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Item 7. Management’s Discussion and Analysis

2025-02-14 compared with 2024-02-16 · 128 added, 125 removed, 264 unchanged (49% of the section changed)

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We focus on owning, acquiring, developing and managing a substantial market share of top-tier office properties and premier multifamily communities in neighborhoods that possess significant supply constraints, high-end executive housing and key lifestyle amenities.

As of December 31, 2023, our portfolio consisted of the following (including ancillary retail space and excluding two parcels of land from which we receive rent under ground leases):

Consolidated Portfolio (1)

Total Portfolio (2)

Class A Properties 68 70

Rentable Square Feet (in thousands) (3)

17,595 17,981

Leased rate 83.3% 83.3%

Occupancy rate 80.9% 81.0%

Properties 14 14

For the purpose of reporting key operating metrics, commencing with the fourth quarter of 2024, we are focused on the properties in our In-Service Portfolio.

The In-Service Portfolio in the fourth quarter of 2024 consisted of our Total Portfolio excluding our Development Portfolio.

The Development Portfolio consists of one office property and one multifamily property whose operations are significantly limited by the development activity and are excluded from our In-Service Portfolio statistics and operating metrics.

Our portfolio statistics and operating metrics as of December 31, 2024 were as follows:

In-Service Portfolio Development Portfolio Total

Office Portfolio

Number of Properties 69 1 70

Rentable square feet 17,524,458 456,205 17,980,663

Multifamily Portfolio

Number of Properties 13 1 14

Number of Units 4,391 712 5,103

In-Service Portfolio Leasing Statistics

Office Portfolio

Leased Rate 81.1 %

Occupancy Rate 79.2 %

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(1) Our Consolidated Portfolio includes the properties in our consolidated results.

Through our subsidiaries, we wholly-own 52 office properties totaling 13.4 million square feet and 12 residential properties with 4,106 apartments.

Through four consolidated JVs, we partially own an additional 16 office properties totaling 4.2 million square feet and two residential properties with 470 apartments.

Our Consolidated Portfolio excludes two wholly-owned land parcels from which we receive ground rent from ground leases to the owners of a Class A office building and a hotel.

(2) Our Total Portfolio includes our Consolidated Portfolio as well as two properties totaling 0.4 million square feet owned by our unconsolidated Fund, Partnership X.

See Note 6 to our consolidated financial statements in Item 15 of this Report for more information about Partnership X.

(3) As of December 31, 2023, we removed approximately 77,000 Rentable Square Feet for an office building we are converting to apartments.

See "Development" further below.

(4) Unit totals exclude units vacated as part of removing Barrington Plaza from the rental market.

The leased and occupancy rates exclude the impact of Barrington Plaza.

See "Property to be Removed from Service" further below.

Multifamily Portfolio Leased Rate 99.1 %

Revenues by Segment and Location

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During the first quarter of 2024 :

• Interest rate swaps, which fixed the interest rate on a $400.0 million interest-only, floating-rate term loan that matures in December 2024 for one of our consolidated JVs, expired on January 1, 2023, and the interest rate on the respective loan is now floating.

• Interest rate swaps, which fixed the interest rate on a $335.0 million interest-only, floating-rate term loan that matures in March 2025 for one of our wholly-owned subsidiaries, expired on March 1, 2023, and the interest rate on the respective loan is now floating.

• An interest rate swap that fixed the interest rate on a $102.4 million interest-only, floating-rate term loan that matures in April 2025 for one of our wholly-owned subsidiaries, expired on March 1, 2023, and the interest rate on the respective loan is now floating.

• We repurchased 1.4 million shares of common stock for $16.5 million in cash, excluding transaction costs, in open market transactions.

The average purchase price was $11.50 per share.

• We acquired 5 thousand OP Units for $89 thousand in cash.

• We acquired an additional 20.2% of the equity in our unconsolidated Fund, Partnership X, which increased our ownership interest in the Fund to 74.0% .

• We acqui red 166 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.

• We acquired 461 OP Un its for $6 thousand in cash.

• In connection with the Barrington Plaza loan, w e signed a construction completion guarantee.

See "Development Portfolio" further below for more information about Barrington Plaza.

During the second quarter of 2024 :

• We repurchased 7.6 million shares of common stock for $92.6 million in cash , excluding transaction costs, in open market transactions.

