Douglas Emmett, Inc. Announces 2008 Second Quarter Earnings Results

Financial Results

Funds From Operations (FFO) for the three months ended June 30, 2008 totaled $51.6 million, or $0.33 per diluted share, compared to $48.7 million, or $0.29 per diluted share, for the second quarter ended June 30, 2007. FFO for the six months ended June 30, 2008 totaled $105.0 million, or $0.67 per diluted share, compared to $95.1 million, or $0.57 per diluted share, for the first six months of 2007. The Company reported a GAAP net loss of $9.4 million, or ($0.08) per diluted share, for the three months ended June 30, 2008, compared to a GAAP net loss of $1.3 million, or ($0.01) per diluted share, in the second quarter ended June 30, 2007. The Company reported a GAAP net loss of $11.9 million, or ($0.10) per diluted share, for the six months ended June 30, 2008, compared to a GAAP net loss of $4.5 million, or ($0.04) per diluted share, in the first six months of 2007.

Company Operations

Total revenues for the three months ended June 30, 2008 increased to $149.4 million from $127.0 million in the second quarter of 2007. Operating income increased to $39.5 million for the three months ended June 30, 2008, representing an increase of 9.2% from the second quarter of 2007. For the same properties owned in the second quarter of 2008 and the second quarter of 2007, net operating income rose 6.1% on a GAAP basis and 11.5% on a cash basis year over year.

Total revenues from the Company's office portfolio increased to $132.4 million for the three months ended June 30, 2008, representing an increase of 20.8% from the second quarter of 2007. For the same properties owned in the second quarter of 2008 and the second quarter of 2007, total office revenues rose 5.2% on a GAAP basis and 8.0% on a cash basis year-over-year. Excluding the six properties that the Company acquired on March 26, 2008, the Company's office portfolio was 95.5% leased and 94.5% occupied at June 30, 2008, compared to 95.3% leased and 94.3% occupied at March 31, 2008. Including the six properties that the Company acquired on March 26, 2008, the Company's office portfolio was 94.8% leased and 93.8% occupied at June 30, 2008, compared to 94.6% leased and 93.4% occupied at March 31, 2008. The occupied percentage represents the leased portion of the Company's office portfolio less those leases where the rent commencement date has yet to occur. During the quarter, the Company signed 114 new and renewal leases, totaling approximately 396,155 square feet.

Total revenues for the Company's multifamily portfolio decreased on a GAAP basis by 2.4% to $17.0 million for the three months ended June 30, 2008 compared to $17.4 million for the three months ended June 30, 2007, while, on a cash basis, total revenues for the multifamily portfolio increased by 3.6% to $16.1 million from $15.5 million over the comparable periods. The Company's multifamily portfolio was 99.2% leased at June 30, 2008 compared to 99.6% leased at March 31, 2008.

Dividends

During the quarter, the Company's Board of Directors declared a quarterly cash dividend of $0.1875 per share. The dividend was paid on July 15, 2008 to shareholders of record as of June 30, 2008. On an annualized basis, this represents a dividend of $0.75 per common share.

Guidance

The Company is revising its FFO guidance range to $1.30 - $1.32 per diluted share from $1.28 - $1.32 per diluted share. This range assumes the first closing of the Company's closed-end fund, which is anticipated to close in the third quarter of 2008. As previously stated, the Company's 2008 full year guidance also excludes any impact from future acquisitions, dispositions, additional equity purchases, debt financings or recapitalizations.

Conference Call and Web Cast Information

A conference call to discuss the Company's 2008 second quarter financial results is scheduled for Wednesday, August 6, 2008 at 2:00 pm Eastern Time or 11:00 am Pacific Time. Interested parties can access the call via the Internet by going to the Investor Relations section of the Company's Web site at www.douglasemmett.com or by dialing into the call at 800-218-0530 (domestic) or 303-262-2137 (international). A replay of the live call will be available via the web site for 90 days. A digital replay will be available through Wednesday, August 13, 2008 at 800-405-2236 (domestic) or 303-590-3000 (international) and using the passcode 11116663.

