Document

EX-99.1 2 exhibit991.htm EX-99.1 Document


Q3 2023 Supplemental Financial Report

Table of Contents


			Page
Corporate Data and Financial Highlights
Company Background			1
Executive Summary			2
Financial Highlights			3
Net Income Available to Common Stockholders / FFO Guidance and Outlook			4
Consolidated Balance Sheets			5
Consolidated Statements of Operations			6
Funds From Operations and Funds Available for Distribution			7-8
Net Operating Income			9
Portfolio Data
Same Store Analysis			11
Stabilized Portfolio Occupancy Overview by Region			12-16
Information on Leases Commenced & Leases Executed			17-18
Stabilized Portfolio Capital Expenditures			19
Stabilized Portfolio Lease Expirations			20-21
Top Fifteen Tenants			22
Consolidated Ventures (Noncontrolling Property Partnerships)			23
Development
Stabilized Development Projects			25
In-Process Development & Redevelopment			26
Future Development Pipeline			27
Debt and Capitalization Data
Capital Structure			29
Debt Analysis			30
Non-GAAP Supplemental Measures			32-34
Definitions & Reconciliations			36-39

This Supplemental Financial Report contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, among other things, information concerning lease expirations, debt maturities, potential investments, development and redevelopment activity, projected construction costs, dispositions and other forward-looking financial data. In some instances, forward-looking statements can be identified by the use of forward-looking terminology such as “expect,” “future,” “will,” “would,” “pursue,” or “project” and variations of such words and similar expressions that do not relate to historical matters. Forward-looking statements are based on Kilroy Realty Corporation’s current expectations, beliefs and assumptions, and are not guarantees of future performance. Forward-looking statements are inherently subject to uncertainties, risks, changes in circumstances, trends and factors that are difficult to predict, many of which are outside of Kilroy Realty Corporation’s control. Accordingly, actual performance, results and events may vary materially from those indicated or implied in the forward-looking statements, and you should not rely on the forward-looking statements as predictions of future performance, results or events. Numerous factors could cause actual future performance, results and events to differ materially from those indicated in the forward-looking statements, including, among others: global market and general economic conditions, including periods of heightened inflation, and their effect on our liquidity and financial conditions and those of our tenants; adverse economic or real estate conditions generally, and specifically, in the States of California, Texas and Washington; risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry; defaults on or non-renewal of leases by tenants; any significant downturn in tenants’ businesses, including bankruptcy, lack of liquidity or lack of funding and the impact labor disruptions or strikes, such as episodic strikes in the entertainment industry, may have on our tenants’ businesses; our ability to re-lease property at or above current market rates; reduced demand for office space, including as a result of remote working and flexible working arrangements that allow work from remote locations other than an employer's office premises; costs to comply with government regulations, including environmental remediation; the availability of cash for distribution and debt service and exposure to risk of default under debt obligations; increases in interest rates and our ability to manage interest rate exposure; changes in interest rates and the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt; a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges; significant competition, which may decrease the occupancy and rental rates of properties; potential losses that may not be covered by insurance; the ability to successfully complete acquisitions and dispositions on announced terms; the ability to successfully operate acquired, developed and redeveloped properties; the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts; delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties; increases in anticipated capital expenditures, tenant improvement and/or leasing costs; defaults on leases for land on which some of our properties are located; adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes; risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers' financial condition and disputes between us and our co-venturers; environmental uncertainties and risks related to natural disasters; and our ability to maintain our status as a REIT. These factors are not exhaustive and additional factors could adversely affect our business and financial performance. For a discussion of additional factors that could materially adversely affect Kilroy Realty Corporation’s business and financial performance, see the factors included under the caption “Risk Factors” in Kilroy Realty Corporation’s annual report on Form 10-K for the year ended December 31, 2022, and its other filings with the Securities and Exchange Commission. All forward-looking statements are based on currently available information and speak only as of the dates on which they are made. Kilroy Realty Corporation assumes no obligation to update any forward-looking statement made in this Supplemental Financial Report that becomes untrue because of subsequent events, new information or otherwise, except to the extent we are required to do so in connection with our ongoing requirements under federal securities laws.

Pictured on cover page, in order of appearance: 333 Dexter, Seattle, WA | Columbia Square, Hollywood, CA | 2100 Kettner, San Diego, CA

Corporate Data and Financial Highlights

–Company Background

–Executive Summary

–Financial Highlights

–Net Income Available to Common Stockholders / FFO Guidance and Outlook

–Consolidated Balance Sheets

–Consolidated Statements of Operations

–Funds From Operations and Funds Available for Distribution

–Net Operating Income


Q3 2023 Supplemental Financial Report

Company Background

Kilroy Realty Corporation (NYSE: KRC), a publicly traded real estate investment trust and member of the S&P MidCap 400 Index, is a leading U.S. landlord and developer, with operations in San Diego, Greater Los Angeles, the San Francisco Bay Area, Greater Seattle and Austin, Texas. The Company has over seven decades of experience developing, acquiring and managing office, life science and mixed-use real estate assets. At September 30, 2023, the Company’s stabilized portfolio totaled approximately 16.3 million square feet of primarily office and life science space that was 86.2% occupied and 87.5% leased. The Company also has 1,001 residential units in the Los Angeles and San Diego regions, which had an average occupancy of 92.7% for the quarter ended September 30, 2023.

Board of Directors

Executive and Senior Management Team

Investor Relations

John Kilroy

Chairman

John Kilroy

Chief Executive Officer

12200 W. Olympic Blvd., Suite 200
Los Angeles, CA 90064
(310) 481-8400
Web: www.kilroyrealty.com
E-mail: investorrelations@kilroyrealty.com

Edward F. Brennan, PhD

Lead Independent

Justin W. Smart

President

Jolie Hunt

Eliott Trencher

Executive VP, Chief Financial Officer and Chief Investment Officer

Scott S. Ingraham

Louisa G. Ritter

Robert Paratte

Executive VP, Chief Leasing Officer and Senior Advisor to the Chairman

Gary R. Stevenson

Peter B. Stoneberg

Heidi R. Roth

Executive VP, Chief Administrative Officer

Bill Hutcheson

John Osmond

Executive VP, Head of Asset Management

Senior VP, Investor Relations & Capital Markets

Merryl Werber

Senior VP, Chief Accounting Officer and Controller

Equity Research Coverage

BofA Securities

J.P. Morgan

Camille Bonnel

(416) 369-2140

Anthony Paolone

(212) 622-6682

BMO Capital Markets Corp.

Keybanc Capital Markets

John P. Kim

(212) 885-4115

Upal Rana

(917) 368-2316

BTIG

Mizuho Securities USA LLC

Thomas Catherwood

(212) 738-6140

Vikram Malhotra

(212) 282-3827

Citigroup Investment Research

RBC Capital Markets

Michael Griffin

(212) 816-5871

Mike Carroll

(440) 715-2649

Evercore ISI

Scotiabank

Steve Sakwa

(212) 446-9462

Nicholas Yulico

(212) 225-6904

Green Street Advisors

Wells Fargo

Dylan Burzinski

(949) 640-8780

Blaine Heck

(443) 263-6529

Jefferies LLC

Wolfe Research

Peter Abramowitz

(212) 336-7241

Andrew Rosivach

(646) 582-9250

Kilroy Realty Corporation is followed by the analysts listed above. Please note that any opinions, estimates or forecasts regarding Kilroy Realty Corporation’s performance made by these analysts are theirs alone and do not represent opinions, forecasts or predictions of Kilroy Realty Corporation or its management. Kilroy Realty Corporation does not by its reference above or distribution imply its endorsement of or concurrence with such information, conclusions or recommendations.


Q3 2023 Supplemental Financial Report

Executive Summary



Quarterly Financial Highlights						Quarterly Operating Highlights

• Revenues grew 2.8% to $283.6 million compared to the prior year						• Stabilized portfolio was 86.2% occupied and 87.5% leased at quarter-end

• Net income available to common stockholders per diluted share of $0.45						• Approximately 425,000 square feet of leases commenced
compared to $0.68 in the prior year. Prior period net income available to common
stockholders per diluted share includes a $0.15 per share gain on sale of an						• Approximately 188,000 square feet of leases executed
operating property
						◦GAAP rents increased 16.1% from prior levels
• FFO per diluted share of $1.12 compared to $1.17 in the prior year
						◦Approximately zero change in cash rents
• Same Store NOI decreased 5.0% compared to the prior year. Same Store Cash
increased 0.2% compared to the prior year						• In October, signed approximately 117,000 square feet of new and renewing leases,
						including extensions of in-place leases











Capital Markets Highlights						Strategic Highlights

• In July, entered into an eleven-year, non-recourse mortgage note for $375.0						• In July, commenced GAAP revenue recognition at 9514 Towne Centre Drive, a
million. The mortgage note bears interest at a fixed rate of 5.90% and matures on						70,616 square foot office building in the University Towne Center submarket of San
August 10, 2034						Diego, and added the building to the stabilized portfolio. The building is 100%
						leased to a global technology company
• In September, drew the remaining $170.0 million available on the unsecured term
loan facility in accordance with the terms of the agreement