The average purchase price was $12.13 per share.

• We acquired 20 thousand OP Units for $232 thousand in cash.

• We acquired 27 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.

• We acquired 703 OP Units for $10 thousand in cash.

During the third quarter of 2024 :

• We closed a new $350.0 million secured, non-recourse interest-only term loan that matures in August 2033.

The loan accrues intere st at SOFR plus 1.37% and is secured by our Landmark Los Angeles and Bishop Place properties.

The interest rate is capped with lender-required out-of-the-money interest rate caps at 7.84% until August 2026 .

We used part of the proceeds to pay off the balance on our revolving credit facility, which expired in August 2023.

• We purchased three lender-required out-of-the-money interest rate caps with an aggregate notional amount of $472.0 million to hedge $472.0 million of a $550.0 million loan.

The interest rate is capped at a weighted average of 8.99% until July 2026.

• We converted our LIBOR loans and swaps to SOFR.

See Item 7A in Part II for our SOFR transition disclosures.

• In connection with the Barrington Plaza loan, Barrington Plaza Apartments have been removed from the rental market.

The lender is treating the debt as a construction loan and they required a $13.3 million cash deposit, which we placed in an interest-bearing collateral account during the third quarter.

See "Property to be Removed from Service" further below for more information about Barrington Plaza.

• We acquired 3 thousand OP Units for $46 thousand in cash.

• We acquired 20 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.

• We acquired 6,798 OP Units for $105 thousand in cash.

• Inte rest rate swaps, which fixed the interest rate on a $400 million interest-only, floating-rate loan that matures in September 2026 for one of our wholly-owned subsidiaries, expired during September 2024, and the interest rate on the respective loan is now floating.

W e also paid the respective loan principal down by $34.0 million in order to meet a minimum financial threshold to exercise an extension option.

During the fourth quarter of 2024 :

• We acquired an additional 20.2% of the equity in our unconsolidated Fund, Partnership X, which increased our ownership interest in the Fund to 53.8% .

• We entered into a guarantee for the $175.0 million consolidated JV loan which guarantees the portion of the loan principal that would need to be paid down to meet the minimum debt yield in the loan agreement.

• We acquired 180 thousand OP Units for $2.0 million in cash.

• We acquired 17 thousand OP Units in exchange for issuing an equal number of shares of our common stock to the holders of the OP Units.

In January of 2024:

• In connection with the Barrington Plaza loan, w e signed a construction completion guarantee.

See "Property to be Removed from Service" further below for more information about Barrington Plaza.

• We acquired 872 OP Units for $17 thousand in cash.

• Interest rate swaps, which fixed the interest rate on a $200.0 million interest-only, floating-rate loan that matures in September 2026 for one of our wholly-owned subsidiaries, expired during October 2024, and the interest rate on the respective loan is now floating.

• Interest rate swaps, which fixed the interest rate on a $400.0 million interest-only, floating-rate loan that matures in November 2026 for one of our wholly-owned subsidiaries, expired during October 2024, and the interest rate on the respective loan is now floating.

• During December 2024, we closed a new $325.0 million loan for one of our JVs.

The loan is secured by the JV's five office properties and matures in December 2028.

The interest rate is SOFR + 2.5% and we used interest rate swaps to swap fix the rate at 6.36%.

The swaps are effective on January 6, 2025.

The loan requires monthly payments of principal and interest commencing on January 5, 2028 for twelve months based upon a 25-year principal amortization schedule.

The loan replaced a $400.0 million loan which we paid off using proceeds from the new loan as well as cash on hand in the joint venture.

• We entered into a new consolidated JV in December 2024 that we manage and in which we own a 30% interest.

The JV purchased a note receivable secured by a property.

To fund the purchase of the secured note, the JV obtained a $61.8 million loan.

The secured loan matures in January 2030.

The interest rate is fixed at 6.0% until July 2027 and then increases to 6.25% for the remaining loan term.

During January 2025

• A consolidated JV that we manage, and in which we own a 30% interest, acquired a 17-story 247,000 square foot office property located at 10900 Wilshire Boulevard in Westwood.

Title to the property was transferred following the purchase of a secured note by the respective JV.

See Note 18 to our consolidated financial statements in Item 15 of this Report for more information regarding subsequent events.

