Douglas Emmett, Inc. ( DEI) Q4 2011 Earnings Conference Call February 8, 2012 2:00 PM ET Executives Mary Jensen – Vice President, Investor Relations Jordan Kaplan – President & Chief Executive Officer Ted Guth – Chief Financial Officer Analysts Bowman [ph] – KeyBanc Capital Markets Alex Goldfarb – Sandler O'Neill Joshua Attie – Citigroup Ross Nussbaum – UBS Securities, LLC Rob Stevenson – Macquarie Equities Research Jamie Feldman – Bank of America/Merrill Lynch Brendan Maiorana – Wells Fargo Equity Research Rich Anderson – BMO Capital Markets-US John Guinee – Stifel, Nicolaus & Company, Inc. Steve Sakwa – ISI Michael Knott – Green Street Advisors Nick Yillego [ph] Presentation Operator
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During the course of this call, we will be making forward-looking statements. We caution investors that any forward-looking statements are based on the beliefs of, assumptions made by, and information currently available to us. The actual outcome will be affected by 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. Therefore, our actual future results can be expected to differ from our expectations and those differences may be material. For a more detailed description on some potential risks, please refer to our press release and the current SEC filings, which can be accessed on the Investor Relations section of our website. Please note that the market data sources that may be referenced in our remarks are CB Richard Ellis for the Honolulu and Los Angeles office market, REIT for the Los Angeles office market, MPF Research for the Los Angeles multifamily market and Property & Portfolio Research for the Honolulu multifamily market. Once we've reached the question-and-answer portion, we request that all participants limit themselves to one question and one follow-up per person. This is in consideration of the others who are waiting. I will now turn the call over to Jordan Kaplan, President and CEO of Douglas Emmett. Jordan? Jordan Kaplan Thank you, Mary. Good morning, everyone and thank you for joining us. As we noted in our press release, since our last call, we have paid off all of our 2012 debt maturities and substantially reduced our overall leverage. We raised an additional $190 million through our ATM program, completing that program. As previously announced, we recently closed a new $155 million seven-year term loan at an interest rate of 4% per annum. We then used the proceeds of those actions together with cash on hand to pay off all of the remaining $522 million of debt scheduled to mature in 2012. As of February 1st, we no longer have any near-term debt maturities, we have reduced our aggregate consolidated debt by over 10% or approximately $367 million, and we have lowered our consolidated loan to value to 47%.
Following our debt reduction, we still have more than $150 million of cash on hand and continue to have significant positive cash flow. Today, our balance sheet is the strongest it has been since we became a public company. We have no near-term maturities and we have locked in very low interest rates for many years into the future. In addition, we have ample liquidity for acquisitions from our funds, our cash on hand, our growing positive operating cash flow, and our unencumbered properties.In terms of fundamentals, I am pleased to announce that we expect to positive same property cash NOI for 2012. In our office portfolio, we also expect to see continued improvement in occupancy, as well as rental increases in a number of our submarkets. In our multifamily portfolio, rental rates are increasing in all of our markets. Tourism and foreign trade had record years in Los Angeles during 2011 as did entertainment, media and technology – entertainment, media, and technology, which continue to benefit from their industry's convergence. All of these industries provide good further support to our already robust legal, accounting, and financial service tenants. We completed 2011 with over 106,000 square feet of positive absorption in our office portfolio. This is a dramatic turnaround from the almost 220,000 square feet of negative absorption we sustained in 2010. Given our significant liquidity, we hope that 2012 provides more acquisition opportunities than we saw in 2011. Our first acquisition for 2012 would be to acquire an additional 16.3% interest in one of our institutional funds for approximately $33.4 million. That fund owns six properties totaling 1.4 million square feet of office space. I will now turn the call over to Ted. Read the rest of this transcript for free on seekingalpha.com