• As of the date of this report, approximately $1.9 billion of total liquidity comprised
of approximately $790.0 million of cash and short term investments and
approximately $1.1 billion available under the unsecured revolving credit facility

________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 36-37 “Definitions Included in Supplemental.”


Q3 2023 Supplemental Financial Report

Financial Highlights

(unaudited, $ in thousands, except per share amounts)


		Three Months Ended
		9/30/2022 (1)			12/31/2022			3/31/2023			6/30/2023			9/30/2023

INCOME ITEMS AND DIVIDENDS:
	Capitalized Interest and Debt Costs	$	19,677		$	19,216		$	17,731		$	19,470		$	20,056
	Cash Lease Termination Fees (2)	$	165		$	503		$	—		$	225		$	1,329



	Net Income Available to Common Stockholders per common share – diluted (3)	$	0.68		$	0.45		$	0.48		$	0.47		$	0.45
	Funds From Operations per common share – diluted (4)	$	1.17		$	1.17		$	1.22		$	1.19		$	1.12
	Dividends per common share (3)	$	0.54		$	0.54		$	0.54		$	0.54		$	0.54
	EBITDA, as adjusted (5)	$	170,453		$	174,421		$	184,577		$	178,020		$	173,798
RATIOS:
	Net Operating Income Margins	70.6		%	70.3		%	71.2		%	69.9		%	68.2		%
	Fixed Charge Coverage Ratio - Net Income	2.3x			1.5x			1.6x			1.4x			1.2x
	Fixed Charge Coverage Ratio - EBITDA	4.5x			4.4x			4.6x			4.1x			3.7x
	Net Income Payout Ratio	73.5		%	107.2		%	97.9		%	104.3		%	108.8		%
	FFO Payout Ratio	45.6		%	45.6		%	43.8		%	45.0		%	47.7		%
	FAD Payout Ratio	54.7		%	60.9		%	48.2		%	53.4		%	53.9		%

________________________

Note: Definitions for commonly used terms in this Supplemental Financial Report are on pages 36-37 “Definitions Included in Supplemental.”

(1)Net Income Available to Common Stockholders includes a $17.3 million of gain on sale of a depreciable operating property for the three months ended September 30, 2022.

(2)Represents cash receipts of lease termination fees in the period they are received, which may not correspond to the timing of GAAP revenue recognition of the lease termination fee over the remaining term of the lease.

(3)Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

(4)Please refer to page 7 for reconciliations of GAAP Net Income Available to Common Stockholders to Funds From Operations available to common stockholders and unitholders and Funds Available for Distribution to common stockholders and unitholders and page 8 for a reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution to common stockholders and unitholders.

(5)Please refer to pages 38-39 for reconciliations of GAAP Net Income Available to Common Stockholders to Net Operating Income and EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.


Q3 2023 Supplemental Financial Report

Net Income Available to Common Stockholders / FFO Guidance and Outlook

(unaudited, $ and shares/units in thousands, except per share amounts)

The Company is providing an updated guidance range of Nareit-defined FFO per diluted share for its fiscal year 2023 of $4.55 to $4.60 per share with a midpoint of $4.58 per share.


	Full Year 2023 Range
	Low End		High End
Net income available to common stockholders per share - diluted	$	1.75	$	1.80

Weighted average common shares outstanding - diluted (1)	117,500		117,500

Net income available to common stockholders	$	206,000	$	212,000
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	2,200		2,400
Net income attributable to noncontrolling interests in consolidated property partnerships	24,500		25,500
Depreciation and amortization of real estate assets	345,000		345,000
Gains on sales of depreciable real estate	—		—
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships	(35,000)		(36,000)
Funds From Operations (2)	$	542,700	$	548,900

Weighted average common shares and units outstanding - diluted (3)	119,200		119,200

FFO per common share/unit - diluted (3)	$	4.55	$	4.60

Key Assumptions

July 2023 Assumptions

Updated 2023 Assumptions

Same Store Cash NOI growth (2)

1.50% to 2.50%

2.75% to 3.25%

Average occupancy

86.75% to 87.75%

87.00% to 87.50%

Total development spending (4)

$425 million to $475 million

$400 million to $450 million

Dispositions

$0 to $200 million

$0 million

________________________

(1)Calculated based on estimated weighted average shares outstanding including non-participating share-based awards.

(2)See pages 33-34 for Management Statements on Funds From Operations and Same Store Cash Net Operating Income.

(3)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

(4)Remaining 2023 development spending is $100 million to $150 million.

The Company’s guidance estimates for the full year 2023, and the reconciliation of net income available to common stockholders per share - diluted and FFO per share and unit - diluted included within this report, reflect management’s views on current and future market conditions, including assumptions with respect to rental rates, occupancy levels, and the earnings impact of the events referenced in this report. Although these guidance estimates reflect the impact on the Company’s operating results of an assumed range of future disposition activity, these guidance estimates do not include any estimates of possible future gains or losses from possible future dispositions because the magnitude of gains or losses on sales of depreciable operating properties, if any, will depend on the sales price and depreciated cost basis of the disposed assets at the time of disposition, information that is not known at the time the Company provides guidance, and the timing of any gain recognition will depend on the closing of the dispositions, information that is also not known at the time the Company provides guidance and may occur after the relevant guidance period. We caution you not to place undue reliance on our assumed range of future disposition activity because any potential future disposition transactions will ultimately depend on the market conditions and other factors, including but not limited to the Company’s capital needs, the particular assets being sold and the Company’s ability to defer some or all of the taxable gain on the sales. These guidance estimates also do not include the impact on operating results from potential future acquisitions, possible capital markets activity, possible future impairment charges or any events outside of the Company’s control. There can be no assurance that the Company’s actual results will not differ materially from these estimates.


Q3 2023 Supplemental Financial Report

Consolidated Balance Sheets

(unaudited, $ in thousands)


	9/30/2023		6/30/2023		3/31/2023		12/31/2022		9/30/2022

ASSETS:
Land and improvements	$	1,743,170	$	1,738,242	$	1,738,242	$	1,738,242	$	1,743,194
Buildings and improvements	8,431,499		8,353,596		8,335,285		8,302,081		7,693,247
Undeveloped land and construction in progress	1,950,424		1,894,545		1,788,542		1,691,860		2,183,071
Total real estate assets held for investment	12,125,093		11,986,383		11,862,069		11,732,183		11,619,512
Accumulated depreciation and amortization	(2,443,659)		(2,369,515)		(2,294,202)		(2,218,710)		(2,150,060)
Total real estate assets held for investment, net	9,681,434		9,616,868		9,567,867		9,513,473		9,469,452

Cash and cash equivalents	618,794		361,885		476,358		347,379		249,981
Restricted cash	—		—		—		—		13,009
Marketable securities	278,789		25,786		23,288		23,547		22,390
Current receivables, net	11,383		10,686		15,926		20,583		15,885
Deferred rent receivables, net	466,073		463,640		457,870		452,200		442,987
Deferred leasing costs and acquisition-related intangible assets, net	228,742		230,559		238,184		250,846		214,484
Right of use ground lease assets	125,765		126,022		126,277		126,530		126,708
Prepaid expenses and other assets, net	60,141		75,588		63,622		62,429		65,096
TOTAL ASSETS	$	11,471,121	$	10,911,034	$	10,969,392	$	10,796,987	$	10,619,992

LIABILITIES AND EQUITY:
Liabilities:
Secured debt, net	$	604,480	$	240,142	$	241,547	$	242,938	$	244,316
Unsecured debt, net	4,330,326		4,172,833		4,171,029		4,020,058		3,823,532

Accounts payable, accrued expenses and other liabilities	426,662		377,733		418,902		392,360		424,087
Ground lease liabilities	124,517		124,678		124,837		124,994		125,065
Accrued dividends and distributions	64,423		64,438		64,461		64,285		64,271
Deferred revenue and acquisition-related intangible liabilities, net	178,542		185,429		195,629		195,959		176,105
Rents received in advance and tenant security deposits	74,646		78,187		80,565		81,432		82,839

Total liabilities	5,803,596		5,243,440		5,296,970		5,122,026		4,940,215
Equity:
Stockholders’ Equity
Common stock	1,173		1,172		1,171		1,169		1,169
Additional paid-in capital	5,195,106		5,184,227		5,175,402		5,170,760		5,162,088
Retained earnings	237,665		248,695		257,079		265,118		276,138
Total stockholders’ equity	5,433,944		5,434,094		5,433,652		5,437,047		5,439,395
Noncontrolling Interests
Common units of the Operating Partnership	53,328		53,358		53,386		53,524		53,475
Noncontrolling interests in consolidated property partnerships	180,253		180,142		185,384		184,390		186,907
Total noncontrolling interests	233,581		233,500		238,770		237,914		240,382
Total equity	5,667,525		5,667,594		5,672,422		5,674,961		5,679,777
TOTAL LIABILITIES AND EQUITY	$	11,471,121	$	10,911,034	$	10,969,392	$	10,796,987	$	10,619,992


Q3 2023 Supplemental Financial Report

Consolidated Statements of Operations

(unaudited, $ and shares in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
REVENUES
Rental income	$	280,681	$	272,546	$	852,094	$	804,330
Other property income	2,913		3,412		8,584		8,313
Total revenues	283,594		275,958		860,678		812,643
EXPENSES
Property expenses	59,445		52,075		168,233		147,421
Real estate taxes	28,363		27,415		84,868		78,718