See Notes 6, 8, 10 and 11 to our consolidated financial statements in Item 15 of this Report for more information regarding our unconsolidated Fund, debt, derivatives and equity, respectively.

• 1132 Bishop Street, Honolulu, Hawaii - "The Residences at Bishop Place"

In downtown Honolulu, we are converting a 25-story, 493 thousand square foot office tower into 493 rental apartments.

This project is helping to address the severe shortage of rental housing in Honolulu and revitalize the central business district, where we own a significant portion of the Class A office space.

As of December 31, 2023, we had delivered ninety-percent of the planned units and leased ninety-seven-percent of the units delivered.

The conversion will continue in phases through 2025 as the remaining office space is vacated, therefore, the expected timing of the remaining spending is uncertain.

Development Portfolio

Studio Plaza is a 456,000 square foot office property located in Burbank.

Following the move-out of a long-term single tenant, we have begun extensive redevelopment of the property to convert it into a multi-tenant building.

The development process is ongoing and we have begun leasing space to be occupied when the common areas and the related floors are completed.

Commencing with the fourth quarter of 2024, we classified this property as part of our Development Portfolio and exclude it from our In-Service Portfolio statistics and operating metrics.

Barrington Plaza

During the second quarter of 2023, we removed our Barrington Plaza Apartments property in Los Angeles from the rental market.

A reconstruction of this property is expected to take a number of years at a cost of several hundred million dollars.

As of December 31, 2024, a significant majority of the tenants have vacated.

See "Legal Proceedings" in Note 17 to our consolidated financial statements in Item 15 of this Report.

We accelerated and re corded additional depreciation expense of $82.1 million for the year ended December 31, 2023 , which is included in Depreciation and amortization on our consolidated stateme nts of operations.

Commencing with the fourth quarter of 2024, we classified this property as part of our Development Portfolio and exclude it from our In-Service Portfolio statistics and operating metrics.

Repositionings

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The work we undertake to reposition a building typically takes months or even years, and could involve a range of improvements from a complete structural renovation to a targeted remodeling of selected spaces.

During the repositioning, the affected property may display depressed rental revenue and occupancy levels that impact our results and, therefore, comparisons of our performance from period to period.

Property to be Removed from Service

During the second quarter of 2023, we removed our Barrington Plaza Apartments property in Los Angeles from the rental market.

A reconstruction of this property is expected to take a number of years at a cost of several hundred million dollars.

We are currently in litigation with the insurance providers in 2020 for Barrington Plaza to recover certain costs associated with reconstruction.

As of December 31, 2023, a significant majority of the tenants have vacated.

Tenants occupying 154 units have the right to remain until May 2024, and we expect them to move out at an uneven pace over the intervening period.

That schedule could be impacted by legal or regulatory actions.

During any period when the property is unoccupied, we will not generate any revenue from it.

In connection with the removal of the property from the rental market, we accelerated and re corded additional depreciation expense of $82.1 million for the year ended December 31, 2023, which is included in Depreciation and amortization on our consolidated stateme nts of operations.

During the repositioning, the affected property may display depressed rental revenues and occupancy levels that impact our operating results and, therefore, comparisons of our performance from period to period.

Rental Rate Trends - Total Portfolio

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The table below presents the average annual rental rate per leased square foot and the annualized lease transaction costs per leased square foot for leases executed in our total office portfolio during the respective periods.

Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.

Year Ended December 31,

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(3) Reflects the weighted average leasing commissions and tenant improvement allowances divided by the weighted average number of years for the leases.

Excludes leases substantially negotiated by the seller in the case of acquired properties and leases for tenants relocated from space at the landlord's request.

Excludes leases substantially negotiated by the seller in the case of acquired properties, leases for tenants relocated from space at the landlord's request, and non-comparable leases, such as retail leases.

(4) Our office rental rates were adversely impacted by the COVID-19 pandemic during 2020, 2021 and 2022, although the lower rental rates for the respective periods were partly offset by lower tenant improvement costs.

(5) Our office rental rates and lease transaction costs for the year ended December 31, 2024 were higher than historical periods as a result of a large tenant lease renewal during the three months ended March 31, 2024.

Office Rent Roll

The table below presents the rent roll for new and renewed leases per leased square foot executed in our total office portfolio.

Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.

Year Ended December 31, 2024

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(1) Represents the average annual initial stabilized cash and straight-line rents per square foot on new and renewed leases signed during the year compared to the prior leases for the same space.

