Douglas Emmett (NYSE:DEI) executives said the company saw improved office leasing momentum in the fourth quarter, supported by “good new office demand and very high retention,” while its multifamily portfolio continued to deliver rent growth and full occupancy. Management also highlighted progress on its development pipeline and refinancing activity, while noting that 2026 guidance reflects higher interest expense and does not assume occupancy growth.
Office leasing: positive absorption and stable rents
Chairman and CEO Jordan Kaplan said the company generated roughly 100,000 square feet of net positive office absorption during the fourth quarter, while “maintaining modest concessions and stable market rents.” In prepared remarks, the company characterized the quarter as having “good new office demand” and “very high retention.”
McElhinney said tenant demand was diversified across industries, with financial services, legal, health services, education, and real estate leading activity in the quarter, and no segment representing more than 20% of demand. He also said the company signed “higher-value new leases,” with straight-line value over the life of leases executed in the quarter increasing 2%. Beginning cash rent was 10% lower than the prior leases’ ending cash rent, but that was more than offset over time by annual fixed rent increases of 3% to 5%, he said.
Office leasing costs averaged $5.76 per square foot per year in the fourth quarter, which McElhinney said remained well below the average of the company’s benchmark group of office REITs.
On the sustainability of the quarter’s positive absorption, Kaplan cautioned that “one point doesn’t create a line,” but said the new leasing pipeline remained “equally as strong” as last quarter. He added that the company would need to perform well for “many quarters in a row” before it could say it is “solidly on the path to recovery.”
Multifamily: full occupancy and NOI growth
On the multifamily side, Kaplan said strong demand and increasing rents led to full occupancy and a nearly 5% year-over-year increase in same-property cash NOI in the fourth quarter. He noted that the company’s Los Angeles residential assets are concentrated on the “very high-end West Side.” McElhinney echoed that the residential portfolio remained essentially fully leased and delivered 5% cash same-property NOI growth versus the prior year’s fourth quarter.
During Q&A, management was asked about Los Angeles’ anti-rent gouging ordinance. Executives said they did not view it as having a material impact on the company, noting the threshold levels referenced in the ordinance were above the rent increases Douglas Emmett was typically seeking for existing tenants.
Development and capital markets activity
Management outlined several initiatives across development and capital markets. Kaplan said the company acquired 10900 Wilshire and is close to beginning construction to convert it into a high-end mixed-use residential and office building. Chief Investment Officer Kevin Crummy said the company expects to commence construction in 2026 to convert the existing office tower into 200 apartments and develop an additional 123 units and a new building at the site. He also said Douglas Emmett’s phased Honolulu conversion project demonstrated that full-floor office tenants and apartments can “coexist quite well.”
Crummy also said the company has started construction on the 712-unit Landmark Residences redevelopment in Brentwood. In December, Douglas Emmett closed a non-recourse first trust deed construction loan that provides up to $375 million for the project; as of Dec. 31, it had drawn $49.5 million. The loan matures in December 2030 and bears interest at SOFR plus 245 basis points. Crummy said the company entered into accreting swaps maturing in January 2030 to effectively fix the interest rate at 5.8% per year on 75% of the increasing estimated balance outstanding under the loan.
Separately, in November, Crummy said one consolidated joint venture reduced its outstanding debt by $60 million and effectively fixed the interest rate on the remaining $565 million at 4.79% through November 2027; that loan matures in August 2028.
In the Burbank Media District, Kaplan said the company converted Studio Plaza into a multi-tenant office building and that leasing is “progressing nicely.” Crummy added that extensive common area upgrades are complete and that construction is underway on new tenant suites. In Q&A, Kaplan said he expects the property’s average tenant size to be larger than the company’s typical building, initially averaging roughly a full floor.
Financial results and 2026 outlook
Chief Financial Officer Peter Seymour said fourth-quarter revenue increased 1.8% year over year to $249 million, reflecting increases in both office and multifamily revenues. Seymour said FFO decreased to $0.35 per share and AFFO decreased to $53 million, driven by increased interest expense and lower interest income, partly offset by strong multifamily performance.
Same-property cash NOI declined 1.4% for the quarter, which Seymour attributed largely to higher office operating expenses, partially offset by multifamily NOI growth. Seymour also said G&A remained low at approximately 4.9% of revenue, and noted during Q&A that the company expects to continue to have lower G&A than office peers even with some additional advocacy spending during election cycles.
For 2026, Seymour guided to net income per diluted common share of negative $0.20 to negative $0.14 and FFO per fully diluted share of $1.39 to $1.45. He said the guidance “primarily reflects the impact of increased interest expense” and that the company has not assumed occupancy growth despite the fourth-quarter results. Seymour also emphasized the standard exclusions in guidance, including the impact of future acquisitions or dispositions and other capital markets activity.
Acquisitions vs. buybacks and strategic priorities
Asked about whether depressed share pricing could shift capital allocation toward buybacks, Kaplan said repurchasing stock would effectively increase leverage, and he was not comfortable increasing leverage given leasing needs, debt monitoring, and development projects. He said the company can pursue acquisitions in a “very forgiving” way by partnering with joint venture capital, allowing it to pursue “control of great properties at great prices without stretching the balance sheet very hard.”
Looking into 2026, Kaplan said priorities include office leasing—specifically re-tenanting Studio Plaza—along with refinancing and extending maturities, and advancing residential construction at Landmark Residences and 10900 Wilshire. He also said the company has begun planning additional residential development sites on West Side land and believes it can make “very high-quality office acquisitions” at valuations that represent a discount to long-term values.
About Douglas Emmett (NYSE:DEI)
Douglas Emmett, Inc is a publicly traded real estate investment trust headquartered in Santa Monica, California. The company specializes in the ownership, management and development of high‐quality office and multifamily properties, primarily concentrated in the coastal regions of Los Angeles County and the Greater Honolulu area. As a vertically integrated real estate platform, Douglas Emmett controls all aspects of property operations, leasing, capital improvements and tenant relations, positioning it to deliver stable, long‐term cash flows.
The company’s office portfolio consists predominantly of Class A buildings located in prime business districts, featuring modern amenities, campus-like settings and environmentally conscious design elements.
