DEI

Strategic Priorities Progress

• Leasing: Three consecutive quarters of strong office leasing activity, with healthy volume and positive net absorption. New leases deliver rental upside relative to expiring contracts, with most revenue impact from this quarter's activity expected to hit over the next 12 months. The apartment portfolio maintains over 99% occupancy with growing rental rates.
• Acquisitions: The firm and joint venture partners acquired the Bedford Collection, a 246,000-square-foot five-building prime Beverly Hills medical office portfolio for $260 million. Douglas Emmett manages the joint venture and holds a 13.3% equity stake; the portfolio is extremely well-leased, fitting the firm's acquisition criteria of high-quality properties at attractive pricing.
• Redevelopment: The Studio Plaza Burbank redevelopment is ahead of plan, reaching over 50% leased and transitioning to in-service status. Ongoing apartment redevelopment projects are on track to add over 1,000 new units to the portfolio. The firm continues ongoing capital improvements to common areas and building systems across the portfolio to maintain its position as a top-tier property owner. Ongoing 10900 Wilshire redevelopment has been intentionally slowed to evaluate potential mixed-use options accommodating large office tenant interest alongside planned residential development.
• Debt & Refinancing: The firm refinanced $815 million of debt maturing later in 2026 during the quarter: a $400 million four-year loan fixed at 6.15% maturing in 2029, and a $415 million four-year loan fixed at 6.18% maturing in 2029. The firm maintains lower leverage than most peers with sufficient equity across all assets, with no properties at risk of default or transfer to lenders.

• Office occupancy guidance for full-year 2026 was revised downward to a range of 75% to 77%, solely due to the inclusion of the partially leased Studio Plaza redevelopment in in-service occupancy calculations.
• Full-year 2026 diluted net income per common share guidance is set at a range of negative 20 cents to negative 16 cents. Negative earnings reflect the impact of higher current market interest rates offsetting improved operating income projections.
• Full-year 2026 fully diluted FFO per share guidance is set at a range of $1.39 to $1.43.
• All guidance does not include potential impacts from future property acquisitions or dispositions, common stock transactions, additional financings, insurance recoveries, impairment charges, or other unannounced capital markets activity.

1. Office Segment: Signed 234 total leases covering 960,000 square feet in the quarter, consisting of 93 new leases (375,000 square feet) and 141 renewal leases (584,000 square feet). Achieved positive net absorption of approximately 60,000 square feet, with the straight-line value of new leases 3.2% higher than the expiring leases they replaced. Average lease transaction costs were $5.35 per square foot per year, below industry benchmarks. The recently redeveloped Studio Plaza in Burbank is now over 50% leased and has been moved to the in-service portfolio, temporarily lowering reported overall office portfolio occupancy. 2. Residential (Apartment) Segment: The portfolio remains over 99% leased, with cash and property NOI increasing 2% year-over-year compared to Q2 2025. Demand remains strong across all of Douglas Emmett's markets, with ongoing rental rate growth. Overall company total revenue for Q2 2026 was $257 million, up from $252 million year-over-year. AFFO increased to $56 million from $54 million year-over-year, while FFO remained 37 cents per share on a rounded basis. Same property cash NOI decreased 1.2% year-over-year for the quarter. G&A expense came in at approximately 4.9% of total revenue, the lowest among the firm's peer benchmark group.

• Higher current market interest rates increase interest expense, offsetting strong operating performance across the portfolio and weighing on reported net results.
• Upcoming interest rate swap maturities over the next 12 months will leave some existing debt exposure to floating interest rates if not addressed before maturity.
• Upcoming large tenant lease expirations (including 77,000 square feet of leases with Morgan Stanley expiring in 2027) create uncertainty for future occupancy and rental revenue.
• The current acquisition market relies on seller acceptance of lower pricing than the 2017-2022 period, which may prevent some targeted deals from closing. Apartment valuations have not adjusted to the same degree as office, limiting acquisition opportunities in that segment.

Q: After three straight quarters of solid new office leasing, what drove this quarter's activity, and what do you expect for the back half of 2026? Also, what are your plans for upcoming interest rate swap maturities over the next 12 months? / A: This quarter's leasing volume was driven by broad activity with fewer extremely large deals than the prior record quarter, building on three quarters of consistent momentum. Management is optimistic that this strong leasing trend will continue through the second half of the year. Management does not plan to retain floating rate exposure for any extended period after swap maturities; all loans with expiring swaps will be refinanced into fixed rate structures before the floating exposure begins, even though management notes high current rates are masking strong underlying operating performance. (378 characters)

Q: Can you update your acquisition pipeline, how pricing has changed, what return hurdles you are targeting, and whether you are targeting other asset classes besides office? / A: Pricing for high-quality office properties has fallen from 2017-2022 levels, and sellers are now more willing to transact at price points that meet buyer return requirements, creating a rare attractive acquisition opportunity not seen since the early 1990s. The firm is actively pursuing multiple large, high-quality office deals alongside joint venture partners, targeting 10% or higher 10-year all-cash IRRs, which have not been available for many years. Medical office is an attractive adjunct target when opportunities arise, but residential acquisition pricing has not adjusted enough to meet the firm's return hurdles so far. (456 characters)

Q: With attractive office acquisition opportunities available, are you slowing your residential redevelopment pipeline? Can you provide an update on the 10900 Wilshire project? / A: The 10900 Wilshire redevelopment has only been temporarily slowed to explore potentially adding office tenancy alongside the planned residential component, after receiving inbound interest from large office tenants for the site. The project remains fully funded and ready to proceed once the mixed-use evaluation is complete; broader residential redevelopment activity is not being put on the back burner. (289 characters)

Q: What industries are driving current office leasing demand, and what is the significance of the widening leased-but-unoccupied spread going into 2027? / A: Demand is consistently strong across all of the firm's largest tenant categories, including legal, financial services, real estate, and entertainment, with both large and small tenants active after years of slow large-tenant activity following rate hikes. Management notes that a wide leased-but-unoccupied spread is a very positive indicator: it reflects high current leasing volume, with future NOI growth already locked in as new tenants move in over the next 12 months. Management reports this spread is one of the widest it has ever been, signaling strong upcoming earnings upside. (368 characters)