Ground leases	2,390		1,771		7,172		5,473
General and administrative expenses (1)	24,761		23,524		71,356		68,425

Leasing costs	1,852		1,015		4,550		3,475
Depreciation and amortization	85,224		81,140		269,262		266,215
Total expenses	202,035		186,940		605,441		569,727
OTHER INCOME (EXPENSES)
Interest and other income, net	7,015		295		11,896		501
Interest expense	(29,837)		(19,982)		(81,891)		(60,728)

Gain on sale of depreciable operating property	—		17,329		—		17,329


Total other expenses	(22,822)		(2,358)		(69,995)		(42,898)
NET INCOME	58,737		86,660		185,242		200,018
Net income attributable to noncontrolling common units of the Operating Partnership	(515)		(664)		(1,612)		(1,695)
Net income attributable to noncontrolling interests in consolidated property partnerships	(5,460)		(6,239)		(18,673)		(18,333)
Total income attributable to noncontrolling interests	(5,975)		(6,903)		(20,285)		(20,028)




NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	52,762	$	79,757	$	164,957	$	179,990
Weighted average common shares outstanding – basic	117,185		116,873		117,133		116,783
Weighted average common shares outstanding – diluted	117,495		117,242		117,411		117,163
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE
Net income available to common stockholders per share – basic	$	0.45	$	0.68	$	1.40	$	1.53
Net income available to common stockholders per share – diluted	$	0.45	$	0.68	$	1.40	$	1.53

_______________________

(1)The three and nine months ended September 30, 2023 includes $5.8 million and $12.0 million, respectively, of retirement costs for our CEO and former President, primarily comprised of accelerated stock compensation expense.


Q3 2023 Supplemental Financial Report

Funds From Operations and Funds Available for Distribution

(unaudited, $ in thousands, except per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022

FUNDS FROM OPERATIONS: (1)
Net income available to common stockholders	$	52,762	$	79,757	$	164,957	$	179,990
Adjustments:
Net income attributable to noncontrolling common units of the Operating Partnership	515		664		1,612		1,695
Net income attributable to noncontrolling interests in consolidated property partnerships	5,460		6,239		18,673		18,333
Depreciation and amortization of real estate assets	83,518		79,410		263,662		261,129
Gain on sale of depreciable real estate	—		(17,329)		—		(17,329)
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships	(8,208)		(9,084)		(27,045)		(27,042)
Funds From Operations (1)(2)	$	134,047	$	139,657	$	421,859	$	416,776
Weighted average common shares/units outstanding – basic (3)	118,934		118,563		118,894		118,591
Weighted average common shares/units outstanding – diluted (4)	119,245		118,933		119,172		118,972
FFO per common share/unit – basic (1)	$	1.13	$	1.18	$	3.55	$	3.51
FFO per common share/unit – diluted (1)	$	1.12	$	1.17	$	3.54	$	3.50

FUNDS AVAILABLE FOR DISTRIBUTION: (1)
Funds From Operations (1)(2)	$	134,047	$	139,657	$	421,859	$	416,776
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures	(20,519)		(20,670)		(56,135)		(52,848)
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5)	(4,883)		(5,017)		(14,980)		(14,221)
Net effect of straight-line rents	(2,382)		(8,838)		(13,721)		(38,722)
Amortization of net below market rents (6)	(1,034)		(2,540)		(5,675)		(8,171)
Amortization of deferred financing costs and net debt discount/premium	1,312		805		3,921		2,442
Non-cash amortization of share-based compensation awards	10,596		8,419		28,360		21,635

Lease related adjustments, leasing costs and other (7)	(401)		3,287		2,955		8,703
Adjustments attributable to noncontrolling interests in consolidated property partnerships	1,962		1,323		4,193		4,464
Funds Available for Distribution (1)	$	118,698	$	116,426	$	370,777	$	340,058

________________________

(1)See page 34 for Management Statements on Funds From Operations and Funds Available for Distribution. Reported per common share/unit amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.

(2)FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.9 million and $5.0 million for the three months ended September 30, 2023 and 2022, respectively, and $15.0 million and $14.2 million for the nine months ended September 30, 2023 and 2022, respectively. These amounts are adjusted out of FFO in our calculation of FAD.

(3)Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding.

(4)Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of contingently issuable shares, and assuming the exchange of all common limited partnership units outstanding.

(5)Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements.

(6)Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents.

(7)Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences, leasing costs and other.


Q3 2023 Supplemental Financial Report

Reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution

(unaudited, $ in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
GAAP Net Cash Provided by Operating Activities	$	208,816	$	205,281	$	492,366	$	484,230
Adjustments:
Recurring tenant improvements, leasing commissions and capital expenditures	(20,519)		(20,670)		(56,135)		(52,848)



Depreciation of non-real estate furniture, fixtures and equipment	(1,706)		(1,730)		(5,600)		(5,086)

Net changes in operating assets and liabilities (1)	(58,450)		(54,285)		(37,248)		(48,977)
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD	(6,246)		(7,761)		(22,852)		(22,578)
Cash adjustments related to investing and financing activities	(3,197)		(4,409)		246		(14,683)
Funds Available for Distribution (2)	$	118,698	$	116,426	$	370,777	$	340,058

_______________________

(1)Primarily includes changes in the following assets and liabilities: marketable securities; current receivables; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; and rents received in advance and tenant security deposits.

(2)Please refer to page 34 for a Management Statement on Funds Available for Distribution.


Q3 2023 Supplemental Financial Report

Net Operating Income (1)

(unaudited, $ in thousands)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2023		2022		% Change		2023		2022		% Change
Operating Revenues:
Rental income (2)	$	231,579	$	230,116	0.6	%	$	709,657	$	685,896	3.5	%
Tenant reimbursements (2)	49,102		42,430		15.7	%	142,437		118,434		20.3	%
Other property income	2,913		3,412		(14.6)	%	8,584		8,313		3.3	%
Total operating revenues	283,594		275,958		2.8	%	860,678		812,643		5.9	%
Operating Expenses:
Property expenses	59,445		52,075		14.2	%	168,233		147,421		14.1	%
Real estate taxes	28,363		27,415		3.5	%	84,868		78,718		7.8	%

Ground leases	2,390		1,771		35.0	%	7,172		5,473		31.0	%
Total operating expenses	90,198		81,261		11.0	%	260,273		231,612		12.4	%
Net Operating Income	$	193,396	$	194,697	(0.7)	%	$	600,405	$	581,031	3.3	%

________________________

(1)Please refer to page 32 for Management Statements on Net Operating Income and page 38 for a reconciliation of GAAP Net Income Available to Common Stockholders to Net Operating Income.

(2)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.

Portfolio Data

–Same Store Analysis

–Stabilized Portfolio Occupancy Overview by Region

–Information on Leases Commenced & Leases Executed

–Stabilized Portfolio Capital Expenditures

–Stabilized Portfolio Lease Expirations

–Top Fifteen Tenants

–Consolidated Ventures (Noncontrolling Property Partnerships)


Q3 2023 Supplemental Financial Report

Same Store Analysis (1)

(unaudited, $ in thousands)



		Three Months Ended September 30,								Nine Months Ended September 30,
		2023			2022			% Change		2023			2022			% Change

	Total Same Store Portfolio
	Office Portfolio
	Number of properties	115			115					115			115
	Square Feet	15,063,419			15,063,419					15,063,419			15,063,419
	Percent of Stabilized Portfolio	92.5		%	92.7		%			92.5		%	92.7		%
	Average Occupancy	86.4		%	91.7		%			88.2		%	91.6		%

	Operating Revenues:
	Rental income (2)	$	207,774		$	215,017		(3.4)	%	$	640,719		$	645,300		(0.7)	%
	Tenant reimbursements (2)	44,399			40,589			9.4	%	127,468			112,994			12.8	%
	Other property income	2,729			3,126			(12.7)	%	7,790			7,355			5.9	%
	Total operating revenues	254,902			258,732			(1.5)	%	775,977			765,649			1.3	%
	Operating Expenses:
	Property expenses	55,539			50,020			11.0	%	157,669			141,529			11.4	%
	Real estate taxes	25,124			25,596			(1.8)	%	74,318			73,837			0.7	%
	Ground leases	1,895			1,754			8.0	%	5,673			5,264			7.8	%
	Total operating expenses	82,558			77,370			6.7	%	237,660			220,630			7.7	%
	Net Operating Income (3)(4)	$	172,344		$	181,362		(5.0)	%	$	538,317		$	545,019		(1.2)	%


Same Store Analysis (Cash Basis)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2023			2022			% Change		2023			2022			% Change
	Total operating revenues	$	250,180		$	244,676		2.2	%	$	758,995		$	711,013		6.7	%
	Total operating expenses	82,459			77,266			6.7	%	237,360			220,305			7.7	%
	Cash Net Operating Income (4)(5)	$	167,721		$	167,410		0.2	%	$	521,635		$	490,708		6.3	%

________________________

(1)Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of September 30, 2023. Same Store includes 100% of consolidated property partnerships as well as our three residential properties.

