(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) |
(Registrant's telephone number, including area code) | ||
N/A | ||
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act: | |||
Registrant | Title of each class | Name of each exchange on which registered | Ticker Symbol |
Kilroy Realty Corporation |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
(a) | Financial statements of businesses acquired: None. | |
(b) | Pro forma financial information: None. | |
(c) | Shell company transactions: None. | |
(d) | Exhibits: |
Exhibit No. | Description | |
99.1** | ||
99.2** | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Kilroy Realty Corporation | ||||||
Date: April 29, 2020 | ||||||
By: | /s/ Merryl E. Werber | |||||
Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller | ||||||
Page | |
Corporate Data and Financial Highlights | |
1 | |
2 | |
3 | |
4 | |
5 | |
6 | |
7-8 | |
9 | |
Portfolio Data | |
10 | |
11-15 | |
16 | |
17 | |
18-20 | |
21 | |
22 | |
Development | |
23 | |
24 | |
25 | |
Debt and Capitalization Data | |
26 | |
27-28 | |
29-31 | |
32-35 |
Board of Directors | Executive Management Team | Investor Relations | ||||
John Kilroy | Chairman | John Kilroy | President and CEO | 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 | Jeffrey C. Hawken | Executive VP and COO | |||
Jolie Hunt | Robert Paratte | Executive VP, Leasing and Business Development | ||||
Scott S. Ingraham | Tyler H. Rose | Executive VP and CFO | ||||
Gary R. Stevenson | Heidi R. Roth | Executive VP and Chief Administrative Officer | ||||
Peter B. Stoneberg | Justin W. Smart | Executive VP, Development and Construction Services |
Equity Research Coverage | ||||
BofA Securities | J.P. Morgan | |||
James Feldman | (646) 855-5808 | Anthony Paolone | (212) 622-6682 | |
BMO Capital Markets Corp. | KeyBanc Capital Markets | |||
John P. Kim | (212) 885-4115 | Craig Mailman | (917) 368-2316 | |
BTIG | Mizuho Securities USA LLC | |||
Thomas Catherwood | (212) 738-6140 | Omotayo Okusanya | (646) 949-9672 | |
Citigroup Investment Research | RBC Capital Markets | |||
Michael Bilerman | (212) 816-1383 | Mike Carroll | (440) 715-2649 | |
Deutsche Bank Securities, Inc. | Robert W. Baird & Co. | |||
Derek Johnston | (210) 250-5683 | David B. Rodgers | (216) 737-7341 | |
Evercore ISI | Scotiabank | |||
Steve Sakwa | (212) 446-9462 | Nicholas Yulico | (212) 225-6904 | |
Goldman Sachs & Co. LLC | Stifel, Nicolaus & Company | |||
Richard Skidmore | (801) 741-5459 | John W. Guinee III | (443) 224-1307 | |
Green Street Advisors | Wells Fargo | |||
Daniel Ismail | (949) 640-8780 | Blaine Heck | (443) 263-6529 | |
Jefferies LLC | ||||
Peter Abramowitz | (212) 336-7241 |
Quarterly Financial Highlights | Quarterly Operating Highlights | |
• Net income available to common stockholders per share of $0.37 | • Stabilized portfolio was 93.5% occupied and 97.3% leased at quarter-end | |
• FFO per share of $1.00 | • 137,993 square feet of leases commenced in the stabilized portfolio | |
• The per share amounts above include a reduction in revenue of approximately $0.06 per | • 221,728 square feet of leases executed in the stabilized portfolio | |
share related to the cumulative impact of transitioning one co-working tenant and two | ||
retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic | - GAAP rents increased approximately 57.5% from prior levels | |
• Revenues of $221.3 million, net of a $6.5 million reduction of revenue as noted above | - Cash rents increased approximately 45.3% from prior levels | |
• Same Store GAAP NOI decreased 0.2% compared to the prior year | • As of the date of this report, across all property types, collected approximately 96% of | |
our April 2020 contractual rent billings, including from all of our top 15 tenants and | ||
• Same Store Cash NOI increased 14.9% compared to the prior year | excluding a rent relief program with certain retail tenants. Adjusted for the retail rent | |
relief program, collected 93% of contractual rent billings | ||
• Due to the uncertainty resulting from the COVID-19 pandemic, the Company is | ||
withdrawing its previous full year 2020 guidance | ||
Capital Markets Highlights | Strategic Highlights | |
• In February, completed a public offering of 5,750,000 shares of common stock priced at | • In January, transferred 333 Dexter, a 635,000 square foot development project located in | |
$86.00 per share structured as a 12-month forward sale. In March, fully physically settled | the South Lake Union submarket of Seattle from the under construction phase to the | |
these shares for net proceeds of approximately $474.9 million | tenant improvement phase. The project is 100% leased to a Fortune 50 public company | |
• In March, fully physically settled 3,147,110 shares of common stock in connection with | • In January, transferred Netflix // On Vine, a 355,000 square foot development project | |
forward transactions under the ATM program for net proceeds of approximately $247.3 | located in the Hollywood submarket of Los Angeles, from the under construction phase | |
million | to the tenant improvement phase. This project is 100% leased to Netflix, Inc. | |
• In April, completed a private placement of $350.0 million aggregate principal amount of | • In February, completed construction on 225 residential units, the second of three phases | |
ten-year, 4.27% unsecured senior notes due 2031 | of the residential development at our One Paseo mixed-use project in the Del Mar | |
submarket of San Diego. Together, Phases I and II were 44% leased and are in lease-up | ||
• As of the date of this report, approximately $1.0 billion of unrestricted cash on hand and | ||
