruction. As of December 31, 2023, a significant majority of the tenants have vacated.
A reconstruction of this property is expected to take a number of years at a cost of several hundred million dollars. As of December 31, 2024, a significant majority of the tenants have vacated. See "Legal Proceedings" in Note 17 to our consolidated financial statements in Item 15 of this Report.
(2) Our office occupancy rates were adversely impacted by the COVID-19 pandemic during 2020, 2021 and 2022. (3) Our Occupancy Rates may not be directly comparable from year to year, as they can be impacted by acquisitions, dispositions, development and redevelopment projects.
Our Occupancy Rates may not be directly comparable from year to year, as they can be impacted by acquisitions, dispositions, and development and redevelopment projects. Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.
The increase in cash from financing activities of $63.9 million was primarily due to: (i) an increase in net borrowings of $175.0 million, (ii) a decrease in dividends paid to common stockholders of $66.9 million, and (iii) lower distributions paid to noncontrolling interests of $18.4 million, partly offset by cash paid to repurchase common stock of $109.2 million and a decrease in contributions from noncontrolling interests in our consolidated JVs of $80.9 million.
The decrease in cash from financing activities of $307.3 million was primarily due to lower proceeds from borrowings and higher repayments of borrowings, partly offset by the repurchase of common stock during the prior period and higher contributions from noncontrolling interests in consolidated JVs during the current period.
Other expenses $ (1,032) $ (714) $ (318) (44.5) % The increase was primarily due to higher transaction costs. (Loss) income from unconsolidated Fund $ (34,643) $ 1,224 $ (35,867) (2,930.3) % The decrease was primarily due to an impairment charge of $36.2 million in 2023 related to our investment in our Fund.
Income (loss) from unconsolidated Fund $ 2,593 $ (34,643) $ 37,236 107.5 % The increase was primarily due to an impairment charge of $36.2 million in 2023 related to our investment in our Fund. Interest expense $ (229,442) $ (209,468) $ (19,974) (9.5) % The increase was primarily due to higher interest rates on our floating rate debt.
The increase was partly offset by a decrease in rental expenses from our office to residential conversion project at Bishop Place and lower property taxes.
The decrease was partly offset by (i) an increase in revenues from new units at our Landmark Los Angeles development project and our Residences at Bishop Place conversion project, and (ii) higher rental rates.
Multifamily Rent Roll The rent on leases subject to rent change during 2023 (new tenants and existing tenants undergoing annual rent review) was 2.1% higher on average than the prior rent on the same unit. 44 Occupancy Rates - Total Portfolio The tables below present the occupancy rates for our total office portfolio and multifamily portfolio: December 31, Occupancy Rates (1) as of: 2023 2022 2021 2020 2019 Office portfolio (2) 81.0 % 83.7 % 84.9 % 87.4 % 91.4 % Multifamily portfolio (3)(5) 96.7 % 98.1 % 98.0 % 94.2 % 95.2 % Year Ended December 31, Average Occupancy Rates (1)(4) : 2023 2022 2021 2020 2019 Office portfolio (2) 82.6 % 84.2 % 85.7 % 89.5 % 90.7 % Multifamily portfolio (3)(5) 96.9 % 97.9 % 96.8 % 94.2 % 96.5 % ___________________________________________________ (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.
December 31, Occupancy Rates as of: 2024 2023 2022 2021 2020 Office portfolio (1) 79.2 % 81.0 % 83.7 % 84.9 % 87.4 % Multifamily portfolio (2) 97.4 % 96.7 % 98.1 % 98.0 % 94.2 % Year Ended December 31, Average Occupancy Rates (3) : 2024 2023 2022 2021 2020 Office portfolio (1) 80.1 % 82.6 % 84.2 % 85.7 % 89.5 % Multifamily portfolio (2) 97.0 % 96.9 % 97.9 % 96.8 % 94.2 % ___________________________________________________ (1) Our office occupancy rate for 2024 was impacted by a large tenant lease expiration during the three months ended December 31, 2024.