(2)Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations.

(3)For the nine months ended September 30, 2023 and 2022, includes $10.4 million and $2.1 million of non-recurring income, respectively.

(4)Please refer to page 38 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store Net Operating Income and Same Store Cash Net Operating Income. Adjustments to GAAP operating revenues include the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.

(5)For the nine months ended September 30, 2023 and 2022, includes $14.4 million and $1.9 million of non-recurring income, respectively.


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region


		Portfolio Breakdown					Occupied at				Leased at
STABILIZED PORTFOLIO (1) (2)	Buildings	YTD NOI %		SF %		Total SF	9/30/2023		6/30/2023		9/30/2023

Greater Los Angeles
Culver City	19	0.7	%	1.0	%	166,207	78.9	%	78.9	%	78.9	%
El Segundo	5	2.8	%	6.8	%	1,103,595	75.4	%	75.8	%	75.6	%
Hollywood	10	7.1	%	7.4	%	1,200,631	87.4	%	87.7	%	90.8	%
Long Beach	7	2.1	%	5.9	%	957,706	82.6	%	84.3	%	86.0	%
West Hollywood	4	0.9	%	1.2	%	189,459	87.4	%	81.9	%	92.7	%
West Los Angeles	8	4.3	%	4.5	%	726,975	76.5	%	76.9	%	76.5	%
Total Greater Los Angeles	53	17.9	%	26.8	%	4,344,573	81.2	%	81.5	%	83.1	%
San Diego County
Del Mar	17	13.7	%	11.0	%	1,791,486	96.7	%	98.1	%	97.1	%
I-15 Corridor	3	0.7	%	2.7	%	433,851	68.0	%	66.3	%	83.0	%
Little Italy / Point Loma	2	—	%	1.9	%	313,983	41.0	%	32.1	%	43.2	%
University Towne Center	2	1.2	%	1.4	%	231,060	100.0	%	100.0	%	100.0	%
Total San Diego County	24	15.6	%	17.0	%	2,770,380	86.1	%	85.4	%	89.0	%
San Francisco Bay Area
Menlo Park	6	2.0	%	2.0	%	329,944	86.1	%	84.5	%	93.1	%
Mountain View	3	3.2	%	2.8	%	457,066	100.0	%	100.0	%	100.0	%
Palo Alto	2	1.3	%	1.0	%	165,574	100.0	%	100.0	%	100.0	%
Redwood City	2	2.9	%	2.1	%	347,269	100.0	%	100.0	%	100.0	%
San Francisco	10	27.7	%	20.9	%	3,400,600	85.3	%	87.5	%	85.3	%
South San Francisco	6	8.5	%	4.9	%	806,109	100.0	%	100.0	%	100.0	%
Sunnyvale	4	4.0	%	4.1	%	663,460	100.0	%	100.0	%	100.0	%
Total San Francisco Bay Area	33	49.6	%	37.8	%	6,170,022	91.1	%	92.3	%	91.5	%
Greater Seattle
Bellevue	2	5.4	%	5.6	%	919,295	94.0	%	93.6	%	95.7	%
Lake Union / Denny Regrade	8	11.5	%	12.8	%	2,080,883	78.9	%	78.9	%	78.9	%
Total Greater Seattle	10	16.9	%	18.4	%	3,000,178	83.5	%	83.4	%	84.0	%
TOTAL STABILIZED PORTFOLIO	120	100.0	%	100.0	%	16,285,153	86.2	%	86.6	%	87.5	%


Average Occupancy
Quarter-to-Date						Year-to-Date
86.1%						87.8%

________________________

(1)Excludes residential properties.

(2)Buildings within a complex of properties are analyzed at the complex level.


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

Greater Los Angeles, California
3101-3243 La Cienega Boulevard	Culver City	166,207	78.9	%	78.9	%
2240 E. Imperial Highway	El Segundo	122,870	100.0	%	100.0	%
2250 E. Imperial Highway	El Segundo	298,728	46.2	%	46.2	%
2260 E. Imperial Highway	El Segundo	298,728	100.0	%	100.0	%
909 N. Pacific Coast Highway	El Segundo	244,880	78.6	%	79.3	%
999 N. Pacific Coast Highway	El Segundo	138,389	58.1	%	58.1	%
1350 Ivar Avenue	Hollywood	16,448	100.0	%	100.0	%
1355 Vine Street	Hollywood	183,129	100.0	%	100.0	%
1375 Vine Street	Hollywood	159,236	100.0	%	100.0	%
1395 Vine Street	Hollywood	2,575	100.0	%	100.0	%
1500 N. El Centro Avenue	Hollywood	113,447	28.8	%	63.6	%
1525 N. Gower Street	Hollywood	9,610	100.0	%	100.0	%
1575 N. Gower Street	Hollywood	264,430	100.0	%	100.0	%
6115 W. Sunset Boulevard	Hollywood	26,238	53.0	%	53.0	%
6121 W. Sunset Boulevard	Hollywood	93,418	100.0	%	100.0	%
6255 W. Sunset Boulevard	Hollywood	332,100	82.4	%	83.0	%
3750 Kilroy Airport Way	Long Beach	10,718	100.0	%	100.0	%
3760 Kilroy Airport Way	Long Beach	166,761	76.5	%	78.3	%
3780 Kilroy Airport Way	Long Beach	221,452	91.9	%	91.9	%
3800 Kilroy Airport Way	Long Beach	192,476	87.7	%	89.3	%
3840 Kilroy Airport Way	Long Beach	138,441	58.5	%	77.6	%
3880 Kilroy Airport Way	Long Beach	96,923	100.0	%	100.0	%
3900 Kilroy Airport Way	Long Beach	130,935	78.7	%	78.7	%
8560 W. Sunset Boulevard	West Hollywood	76,558	77.4	%	87.6	%
8570 W. Sunset Boulevard	West Hollywood	49,276	95.6	%	100.0	%
8580 W. Sunset Boulevard	West Hollywood	6,875	59.0	%	59.0	%
8590 W. Sunset Boulevard	West Hollywood	56,750	97.4	%	97.4	%
12100 W. Olympic Boulevard	West Los Angeles	155,679	100.0	%	100.0	%
12200 W. Olympic Boulevard	West Los Angeles	154,544	84.7	%	84.7	%
12233 W. Olympic Boulevard	West Los Angeles	156,746	53.0	%	53.0	%
12312 W. Olympic Boulevard	West Los Angeles	76,644	100.0	%	100.0	%
2100/2110 Colorado Avenue	West Los Angeles	104,853	55.4	%	55.4	%
501 Santa Monica Boulevard	West Los Angeles	78,509	65.7	%	65.7	%
Total Greater Los Angeles		4,344,573	81.2	%	83.1	%


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

San Diego County, California
12225 El Camino Real	Del Mar	58,401	100.0	%	100.0	%
12235 El Camino Real	Del Mar	53,751	100.0	%	100.0	%
12340 El Camino Real *	Del Mar	109,307	100.0	%	100.0	%
12390 El Camino Real	Del Mar	73,238	100.0	%	100.0	%
12770 El Camino Real	Del Mar	75,035	100.0	%	100.0	%
12780 El Camino Real	Del Mar	140,591	100.0	%	100.0	%
12790 El Camino Real	Del Mar	87,944	100.0	%	100.0	%
12830 El Camino Real	Del Mar	196,444	100.0	%	100.0	%
12860 El Camino Real	Del Mar	92,042	100.0	%	100.0	%
12348 High Bluff Drive	Del Mar	39,192	100.0	%	100.0	%
12400 High Bluff Drive *	Del Mar	216,518	91.7	%	91.7	%
3579 Valley Centre Drive	Del Mar	54,960	94.7	%	94.7	%
3611 Valley Centre Drive	Del Mar	132,425	96.4	%	100.0	%
3661 Valley Centre Drive	Del Mar	131,662	100.0	%	100.0	%
3721 Valley Centre Drive	Del Mar	115,193	78.4	%	78.4	%
3811 Valley Centre Drive	Del Mar	118,912	100.0	%	100.0	%
3745 Paseo Place	Del Mar	95,871	90.3	%	93.8	%
13480 Evening Creek Drive North	I-15 Corridor	143,401	10.4	%	55.6	%
13500 Evening Creek Drive North	I-15 Corridor	143,749	92.9	%	92.9	%
13520 Evening Creek Drive North	I-15 Corridor	146,701	100.0	%	100.0	%
2100 Kettner Boulevard *	Little Italy	206,527	13.5	%	16.8	%
2305 Historic Decatur Road	Point Loma	107,456	93.9	%	93.9	%
9455 Towne Centre Drive	University Towne Center	160,444	100.0	%	100.0	%
9514 Towne Centre Drive *	University Towne Center	70,616	100.0	%	100.0	%
Total San Diego County		2,770,380	86.1	%	89.0	%

________________________

* Excluded from our Same Store portfolio.