Supplemental Information

Supplemental financial information for the Company's 2008 second quarter financial results can be accessed on the Company's Web site under the Investor Relations section at www.douglasemmett.com.

About Douglas Emmett, Inc.

Douglas Emmett, Inc. (NYSE:DEI) is a fully integrated, self-administered and self-managed real estate investment trust (REIT), and one of the largest owners and operators of high-quality office and multifamily properties located in premier submarkets in California and Hawaii. The Company's properties are concentrated in ten submarkets - Brentwood, Olympic Corridor, Century City, Santa Monica, Beverly Hills, Westwood, Sherman Oaks/Encino, Warner Center/Woodland Hills, Burbank and Honolulu. The Company focuses on owning and acquiring a substantial share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities. For more information on Douglas Emmett, please visit the Company's Web site at www.douglasemmett.com.

Safe Harbor Statement

Except for the historical facts, the statements in this press release regarding Douglas Emmett's business activities are forward-looking statements based on the beliefs of, assumptions made by, and information currently available to us about known and unknown risks, trends, uncertainties and factors that are beyond our control or ability to predict. Although we believe that our assumptions are reasonable, they are not guarantees of future performance and some will inevitably prove to be incorrect. As a result, our actual future results can be expected to differ from our expectations, and those differences may be material. Accordingly, investors should use caution in relying on forward-looking statements to anticipate future results or trends. For a discussion of some of the risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission.

Douglas Emmett, Inc. Consolidated Balance Sheets (in thousands) June 30, December 31, 2008 2007 ----------- ------------ Assets (unaudited) Investments in real estate: Land $ 890,148 $ 825,560 Buildings and improvements 5,515,561 4,978,124 Tenant improvements and lease intangibles 530,368 460,486 ----------- ------------ 6,936,077 6,264,170 Less: accumulated depreciation (362,721) (242,114) ----------- ------------ Net investment in real estate 6,573,356 6,022,056 Cash and cash equivalents 2,764 5,843 Tenant receivables, net 553 955 Deferred rent receivables, net 28,447 20,805 Interest rate contracts 94,932 84,600 Acquired lease intangible assets, net 21,701 24,313 Other assets 25,636 31,396 ----------- ------------ Total Assets $ 6,747,389 $ 6,189,968 =========== ============ Liabilities Secured notes payable $ 3,712,050 $ 3,080,450 Unamortized non-cash debt premium 22,891 25,227 Interest rate contracts 133,769 129,083 Accrued interest payable 20,723 13,963 Accounts payable and accrued expenses 37,539 48,741 Acquired lease intangible liabilities, net 219,730 218,371 Security deposits 35,298 31,309 Dividends payable 22,760 19,221 ----------- ------------ Total Liabilities 4,204,760 3,566,365 ----------- ------------ Minority interests 568,844 793,764 Stockholders' equity Common stock 1,214 1,098 Additional paid-in capital 2,275,364 2,019,716 Accumulated other comprehensive income (88,178) (101,163) Accumulated deficit (214,615) (89,812) ----------- ------------ Total stockholders' equity 1,973,785 1,829,839 ----------- ------------ Total liabilities and stockholders' equity $ 6,747,389 $ 6,189,968 =========== ============

Douglas Emmett, Inc. Consolidated Statements of Operations (unaudited and in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2008 2007 2008 2007 -------- -------- -------- -------- Revenues: Office rental: Rental revenues $111,213 $ 92,884 $210,229 $184,496 Tenant recoveries 7,269 5,575 12,637 13,761 Parking and other income 13,911 11,098 26,571 22,198 -------- -------- -------- -------- Total office revenues 132,393 109,557 249,437 220,455 Multifamily rental: Rental revenues 16,423 16,879 33,647 33,393 Parking and other income 559 526 1,119 1,017 -------- -------- -------- -------- Total multifamily revenues 16,982 17,405 34,766 34,410 Total revenues 149,375 126,962 284,203 254,865 Operating Expenses: Office expenses 36,574 31,337 67,938 64,631 Multifamily expenses 3,759 3,872 7,636 8,795 General and administrative 5,729 5,120 11,014 10,162 Depreciation and amortization 63,858 50,494 120,607 101,615 -------- -------- -------- -------- Total operating expenses 109,920 90,823 207,195 185,203 -------- -------- -------- -------- Operating income 39,455 36,139 77,008 69,662 Interest and other income 123 372 532 454 Interest expense (51,791) (38,313) (92,994) (76,615) -------- -------- -------- -------- Loss before minority interests (12,213) (1,802) (15,454) (6,499) Minority interests 2,785 542 3,526 1,966 -------- -------- -------- -------- Net loss $ (9,428) $ (1,260)$(11,928) $ (4,533) ======== ======== ======== ======== Net loss per common share - basic and diluted(1) $ (0.08) $ (0.01)$ (0.10) $ (0.04) ======== ======== ======== ======== Weighted average shares of common stock outstanding - basic and diluted(1) 121,314 114,862 119,799 114,933 ======== ======== ======== ========