(4) Our office rental rates were adversely impacted by the COVID-19 pandemic during 2020, 2021 and 2022, although the lower rental rates for the respective periods were partly offset by lower tenant improvement costs. 43 Office Rent Roll The table below presents the rent roll for new and renewed leases per leased square foot executed in our total office portfolio: Year Ended December 31, 2023 Rent Roll (1)(2) Expiring Rate (2) New/Renewal Rate (2) Percentage Change Cash Rent $45.25 $41.80 (7.6)% Straight-line Rent $41.17 $42.97 4.4% ___________________________________________________ (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.
Year Ended December 31, 2024 Rent Roll (1)(2)(3) Expiring Rate (2) New/Renewal Rate (2) Percentage Change Cash Rent $50.03 $47.31 (5.4)% Straight-line Rent $44.47 $50.50 13.5% ___________________________________________________ (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.
The decrease in cash from operating activities of $69.9 million was primarily due to: (i) higher interest expense, (ii) cash used to fund working capital, (iii) an increase in general and administrative cash expenses, and (iv) a decrease in NOI from our office portfolio, partly offset by higher interest income and an increase in NOI from our multifamily portfolio.
The decrease was partly offset by (i) higher cash provided by working capital, (ii) higher interest income, (iii) lower office property taxes, (iv) new units from our multifamily development projects, (v) higher multifamily rental rates, and (vi) lower general and administrative expenses.
Year Ended December 31, Favorable (Unfavorable) 2023 2022 Change % Commentary (In thousands) Office revenues $ 819,931 $ 814,084 $ 5,847 0.7 % The increase was primarily due to an increase in parking income and tenant recoveries, partly offset by lower rental revenues.
Year Ended December 31, Favorable (Unfavorable) 2024 2023 Change % Commentary (In thousands) Office revenues $ 769,882 $ 795,768 $ (25,886) (3.3) % The decrease was primarily due to a decrease in rental revenues due to lower occupancy, and lower tenant recoveries. The decrease in tenant recoveries was primarily due to lower property taxes.
The lower rental revenues were primarily due to lower occupancy, lower collections and lower accretion from below-market leases, partly offset by higher lease termination revenues. Office expenses (293,686) (279,653) (14,033) (5.0) % The increase was primarily due to an increase in utility, security, janitorial and insurance expenses. The increase was partly offset by lower property taxes.
Office NOI 487,248 504,707 (17,459) (3.5) % Multifamily revenues 144,084 141,640 2,444 1.7 % The increase was primarily due to an increase in rental revenues due to higher rental rates, partly offset by lower accretion from below-market leases. Multifamily expenses (44,894) (44,547) (347) (0.8) % The increase was primarily due to higher personnel expenses and professional fees.
The decrease in NOI from our office portfolio was primarily due to: (i) lower occupancy, (ii) lower collections, (iii) lower accretion from below-market leases, (iv) our office to residential conversion project at Bishop Place and (v) higher rental expenses. The increase in interest income was primarily due to higher interest rates and higher cash and cash equivalents balances.
The decrease was partly offset by (i) higher interest income, (ii) lower office property taxes, (iii) new units from our multifamily development projects, (iv) higher multifamily rental rates, and (v) lower general and administrative expenses.
Removed
As of December 31, 2023, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases): Consolidated Portfolio (1) Total Portfolio (2) Office Class A Properties 68 70 Rentable Square Feet (in thousands) (3) 17,595 17,981 Leased rate 83.3% 83.3% Occupancy rate 80.9% 81.0% Multifamily Properties 14 14 Units (4) 4,576 4,576 Leased rate (4) 98.5% 98.5% Occupancy rate (4) 96.7% 96.7% _____________________________________________________________________ (1) Our Consolidated Portfolio includes the properties in our consolidated results.
Added
The In-Service Portfolio in the fourth quarter of 2024 consisted of our Total Portfolio excluding our Development Portfolio. The Development Portfolio consists of one office property and one multifamily property whose operations are significantly limited by the development activity and are excluded from our In-Service Portfolio statistics and operating metrics.