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

San Francisco Bay Area, California
4100 Bohannon Drive	Menlo Park	47,643	100.0	%	100.0	%
4200 Bohannon Drive	Menlo Park	43,600	69.4	%	69.4	%
4300 Bohannon Drive	Menlo Park	63,430	48.8	%	85.1	%

4500 Bohannon Drive	Menlo Park	63,429	100.0	%	100.0	%
4600 Bohannon Drive	Menlo Park	48,413	100.0	%	100.0	%
4700 Bohannon Drive	Menlo Park	63,429	100.0	%	100.0	%
1290-1300 Terra Bella Avenue	Mountain View	114,175	100.0	%	100.0	%
680 E. Middlefield Road	Mountain View	171,676	100.0	%	100.0	%
690 E. Middlefield Road	Mountain View	171,215	100.0	%	100.0	%
1701 Page Mill Road	Palo Alto	128,688	100.0	%	100.0	%
3150 Porter Drive	Palo Alto	36,886	100.0	%	100.0	%
900 Jefferson Avenue	Redwood City	228,505	100.0	%	100.0	%
900 Middlefield Road	Redwood City	118,764	100.0	%	100.0	%
100 Hooper Street	San Francisco	417,914	95.5	%	95.5	%
100 First Street	San Francisco	480,457	98.3	%	98.3	%
303 Second Street	San Francisco	784,658	71.5	%	71.7	%
201 Third Street	San Francisco	346,538	68.2	%	68.2	%
360 Third Street	San Francisco	436,357	68.2	%	68.2	%
250 Brannan Street	San Francisco	100,850	100.0	%	100.0	%
301 Brannan Street	San Francisco	82,834	100.0	%	100.0	%
333 Brannan Street	San Francisco	185,602	100.0	%	100.0	%
345 Brannan Street	San Francisco	110,050	99.7	%	99.7	%
350 Mission Street	San Francisco	455,340	99.7	%	99.7	%
345 Oyster Point Boulevard	South San Francisco	40,410	100.0	%	100.0	%
347 Oyster Point Boulevard	South San Francisco	39,780	100.0	%	100.0	%
349 Oyster Point Boulevard	South San Francisco	65,340	100.0	%	100.0	%
350 Oyster Point Boulevard	South San Francisco	234,892	100.0	%	100.0	%
352 Oyster Point Boulevard	South San Francisco	232,215	100.0	%	100.0	%
354 Oyster Point Boulevard	South San Francisco	193,472	100.0	%	100.0	%
505 Mathilda Avenue	Sunnyvale	212,322	100.0	%	100.0	%
555 Mathilda Avenue	Sunnyvale	212,322	100.0	%	100.0	%
599 Mathilda Avenue	Sunnyvale	76,031	100.0	%	100.0	%
605 Mathilda Avenue	Sunnyvale	162,785	100.0	%	100.0	%
Total San Francisco Bay Area		6,170,022	91.1	%	91.5	%


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Occupancy Overview by Region, continued


	Submarket	Square Feet	Occupied		Leased

Greater Seattle, Washington
601 108th Avenue NE	Bellevue	490,738	100.0	%	100.0	%
10900 NE 4th Street	Bellevue	428,557	87.2	%	90.7	%
2001 West 8th Avenue	Denny Regrade	539,226	20.0	%	20.0	%
333 Dexter Avenue North *	Lake Union	618,766	100.0	%	100.0	%
701 N. 34th Street	Lake Union	141,860	100.0	%	100.0	%
801 N. 34th Street	Lake Union	173,615	100.0	%	100.0	%
837 N. 34th Street	Lake Union	112,487	100.0	%	100.0	%
320 Westlake Avenue North	Lake Union	184,644	96.1	%	96.1	%
321 Terry Avenue North	Lake Union	135,755	100.0	%	100.0	%
401 Terry Avenue North	Lake Union	174,530	100.0	%	100.0	%
Total Greater Seattle		3,000,178	83.5	%	84.0	%

TOTAL STABILIZED PORTFOLIO		16,285,153	86.2	%	87.5	%

________________________

* Excluded from our Same Store portfolio.


			Average Residential Occupancy
RESIDENTIAL PROPERTIES	Submarket	Total No. of Units	Quarter-to-Date	Year-to-Date

Greater Los Angeles
1550 N. El Centro Avenue	Hollywood	200	93.2%	93.1%
6390 De Longpre Avenue	Hollywood	193	91.0%	92.5%
San Diego County
3200 Paseo Village Way	Del Mar	608	93.1%	93.0%
TOTAL RESIDENTIAL PROPERTIES		1,001	92.7%	92.9%


Q3 2023 Supplemental Financial Report

Information on Leases Commenced (1)


Quarter to Date	# of Leases (2)		Square Feet (2)			Weighted Average Lease Term (Mo.)	TI/LC Per Sq.Ft. (3)		TI/LC Per Sq.Ft. /Year (3)		Changes in GAAP Rents		Changes in Cash Rents
	New	Renewal	New	Renewal	Total
2nd Generation	12	13	178,282	148,599	326,881	81	$	49.43	$	7.32	6.9	%	(6.2)	%

Development Leasing (4)	2	—	98,561	—	98,561	149	$	121.74	$	9.80
TOTAL:	14	13	276,843	148,599	425,442


Year to Date	# of Leases (2)		Square Feet (2)			Weighted Average Lease Term (Mo.)	TI/LC Per Sq.Ft. (3)		TI/LC Per Sq.Ft. /Year (3)		Changes in GAAP Rents		Changes in Cash Rents
	New	Renewal	New	Renewal	Total
2nd Generation	33	38	359,620	387,517	747,137	73	$	52.33	$	8.60	13.4	%	(0.5)	%

Development Leasing (4)	3	—	104,016	—	104,016	146	$	121.73	$	10.01
TOTAL:	36	38	463,636	387,517	851,153

________________________

(1)Includes 100% of consolidated property partnerships.

(2)Represents leasing activity for leases that commenced at properties in the stabilized and development portfolios during the period, net of month-to-month leases.

(3)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.

(4)Represents leases commenced on new construction added to the stabilized portfolio and leasing activity for leases signed in our development portfolio.


Q3 2023 Supplemental Financial Report

Information on Leases Executed (1)


Quarter to Date (2)	# of Leases (3)		Square Feet (3)			Weighted Average Lease Term (Mo.)	TI/LC Per Sq.Ft. (4)		TI/LC Per Sq.Ft. /Year (4)		Changes in GAAP Rents		Changes in Cash Rents		Retention Rates
	New	Renewal	New	Renewal	Total
2nd Generation	9	13	30,867	148,599	179,466	72	$	30.63	$	5.10	16.1	%	(0.1)	%	41.0	%
Development Leasing (5)	2	—	8,302	—	8,302	101	$	126.44	$	15.02
TOTAL:	11	13	39,169	148,599	187,768


Year to Date (6)	# of Leases (3)		Square Feet (3)			Weighted Average Lease Term (Mo.)	TI/LC Per Sq.Ft. (4)		TI/LC Per Sq.Ft. /Year (4)		Changes in GAAP Rents		Changes in Cash Rents		Retention Rates
	New	Renewal	New	Renewal	Total
2nd Generation	35	38	341,976	387,517	729,493	65	$	54.62	$	10.08	10.8	%	(0.9)	%	24.7	%
Development Leasing (5)	4	—	29,452	—	29,452	134	$	168.60	$	15.10
TOTAL:	39	38	371,428	387,517	758,945

________________________

(1)Includes 100% of consolidated property partnerships.

(2)During the three months ended September 30, 2023, 9 new leases totaling 35,726 square feet were signed but not commenced as of September 30, 2023.

(3)Represents leasing activity for leases signed at properties in the stabilized and development portfolios during the period, net of month-to-month leases.

(4)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs.

(5)Represents leasing on new construction added to the stabilized portfolio and leasing activity for leases signed in our development and redevelopment portfolios.

(6)During the nine months ended September 30, 2023, 20 new leases totaling 227,282 square feet were signed but not commenced as of September 30, 2023.


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Capital Expenditures

($ in thousands)


	Total 2023		Q3 2023		Q2 2023		Q1 2023

1st Generation (Nonrecurring) Capital Expenditures: (1)
Capital Improvements	$	1,591	$	1,091	$	153	$	347
Tenant Improvements & Leasing Commissions (2)	—		—		—		—

Total	$	1,591	$	1,091	$	153	$	347


	Total 2023		Q3 2023		Q2 2023		Q1 2023

2nd Generation (Recurring) Capital Expenditures: (1)
Capital Improvements	$	20,921	$	6,361	$	7,263	$	7,297
Tenant Improvements & Leasing Commissions (2)	35,214		14,158		10,587		10,469

Total	$	56,135	$	20,519	$	17,850	$	17,766

________________________

(1)Includes 100% of capital expenditures of consolidated property partnerships.

(2)Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements.


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Lease Expiration Summary (1)(2)

($ in thousands, except for annualized rent per sq. ft.)


# of Expiring Leases	13		22		13		18		15		67		59		69		48		32		38		36		14		21
% of Total Leased Sq. Ft.	1.9	%	1.8	%	0.7	%	2.2	%	2.6	%	5.0	%	13.9	%	8.2	%	8.2	%	7.6	%	11.1	%	14.3	%	7.9	%	14.6	%
Annualized Base Rent	$15,076		$11,864		$4,156		$10,662		$22,018		$34,152		$90,492		$47,283		$71,245		$57,126		$91,359		$132,118		$72,809		$131,760
% of Total Annualized Base Rent (3)	1.9	%	1.5	%	0.5	%	1.3	%	2.8	%	4.3	%	11.4	%	6.0	%	9.0	%	7.2	%	11.5	%	16.7	%	9.2	%	16.7	%
Annualized Rent per Sq. Ft.	$56.96		$47.68		$41.34		$35.42		$61.43		$49.28		$47.21		$41.55		$62.91		$54.69		$59.58		$67.12		$66.73		$65.31

________________________

(1)For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of September 30, 2023, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of September 30, 2023.