(1) Diluted shares are calculated in accordance with GAAP accounting literature, and include common stock plus dilutive equity instruments, as appropriate. This amount excludes OP units, which are included in the non-GAAP calculation of fully diluted shares below.

Douglas Emmett, Inc. FFO Reconciliation (unaudited and in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, ------------------ ------------------ 2008 2007 2008 2007 -------- -------- -------- -------- Funds From Operations (FFO)(1): Net loss $ (9,428) $ (1,260) $(11,928) $ (4,533) Depreciation and amortization of real estate assets 63,858 50,494 120,607 101,612 Minority interests (2,785) (542) (3,526) (1,966) Loss on asset disposition 32 - 32 - Less: adjustments attributable to minority interest in consolidated joint venture (99) - (162) - -------- -------- -------- -------- FFO $ 51,578 $ 48,692 $105,023 $ 95,113 ======== ======== ======== ======== Weighted average share equivalents outstanding (in thousands) - diluted 156,724 165,709 156,573 166,048 FFO per share - diluted $ 0.33 $ 0.29 $ 0.67 $ 0.57

(1) We calculate funds from operations before minority interest (FFO) in accordance with the standards established by the National Association of Real Estate Investment Trusts (NAREIT). FFO represents net income (loss), computed in accordance with accounting principles generally accepted in the United States of America (GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Management uses FFO as a supplemental performance measure because, in excluding real estate depreciation and amortization and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that, as a widely recognized measure of the performance of REITs, FFO will be used by investors as a basis to compare our operating performance with that of other REITs. However, because FFO excludes depreciation and amortization and captures neither the changes in the value of our properties that results from use or market conditions nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations, the utility of FFO as a measure of our performance is limited. Other equity REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to such other REITs' FFO. Accordingly, FFO should be considered only as a supplement to net income as a measure of our performance. FFO should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. FFO should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

Douglas Emmett, Inc. Same Property Statistical and Financial Data (unaudited and in thousands, except statistics) Three Months Ended June 30, --------------------------- 2008 2007 % Change -------------- ----------- -------- Number of properties 46 46 Rentable square feet 11,586,150 11,585,250 Average % leased 95.4% 95.4% Average % occupied 94.4% 93.4% Same Property Net Operating Income - GAAP Basis(1)(3) Total office revenues $ 114,790 $ 109,102 5.2% Total multifamily revenues 16,982 17,405 (2.4) -------------- ----------- Total revenues 131,772 126,507 4.2 Total office expense 31,072 31,238 (0.5) Total multifamily expense 3,759 3,872 (2.9) -------------- ----------- Total property expense 34,831 35,110 (0.8) -------------- ----------- Same Property NOI - GAAP basis $ 96,941 $ 91,397 6.1% ============== =========== Same Property Net Operating Income - Cash Basis(1)(2)(3) Total office revenues $ 104,659 $ 96,867 8.0% Total multifamily revenues 16,058 15,501 3.6 -------------- ----------- Total revenues 120,717 112,368 7.4 Total office expense 31,237 31,639 (1.3) Total multifamily expense 3,759 3,872 (2.9) -------------- ----------- Total property expense 34,996 35,511 (1.5) -------------- ----------- Same Property NOI - cash basis $ 85,721 $ 76,857 11.5% ============== =========== NOTE: See below for a description of same property, cash basis and NOI.