Excludes leases with a term of twelve months or less, leases where the prior lease was terminated more than a year before signing of the new lease, leases for tenants relocated at the landlord's request, leases in acquired buildings where we believe the information about the prior agreement is incomplete or where we believe the base rent reflects other off-market inducements to the tenant, and other non-comparable leases.

(2) Our office rent roll can fluctuate from period to period as a result of changes in our submarkets, buildings and term of the expiring leases, making these metrics difficult to predict.

(3) Our office cash rent and straight-line rent roll were impacted by a large tenant lease renewal during the three months ended March 31, 2024.

Multifamily Rental Rates

The table below presents the average annual rental rate per leased unit for new tenants.

Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.

Year Ended December 31,

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Barrington Plaza was removed from this metric beginning with the third quarter of 2023.

(iv) During 2024, the average was impacted by leasing of units at our newly developed West Los Angeles property, where the rental rates were higher than the average in our portfolio.

(2) Our multifamily rental rates were adversely impacted by the COVID-19 pandemic in 2020 but improved in 2021 and 2022.

Multifamily Rent Roll

The rent on leases subject to rent change during 2023 (new tenants and existing tenants undergoing annual rent review) was 2.1% higher on average than the prior rent on the same unit.

The rent on leases subject to rent change during 2024 (new tenants and existing tenants undergoing annual rent review) was 2.4% higher on average than the prior rent for the same unit after adjusting for rent concessions.

Commencing with the fourth quarter of 2024, the rent change includes only our In-Service Portfolio.

Occupancy Rates - Total Portfolio

The tables below present the occupancy rates for our total office portfolio and multifamily portfolio.

Our Occupancy Rates may not be directly comparable from year to year, as they can be impacted by acquisitions, dispositions, and development and redevelopment projects.

Commencing with the fourth quarter of 2024, the table below presents only our In-Service Portfolio.

Occupancy Rates as of:

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(1) Occupancy rates include the impact of property acquisitions, most of whose occupancy rates at the time of acquisition were below that of our existing portfolio.

(1) Our office occupancy rate for 2024 was impacted by a large tenant lease expiration during the three months ended December 31, 2024.

Our office occupancy rates were adversely impacted by the COVID-19 pandemic during 2020, 2021 and 2022.

(3) Our Occupancy Rates may not be directly comparable from year to year, as they can be impacted by acquisitions, dispositions, development and redevelopment projects.

(2) Excludes units vacated as part of removing Barrington Plaza from the rental market until June of 2023 and excludes the impact of Barrington Plaza entirely starting in July 2023.

(4) Average occupancy rates are calculated by averaging the occupancy rates at the end of each of the quarters in the period and at the end of the quarter immediately prior to the start of the period.

Our multifamily occupancy rates were adversely impacted by the COVID-19 pandemic during 2020 but recovered during 2021 and 2022.

Office Lease Expirations

As of December 31, 2023, assuming non-exercise of renewal options and early termination rights, we expect to see expiring square footage in our total office portfolio as follows:

(3) Average occupancy rates are calculated by averaging the occupancy rates at the end of each of the quarters in the period and at the end of the quarter immediately prior to the start of the period.

In-Service Office Portfolio Lease Expirations

As of December 31, 2024, assuming non-exercise of renewal options and early termination rights, we expect to see expiring square footage for our In-Service office portfolio as follows:

_______________________________________________________________

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Comparison of 2024 to 2023

Our operating results were adversely impacted by the effects of inflation and higher interest rates during 2023 , and by the COVID-19 pandemic during 2022 .

Our operating results were adversely impacted by the effects of inflation and higher interest rates during 2024 and 2023 .

Year Ended December 31, Favorable (Unfavorable)

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(In thousands)

Office rental revenue and tenant recoveries $ 714,742 $ 724,131 $ (9,389) (1.3) % The decrease was primarily due to lower occupancy, lower collections, lower accretion from below-market leases and our office to residential conversion project at Bishop Place.

The decrease was partly offset by higher rental rates, higher lease termination revenues and an increase in tenant recoveries.

Office parking and other income $ 115,203 $ 100,442 $ 14,761 14.7 % The increase was primarily due to an increase in parking income due to higher parking activity and higher ground lease income due to a one-time catch-up payment related to a ground lease reset dispute.

