Douglas Emmett Inc 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk Hedging our Floating Rate Borrowings As of December 31, 2021, all of our floating rate borrowings were hedged with interest rate swaps. Our use of these instruments exposes us to credit risk from the potential inability of our counterparties to perform under the terms of those agreements. We attempt to minimize this credit risk by contracting with a variety of financial counterparties with investment ratings. Market Transition to SOFR from USD-LIBOR On March 5, 2021, the FCA announced that USD-LIBOR will no longer be published after June 30, 2023. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from USD-LIBOR to SOFR. Most of our floating rate borrowings and interest rate swaps are indexed to USD-LIBOR and we are monitoring this activity and evaluating the related risks in connection with transitioning contracts to SOFR - which include: (i) loan interest payments, (ii) swap interest payments, and (iii) the value of loans and swaps. While we currently expect USD-LIBOR to be available in substantially its current form until at least June 30, 2023, it is possible that USD-LIBOR will become unavailable prior to that time. This could occur, if, for example, sufficient banks decline to make submissions to the LIBOR administrator. In that case, the risks associated with the transition to SOFR will be accelerated and potentially magnified. See Notes 8 and 10 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt and interest rate swaps. Item 8. Financial Statements and Supplementary Data See the Index to our Financial Statements in Item 15 . Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 52 Table of Contents