Removed
Through our subsidiaries, we wholly-own 52 office properties totaling 13.4 million square feet and 12 residential properties with 4,106 apartments. Through four consolidated JVs, we partially own an additional 16 office properties totaling 4.2 million square feet and two residential properties with 470 apartments.
Added
Our portfolio statistics and operating metrics as of December 31, 2024 were as follows: In-Service Portfolio Development Portfolio Total Office Portfolio Number of Properties 69 1 70 Rentable square feet 17,524,458 456,205 17,980,663 Multifamily Portfolio Number of Properties 13 1 14 Number of Units 4,391 712 5,103 In-Service Portfolio Leasing Statistics Office Portfolio Leased Rate 81.1 % Occupancy Rate 79.2 % Multifamily Portfolio Leased Rate 99.1 % Revenues by Segment and Location During 2024, revenues from our Consolidated Portfolio were derived as follows: ____ 41 Debt and Equity Transactions, Development and Repositioning Projects, and Other Transactions Debt and Equity Transactions During the first quarter of 2024 : • We acquired an additional 20.2% of the equity in our unconsolidated Fund, Partnership X, which increased our ownership interest in the Fund to 74.0% . • We acqui red 166 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units. • We acquired 461 OP Un its for $6 thousand in cash. • In connection with the Barrington Plaza loan, w e signed a construction completion guarantee.
Removed
Our Consolidated Portfolio excludes two wholly-owned 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, Partnership X.
Added
See "Development Portfolio" further below for more information about Barrington Plaza. During the second quarter of 2024 : • We acquired 27 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units. • We acquired 703 OP Units for $10 thousand in cash.
Removed
See Note 6 to our consolidated financial statements in Item 15 of this Report for more information about Partnership X. (3) As of December 31, 2023, we removed approximately 77,000 Rentable Square Feet for an office building we are converting to apartments. See "Development" further below.
Added
During the third quarter of 2024 : • We acquired 20 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units. • We acquired 6,798 OP Units for $105 thousand in cash. • Inte rest rate swaps, which fixed the interest rate on a $400 million interest-only, floating-rate loan that matures in September 2026 for one of our wholly-owned subsidiaries, expired during September 2024, and the interest rate on the respective loan is now floating.
Removed
(4) Unit totals exclude units vacated as part of removing Barrington Plaza from the rental market. The leased and occupancy rates exclude the impact of Barrington Plaza. See "Property to be Removed from Service" further below.
Added
W e also paid the respective loan principal down by $34.0 million in order to meet a minimum financial threshold to exercise an extension option.
Removed
The average purchase price was $11.50 per share. • We acquired 5 thousand OP Units for $89 thousand in cash. During the second quarter of 2023: • We repurchased 7.6 million shares of common stock for $92.6 million in cash , excluding transaction costs, in open market transactions.
Added
The loan is secured by the JV's five office properties and matures in December 2028. The interest rate is SOFR + 2.5% and we used interest rate swaps to swap fix the rate at 6.36%. The swaps are effective on January 6, 2025.
Removed
The average purchase price was $12.13 per share. • We acquired 20 thousand OP Units for $232 thousand in cash. During the third quarter of 2023: • We closed a new $350.0 million secured, non-recourse interest-only term loan that matures in August 2033.
Added
The loan requires monthly payments of principal and interest commencing on January 5, 2028 for twelve months based upon a 25-year principal amortization schedule.
Removed
The loan accrues intere st at SOFR plus 1.37% and is secured by our Landmark Los Angeles and Bishop Place properties. The interest rate is capped with lender-required out-of-the-money interest rate caps at 7.84% until August 2026 .
Added
The loan replaced a $400.0 million loan which we paid off using proceeds from the new loan as well as cash on hand in the joint venture. • We entered into a new consolidated JV in December 2024 that we manage and in which we own a 30% interest. The JV purchased a note receivable secured by a property.
Removed
We used part of the proceeds to pay off the balance on our revolving credit facility, which expired in August 2023. • We purchased three lender-required out-of-the-money interest rate caps with an aggregate notional amount of $472.0 million to hedge $472.0 million of a $550.0 million loan.