Multifamily revenue $ 190,543 $ 169,079 $ 21,464 12.7 % The increase was primarily due to:

(i) an increase in revenues from new units at our Landmark Los Angeles development project and our Residences at Bishop Place conversion project, (ii) an increase in revenues from our 1221 Ocean Avenue property in Santa Monica that we purchased in the second quarter of 2022 and (iii) higher rental rates at our other multifamily properties.

The increase was partly offset by a decrease in revenues from units removed from service at our Barrington Plaza property commencing during the second quarter of 2023.

Office rental revenue and tenant recoveries $ 683,901 $ 714,742 $ (30,841) (4.3) % The decrease was primarily due to a decrease in rental revenues due to lower occupancy, and lower tenant recoveries.

The lower tenant recoveries were primarily due to lower property taxes.

Office parking and other income $ 112,503 $ 115,203 $ (2,700) (2.3) % The decrease was primarily due to a one-time

catch-up payment related to a ground lease

reset dispute in 2023, partly offset by an increase in parking income due to higher parking rates.

Multifamily revenue $ 190,074 $ 190,543 $ (469) (0.2) % The decrease was primarily due to:

(i) a decrease in revenues at our Barrington Plaza property, which we removed from service during the second quarter of 2023, (ii) lower accretion from below-market leases, and (iii) insurance proceeds received during the first quarter of 2023 for the 2020 Barrington Plaza fire.

The decrease was partly offset by (i) an increase in revenues from new units at our Landmark Los Angeles development project and our Residences at Bishop Place conversion project, and (ii) higher rental rates.

Operating expenses

Office rental expenses $ 294,310 $ 284,522 $ (9,788) (3.4) % The increase was primarily due to an increase in utility, security, janitorial and insurance expenses.

The increase was partly offset by a decrease in rental expenses from our office to residential conversion project at Bishop Place and lower property taxes.

Multifamily rental expenses $ 67,323 $ 49,299 $ (18,024) (36.6) % The increase was primarily due to:

(i) an increase in rental expenses from new units at our development projects, (ii) an increase in rental expenses from our 1221 Ocean Avenue property in Santa Monica that we purchased in the second quarter of 2022, and (iii) an increase in property taxes, security and personnel expenses at our other multifamily properties.

General and administrative expenses $ 49,236 $ 45,405 $ (3,831) (8.4) % The increase was primarily due to higher legal expenses, partly offset by a decrease in advocacy expenses.

Depreciation and amortization $ 459,949 $ 372,798 $ (87,151) (23.4) % The increase was primarily due to accelerated depreciation related to removing units from service at our Barrington Plaza property commencing during the second quarter of 2023.

Office rental expenses $ 285,352 $ 294,310 $ 8,958 3.0 % The decrease was primarily due to lower property taxes and lower repairs and maintenance expenses, partly offset by higher personnel and security expenses.

Multifamily rental expenses $ 64,906 $ 67,323 $ 2,417 3.6 % The decrease was primarily due to a decrease in multifamily expenses at our Barrington Plaza property, which we removed from service during the second quarter of 2023, partly offset by an increase in multifamily expenses from new units at our Residences at Bishop Place conversion project.

General and administrative expenses $ 45,356 $ 49,236 $ 3,880 7.9 % The decrease was primarily due to lower advocacy, legal and personnel expenses.

Depreciation and amortization $ 384,048 $ 459,949 $ 75,901 16.5 % The decrease was primarily due to accelerated depreciation during 2023 related to removing units from service at our Barrington Plaza property.

Year Ended December 31, Favorable (Unfavorable)

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Non-Operating Income and Expenses

Other income $ 19,633 $ 4,587 $ 15,046 328.0 % The increase was primarily due to an increase in interest income due to higher interest rates and higher cash and cash equivalent balances.

Other expenses $ (1,032) $ (714) $ (318) (44.5) % The increase was primarily due to higher transaction costs.

(Loss) income from unconsolidated Fund $ (34,643) $ 1,224 $ (35,867) (2,930.3) % The decrease was primarily due to an impairment charge of $36.2 million in 2023 related to our investment in our Fund.

Interest expense $ (209,468) $ (150,185) $ (59,283) (39.5) % The increase was primarily due to higher interest rates on our floating rate debt, higher debt, and a decrease in interest capitalized related to development activity.