$370.0 million of availability under the unsecured revolving credit facility | • In March, completed and added The Exchange on 16th, a $585.0 million, 750,000 square | |
foot development project located in San Francisco’s Mission Bay district, to the stabilized | ||
portfolio. The office component of the project is 100% leased to Dropbox | ||
• In March, added One Paseo Retail, a 96,000 square foot retail development project | ||
located in San Diego’s Del Mar submarket, to the stabilized portfolio | ||
• In March, transferred One Paseo Office, a 285,000 square foot development project | ||
located in the Del Mar submarket of San Diego from the under construction phase to | ||
the tenant improvement phase | ||
Three Months Ended | |||||||||||||||||||||
3/31/2020 (1) | 12/31/2019 (1) | 9/30/2019 | 6/30/2019 (1) | 3/31/2019 | |||||||||||||||||
INCOME ITEMS: | |||||||||||||||||||||
Revenues | $ | 221,328 | $ | 220,235 | $ | 215,525 | $ | 200,492 | $ | 201,202 | |||||||||||
Lease Termination Fees, net | 60 | — | — | 1,824 | 1,888 | ||||||||||||||||
Net Operating Income (2) | 157,826 | 154,679 | 152,170 | 141,916 | 142,442 | ||||||||||||||||
Capitalized Interest and Debt Costs | 21,418 | 20,339 | 20,585 | 20,880 | 19,437 | ||||||||||||||||
Net Income Available to Common Stockholders | 39,817 | 72,500 | 43,846 | 42,194 | 36,903 | ||||||||||||||||
EBITDA, as adjusted (2) (3) | 134,232 | 131,734 | 129,163 | 120,025 | 119,172 | ||||||||||||||||
Funds From Operations (3) (4) | 110,173 | 109,518 | 109,243 | 99,905 | 99,812 | ||||||||||||||||
Net Income Available to Common Stockholders per common share – diluted (5) | $ | 0.37 | $ | 0.67 | $ | 0.41 | $ | 0.41 | $ | 0.36 | |||||||||||
Funds From Operations per common share – diluted (3) (4) | $ | 1.00 | $ | 1.00 | $ | 1.01 | $ | 0.95 | $ | 0.95 | |||||||||||
LIQUIDITY ITEMS: | |||||||||||||||||||||
Funds Available for Distribution (4) | $ | 84,899 | $ | 65,443 | $ | 65,078 | $ | 52,369 | $ | 65,934 | |||||||||||
Dividends per common share (5) | $ | 0.485 | $ | 0.485 | $ | 0.485 | $ | 0.485 | $ | 0.455 | |||||||||||
RATIOS: | |||||||||||||||||||||
Net Operating Income Margins | 71.3 | % | 70.2 | % | 70.6 | % | 70.8 | % | 70.8 | % | |||||||||||
Fixed Charge Coverage Ratio | 3.9x | 4.0x | 4.2x | 3.9x | 4.0x | ||||||||||||||||
FFO Payout Ratio | 51.5 | % | 47.8 | % | 48.0 | % | 50.0 | % | 46.9 | % | |||||||||||
FAD Payout Ratio | 66.9 | % | 80.1 | % | 80.5 | % | 95.4 | % | 71.1 | % | |||||||||||
ASSETS: | |||||||||||||||||||||
Real Estate Held for Investment before Depreciation | $ | 9,822,116 | $ | 9,628,773 | $ | 8,977,843 | $ | 8,824,558 | $ | 8,616,167 | |||||||||||
Total Assets | 9,735,147 | 8,900,094 | 8,623,815 | 8,094,721 | 7,883,987 | ||||||||||||||||
CAPITALIZATION: (6) | |||||||||||||||||||||
Total Debt | $ | 3,713,236 | $ | 3,579,502 | $ | 3,334,967 | $ | 3,210,427 | $ | 3,020,882 | |||||||||||
Total Common Equity and Noncontrolling Interests in the Operating Partnership | 7,458,583 | 9,064,520 | 8,414,862 | 7,602,085 | 7,823,144 | ||||||||||||||||
Total Market Capitalization | 11,171,819 | 12,644,022 | 11,749,829 | 10,812,512 | 10,844,026 | ||||||||||||||||
Total Debt / Total Market Capitalization | 33.2 | % | 28.3 | % | 28.4 | % | 29.7 | % | 27.9 | % | |||||||||||
(1) | Net Income Available to Common Stockholders includes a reduction in revenue of $6.5 million related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic for the three months ended March 31, 2020 and $29.6 million and $7.2 million of gains on sale of depreciable operating properties for the three months ended December 31, 2019 and June 30, 2019, respectively. |
(2) | Please refer to pages 34-35 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. |
(3) | EBITDA, as adjusted, and Funds From Operations include a reduction in revenue of $6.5 million related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic for the three months ended March 31, 2020. |
(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) | Reported amounts are attributable to common stockholders, common unitholders and restricted stock unit holders. |
(6) | Please refer to page 26 for additional information regarding our capital structure. |
Three Months Ended | |||||||||||||||||||||
3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | |||||||||||||||||
High Price | $ | 88.28 | $ | 84.50 | $ | 80.06 | $ | 78.36 | $ | 76.50 | |||||||||||
Low Price | $ | 49.01 | $ | 76.35 | $ | 74.25 | $ | 72.87 | $ | 61.44 | |||||||||||
Closing Price | $ | 63.70 | $ | 83.90 | $ | 77.89 | $ | 73.81 | $ | 75.96 | |||||||||||
Dividends per share – annualized | $ | 1.94 | $ | 1.94 | $ | 1.94 | $ | 1.94 | $ | 1.82 | |||||||||||
Closing common shares (in 000’s) (1) | 115,068 | 106,016 | 106,012 | 100,972 | 100,967 | ||||||||||||||||
Closing common partnership units (in 000’s) (1) | 2,021 | 2,023 | 2,023 | 2,023 | 2,023 | ||||||||||||||||
117,089 | 108,039 | 108,035 | 102,995 | 102,990 | |||||||||||||||||
(1) | As of the end of the period. |
3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | |||||||||||||||||
ASSETS: | |||||||||||||||||||||
Land and improvements | $ | 1,506,357 | $ | 1,466,166 | $ | 1,315,448 | $ | 1,284,582 | $ | 1,184,496 | |||||||||||
Buildings and improvements | 5,997,523 | 5,866,477 | 5,770,226 | 5,712,448 | 5,300,313 | ||||||||||||||||
Undeveloped land and construction in progress | 2,318,236 | 2,296,130 | 1,892,169 | 1,827,528 | 2,131,358 | ||||||||||||||||
Total real estate assets held for investment | 9,822,116 | 9,628,773 | 8,977,843 | 8,824,558 | 8,616,167 | ||||||||||||||||
Accumulated depreciation and amortization | (1,622,369 | ) | (1,561,361 | ) | (1,505,785 | ) | (1,480,766 | ) | (1,441,506 | ) | |||||||||||
