Douglas Emmett Inc (NYSE: DEI)

Sector: Real Estate Industry: REIT - Office CIK: 0001364250
Market Cap 1.76 Bn
P/B 0.71
P/E 19.55
P/S 1.75
ROIC (Qtr) 2.57
Div Yield % 11.33
Rev 1y % (Qtr) -0.07
Total Debt (Qtr) 5.57 Bn
Debt/Equity (Qtr) 2.86
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About

Douglas Emmett Inc., a real estate investment trust (REIT) with the ticker symbol DEI, operates primarily in the real estate industry, specializing in the acquisition, development, ownership, and management of high-quality office and multifamily properties in premier coastal submarkets in Los Angeles and Honolulu. The company's main business activities revolve around the acquisition and management of top-tier office properties and premier multifamily communities in neighborhoods with significant supply constraints, high-end executive housing, and...

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Investment thesis

Bull case

  • Strong operating cash flow of 397.80M provides 8.52x coverage of SG&A expenses 46.70M, showing efficient operational cost management.
  • Operating cash flow of 397.80M provides strong 18.95x coverage of stock compensation 21M, indicating sustainable incentive practices.
  • Cash reserves of 408.48M provide ample 15.92x coverage of acquisition spending 25.66M, enabling strategic growth opportunities.
  • Strong free cash flow of 96.22M provides 3.75x coverage of acquisition spending 25.66M, indicating disciplined M&A strategy.
  • Strong tangible asset base of 9.38B provides 365.55x coverage of acquisition spending 25.66M, enabling strategic growth.

Bear case

  • Operating cash flow of 397.80M barely covers its investment activities of (273.15M), with a coverage ratio of -1.46, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 397.80M provides thin coverage of dividend payments of (127.25M) with a -3.13 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 96.22M provides weak coverage of capital expenditures of 301.58M, with a 0.32 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 282.78M show weak coverage of depreciation charges of 390.93M, with a 0.72 ratio indicating high capital intensity and potential reinvestment needs.
  • High depreciation of 390.93M relative to operating cash flow of 397.80M, which is 0.98x suggests significant maintenance capital requirements affecting free cash flow.

Segments Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the REIT - Office
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BXP BXP, Inc. 9.52 Bn 10.44 3.12 17.35 Bn
2 ARE Alexandria Real Estate Equities, Inc. 9.27 Bn -6.45 3.06 12.40 Bn
3 VNO Vornado Realty Trust 5.56 Bn 6.60 3.07 7.89 Bn
4 KRC Kilroy Realty Corp 3.77 Bn 13.65 3.39 4.59 Bn
5 CDP Copt Defense Properties 3.33 Bn 46.00 5.75 2.49 Bn
6 SLG Sl Green Realty Corp 2.75 Bn -24.56 2.74 5.97 Bn
7 HIW Highwoods Properties, Inc. 2.49 Bn 15.83 3.09 3.55 Bn
8 CUZ Cousins Properties Inc 2.44 Bn 24.76 4.97 3.34 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.71 0.66
EV to Cash from Ops. EV/CFO 13.31 35.35
EV to Debt EV to Debt 1.20 1.60
EV to EBIT EV/EBIT 26.69 -177.85
EV to EBITDA EV/EBITDA 11.09 15.22
EV to Free Cash Flow [EV/FCF] EV/FCF -154.15 -21.54
EV to Market Cap EV to Market Cap 3.80 14.69
EV to Revenue EV/Rev 6.65 6.06
Price to Book Value [P/B] P/B 0.71 0.76
Price to Earnings [P/E] P/E 19.55 3.15
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.17 -2.81
Dividend Payout Ratio % Div Payout % (Qtr) 633.30 86.83
Dividend per Basic Share Div per Share (Qtr) 0.76 1.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 132.17 -31.14
Interest Coverage Int. cover (Qtr) 1.09 -0.15
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -48.34 -13.82
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -24.94 8.92
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 -13.06
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 35.51 -81.02
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -1.30 -59.28
EBIT Growth (1y) % EBIT 1y % (Qtr) 35.51 -85.68
EBT Growth (1y) % EBT 1y % (Qtr) 238.46 -24.55
EPS Growth (1y) % EPS 1y % (Qtr) 220.00 393.08
FCF Growth (1y) % FCF 1y % (Qtr) -57.43 148.67
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.89 -2.47
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.11 0.13
Cash Payout Ratio Cash Payout (Qtr) 0.18 0.24
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 2.86 1.46
Interest Cover Ratio Int Coverage (Qtr) 1.09 -0.15
Times Interest Earned Times Interest Earned (Qtr) 1.09 -0.15
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 67.40 29.81
EBIT Margin % EBIT Margin % (Qtr) 28.29 -4.47
EBT Margin % EBT Margin % (Qtr) 2.22 -25.12
Gross Margin % Gross Margin % (Qtr) 63.70 60.66
Net Profit Margin % Net Margin % (Qtr) 2.20 -26.43