Other income $ 28,019 $ 19,633 $ 8,386 42.7 % The increase was primarily due to an increase in interest income due to higher cash and cash equivalent balances during the year.

Other expenses $ (398) $ (1,032) $ 634 61.4 % The decrease was primarily due to transaction costs during the first quarter of 2023 and lower expenses related to property management and other services provided to our unconsolidated fund.

Income (loss) from unconsolidated Fund $ 2,593 $ (34,643) $ 37,236 107.5 % The increase was primarily due to an impairment

charge of $36.2 million in 2023 related to our

investment in our Fund.

Interest expense $ (229,442) $ (209,468) $ (19,974) (9.5) % The increase was primarily due to higher interest rates on our floating rate debt.

The increase was partly offset by interest capitalized related to development activity.

Comparison of 2023 to 2022

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Usefulness to Investors

We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding the impacts from changes in the value of our real estate, and to compare our performance with other REITs.

We report FFO because it is a widely reported measure of the performance of equity REITs, and is also used by some investors to identify the impact of trends in occupancy rates, rental rates and operating costs from year to year, excluding impacts from changes in the value of our real estate, and to compare our performance with other REITs.

FFO is a non-GAAP financial measure for which we believe that net income (loss) is the most directly comparable GAAP financial measure.

FFO has limitations as a measure of our performance because it excludes depreciation and amortization of real estate, and captures neither the changes in the value of our properties that result from use or market conditions, nor the level of capital expenditures, tenant improvements and leasing commissions necessary to maintain the operating performance of our properties, all of which have real economic effect and could materially impact our results from operations.

FFO should be considered only as a supplement to net income as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

FFO should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

Other REITs may not calculate FFO in accordance with the NAREIT definition and, accordingly, our FFO may not be comparable to the FFO of other REITs.

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FFO Reconciliation to GAAP

The table below reconciles our FFO (the FFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership - which includes our share of our consolidated JVs and our unconsolidated Fund's FFO) to net (loss) income attributable to common stockholders (the most directly comparable GAAP measure).

Our FFO was adversely impacted by the effects of inflation and higher interest rates during 2023 , and by the COVID-19 pandemic during 2022 .

The table below reconciles our FFO (the FFO attributable to our common stockholders and noncontrolling interests in our Operating Partnership - which includes our share of our consolidated JVs and our unconsolidated Fund's FFO) to net income (loss) attributable to common stockholders (the most directly comparable GAAP measure).

Our FFO was adversely impacted by the effects of inflation and higher interest rates during 2024 and 2023 .

Year Ended December 31,

(In thousands) 2024 2023

Net (loss) income attributable to common stockholders (1)

Net income (loss) attributable to common stockholders (1)

$ 23,517 $ (42,706)

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During 2024, FFO decreased by $31.8 million, or 8.4%, to $345.5 million, compared to $377.3 million for 2023 .

The decrease was primarily due to higher interest expense and a decrease in NOI from our office portfolio, partly offset by higher interest income and an increase in NOI from our multifamily portfolio.

The increase in interest expense was primarily due to higher interest rates on our floating rate debt, higher debt and a decrease in interest capitalized related to development activity.

The decrease in NOI from our office portfolio was primarily due to:

(i) lower occupancy, (ii) lower collections, (iii) lower accretion from below-market leases, (iv) our office to residential conversion project at Bishop Place and (v) higher rental expenses.

The increase in interest income was primarily due to higher interest rates and higher cash and cash equivalents balances.

The increase in NOI from our multifamily portfolio was primarily due to:

(i) new units from our development projects , (ii) our acquisition of the 1221 Ocean Avenue property in Santa Monica in the second quarter of 2022, and (iii) higher rental rates at our other multifamily properties.

The decrease was primarily due to:

(i) lower office occupancy and tenant recoveries, (ii) higher interest expense, and (iii) the removal of our Barrington Plaza property from service during the second quarter of 2023.

The decrease was partly offset by (i) higher interest income, (ii) lower office property taxes, (iii) new units from our multifamily development projects, (iv) higher multifamily rental rates, and (v) lower general and administrative expenses.

Comparison of 2023 to 2022

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As a result, our Same Property NOI may not be comparable to the Same Property NOI of other REITs.