Added
To fund the purchase of the secured note, the JV obtained a $61.8 million loan. The secured loan matures in January 2030. The interest rate is fixed at 6.0% until July 2027 and then increases to 6.25% for the remaining loan term.
Removed
The interest rate is capped at a weighted average of 8.99% until July 2026. • We converted our LIBOR loans and swaps to SOFR. See Item 7A in Part II for our SOFR transition disclosures. • In connection with the Barrington Plaza loan, Barrington Plaza Apartments have been removed from the rental market.
Added
During January 2025 • A consolidated JV that we manage, and in which we own a 30% interest, acquired a 17-story 247,000 square foot office property located at 10900 Wilshire Boulevard in Westwood. Title to the property was transferred following the purchase of a secured note by the respective JV.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur use of interest rate swaps and caps exposes us to credit risk from the potential inability of our counterparties to perform under the terms of those agreements. We attempt to minimize this credit risk by contracting with a variety of financial counterparties with investment grade ratings.
Biggest changeWe attempt to minimize this credit risk by contracting with a variety of financial counterparties with investment grade ratings. See Note 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our interest rate swaps and caps.
Higher interest rates would cause an increase in our future interest expense on our floating-rate debt, which would reduce our future net income, cash flows from operations and FFO. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt and our future swap and cap expirations.
Higher interest rates would cause an increase in our future interest expense on our floating-rate debt, which would reduce our future net income, cash flows from operations and FFO. See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our floating rate debt.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Fixed-Rate Borrowings and Hedged Borrowings As of December 31, 2023, the interest rates for 69% of our consolidated borrowings were fixed or swap-fixed with interest rate swaps, and 15% were capped with interest rate caps.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk Fixed-Rate Borrowings and Hedged Borrowings As of December 31, 2024, the interest rates for 58% of our consolidated borrowings were fixed or swap-fixed with interest rate swaps, and 15% were capped with interest rate caps.
As of December 31, 2023, the maximum amount the interest expense on our capped-rate borrowings could increase is $14.3 million per year. Higher interest rates would cause an increase in our future interest expense on our capped-rate debt, which would reduce our future net income, cash flows from operations and FFO.
As of December 31, 2024, the maximum amount the interest expense on our capped-rate borrowings could increase by is $21.7 million per year. Higher interest rates would cause an increase in our future interest expense on our capped-rate debt, which would reduce our future net income, cash flows from operations and FFO.
Unhedged Floating-Rate Borrowings As of December 31, 2023, the interest rates for 16% of our consolidated borrowings were floating. As of December 31, 2023, the interest expense for our floating-rate borrowings that are not hedged would increase by $9.3 million per year for every one hundred basis point increase in the related benchmark interest rate.
Unhedged Floating-Rate Borrowings As of December 31, 2024, the interest rates for 27% of our consolidated borrowings were floating. As of December 31, 2024, the interest expense for our unhedged floating-rate borrowings would increase by $15.0 million per year for every one hundred basis point increase in the related benchmark interest rate.
See Notes 8 and 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt and derivatives, respectively.
See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt maturities and our interest rate swap expirations. Our use of interest rate swaps and caps also exposes us to credit risk from the potential inability of our counterparties to perform under the terms of those agreements.
Removed
See Note 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our swaps and caps. Market Transition to SOFR from LIBOR During the third quarter of 2023, we converted all of our LIBOR loans and swaps to SOFR.
Added
Our interest rate swap agreements generally expire two years before the maturity date of the related loan, during which time we can refinance the loan without any interest penalty. After the interest rate swap agreements expire the related debt will be floating rate.
Removed
The LIBOR loans converted to SOFR include a small SOFR adjustment (an increase to the SOFR rate) to calculate the interest payable to the lender. The SOFR conversion did not change the swap-fixed interest rates for our swap-fixed loans.
Added
Higher interest rates, to the extent they are higher than our swap-fixed rates when our interest rate swaps expire, would cause our future interest expense on our debt to increase, which would reduce our future net income, cash flows from operations and FFO.

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