In order to finance its Warner Center Towers, California-based real estate investment trust (REIT) Douglas Emmett, Inc. (DEI) obtained a loan worth $285.0 million. The Northwestern Mutual Life Insurance Company and Prudential Mortgage Capital Company jointly provided $142.5 million each towards the loan to Douglas Emmett. The new fixed rate loan is scheduled to expire after seven years.
With total space of 1.9 million square feet, Warner Center Towers is one of Southern California's largest and best known office complexes. The campus consists of six office towers and boasts a number of prominent banking and financial services tenants.
Northwestern Mutual is a Wisconsin based company that offers financial services - including life insurance, long-term care insurance, disability insurance, annuity, mutual fund, and employee benefit services. The company primarily invests in commercial mortgages, equities and securitized investments across all major real estate property types.
Prudential Mortgage Capital Company is the full-service, commercial and multifamily mortgage lending business of Prudential Financial, Inc. (PRU). This new financing loan continues its lending relationship with Douglas Emmett. Prudential Mortgage Capital previously provided a loan worth $355 million to finance the portfolio of Douglas Emmett in 2011.
With a geographically diverse portfolio concentrated mostly in high-income, high-growth areas, Douglas Emmett is one of the largest owners and operators of high-quality office and multi-family properties in premier coastal submarkets of Southern California and Hawaii. The company generally signs long-term leases with high credit tenants. It limits the downside risk and provides a steady source of income.
As of June 30, 2012, the company had cash and cash equivalents of $162.0 million and a consolidated debt balance of $3,256.1 million. At present the company has over 55 properties spanning approximately 14.7 million square feet.
Douglas Emmett recently reported second-quarter 2012 FFO (Funds from Operations) of 36 cents, beating the Zacks Consensus Estimate by a penny. We presently have a long-term 'Neutral' recommendation on the stock. Also, it carries a Zacks #3 Rank (a short-term Hold rating).
Note: FFO, a widely accepted and reported measure of the performance of REITs, is derived by adding depreciation, amortization and other non-cash expenses to net income.