Same Property NOI should be considered only as a supplement to net income as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

Same Property NOI should be considered only as a supplement to net income (loss) as a measure of our performance and should not be used as a measure of our liquidity or cash flow, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends.

Comparison of 2024 to 2023:

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The amounts presented below reflect 100% (not our pro-rata share).

Our Same Property results were adversely impacted by the effects of inflation during 2023 and by the COVID-19 pandemic during 2022.

Our Same Property results were adversely impacted by the effects of inflation during 2024 and 2023.

Year Ended December 31, Favorable

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(In thousands)

Office revenues $ 819,931 $ 814,084 $ 5,847 0.7 % The increase was primarily due to an increase in parking income and tenant recoveries, partly offset by lower rental revenues.

The lower rental revenues were primarily due to lower occupancy, lower collections and lower accretion from below-market leases, partly offset by higher lease termination revenues.

Office expenses (293,686) (279,653) (14,033) (5.0) % The increase was primarily due to an increase in utility, security, janitorial and insurance expenses.

The increase was partly offset by lower property taxes.

Office revenues $ 769,882 $ 795,768 $ (25,886) (3.3) % The decrease was primarily due to a decrease in rental revenues due to lower occupancy, and lower tenant recoveries.

The decrease in tenant recoveries was primarily due to lower property taxes.

The decrease was partly offset by higher parking income, due to higher parking rates.

Office expenses (282,634) (291,061) 8,427 2.9 % The decrease was primarily due to lower property taxes and repairs and maintenance expenses.

The decrease was partly offset by higher personnel and security expenses.

Office NOI 487,248 504,707 (17,459) (3.5) %

Multifamily revenues 119,718 114,688 5,030 4.4 % The increase was primarily due to an increase in rental revenues due to higher rental rates.

Multifamily expenses (37,318) (34,633) (2,685) (7.8) % The increase was primarily due to an increase in property taxes, security, and personnel expenses.

Multifamily revenues 144,084 141,640 2,444 1.7 % The increase was primarily due to an increase in rental revenues due to higher rental rates, partly offset by lower accretion from below-market leases.

Multifamily expenses (44,894) (44,547) (347) (0.8) % The increase was primarily due to higher personnel expenses and professional fees.

The increase was partly offset by lower utility expenses and lower property taxes.

Multifamily NOI 99,190 97,093 2,097 2.2 %

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Reconciliation to GAAP

The table below presents a reconciliation of Net (loss) income attributable to common stockholders (the most directly comparable GAAP measure) to Same Property NOI:

The table below presents a reconciliation of Net income (loss) attributable to common stockholders (the most directly comparable GAAP measure) to NOI and Same Property NOI:

Year Ended December 31,

(In thousands) 2024 2023

Net (loss) income attributable to common stockholders $ (42,706) $ 97,145

Net income (loss) attributable to common stockholders $ 23,517 $ (42,706)

Net loss attributable to noncontrolling interests (15,929) (33,134)

Net (loss) income (75,840) 96,540

Net income (loss) 7,588 (75,840)

General and administrative expenses 45,356 49,236

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Other expenses 398 1,032

Loss (income) from unconsolidated Fund 34,643 (1,224)

(Income) loss from unconsolidated Fund (2,593) 34,643

Interest expense 229,442 209,468

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As of December 31, 2024, we had $444.6 million of cash and cash equivalents.

Our earliest term loan maturity is December 2024.

See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt.

See Note 8 to our consolidated financial statements in Item 15 of this Report for more information regarding our debt maturities and interest rate swap expirations.

Excluding acquisitions and debt refinancings, we expect to meet our short-term liquidity requirements through cash on hand and cash generated by operations.

With respect to our short-term debt maturities, we expect to refinance or extend them prior to maturity.

We are currently in the process of negotiating an amendment and extension of a $335.0 million loan secured by a wholly-owned office property that matures on March 03, 2025.

If the amendment and extension is not finalized by the due date, the holding period and carrying value for the asset encumbered by the loan may be affected.

Long-term liquidity

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We plan to meet our long-term liquidity needs through long-term secured non-recourse debt, the issuance of equity securities, including common stock and OP Units, as well as property dispositions and JV transactions.

We only use non-recourse debt, secured by our properties.

We generally only use non-recourse debt, secured by our properties.

As of the date of this report, approximately 44% of our total office portfolio was unencumbered.