Douglas Emmett, Inc. Reconciliation of Same Property NOI to GAAP Net Income (Loss) (unaudited and in thousands) Three Months Ended June 30, --------------------------- 2008 2007 ------------ ------------ Same property office revenues - cash basis (1)(2) $104,659 $ 96,867 GAAP adjustments 10,131 12,235 ------------ ------------ Same property office revenues - GAAP basis 114,790 109,102 ------------ ------------ Same property multifamily revenues - cash basis 16,058 15,501 GAAP adjustments 924 1,904 ------------ ------------ Same property multifamily revenues - GAAP basis 16,982 17,405 ------------ ------------ Same property revenues - GAAP basis 131,772 126,507 Same property office expenses - GAAP basis (31,072) (31,238) Same property multifamily expenses - GAAP basis (3,759) (3,872) ------------ ------------ Same property Net Operating Income (NOI)(3) - GAAP basis 96,941 91,397 Non-same property NOI - GAAP Basis 12,101 356 ------------ ------------ Total property NOI - GAAP basis 109,042 91,753 General and administrative expenses (5,729) (5,120) Depreciation and amortization (63,858) (50,494) ------------ ------------ Operating income 39,455 36,139 Interest and other income 123 372 Interest expense (51,791) (38,313) ------------ ------------ Loss before minority interests (12,213) (1,802) Minority interests 2,785 542 ------------ ------------ Net loss $ (9,428) $ (1,260) ============ ============

(1) To facilitate a more meaningful comparison of net operating income (NOI) (as defined below) between periods, we calculate the amounts attributable to comparable properties, which we call same properties, that have been owned and operated by us during the entire span of both periods compared. Therefore, any properties either acquired after the first day of the earlier comparison period or sold before the last day of the later comparison period are excluded from same properties. We may also exclude from the same property set any property that is undergoing a major repositioning project that would impact the comparability of its results between two periods. (2) NOI as defined below includes the revenue and expense directly attributable to our real estate properties calculated in accordance with accounting principles generally accepted in the United States of America (GAAP), and is specifically labeled as GAAP basis. We also believe that NOI calculated on a cash basis is useful for investors to understand our operations. Cash basis NOI is also a non-GAAP measure, which we calculate by excluding from GAAP basis NOI our straight-line rent adjustments and the amortization of above/below market lease intangible assets and liabilities. Accordingly, cash basis NOI should be considered only as a supplement to net income as a measure of our performance. Cash basis NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. Cash basis NOI should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP. (3) Reported net income (or loss) is computed in accordance with GAAP. In contrast, NOI is a non-GAAP measure consisting of the revenue and expense attributable to the real estate properties that we own and operate. The most directly comparable GAAP measure to NOI is net income (or loss), adjusted to exclude general and administrative expense, depreciation and amortization expense, interest income, interest expense, income from unconsolidated partnerships, minority interests in consolidated partnerships, gains (or losses) from sales of depreciable operating properties, net income from discontinued operations and extraordinary items. Management uses NOI as a supplemental performance measure because, in excluding real estate depreciation and amortization expense and gains (or losses) from property dispositions, it provides a performance measure that, when compared year over year, captures trends in occupancy rates, rental rates and operating costs. We also believe that NOI will be useful to investors as a basis to compare our operating performance with that of other REITs. However, because NOI excludes depreciation and amortization expense and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures and leasing commissions necessary to maintain the operating performance of our properties (all of which have real economic effect and could materially impact our results from operations), the utility of NOI as a measure of our performance is limited. Other equity REITs may not calculate NOI in a similar manner and, accordingly, our NOI may not be comparable to such other REITs' NOI. Accordingly, NOI should be considered only as a supplement to net income as a measure of our performance. NOI should not be used as a measure of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends. NOI should not be used as a supplement to or substitute for cash flow from operating activities computed in accordance with GAAP.

SOURCE: Douglas Emmett, Inc.

Douglas Emmett, Inc. Mary Jensen, Vice President - Investor Relations 310-255-7751 mjensen@douglasemmett.com