(2)Adjusting for leasing transactions executed as of September 30, 2023 but not yet commenced, the 2023 and 2024 expirations would be reduced by 15,973 and 13,325 square feet, respectively.

(3)Includes 100% of annualized base rent of consolidated property partnerships.


Q3 2023 Supplemental Financial Report

Stabilized Portfolio Lease Expiration Schedule by Region

($ in thousands, except for annualized rent per sq. ft.)


Year	Region	# of Expiring Leases	Total Square Feet	% of Total Leased Sq. Ft.		Annualized Base Rent (1)		% of Total Annualized Base Rent		Annualized Rent per Sq. Ft.

2023	Greater Los Angeles	8	214,689	1.5	%	$	12,969	1.6	%	$	60.41
	San Diego	3	38,552	0.3	%	1,367		0.2	%	35.46
	San Francisco Bay Area	1	7,141	0.1	%	547		0.1	%	76.60
	Greater Seattle	1	4,286	—	%	193		—	%	45.03
	Total	13	264,668	1.9	%	$	15,076	1.9	%	$	56.96

2024	Greater Los Angeles	42	482,259	3.5	%	$	21,087	2.7	%	$	43.73
	San Diego	6	45,597	0.3	%	1,759		0.2	%	38.58
	San Francisco Bay Area	11	267,887	1.9	%	17,958		2.2	%	67.04
	Greater Seattle	9	213,085	1.6	%	7,896		1.0	%	37.06
	Total	68	1,008,828	7.3	%	$	48,700	6.1	%	$	48.27

2025	Greater Los Angeles	28	185,098	1.3	%	$	8,155	1.0	%	$	44.06
	San Diego	19	227,189	1.6	%	11,484		1.4	%	50.55
	San Francisco Bay Area	9	124,088	1.0	%	8,725		1.2	%	70.31
	Greater Seattle	11	156,575	1.1	%	5,788		0.7	%	36.97
	Total	67	692,950	5.0	%	$	34,152	4.3	%	$	49.28

2026	Greater Los Angeles	22	397,243	2.9	%	$	15,599	2.0	%	$	39.27
	San Diego	11	186,397	1.3	%	9,531		1.2	%	51.13
	San Francisco Bay Area	15	937,945	6.8	%	49,166		6.2	%	52.42
	Greater Seattle	11	395,359	2.9	%	16,196		2.0	%	40.97
	Total	59	1,916,944	13.9	%	$	90,492	11.4	%	$	47.21

2027	Greater Los Angeles	36	728,411	5.3	%	$	26,898	3.4	%	$	36.93
	San Diego	18	249,362	1.8	%	12,390		1.6	%	49.69
	San Francisco Bay Area	5	73,790	0.5	%	4,729		0.6	%	64.09
	Greater Seattle	10	86,543	0.6	%	3,266		0.4	%	37.74
	Total	69	1,138,106	8.2	%	$	47,283	6.0	%	$	41.55

2028 and Beyond	Greater Los Angeles	56	1,404,349	10.2	%	$	79,746	10.1	%	$	56.79
	San Diego	60	1,621,549	11.8	%	101,253		12.8	%	62.44
	San Francisco Bay Area	45	4,156,507	30.1	%	301,639		38.1	%	72.57
	Greater Seattle	28	1,604,650	11.6	%	73,779		9.3	%	45.98
	Total	189	8,787,055	63.7	%	$	556,417	70.3	%	$	63.32

________________________

(1)Includes 100% of annualized base rent of consolidated property partnerships.


Q3 2023 Supplemental Financial Report

Top Fifteen Tenants (1)

($ in thousands)


Tenant Name (2)	Region	Annualized Base Rental Revenue (3)		Rentable Square Feet	Percentage of Total Annualized Base Rental Revenue		Percentage of Total Rentable Square Feet		Year(s) of Significant Lease Expiration(s) (4)
Global technology company	Greater Seattle / San Diego County	$	44,851	849,826	5.7	%	5.2	%	2032 - 2033 / 2037
Cruise LLC	San Francisco Bay Area	35,449		374,618	4.5	%	2.3	%	2031
Stripe, Inc.	San Francisco Bay Area	33,110		425,687	4.2	%	2.6	%	2034
Salesforce, Inc.	San Francisco Bay Area / Greater Seattle	30,100		613,497	3.8	%	3.8	%	2024 / 2029 - 2030 / 2032
LinkedIn Corporation / Microsoft Corporation	San Francisco Bay Area	29,752		663,460	3.8	%	4.1	%	2024 / 2026
Adobe Systems, Inc.	San Francisco Bay Area / Greater Seattle	27,897		522,879	3.5	%	3.2	%	2027 / 2031
Okta, Inc.	San Francisco Bay Area	24,206		293,001	3.1	%	1.8	%	2028
DoorDash, Inc.	San Francisco Bay Area	23,842		236,759	3.0	%	1.5	%	2032
Riot Games, Inc. (5)	Greater Los Angeles	22,918		340,584	2.9	%	2.1	%	2023 - 2024 / 2031
Netflix, Inc.	Greater Los Angeles	21,854		361,388	2.8	%	2.2	%	2032
Box, Inc.	San Francisco Bay Area	20,390		341,441	2.6	%	2.1	%	2028
Cytokinetics, Inc.	San Francisco Bay Area	18,167		234,892	2.3	%	1.4	%	2033
DIRECTV, LLC	Greater Los Angeles	16,085		532,956	2.0	%	3.3	%	2026 - 2027
Synopsys, Inc.	San Francisco Bay Area	15,492		342,891	2.0	%	2.1	%	2030
Amazon.com	Greater Seattle	14,989		340,705	1.9	%	2.1	%	2029 - 2030
Total Top Fifteen Tenants		$	379,102	6,474,584	48.1	%	39.8	%

________________________

(1)The information presented is as of the date of the report.

(2)Includes subsidiaries of tenant listed.

(3)Includes 100% of annualized base rental revenues of consolidated property partnerships.

(4)We define significant lease expirations as those with space expiring greater than 25,000 rentable square feet.

(5)The 2023 lease expiration represents 158,371 rentable square feet expiring on November 30, 2023.


Q3 2023 Supplemental Financial Report

Consolidated Ventures (Noncontrolling Property Partnerships)

Property (1)

Venture Partner

Submarket

Rentable Square Feet

KRC Ownership %

100 First Street, San Francisco, CA

Norges Bank Real Estate Management

San Francisco

480,457

56%

303 Second Street, San Francisco, CA

Norges Bank Real Estate Management

San Francisco

784,658

56%

900 Jefferson Avenue and 900 Middlefield Road, Redwood City, CA (2)

Local developer

Redwood City

347,269

93%

____________________

(1)For breakout of Net Operating Income by partnership, refer to page 38, Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income.

(2)Reflects the KRC ownership percentage at time of agreement. Actual percentage may vary depending on cash flows or promote structure.

Development

–Stabilized Development Projects

–In-Process Development & Redevelopment

–Future Development Pipeline


Q3 2023 Supplemental Financial Report

Stabilized Development Projects

($ in millions)

STABILIZED DEVELOPMENT PROJECTS

Location

Construction Start Date

Stabilization Date (1)

Total Estimated Investment (2)

Rentable
Square Feet

% Leased

Total Project % Occupied

1st Quarter

None

2nd Quarter

None

3rd Quarter

9514 Towne Centre Drive

University Towne Center

3Q 2021

3Q 2023

70,616

100%

TOTAL:

70,616

100%

____________________

(1)Represents the earlier of 95% occupancy date or one year from substantial completion of base building components.


Q3 2023 Supplemental Financial Report

In-Process Development & Redevelopment

($ in millions)



	Location	Construction Start Date	Estimated Stabilization Date (2)	Estimated Rentable Square Feet	Total Estimated Investment		Total Cash Costs Incurred as of 9/30/2023 (3)		% Leased	Total Project % Occupied
TENANT IMPROVEMENT (1)

Office
Austin
Indeed Tower	Austin CBD	2Q 2021	4Q 2023	734,000	$	690	$	649	74%	61%




TOTAL:				734,000	$	690	$	649	74%	61%



UNDER CONSTRUCTION	Location	Construction Start Date	Estimated Stabilization Date (2)	Estimated Rentable Square Feet (4)	Total Estimated Investment		Total Cash Costs Incurred as of 9/30/2023 (3)(5)		% Leased

Office / Life Science
San Francisco Bay Area
Kilroy Oyster Point - Phase 2	South San Francisco	2Q 2021	2Q 2025	875,000	$	940	$	535	—%
4400 Bohannon Drive (6)	Menlo Park	4Q 2022	3Q 2025	48,000	55		18		—%
San Diego County

4690 Executive Drive (6)	University Towne Center	1Q 2022	4Q 2024	52,000	25		19		—%

TOTAL:				975,000	$	1,020	$	572	—%

________________________

(1)Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.

(2)For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope. For projects being redeveloped, redevelopment will occur in phases based on existing lease expiration dates and timing of the tenant improvement build-out.

(3)Represents costs incurred as of September 30, 2023, excluding GAAP accrued liabilities and leasing overhead.

(4)For projects being redeveloped, represents the total square footage leased.

(5)For redevelopment projects, includes the existing depreciated basis for the buildings to be redeveloped.

(6)Redevelopment project.


Q3 2023 Supplemental Financial Report

Future Development Pipeline

($ in millions)


FUTURE DEVELOPMENT PIPELINE	Location	Approx. Developable Square Feet (1)	Total Cash Costs Incurred as of 9/30/2023 (2)

Greater Los Angeles
1633 26th Street	West Los Angeles	190,000	$	15
San Diego County
Santa Fe Summit South / North	56 Corridor	600,000 - 650,000	113
2045 Pacific Highway	Little Italy	275,000	54
Kilroy East Village	East Village	TBD	68
San Francisco Bay Area
Kilroy Oyster Point - Phases 3 and 4	South San Francisco	875,000 - 1,000,000	213
Flower Mart	SOMA	2,300,000	550
Greater Seattle
SIX0	Denny Regrade	925,000	181
Austin
Stadium Tower	Stadium District / Domain	493,000	69

TOTAL:			$	1,263

________________________

(1)Represents developable office/life science square feet. The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design.

(2)Represents costs incurred as of September 30, 2023, excluding accrued liabilities recorded in accordance with GAAP.

Debt and

Capitalization Data

–Capital Structure

–Debt Analysis


Q3 2023 Supplemental Financial Report

Capital Structure

As of September 30, 2023 ($ in thousands)


Debt Balance (3)		Stated Rate		Maturity Date

Unsecured Debt (4)
$	410,710	3.45	%	12/15/2024
$	400,000	4.38	%	10/1/2025
$	50,000	4.30	%	7/18/2026
$	520,000	6.37	%	10/3/2026 (5)
$	200,000	4.35	%	10/18/2026
$	175,000	3.35	%	2/17/2027
$	400,000	4.75	%	12/15/2028
$	75,000	3.45	%	2/17/2029
$	400,000	4.25	%	8/15/2029
$	500,000	3.05	%	2/15/2030
$	350,000	4.27	%	1/31/2031
$	425,000	2.50	%	11/15/2032
$	450,000	2.65	%	11/15/2033
$	4,355,710	3.97	%

Secured Debt
$	157,295	3.57	%	12/1/2026
$	81,864	4.48	%	7/1/2027
$	375,000	5.90	%	8/10/2034
$	614,159	5.11	%

________________________

(1)Value based on closing share price of $31.61 as of September 30, 2023.

(2)Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.

(3)Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts.

(4)As of September 30, 2023, there was no outstanding balance on the unsecured revolving credit facility.

(5)The maturity date of the unsecured term loan assumes the exercise of the two twelve-month extensions at the Company’s option.


Q3 2023 Supplemental Financial Report

Debt Analysis

As of September 30, 2023



TOTAL DEBT COMPOSITION (1)
	Weighted Average
	Interest Rate	Years to Maturity (2)
Secured vs. Unsecured Debt
Unsecured Debt	4.0%	5.3
Secured Debt	5.1%	8.0
Floating vs. Fixed-Rate Debt
Floating-Rate Debt	6.4%	3.0
Fixed-Rate Debt	3.8%	6.0

Stated Interest Rate	4.1%	5.7

GAAP Effective Rate	4.1%

GAAP Effective Rate Including Debt Issuance Costs	4.3%

KEY DEBT COVENANTS (3)

Covenant

Actual Performance
as of September 30, 2023

Unsecured Credit and Term Loan Facility and Private Placement Notes:

Total debt to total asset value

less than 60%

28%

Fixed charge coverage ratio

greater than 1.5x

3.7x

Unsecured debt ratio

greater than 1.67x

3.56x

Unencumbered asset pool debt service coverage

greater than 1.75x

4.11x

Unsecured Senior Notes due 2024, 2025, 2028, 2029, 2030, 2032 and 2033:

Total debt to total asset value

less than 60%

39%

Interest coverage

greater than 1.5x

7.1x

Secured debt to total asset value

less than 40%

Unencumbered asset pool value to unsecured debt

greater than 150%

268%

________________________

(1)As of September 30, 2023, there was no outstanding balance on the unsecured revolving credit facility.

(2)The maturity date of the unsecured term loan assumes the exercise of the two twelve-month extensions at the Company’s option.

(3)All covenant ratio titles utilize terms and are calculated as defined in the respective debt and credit agreements.

Non-GAAP Supplemental

Measures


Q3 2023 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures

Included in this section are management’s statements regarding certain non-GAAP financial measures provided in this supplemental financial report and, with respect to Funds From Operations available to common stockholders and common unitholders (“FFO”), in the Company’s earnings release on October 25, 2023 and the reasons why management believes that these measures provide useful information to investors about the Company’s financial condition and results of operations.

Net Operating Income:

Management believes that Net Operating Income (“NOI”) is a useful supplemental measure of the Company’s operating performance. The Company defines NOI as follows: consolidated operating revenues (rental income and other property income) less consolidated property and related expenses (property expenses, real estate taxes and ground leases). Other real estate investment trusts (“REITs”) may use different methodologies for calculating NOI, and accordingly, the Company’s NOI may not be comparable to other REITs.

Because NOI excludes leasing costs, general and administrative expenses, interest expense, depreciation and amortization, other nonproperty income and losses, and gains and losses from property dispositions, it provides a performance measure that, when compared year over year, reflects the consolidated revenues and expenses directly associated with owning and operating commercial real estate and the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing a perspective on operations not immediately apparent from net income. The Company uses NOI to evaluate its operating performance on a portfolio basis since NOI allows the Company to evaluate the impact that factors such as occupancy levels, lease structure, rental rates, and tenant base have on the Company’s results, margins and returns. In addition, management believes that NOI provides useful information to the investment community about the Company’s financial and operating performance when compared to other REITs since NOI is generally recognized as a standard measure of performance in the real estate industry.

However, NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.

Same Store Net Operating Income:

Management believes that Same Store NOI is a useful supplemental measure of the Company’s operating performance. Same Store NOI represents the consolidated NOI for all of the properties that were owned and included in the Company's stabilized portfolio for two comparable reporting periods. Because Same Store NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store NOI, and accordingly, the Company’s Same Store NOI may not be comparable to other REITs.

However, Same Store NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company’s entire portfolio, nor does it reflect the impact of general and administrative expenses, leasing costs, interest expense, depreciation and amortization costs, other nonproperty income and losses and the level of capital expenditures necessary to maintain the operating performance of the Company’s properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company’s results from operations.


Q3 2023 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures, continued

Same Store Cash Net Operating Income:

Management believes that Same Store Cash NOI is a useful supplemental measure of the Company’s operating performance. Same Store Cash NOI represents the consolidated NOI for all of the properties that were owned and included in the Company’s stabilized portfolio for two comparable reporting periods, adjusted for the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles, and the provision for bad debts. Because Same Store Cash NOI excludes the change in NOI from developed, redeveloped, acquired and disposed of and held for sale properties, it highlights operating trends on a cash basis such as occupancy levels, rental rates and operating costs on properties. Other REITs may use different methodologies for calculating Same Store Cash NOI, and accordingly, our Same Store Cash NOI may not be comparable to other REITs.

However, Same Store Cash NOI should not be viewed as an alternative measure of the Company’s financial performance since it does not reflect the operations of the Company's entire portfolio, nor does it reflect the impact of general and administrative expenses, acquisition-related expenses, interest expense, depreciation and amortization costs, other nonproperty income and losses, the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company's properties, or trends in development and construction activities which are significant economic costs and activities that could materially impact the Company's results from operations.

EBITDA, as adjusted:

Management believes that consolidated earnings before interest expense, depreciation and amortization, gain/loss on early extinguishment of debt, gains and losses on depreciable real estate, net income attributable to noncontrolling interests, preferred dividends and distributions, original issuance costs of redeemed preferred stock and preferred units, and impairment losses (“EBITDA, as adjusted”) is a useful supplemental measure of the Company’s operating performance. When considered with other GAAP measures and FFO, management believes EBITDA, as adjusted, gives the investment community a more complete understanding of the Company’s consolidated operating results, including the impact of general and administrative expenses and acquisition-related expenses, before the impact of investing and financing transactions and facilitates comparisons with competitors. Management also believes it is appropriate to present EBITDA, as adjusted, as it is used in several of the Company’s financial covenants for both its secured and unsecured debt. However, EBITDA, as adjusted, should not be viewed as an alternative measure of the Company’s operating performance since it excludes financing costs as well as depreciation and amortization costs which are significant economic costs that could materially impact the Company’s results of operations and liquidity. Other REITs may use different methodologies for calculating EBITDA, as adjusted, and, accordingly, the Company’s EBITDA, as adjusted, may not be comparable to other REITs. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.


Q3 2023 Supplemental Financial Report

Management Statements on Non-GAAP Supplemental Measures, continued

Funds From Operations:

The Company calculates Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of Nareit. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.

Management believes that FFO is a useful supplemental measure of the Company’s operating performance. The exclusion from FFO of gains and losses from the sale of operating real estate assets allows investors and analysts to readily identify the operating results of the assets that form the core of the Company’s activity and assists in comparing those operating results between periods. Also, because FFO is generally recognized as the industry standard for reporting the operations of REITs, it facilitates comparisons of operating performance to other REITs. However, other REITs may use different methodologies to calculate FFO, and accordingly, the Company’s FFO may not be comparable to all other REITs.

Implicit in historical cost accounting for real estate assets in accordance with GAAP is the assumption that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, many industry investors and analysts have considered presentations of operating results for real estate companies using historical cost accounting alone to be insufficient. Because FFO excludes depreciation and amortization of real estate assets, management believes that FFO along with the required GAAP presentations provides a more complete measurement of the Company’s performance relative to its competitors and a more appropriate basis on which to make decisions involving operating, financing and investing activities than the required GAAP presentations alone would provide.

However, FFO should not be viewed as an alternative measure of the Company’s operating performance since it does not reflect either depreciation and amortization costs or the level of capital expenditures and leasing costs necessary to maintain the operating performance of the Company’s properties, which are significant economic costs and could materially impact the Company’s results from operations.

Funds Available for Distribution:

Management believes that Funds Available for Distribution available to common stockholders and common unitholders (“FAD”) is a useful supplemental measure of the Company’s liquidity. The Company computes FAD by adding to FFO the non-cash amortization of deferred financing costs, debt discounts and premiums and share-based compensation awards, amortization of above (below) market rents for acquisition properties, then subtracting recurring tenant improvements, leasing commissions and capital expenditures and eliminating the net effect of straight-line rents, amortization of deferred revenue related to tenant improvements, adjusting for other lease related items and amounts of gain or loss on marketable securities related to the Company’s executive deferred compensation plan that are capitalized as development costs, and after adjustment for amounts attributable to noncontrolling interests in consolidated property partnerships. FAD provides an additional perspective on the Company’s ability to fund cash needs and make distributions to stockholders by adjusting FFO for the impact of certain cash and non-cash items, as well as adjusting FFO for recurring capital expenditures and leasing costs. Management also believes that FAD provides useful information to the investment community about the Company’s financial position as compared to other REITs since FAD is a liquidity measure used by other REITs. However, other REITs may use different methodologies for calculating FAD and, accordingly, the Company’s FAD may not be comparable to other REITs.

Definitions and Reconciliations


Q3 2023 Supplemental Financial Report

Definitions Included in Supplemental

Annualized Base Rent:

Includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.

Change in GAAP / Cash Rents (Leases Commenced):

Calculated as the change between GAAP / cash rents for new/renewed leases and the expiring GAAP / cash rents for the same space. May include leases for which re-leasing timing was impacted by the COVID-19 pandemic and restrictions intended to prevent its spread. Excludes leases for which the space was vacant when the property was acquired by the Company.

Change in GAAP / Cash Rents (Leases Executed):

Calculated as the change between GAAP / cash rents for signed leases and the expiring GAAP / cash rents for the same space. May include leases for which re-leasing timing was impacted by the COVID-19 pandemic and restrictions intended to prevent its spread. Excludes leases for which the space was vacant when the property was acquired by the Company.

Estimated Stabilization Date (Development):

Management’s estimation of the earlier of stabilized occupancy (95%) or one year from the date of the cessation of major base building construction activities for office and retail properties and upon substantial completion for residential properties.

FAD Payout Ratio:

Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FAD.

First Generation Capital Expenditures:

Capital expenditures for newly acquired space, newly developed, and redeveloped space, or a significant change in use or repositioning of space that result in additional revenue generated when the space is re-leased. These costs are not subtracted in our calculation of FAD.

Fixed Charge Coverage Ratio - EBITDA:

Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.

Fixed Charge Coverage Ratio - Net Income:

Calculated as net income, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums) and current year accrued preferred dividends.

FFO Payout Ratio:

Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by FFO attributable to common stockholders and unitholders.


Q3 2023 Supplemental Financial Report

Definitions Included in Supplemental, continued

GAAP Effective Rate:

The rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of any discounts/premiums, excluding debt issuance costs.

Interest Coverage Ratio:

Calculated as EBITDA, as adjusted, divided by gross interest expense (excluding amortization of deferred debt costs and debt discounts/premiums).

Net Effect of Straight-Line Rents:

Represents the straight-line rent income recognized during the period offset by cash received during the period that was applied to deferred rents receivable balances for terminated leases and the provision for bad debts recorded for deferred rent receivable balances.

Net Income Payout Ratio:

Calculated as current-quarter dividends accrued to common stockholders and common unitholders (excluding dividend equivalents accrued to restricted stock unitholders) divided by net income.

Net Operating Income Margins:

Calculated as net operating income divided by total revenues.

Retention Rates (Leases Executed):

Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.

Same Store Portfolio:

Our Same Store Portfolio includes all of our properties owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1, 2022 and still owned and included in the stabilized portfolio as of September 30, 2023. It does not include undeveloped land, development and redevelopment properties currently committed for construction, under construction, or in the tenant improvement phase, completed residential developments not yet stabilized and properties held-for-sale. We define redevelopment properties as those projects for which we expect to spend significant development and construction costs on existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property.

Second Generation Capital Expenditures:

Second generation leasing includes space in the stabilized portfolio where we have made capital expenditures to maintain the current market revenue stream; generally recurring in nature or related to space previously occupied.

Stated Interest Rate:

The rate at which interest expense is recorded per the respective loan documents, excluding the impact of the amortization of any debt discounts/premiums.

Tenant Improvement Phase:

Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.


Q3 2023 Supplemental Financial Report

Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income

(unaudited, $ in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net Income Available to Common Stockholders	$	52,762	$	79,757	$	164,957	$	179,990
Net income attributable to noncontrolling common units of the Operating Partnership	515		664		1,612		1,695
Net income attributable to noncontrolling interests in consolidated property partnerships	5,460		6,239		18,673		18,333

Net Income	58,737		86,660		185,242		200,018
Adjustments:
General and administrative expenses	24,761		23,524		71,356		68,425

Leasing costs	1,852		1,015		4,550		3,475
Depreciation and amortization	85,224		81,140		269,262		266,215
Interest income and other income, net	(7,015)		(295)		(11,896)		(501)
Interest expense	29,837		19,982		81,891		60,728


Gain on sale of depreciable operating property	—		(17,329)		—		(17,329)
Net Operating Income, as defined (1)	193,396		194,697		600,405		581,031
Wholly-Owned Properties	170,492		170,166		526,594		507,338
Consolidated property partnerships: (2)
100 First Street (3)	6,782		5,791		18,859		17,448
303 Second Street (3)	10,243		12,941		37,185		38,264
Crossing/900 (4)	5,879		5,799		17,767		17,981
Net Operating Income, as defined (1)	193,396		194,697		600,405		581,031
Non-Same Store Net Operating Income (5)	(21,052)		(13,335)		(62,088)		(36,012)
Same Store Net Operating Income	172,344		181,362		538,317		545,019
GAAP to Cash Adjustments:
GAAP Operating Revenues Adjustments, net (6)	(4,722)		(14,056)		(16,982)		(54,636)
GAAP Operating Expenses Adjustments, net	99		104		300		325
Same Store Cash Net Operating Income	$	167,721	$	167,410	$	521,635	$	490,708

________________________

(1)Please refer to pages 32-33 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income.

(2)Reflects Net Operating Income for all periods presented.

(3)For all periods presented, an unrelated third party entity owned approximately 44% common equity interests in two properties located at 100 First Street and 303 Second Street in San Francisco, CA.

(4)For all periods presented, an unrelated third party entity owned an approximate 7% common equity interest in two properties located at 900 Jefferson Avenue and 900 Middlefield Road in Redwood City, CA.

(5)Includes the results of one office operating property disposed of in the third quarter of 2022, one office development building added to the stabilized portfolio during the second quarter of 2022, one office development building and two life science redevelopment buildings added to the stabilized portfolio during the third quarter of 2022, one office development building added to the stabilized portfolio during the third quarter of 2023, and our in-process and future development projects.

(6)Includes the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements, amortization of above and below market lease intangibles and revenue reversals (recoveries) related to tenant creditworthiness.


Q3 2023 Supplemental Financial Report

Reconciliation of Net Income Available to Common Stockholders to EBITDA, as Adjusted

(unaudited, $ in thousands)


	Three Months Ended September 30,
	2023		2022
Net Income Available to Common Stockholders	$	52,762	$	79,757
Interest expense	29,837		19,982
Depreciation and amortization	85,224		81,140

Net income attributable to noncontrolling common units of the Operating Partnership	515		664
Net income attributable to noncontrolling interests in consolidated property partnerships	5,460		6,239
Gain on sale of depreciable operating property	—		(17,329)



EBITDA, as adjusted (1)	$	173,798	$	170,453

________________________

(1)Please refer to page 33 for a Management Statement on EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by Nareit, as the Company does not have any unconsolidated joint ventures.