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• Note 8 - minimum future principal payments for our secured notes payable, and the interest rates that determine our future periodic interest payments;

• Note 17 - contractual commitments.

• Note 17 - contractual commitments and guarantees.

Off-Balance Sheet Arrangements

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Comparison of 2024 to 2023

Our operating cash flows were adversely impacted by the effects of inflation and higher interest rates during 2023 and by the COVID-19 pandemic during 2022.

Our operating cash flows were adversely impacted by the effects of inflation and higher interest rates during 2024 and 2023.

Year Ended December 31, Increase (Decrease)

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$ (240,761) $ (233,590) $ (7,171) (3.1) %

Cash provided by (used in) financing activities (3)

Net cash (used in) provided by financing activities (3)

$ (246,463) $ 60,871 $ (307,334) (504.9) %

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The decrease in cash from operating activities of $18.3 million was primarily due to:

(i) higher interest expense, (ii) cash used to fund working capital, (iii) an increase in general and administrative cash expenses, and (iv) a decrease in NOI from our office portfolio, partly offset by higher interest income and an increase in NOI from our multifamily portfolio.

(i) lower office occupancy and tenant recoveries, (ii) higher interest expense, and (iii) the removal of our Barrington Plaza property from service during the second quarter of 2023.

The decrease was partly offset by (i) higher cash provided by working capital, (ii) higher interest income, (iii) lower office property taxes, (iv) new units from our multifamily development projects, (v) higher multifamily rental rates, and (vi) lower general and administrative expenses.

(2) Our cash flows from investing activities is generally used to fund property acquisitions, developments and redevelopment projects, and Recurring and non-Recurring Capital Expenditures.

The increase in cash from investing activities of $327.4 million was primarily due to $330.5 million for a property acquisition during 2022 and a decrease in capital expenditures for developments of $34.3 million, partly offset by an increase in capital expenditures for improvements to real estate of $26.8 million.

The decrease in cash from investing activities of $7.2 million was primarily due to the purchase of a note receivable partly offset by a decrease in capital expenditures for improvements to real estate.

(3) Our cash flows from financing activities are generally impacted by our borrowings and capital activities, as well as dividends and distributions paid to common stockholders and noncontrolling interests, respectively.

The increase in cash from financing activities of $63.9 million was primarily due to:

(i) an increase in net borrowings of $175.0 million, (ii) a decrease in dividends paid to common stockholders of $66.9 million, and (iii) lower distributions paid to noncontrolling interests of $18.4 million, partly offset by cash paid to repurchase common stock of $109.2 million and a decrease in contributions from noncontrolling interests in our consolidated JVs of $80.9 million.

The decrease in cash from financing activities of $307.3 million was primarily due to lower proceeds from borrowings and higher repayments of borrowings, partly offset by the repurchase of common stock during the prior period and higher contributions from noncontrolling interests in consolidated JVs during the current period.

Comparison of 2023 to 2022

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Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with GAAP, which requires us to make estimates of certain items which affect the reported amounts of our assets, liabilities, revenues and expenses.

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with US GAAP, and which requires us to make estimates of certain items, which affect the reported amounts of our assets, liabilities, revenues and expenses.

While we believe that our estimates are based upon reasonable assumptions and judgments at the time that they are made, some of our estimates could prove to be incorrect, and those differences could be material.

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This assessment involves using a methodology that requires judgment and estimates about matters that are uncertain at the time the estimates are made, including tenant specific factors, specific industry conditions, and general economic trends and conditions.

During 2022 and 2021, our results of operations were materially impacted by the COVID-19 pandemic.

Charges for uncollectible amounts related to tenant receivables and deferred rent receivables reduced our rental revenues and tenant recoveries by $1.0 million, $0.8 million, and $0.6 million in 2024, 2023 and 2022, respectively.

We restored accrual basis accounting for certain office tenants that were previously determined to be uncollectible and accounted for on a cash basis of accounting, which increased our office revenues by $4.4 million and $3.6 million in 2023 and 2022, respectively.

We restored accrual basis accounting for certain office tenants that were previously determined to be uncollectible and accounted for on a cash basis of accounting, which increased our office revenues by $0.9 million, $4.4 million, and $3.6 million in 2024, 2023, and 2022, respectively.

Revenue Recognition for Tenant Recoveries

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis