Douglas Elliman Inc.DOUG
Douglas Elliman Inc. Debt Disclosure
NOTES PAYABLE AND OTHER OBLIGATIONS
Notes payable and other obligations consisted of the following:
| December 31, 2025 | December 31, 2024 | ||||||||||
Convertible Notes, net of unamortized discount of $0 and $17,330 | $ | — | $ | 32,670 | |||||||
Aggregate carrying value(1) | $ | — | $ | 32,670 | |||||||
(1) The Convertible Notes were redeemed on October 24, 2025 and are no longer outstanding.
*The fair value of the derivative embedded within the 7.0% Convertible Note ($0 at December 31, 2025 and $30,253 at December 31, 2024, respectively) is separately classified as a derivative liability in the consolidated balance sheets.
Redemption of the 7.0% Convertible Notes due 2029:
On July 2, 2024, the Company, Alter Domus (US) LLC, as collateral agent, and entities (the “Purchasers”) advised or managed by Kennedy Lewis Investment Management LLC (“KLIM”) entered into a Securities Purchase Agreement pursuant to which the Company agreed to issue and sell to the Purchasers, and the Purchasers agreed to purchase from the Company, $50,000 aggregate principal amount of the Company’s newly issued senior secured convertible promissory notes due July 2, 2029 (the “Convertible Notes”) in a private placement transaction in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company used the net proceeds from the sale of the Convertible Notes for general corporate purposes.
The Convertible Notes bore interest at a rate of 7.0% per annum payable in cash, or, at the Company’s election, 8.0% per annum paid in kind, due semi-annually.
The aggregate net proceeds from the issuance of the Convertible Notes were $33,475 and the Convertible Notes were senior secured obligations of the Company and were guaranteed by certain of the Company’s direct and indirect subsidiaries and secured by first priority security interests in substantially all of the assets of the Company and the Subsidiary Guarantors, subject to certain exceptions.
In connection with the DEPM Sale, on October 24, 2025, the Company repaid and redeemed all of the Convertible Notes for an aggregate payment of $95,000, including approximately $1,400 of accrued interest (the ”Redemption”). The liens on the assets of the Company and the subsidiary guarantors were released upon the Redemption. The Redemption was effected because the noteholders informed the Company that they were not willing to waive their contractual redemption rights with respect to the Convertible Notes but would agree to a redemption of the Convertible Notes in connection with the consummation of the DEPM Sale.
The Company accelerated recognition of $1,631 of unamortized debt issuance costs associated with the extinguishment of the debt, which is included as a realized loss within “Loss on extinguishment of liability” on its Consolidated Statement of Operations for the year ended December 31, 2025. The loss on extinguishment of liability includes $3 which was recorded and represented the difference between the net carrying amount of the Convertible Notes at the time of the extinguishment and fair value of the costs issued to redeem the Convertible Notes, and $463 of legal fees related to the extinguishment of the debt.
Embedded Derivative on the Convertible Notes:
At the time of the issuance of the Convertible Notes, the Company determined that the conversion feature meets the definition of a derivative liability. The Company separated the derivative liability from the host debt instrument based on the fair value of the derivative liability. In accordance with authoritative guidance on accounting for derivatives and hedging, the Company bifurcated the embedded derivative and estimated the fair value of the embedded derivative liability based on a third-party valuation. The resulting discount created by allocating a portion of the issuance proceeds to the embedded derivative was then amortized to interest expense over the term of the debt using the effective interest method. Changes to the fair value of the embedded derivative were reflected in the Company’s consolidated statements of operations as “Change in fair value of the derivative embedded within convertible debt.” The value of the embedded derivative was contingent on changes in interest rates, the Company’s stock price, stock price volatility, and the Company’s dividend yield over the term of the debt.
A summary of non-cash interest expense associated with the amortization of the debt discount created by the embedded derivative liability associated with the Company’s convertible debt is as follows:
| Year ended | ||||||||||||||
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Convertible Notes | $ | 1,814 | $ | 983 | ||||||||||
Interest expense associated with embedded derivative | $ | 1,814 | $ | 983 | ||||||||||
A summary of non-cash changes in fair value of the derivative embedded within convertible debt is as follows:
| Year ended | ||||||||||||||
| December 31, | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| Convertible Notes | $ | 28,482 | $ | 14,978 | ||||||||||
| Loss on changes in fair value of the derivative embedded within convertible debt | $ | 28,482 | $ | 14,978 | ||||||||||
Fair Values of Notes Payable and Other Obligations:
The estimated fair value of the Company’s notes payable has been determined by the Company using available market information and appropriate valuation methodologies including the evaluation of the Company’s credit risk as described in Note 1. However, considerable judgment is required to develop the estimates of fair value and, accordingly, the estimate presented herein is not necessarily indicative of the amount that could be realized in a current market exchange.
The estimated fair value of the Company’s notes payable is as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
| Notes payable | $ | — | $ | — | $ | 32,670 | $ | 41,002 | |||||||||||||||
| Notes payable and other obligations | $ | — | $ | — | $ | 32,670 | $ | 41,002 | |||||||||||||||
Notes payable is recorded on the consolidated balance sheets at amortized cost. The determinations of fair values disclosed above would be classified as Level 3 under the fair value hierarchy disclosed in Note 17 if such liabilities were recorded on the consolidated balance sheets at fair value.
Letters of Credit:
As of December 31, 2025 and 2024, the Company had outstanding $2,645 and $2,990, respectively, of letters of credit, collateralized by certificates of deposit. The letters of credit have been issued as security deposits for leases of office space.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 31, 2022 | |
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.