Total real estate assets held for investment, net | 8,199,747 | 8,067,412 | 7,472,058 | 7,343,792 | 7,174,661 | ||||||||||||||||
Real estate assets and other assets held for sale, net | — | — | 77,751 | — | — | ||||||||||||||||
Cash and cash equivalents | 762,134 | 60,044 | 297,620 | 52,415 | 49,693 | ||||||||||||||||
Restricted cash | 16,300 | 16,300 | 6,300 | 6,300 | 6,300 | ||||||||||||||||
Marketable securities | 19,984 | 27,098 | 26,188 | 25,203 | 24,098 | ||||||||||||||||
Current receivables, net | 16,534 | 26,489 | 34,116 | 27,563 | 28,016 | ||||||||||||||||
Deferred rent receivables, net | 352,352 | 337,937 | 314,812 | 297,358 | 280,756 | ||||||||||||||||
Deferred leasing costs and acquisition-related intangible assets, net | 204,392 | 212,805 | 202,063 | 203,451 | 187,309 | ||||||||||||||||
Right of use ground lease assets | 96,145 | 96,348 | 83,200 | 82,647 | 82,794 | ||||||||||||||||
Prepaid expenses and other assets, net | 67,559 | 55,661 | 109,707 | 55,992 | 50,360 | ||||||||||||||||
TOTAL ASSETS | $ | 9,735,147 | $ | 8,900,094 | $ | 8,623,815 | $ | 8,094,721 | $ | 7,883,987 | |||||||||||
LIABILITIES AND EQUITY: | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Secured debt, net | $ | 257,359 | $ | 258,593 | $ | 259,027 | $ | 259,455 | $ | 259,878 | |||||||||||
Unsecured debt, net | 3,050,103 | 3,049,185 | 3,048,209 | 2,553,651 | 2,552,883 | ||||||||||||||||
Unsecured line of credit | 380,000 | 245,000 | — | 375,000 | 185,000 | ||||||||||||||||
Accounts payable, accrued expenses and other liabilities | 417,547 | 418,848 | 439,081 | 385,567 | 373,691 | ||||||||||||||||
Ground lease liabilities | 98,247 | 98,400 | 87,617 | 87,082 | 87,247 | ||||||||||||||||
Accrued dividends and distributions | 57,620 | 53,219 | 53,205 | 50,800 | 47,676 | ||||||||||||||||
Deferred revenue and acquisition-related intangible liabilities, net | 130,843 | 139,488 | 134,828 | 136,266 | 138,973 | ||||||||||||||||
Rents received in advance and tenant security deposits | 65,913 | 66,503 | 57,428 | 59,997 | 55,457 | ||||||||||||||||
Liabilities and deferred revenue of real estate assets held for sale | — | — | 4,911 | — | — | ||||||||||||||||
Total liabilities | 4,457,632 | 4,329,236 | 4,084,306 | 3,907,818 | 3,700,805 | ||||||||||||||||
Equity: | |||||||||||||||||||||
Stockholders’ Equity | |||||||||||||||||||||
Common stock | 1,151 | 1,060 | 1,060 | 1,010 | 1,010 | ||||||||||||||||
Additional paid-in capital | 5,067,181 | 4,350,917 | 4,342,296 | 3,984,867 | 3,976,204 | ||||||||||||||||
Distributions in excess of earnings | (76,182 | ) | (58,467 | ) | (78,707 | ) | (70,345 | ) | (62,690 | ) | |||||||||||
Total stockholders’ equity | 4,992,150 | 4,293,510 | 4,264,649 | 3,915,532 | 3,914,524 | ||||||||||||||||
Noncontrolling Interests | |||||||||||||||||||||
Common units of the Operating Partnership | 87,655 | 81,917 | 81,393 | 78,463 | 78,413 | ||||||||||||||||
Noncontrolling interests in consolidated property partnerships | 197,710 | 195,431 | 193,467 | 192,908 | 190,245 | ||||||||||||||||
Total noncontrolling interests | 285,365 | 277,348 | 274,860 | 271,371 | 268,658 | ||||||||||||||||
Total equity | 5,277,515 | 4,570,858 | 4,539,509 | 4,186,903 | 4,183,182 | ||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 9,735,147 | $ | 8,900,094 | $ | 8,623,815 | $ | 8,094,721 | $ | 7,883,987 | |||||||||||
Three Months Ended March 31, | ||||||||||
2020 | 2019 | |||||||||
REVENUES | ||||||||||
Rental income (1) | $ | 218,633 | $ | 199,382 | ||||||
Other property income | 2,695 | 1,820 | ||||||||
Total revenues | 221,328 | 201,202 | ||||||||
EXPENSES | ||||||||||
Property expenses | 38,983 | 38,149 | ||||||||
Real estate taxes | 22,202 | 18,639 | ||||||||
Ground leases | 2,317 | 1,972 | ||||||||
General and administrative expenses | 19,010 | 23,341 | ||||||||
Leasing costs | 1,456 | 1,757 | ||||||||
Depreciation and amortization | 74,370 | 66,135 | ||||||||
Total expenses | 158,338 | 149,993 | ||||||||
OTHER (EXPENSES) INCOME | ||||||||||
Interest income and other net investment (loss) gain | (3,128 | ) | 1,828 | |||||||
Interest expense | (14,444 | ) | (11,243 | ) | ||||||
Total other (expenses) income | (17,572 | ) | (9,415 | ) | ||||||
NET INCOME | 45,418 | 41,794 | ||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | (705 | ) | (700 | ) | ||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,896 | ) | (4,191 | ) | ||||||
Total income attributable to noncontrolling interests | (5,601 | ) | (4,891 | ) | ||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 39,817 | $ | 36,903 | ||||||
Weighted average common shares outstanding – basic | 106,875 | 100,901 | ||||||||
Weighted average common shares outstanding – diluted | 107,390 | 101,443 | ||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE | ||||||||||
Net income available to common stockholders per share – basic | $ | 0.37 | $ | 0.36 | ||||||
Net income available to common stockholders per share – diluted | $ | 0.37 | $ | 0.36 | ||||||
(1) | Rental income is presented net of reductions in revenue related to the creditworthiness of tenants. For the three months ended March 31, 2020, rental income includes a reduction in revenue of $6.5 million related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic. |
Three Months Ended March 31, | ||||||||||
2020 | 2019 | |||||||||
FUNDS FROM OPERATIONS: (1) | ||||||||||
Net income available to common stockholders | $ | 39,817 | $ | 36,903 | ||||||
Adjustments: | ||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 705 | 700 | ||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,896 | 4,191 | ||||||||
Depreciation and amortization of real estate assets | 72,438 | 64,971 | ||||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (7,683 | ) | (6,953 | ) | ||||||
Funds From Operations (1)(2) | $ | 110,173 | $ | 99,812 | ||||||
Weighted average common shares/units outstanding – basic (3) | 110,031 | 104,062 | ||||||||
Weighted average common shares/units outstanding – diluted (4) | 110,546 | 104,603 | ||||||||
FFO per common share/unit – basic (1) | $ | 1.00 | $ | 0.96 | ||||||
FFO per common share/unit – diluted (1) | $ | 1.00 | $ | 0.95 | ||||||
FUNDS AVAILABLE FOR DISTRIBUTION: (1) | ||||||||||
Funds From Operations (1)(2) | $ | 110,173 | $ | 99,812 | ||||||
Adjustments: | ||||||||||
Recurring tenant improvements, leasing commissions and capital expenditures | (17,063 | ) | (21,583 | ) | ||||||
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5) | (5,002 | ) | (3,817 | ) | ||||||
Net effect of straight-line rents | (14,415 | ) | (16,511 | ) | ||||||
Amortization of net below market rents (6) | (2,586 | ) | (2,094 | ) | ||||||
Amortization of deferred financing costs and net debt discount/premium | 505 | 135 | ||||||||
Non-cash executive compensation expense (7) | 7,159 | 7,584 | ||||||||
Lease related adjustments, leasing costs and other (8) | 3,461 | 35 | ||||||||
Adjustments attributable to noncontrolling interests in consolidated property partnerships | 2,667 | 2,373 | ||||||||
Funds Available for Distribution (1) | $ | 84,899 | $ | 65,934 | ||||||
(1) | See page 31 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 unit holders. |
(2) | FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.0 million and $3.8 million for the three months ended March 31, 2020 and 2019, 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 stock options, and 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 non-cash amortization of share-based compensation and accrued potential future executive retirement benefits. |
(8) | Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences, leasing costs and other. |
Three Months Ended March 31, | ||||||||||
2020 | 2019 | |||||||||
GAAP Net Cash Provided by Operating Activities | $ | 122,940 | $ | 99,790 | ||||||
Adjustments: | ||||||||||
Recurring tenant improvements, leasing commissions and capital expenditures | (17,063 | ) | (21,583 | ) | ||||||
Depreciation of non-real estate furniture, fixtures and equipment | (1,932 | ) | (1,164 | ) | ||||||
Net changes in operating assets and liabilities (1) | (13,582 | ) | (5,962 | ) | ||||||
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD | (5,016 | ) | (4,580 | ) | ||||||
Cash adjustments related to investing and financing activities | (448 | ) | (567 | ) | ||||||
Funds Available for Distribution(2) | $ | 84,899 | $ | 65,934 | ||||||
(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 31 for a Management Statement on Funds Available for Distribution. |
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | % Change | |||||||||||
Operating Revenues: | |||||||||||||
Rental income (2) | $ | 187,015 | $ | 171,882 | 8.8 | % | |||||||
Tenant reimbursements (2) | 31,618 | 27,500 | 15.0 | % | |||||||||
Other property income | 2,695 | 1,820 | 48.1 | % | |||||||||
Total operating revenues | 221,328 | 201,202 | 10.0 | % | |||||||||
Operating Expenses: | |||||||||||||
Property expenses | 38,983 | 38,149 | 2.2 | % | |||||||||
Real estate taxes | 22,202 | 18,639 | 19.1 | % | |||||||||
Ground leases | 2,317 | 1,972 | 17.5 | % | |||||||||
Total operating expenses | 63,502 | 58,760 | 8.1 | % | |||||||||
Net Operating Income | $ | 157,826 | $ | 142,442 | 10.8 | % | |||||||
(1) | Please refer to page 29 for Management Statements on Net Operating Income and page 34 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. |
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | % Change | |||||||||||
Total Same Store Portfolio | |||||||||||||
Office Portfolio | |||||||||||||
Number of properties | 92 | 92 | |||||||||||
Square Feet | 12,931,083 | 12,931,083 | |||||||||||
Percent of Stabilized Portfolio | 90.3 | % | 97.7 | % | |||||||||
Average Occupancy | 93.7 | % | 93.2 | % | |||||||||
Operating Revenues: | |||||||||||||
Rental income (2)(3) | $ | 162,951 | $ | 163,462 | (0.3 | )% | |||||||
Tenant reimbursements (2) | 23,463 | 24,979 | (6.1 | )% | |||||||||
Other property income | 2,179 | 1,711 | 27.4 | % | |||||||||
Total operating revenues | 188,593 | 190,152 | (0.8 | )% | |||||||||
Operating Expenses: | |||||||||||||
Property expenses | 34,757 | 36,295 | (4.2 | )% | |||||||||
Real estate taxes | 17,246 | 17,110 | 0.8 | % | |||||||||
Ground leases | 2,109 | 1,972 | 6.9 | % | |||||||||
Total operating expenses | 54,112 | 55,377 | (2.3 | )% | |||||||||
GAAP Net Operating Income | $ | 134,481 | $ | 134,775 | (0.2 | )% | |||||||
Same Store Analysis (Cash Basis) (4) | |||||||||||||
Three Months Ended March 31, | |||||||||||||
2020 | 2019 | % Change | |||||||||||
Total operating revenues | $ | 183,226 | $ | 167,722 | 9.2 | % | |||||||
Total operating expenses | 54,129 | 55,381 | (2.3 | )% | |||||||||
Cash Net Operating Income | $ | 129,097 | $ | 112,341 | 14.9 | % | |||||||
(1) | Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2019 and still owned and included in the stabilized portfolio as of March 31, 2020. Same Store includes 100% of consolidated property partnerships as well as the residential tower at Columbia Square. |
(2) | Revenue from tenant reimbursements is included in rental income on our consolidated statements of operations. |
(3) | Rental income is presented net of reductions in revenue related to the creditworthiness of tenants. For the three months ended March 31, 2020, rental income includes a reduction in revenue of $5.9 million related to the cumulative impact of transitioning one co-working tenant and one retail tenant to a cash basis of reporting as a result of the COVID-19 pandemic. For the three months ended March 31, 2019, rental income includes a recovery of provision for bad debts of $3.1 million. |
(4) | Please refer to page 34 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store GAAP Net Operating Income and Same Store Cash Net Operating Income. |
Portfolio Breakdown | Occupied at | Leased at | |||||||||||||||||||||
STABILIZED OFFICE PORTFOLIO (1) | Buildings | YTD NOI % | SF % | Total SF | 3/31/2020 | 12/31/2019 (2) | 3/31/2020 | ||||||||||||||||
Greater Los Angeles | |||||||||||||||||||||||
Culver City | 19 | 1.7 | % | 1.1 | % | 151,908 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
El Segundo | 5 | 4.6 | % | 7.6 | % | 1,093,050 | 97.5 | % | 97.6 | % | 97.8 | % | |||||||||||
Hollywood | 6 | 5.6 | % | 5.6 | % | 806,557 | 98.7 | % | 98.7 | % | 99.2 | % | |||||||||||
Long Beach | 7 | 2.8 | % | 6.7 | % | 952,766 | 92.7 | % | 93.2 | % | 96.9 | % | |||||||||||
West Hollywood | 4 | 1.7 | % | 1.2 | % | 178,699 | 90.5 | % | 95.4 | % | 94.0 | % | |||||||||||
West Los Angeles | 10 | 5.6 | % | 5.9 | % | 844,151 | 86.1 | % | 90.0 | % | 88.0 | % | |||||||||||
Total Greater Los Angeles | 51 | 22.0 | % | 28.1 | % | 4,027,131 | 94.0 | % | 95.2 | % | 95.7 | % | |||||||||||
San Diego County | |||||||||||||||||||||||
Del Mar | 15 | 7.7 | % | 10.1 | % | 1,448,547 | 89.6 | % | 92.2 | % | 95.1 | % | |||||||||||
I-15 Corridor | 5 | 1.3 | % | 3.8 | % | 540,892 | 82.5 | % | 81.3 | % | 96.4 | % | |||||||||||
Point Loma | 1 | 0.4 | % | 0.8 | % | 107,456 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
University Towne Center | 1 | 0.1 | % | 0.3 | % | 47,846 | 91.4 | % | 91.4 | % | 91.4 | % | |||||||||||
Total San Diego County | 22 | 9.5 | % | 15.0 | % | 2,144,741 | 88.3 | % | 89.7 | % | 95.6 | % | |||||||||||
San Francisco Bay Area | |||||||||||||||||||||||
Menlo Park | 7 | 2.7 | % | 2.6 | % | 378,358 | 79.2 | % | 87.1 | % | 80.2 | % | |||||||||||
Mountain View | 4 | 4.0 | % | 3.8 | % | 542,235 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Palo Alto | 2 | 1.4 | % | 1.2 | % | 165,585 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Redwood City | 2 | 3.4 | % | 2.4 | % | 347,269 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
San Francisco | 11 | 39.2 | % | 28.7 | % | 4,107,473 | 93.0 | % | 93.1 | % | 99.1 | % | |||||||||||
South San Francisco | 3 | 1.3 | % | 1.0 | % | 145,530 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Sunnyvale | 4 | 4.8 | % | 4.6 | % | 663,460 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Total San Francisco Bay Area | 33 | 56.8 | % | 44.3 | % | 6,349,910 | 94.3 | % | 95.0 | % | 98.2 | % | |||||||||||
Greater Seattle | |||||||||||||||||||||||
Bellevue | 2 | 5.4 | % | 6.4 | % | 917,027 | 91.1 | % | 96.9 | % | 98.7 | % | |||||||||||
Lake Union | 6 | 6.3 | % | 6.2 | % | 884,763 | 100.0 | % | 98.6 | % | 100.0 | % | |||||||||||
Total Greater Seattle | 8 | 11.7 | % | 12.6 | % | 1,801,790 | 95.5 | % | 97.7 | % | 99.3 | % | |||||||||||
TOTAL STABILIZED OFFICE PORTFOLIO | 114 | 100.0 | % | 100.0 | % | 14,323,572 | 93.5 | % | 94.6 | % | 97.3 | % | |||||||||||
Total No. of Units | Average Residential Occupancy | ||||||||||||||||||||||
STABILIZED RESIDENTIAL PROPERTY | Submarket | Buildings | Quarter-to-Date | ||||||||||||||||||||
Greater Los Angeles | |||||||||||||||||||||||
1550 N. El Centro Avenue | Hollywood | 1 | 200 | 93.5% | |||||||||||||||||||
Average Office Occupancy |
Quarter-to-Date |
93.7% |
(1) | Includes stabilized retail space. |
(2) | Represents occupancy for properties in the stabilized portfolio as of the date presented, including properties sold subsequent to the date presented. |
Submarket | Square Feet | Occupied | ||||||||
Greater Los Angeles, California | ||||||||||
3101-3243 La Cienega Boulevard | Culver City | 151,908 | 100.0 | % | ||||||
2240 E. Imperial Highway | El Segundo | 122,870 | 100.0 | % | ||||||
2250 E. Imperial Highway | El Segundo | 298,728 | 100.0 | % | ||||||
2260 E. Imperial Highway | El Segundo | 298,728 | 100.0 | % | ||||||
909 N. Pacific Coast Highway | El Segundo | 244,136 | 92.3 | % | ||||||
999 N. Pacific Coast Highway | El Segundo | 128,588 | 93.4 | % | ||||||
1500 N. El Centro Avenue | Hollywood | 104,504 | 100.0 | % | ||||||
1525 N. Gower Street | Hollywood | 9,610 | 100.0 | % | ||||||
1575 N. Gower Street | Hollywood | 251,245 | 100.0 | % | ||||||
6115 W. Sunset Boulevard | Hollywood | 26,105 | 100.0 | % | ||||||
6121 W. Sunset Boulevard | Hollywood | 91,173 | 100.0 | % | ||||||
6255 W. Sunset Boulevard | Hollywood | 323,920 | 96.8 | % | ||||||
3750 Kilroy Airport Way | Long Beach | 10,718 | 100.0 | % | ||||||
3760 Kilroy Airport Way | Long Beach | 165,278 | 92.5 | % | ||||||
3780 Kilroy Airport Way | Long Beach | 221,452 | 79.4 | % | ||||||
3800 Kilroy Airport Way | Long Beach | 192,476 | 100.0 | % | ||||||
3840 Kilroy Airport Way | Long Beach | 136,026 | 100.0 | % | ||||||
3880 Kilroy Airport Way | Long Beach | 96,923 | 100.0 | % | ||||||
3900 Kilroy Airport Way | Long Beach | 129,893 | 91.4 | % | ||||||
8560 W. Sunset Boulevard | West Hollywood | 71,875 | 100.0 | % | ||||||
8570 W. Sunset Boulevard | West Hollywood | 43,603 | 95.8 | % | ||||||
8580 W. Sunset Boulevard | West Hollywood | 7,126 | 0.0 | % | ||||||
8590 W. Sunset Boulevard | West Hollywood | 56,095 | 85.6 | % | ||||||
12100 W. Olympic Boulevard | West Los Angeles | 152,048 | 71.6 | % | ||||||
12200 W. Olympic Boulevard | West Los Angeles | 150,832 | 90.2 | % | ||||||
12233 W. Olympic Boulevard | West Los Angeles | 151,029 | 81.0 | % | ||||||
12312 W. Olympic Boulevard | West Los Angeles | 76,644 | 100.0 | % | ||||||
1633 26th Street | West Los Angeles | 43,857 | 34.9 | % | ||||||
2100/2110 Colorado Avenue | West Los Angeles | 102,864 | 100.0 | % | ||||||
3130 Wilshire Boulevard | West Los Angeles | 90,074 | 100.0 | % | ||||||
501 Santa Monica Boulevard | West Los Angeles | 76,803 | 97.8 | % | ||||||
Total Greater Los Angeles | 4,027,131 | 94.0 | % | |||||||
Submarket | Square Feet | Occupied | ||||||||
San Diego, California | ||||||||||
12225 El Camino Real | Del Mar | 58,401 | 100.0 | % | ||||||
12235 El Camino Real | Del Mar | 53,751 | 88.9 | % | ||||||
12340 El Camino Real | Del Mar | 89,272 | 50.1 | % | ||||||
12390 El Camino Real | Del Mar | 70,140 | 100.0 | % | ||||||
12348 High Bluff Drive | Del Mar | 39,193 | 85.3 | % | ||||||
12770 El Camino Real | Del Mar | 73,032 | 66.1 | % | ||||||
12780 El Camino Real | Del Mar | 140,591 | 100.0 | % | ||||||
12790 El Camino Real | Del Mar | 78,836 | 71.2 | % | ||||||
12400 High Bluff Drive | Del Mar | 209,220 | 100.0 | % | ||||||
3579 Valley Centre Drive | Del Mar | 54,960 | 31.1 | % | ||||||
3611 Valley Centre Drive | Del Mar | 129,656 | 100.0 | % | ||||||
3661 Valley Centre Drive | Del Mar | 128,364 | 100.0 | % | ||||||
3721 Valley Centre Drive | Del Mar | 115,193 | 100.0 | % | ||||||
3811 Valley Centre Drive | Del Mar | 112,067 | 100.0 | % | ||||||
3745 Paseo Place | Del Mar | 95,871 | 90.0 | % | ||||||
13280 Evening Creek Drive South | I-15 Corridor | 41,196 | 100.0 | % | ||||||
13290 Evening Creek Drive South | I-15 Corridor | 61,180 | 100.0 | % | ||||||
13480 Evening Creek Drive North | I-15 Corridor | 154,157 | 100.0 | % | ||||||
13500 Evening Creek Drive North | I-15 Corridor | 137,658 | 43.0 | % | ||||||
13520 Evening Creek Drive North | I-15 Corridor | 146,701 | 89.0 | % | ||||||
2305 Historic Decatur Road | Point Loma | 107,456 | 100.0 | % | ||||||
4690 Executive Drive | University Towne Center | 47,846 | 91.4 | % | ||||||
Total San Diego County | 2,144,741 | 88.3 | % | |||||||
Submarket | Square Feet | Occupied | ||||||||
San Francisco Bay Area, California | ||||||||||
4100 Bohannon Drive | Menlo Park | 47,379 | 100.0 | % | ||||||
4200 Bohannon Drive | Menlo Park | 45,451 | 70.8 | % | ||||||
4300 Bohannon Drive | Menlo Park | 63,079 | 48.8 | % | ||||||
4400 Bohannon Drive | Menlo Park | 48,146 | 31.4 | % | ||||||
4500 Bohannon Drive | Menlo Park | 63,078 | 100.0 | % | ||||||
4600 Bohannon Drive | Menlo Park | 48,147 | 100.0 | % | ||||||
4700 Bohannon Drive | Menlo Park | 63,078 | 100.0 | % | ||||||
1290-1300 Terra Bella Avenue | Mountain View | 114,175 | 100.0 | % | ||||||
331 Fairchild Drive | Mountain View | 87,147 | 100.0 | % | ||||||
680 E. Middlefield Road | Mountain View | 170,090 | 100.0 | % | ||||||
690 E. Middlefield Road | Mountain View | 170,823 | 100.0 | % | ||||||
1701 Page Mill Road | Palo Alto | 128,688 | 100.0 | % | ||||||
3150 Porter Drive | Palo Alto | 36,897 | 100.0 | % | ||||||
900 Jefferson Avenue | Redwood City | 228,505 | 100.0 | % | ||||||
900 Middlefield Road | Redwood City | 118,764 | 100.0 | % | ||||||
100 Hooper Street | San Francisco | 394,340 | 87.6 | % | ||||||
100 First Street | San Francisco | 467,095 | 87.2 | % | ||||||
1800 Owens Street | San Francisco | 750,370 | 99.6 | % | ||||||
303 Second Street | San Francisco | 784,658 | 78.4 | % | ||||||
201 Third Street | San Francisco | 346,538 | 99.2 | % | ||||||
360 Third Street | San Francisco | 429,796 | 100.0 | % | ||||||
250 Brannan Street | San Francisco | 100,850 | 100.0 | % | ||||||
301 Brannan Street | San Francisco | 82,834 | 100.0 | % | ||||||
333 Brannan Street | San Francisco | 185,602 | 100.0 | % | ||||||
345 Brannan Street | San Francisco | 110,050 | 99.7 | % | ||||||
350 Mission Street | San Francisco | 455,340 | 99.7 | % | ||||||
345 Oyster Point Boulevard | South San Francisco | 40,410 | 100.0 | % | ||||||
347 Oyster Point Boulevard | South San Francisco | 39,780 | 100.0 | % | ||||||
349 Oyster Point Boulevard | South San Francisco | 65,340 | 100.0 | % | ||||||
505 Mathilda Avenue | Sunnyvale | 212,322 | 100.0 | % | ||||||
555 Mathilda Avenue | Sunnyvale | 212,322 | 100.0 | % | ||||||
605 Mathilda Avenue | Sunnyvale | 162,785 | 100.0 | % | ||||||
599 Mathilda Avenue | Sunnyvale | 76,031 | 100.0 | % | ||||||
Total San Francisco Bay Area | 6,349,910 | 94.3 | % | |||||||
Submarket | Square Feet | Occupied | ||||||||
Greater Seattle, Washington | ||||||||||
601 108th Avenue NE | Bellevue | 488,470 | 98.3 | % | ||||||
10900 NE 4th Street | Bellevue | 428,557 | 82.8 | % | ||||||
837 N. 34th Street | Lake Union | 112,487 | 100.0 | % | ||||||
701 N. 34th Street | Lake Union | 141,860 | 100.0 | % | ||||||
801 N. 34th Street | Lake Union | 169,412 | 100.0 | % | ||||||
320 Westlake Avenue North | Lake Union | 184,644 | 100.0 | % | ||||||
321 Terry Avenue North | Lake Union | 135,755 | 100.0 | % | ||||||
401 Terry Avenue North | Lake Union | 140,605 | 100.0 | % | ||||||
Total Greater Seattle | 1,801,790 | 95.5 | % | |||||||
TOTAL | 14,323,572 | 93.5 | % | |||||||
1st & 2nd Generation | 2nd Generation | ||||||||||||||||||||||||||||||||
# of Leases (2) | Square Feet (2) | Retention Rates | TI/LC Per Sq.Ft. (3) | TI/LC Per Sq.Ft. /Year (3) | Changes in GAAP Rents | Changes in Cash Rents | Weighted Average Lease Term (Mo.) | ||||||||||||||||||||||||||
New | Renewal | New | Renewal | ||||||||||||||||||||||||||||||
Quarter to Date | 10 | 9 | 47,926 | 90,067 | 27.0 | % | $ | 37.57 | $ | 5.01 | 31.1 | % | 21.0 | % | 90 | ||||||||||||||||||
1st & 2nd Generation | 2nd Generation | |||||||||||||||||||||||||||||
# of Leases (4) | Square Feet (4) | TI/LC Per Sq.Ft. (3) | TI/LC Per Sq.Ft. /Year (3) | Changes in GAAP Rents | Changes in Cash Rents | Weighted Average Lease Term (Mo.) | ||||||||||||||||||||||||
New | Renewal | New | Renewal | |||||||||||||||||||||||||||
Quarter to Date (5) | 7 | 9 | 131,661 | 90,067 | $ | 60.11 | $ | 8.29 | 57.5 | % | 45.3 | % | 87 | |||||||||||||||||
(1) | Includes 100% of consolidated property partnerships. |
(2) | Represents leasing activity for leases that commenced at properties in the stabilized portfolio during the three months ended March 31, 2020, including first and second generation space, 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 leasing activity for leases signed at properties in the stabilized portfolio during the three months ended March 31, 2020, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction. |
(5) | During the three months ended March 31, 2020, 6 new leases totaling 125,420 square feet were signed but not commenced as of March 31, 2020. |
Q1 2020 | |||||
1st Generation (Nonrecurring) Capital Expenditures: (1) | |||||
Capital Improvements | $ | 621 | |||
Tenant Improvements & Leasing Commissions (2) | 4,307 | ||||
Total | $ | 4,928 | |||
Q1 2020 | |||||
2nd Generation (Recurring) Capital Expenditures: (1) | |||||
Capital Improvements | $ | 2,976 | |||
Tenant Improvements & Leasing Commissions (2) | 14,087 | ||||
Total | $ | 17,063 | |||
(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. |
Year of Expiration | # 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. | ||||||||||||||||
Remaining 2020 (2) | 53 | 677,934 | 5.3 | % | $ | 29,929 | 4.3 | % | $ | 44.15 | ||||||||||||
2021 (2) | 81 | 842,815 | 6.4 | % | 36,455 | 5.3 | % | 43.25 | ||||||||||||||
2022 | 62 | 749,300 | 5.8 | % | 32,462 | 4.6 | % | 43.32 | ||||||||||||||
2023 | 77 | 1,233,952 | 9.4 | % | 65,432 | 9.4 | % | 53.03 | ||||||||||||||
2024 | 60 | 952,945 | 7.2 | % | 46,791 | 6.7 | % | 49.10 | ||||||||||||||
2025 | 51 | 634,142 | 4.8 | % | 30,781 | 4.4 | % | 48.54 | ||||||||||||||
2026 | 34 | 1,485,620 | 11.3 | % | 65,703 | 9.4 | % | 44.23 | ||||||||||||||
2027 | 28 | 1,227,633 | 9.3 | % | 50,287 | 7.2 | % | 40.96 | ||||||||||||||
2028 | 21 | 924,891 | 7.0 | % | 57,805 | 8.3 | % | 62.50 | ||||||||||||||
2029 | 26 | 775,552 | 5.9 | % | 44,468 | 6.4 | % | 57.34 | ||||||||||||||
2030 and beyond | 47 | 3,636,258 | 27.6 | % | 238,262 | 34.0 | % | 65.52 | ||||||||||||||
Total (3) | 540 | 13,141,042 | 100.0 | % | $ | 698,375 | 100.0 | % | $ | 53.14 | ||||||||||||
(1) | Includes 100% of annualized base rent of consolidated property partnerships. |
(2) | Adjusting for leasing transactions executed as of March 31, 2020 but not yet commenced, the 2020 and 2021 expirations would be reduced by 173,477 and 173,267 square feet, respectively. |
(3) | 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 March 31, 2020, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of March 31, 2020. |
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. | |||||||||||||||||
2020 | Greater Los Angeles | 30 | 349,319 | 2.7 | % | $ | 13,724 | 2.0 | % | $ | 39.29 | |||||||||||||
San Diego | 12 | 151,138 | 1.2 | % | 6,345 | 0.9 | % | 41.98 | ||||||||||||||||
San Francisco Bay Area | 10 | 155,043 | 1.2 | % | 9,130 | 1.3 | % | 58.89 | ||||||||||||||||
Greater Seattle | 1 | 22,434 | 0.2 | % | 730 | 0.1 | % | 32.54 | ||||||||||||||||
Total | 53 | 677,934 | 5.3 | % | $ | 29,929 | 4.3 | % | $ | 44.15 | ||||||||||||||
2021 | Greater Los Angeles | 47 | 285,279 | 2.2 | % | $ | 11,630 | 1.7 | % | $ | 40.77 | |||||||||||||
San Diego | 14 | 289,090 | 2.2 | % | 11,635 | 1.7 | % | 40.25 | ||||||||||||||||
San Francisco Bay Area | 11 | 239,093 | 1.8 | % | 12,245 | 1.8 | % | 51.21 | ||||||||||||||||
Greater Seattle | 9 | 29,353 | 0.2 | % | 945 | 0.1 | % | 32.19 | ||||||||||||||||
Total | 81 | 842,815 | 6.4 | % | $ | 36,455 | 5.3 | % | $ | 43.25 | ||||||||||||||
2022 | Greater Los Angeles | 43 | 364,184 | 2.8 | % | $ | 16,471 | 2.4 | % | $ | 45.23 | |||||||||||||
San Diego | 8 | 204,237 | 1.6 | % | 6,991 | 1.0 | % | 34.23 | ||||||||||||||||
San Francisco Bay Area | 6 | 115,111 | 0.9 | % | 6,558 | 0.9 | % | 56.97 | ||||||||||||||||
Greater Seattle | 5 | 65,768 | 0.5 | % | 2,442 | 0.3 | % | 37.13 | ||||||||||||||||
Total | 62 | 749,300 | 5.8 | % | $ | 32,462 | 4.6 | % | $ | 43.32 | ||||||||||||||
2023 | Greater Los Angeles | 37 | 356,052 | 2.7 | % | $ | 18,874 | 2.7 | % | $ | 53.01 | |||||||||||||
San Diego | 13 | 195,866 | 1.5 | % | 8,163 | 1.2 | % | 41.68 | ||||||||||||||||
San Francisco Bay Area | 21 | 588,422 | 4.5 | % | 35,145 | 5.0 | % | 59.73 | ||||||||||||||||
Greater Seattle | 6 | 93,612 | 0.7 | % | 3,250 | 0.5 | % | 34.72 | ||||||||||||||||
Total | 77 | 1,233,952 | 9.4 | % | $ | 65,432 | 9.4 | % | $ | 53.03 | ||||||||||||||
2024 | Greater Los Angeles | 31 | 439,031 | 3.3 | % | $ | 19,711 | 2.8 | % | $ | 44.90 | |||||||||||||
San Diego | 10 | 68,501 | 0.5 | % | 3,522 | 0.5 | % | 51.42 | ||||||||||||||||
San Francisco Bay Area | 11 | 239,751 | 1.8 | % | 15,807 | 2.3 | % | 65.93 | ||||||||||||||||
Greater Seattle | 8 | 205,662 | 1.6 | % | 7,751 | 1.1 | % | 37.69 | ||||||||||||||||
Total | 60 | 952,945 | 7.2 | % | $ | 46,791 | 6.7 | % | $ | 49.10 | ||||||||||||||
2025 and Beyond | Greater Los Angeles | 56 | 1,831,601 | 13.9 | % | $ | 80,073 | 11.4 | % | $ | 43.72 | |||||||||||||
San Diego | 63 | 957,224 | 7.3 | % | 46,355 | 6.6 | % | 48.43 | ||||||||||||||||
San Francisco Bay Area | 53 | 4,602,672 | 34.9 | % | 308,393 | 44.2 | % | 67.00 | ||||||||||||||||
Greater Seattle | 35 | 1,292,599 | 9.8 | % | 52,485 | 7.5 | % | 40.60 | ||||||||||||||||
Total | 207 | 8,684,096 | 65.9 | % | $ | 487,306 | 69.7 | % | $ | 56.11 | ||||||||||||||
(1) | Includes 100% of annualized base rent of consolidated property partnerships. |
# 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. | |||||||||||||||||
2020: | ||||||||||||||||||||||
Q2 2020 | 12 | 147,536 | 1.1 | % | $ | 7,029 | 1.0 | % | $ | 47.64 | ||||||||||||
Q3 2020 | 18 | 176,222 | 1.4 | % | 6,129 | 0.9 | % | 34.78 | ||||||||||||||
Q4 2020 | 23 | 354,176 | 2.8 | % | 16,771 | 2.4 | % | 47.35 | ||||||||||||||
Total 2020 (2) | 53 | 677,934 | 5.3 | % | $ | 29,929 | 4.3 | % | $ | 44.15 | ||||||||||||
2021: | ||||||||||||||||||||||
Q1 2021 | 19 | 176,993 | 1.3 | % | $ | 7,052 | 1.0 | % | $ | 39.84 | ||||||||||||
Q2 2021 | 20 | 107,172 | 0.8 | % | 4,038 | 0.7 | % | 37.68 | ||||||||||||||
Q3 2021 | 21 | 388,069 | 3.0 | % | 18,950 | 2.7 | % | 48.83 | ||||||||||||||
Q4 2021 | 21 | 170,581 | 1.3 | % | 6,415 | 0.9 | % | 37.61 | ||||||||||||||
Total 2021 (2) | 81 | 842,815 | 6.4 | % | $ | 36,455 | 5.3 | % | $ | 43.25 | ||||||||||||
(1) | Includes 100% of annualized base rent of consolidated property partnerships. |
(2) | Adjusting for leasing transactions executed as of March 31, 2020 but not yet commenced, the 2020 and 2021 expirations would be reduced by 173,477 and 173,267 square feet, respectively. |
Tenant Name | Region | Annualized Base Rental Revenue (2) | Rentable Square Feet | Percentage of Total Annualized Base Rental Revenue | Percentage of Total Rentable Square Feet | ||||||||||||
Dropbox, Inc. | San Francisco Bay Area | $ | 55,998 | 738,081 | 8.0 | % | 5.2 | % | |||||||||
GM Cruise, LLC | San Francisco Bay Area | 36,337 | 374,618 | 5.2 | % | 2.6 | % | ||||||||||
LinkedIn Corporation / Microsoft Corporation | San Francisco Bay Area | 29,752 | 663,460 | 4.3 | % | 4.6 | % | ||||||||||
Adobe Systems, Inc. | San Francisco Bay Area / Greater Seattle | 27,897 | 513,111 | 4.0 | % | 3.6 | % | ||||||||||
salesforce.com, inc. | San Francisco Bay Area | 24,076 | 451,763 | 3.5 | % | 3.2 | % | ||||||||||
DIRECTV, LLC | Greater Los Angeles | 23,152 | 684,411 | 3.3 | % | 4.8 | % | ||||||||||
Box, Inc. | San Francisco Bay Area | 22,441 | 371,792 | 3.2 | % | 2.6 | % | ||||||||||
Okta, Inc. | San Francisco Bay Area | 17,122 | 207,066 | 2.5 | % | 1.4 | % | ||||||||||
Riot Games, Inc. | Greater Los Angeles | 15,514 | 251,509 | 2.2 | % | 1.8 | % | ||||||||||
Synopsys, Inc. | San Francisco Bay Area | 15,492 | 340,913 | 2.2 | % | 2.4 | % | ||||||||||
Viacom International, Inc. | Greater Los Angeles | 13,718 | 211,343 | 2.0 | % | 1.5 | % | ||||||||||
DoorDash, Inc. | San Francisco Bay Area | 13,531 | 135,137 | 1.9 | % | 0.9 | % | ||||||||||
Amazon.com | Greater Seattle | 12,397 | 277,399 | 1.8 | % | 1.9 | % | ||||||||||
Nektar Therapeutics, Inc. | San Francisco Bay Area | 12,297 | 135,350 | 1.8 | % | 0.9 | % | ||||||||||
Concur Technologies | Greater Seattle | 10,643 | 288,322 | 1.5 | % | 2.0 | % | ||||||||||
Total Top Fifteen Tenants | $ | 330,367 | 5,644,275 | 47.4 | % | 39.4 | % | ||||||||||
(1) | The information presented is as of March 31, 2020. |
(2) | Includes 100% of annualized base rental revenues of consolidated 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 | 467,095 | 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 34, 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. |
STABILIZED OFFICE AND RETAIL DEVELOPMENT PROJECTS (1) | Location | Start Date | Stabilization Date (2) | Total Estimated Investment | Rentable Square Feet | Total Project % Occupied | |||||||||||
1st Quarter | |||||||||||||||||
The Exchange on 16th | San Francisco | 2Q 2015 | 1Q 2020 | $ | 585.0 | 750,370 | 100% | ||||||||||
One Paseo - Retail | Del Mar | 4Q 2016 | 1Q 2020 | 100.0 | 95,871 | 90% | |||||||||||
TOTAL: | $ | 685.0 | 846,241 | 98% | |||||||||||||
COMPLETED RESIDENTIAL DEVELOPMENT PROJECTS NOT YET STABILIZED | Location | Start Date | Completion Date | Total Estimated Investment | Number of Units | % Leased | |||||||||||
One Paseo - Residential Phase I | Del Mar | 4Q 2016 | 3Q 2019 | $ | 145.0 | 237 | 70% | ||||||||||
One Paseo - Residential Phase II | Del Mar | 4Q 2016 | 1Q 2020 | 145.0 | 225 | 17% | |||||||||||
TOTAL: | $ | 290.0 | 462 | 44% | |||||||||||||
(1) | Our stabilized office portfolio includes stabilized retail space. |
(2) | For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. |
Location | Construction Start Date | Estimated Stabilization Date (2) | Estimated Rentable Square Feet | Total Estimated Investment | Total Cash Costs Incurred as of 3/31/2020 (3) | % Leased | |||||||||||||||
TENANT IMPROVEMENT (1) | |||||||||||||||||||||
Office | |||||||||||||||||||||
San Diego County | |||||||||||||||||||||
One Paseo - Office | Del Mar | 4Q 2018 | 2Q 2021 | 285,000 | $ | 205.0 | $ | 164.4 | 91% | ||||||||||||
Greater Seattle | |||||||||||||||||||||
333 Dexter | South Lake Union | 2Q 2017 | 3Q 2022 | 635,000 | 410.0 | 285.1 | 100% | ||||||||||||||
Greater Los Angeles | |||||||||||||||||||||
Netflix // On Vine - Office | Hollywood | 1Q 2018 | 1Q 2021 | 355,000 | 300.0 | 210.8 | 100% | ||||||||||||||
TOTAL: | 1,275,000 | $ | 915.0 | $ | 660.3 | 98% | |||||||||||||||
UNDER CONSTRUCTION | Location | Construction Start Date | Estimated Stabilization Date (2) | Estimated Rentable Square Feet | Total Estimated Investment | Total Cash Costs Incurred as of 3/31/2020 (3) | Office % Leased | ||||||||||||||
Office / Life Science | |||||||||||||||||||||
San Francisco Bay Area | |||||||||||||||||||||
Kilroy Oyster Point - Phase I | South San Francisco | 1Q 2019 | 4Q 2021 | 656,000 | $ | 570.0 | $ | 198.7 | 100% | ||||||||||||
San Diego County | |||||||||||||||||||||
2100 Kettner | Little Italy | 3Q 2019 | 1Q 2022 | 200,000 | 140.0 | 48.9 | —% | ||||||||||||||
9455 Towne Centre Drive | University Towne Center | 1Q 2019 | 1Q 2021 | 160,000 | 110.0 | 63.3 | 100% | ||||||||||||||
Residential | |||||||||||||||||||||
Greater Los Angeles | |||||||||||||||||||||
Living // On Vine - Residential | Hollywood | 4Q 2018 | 1Q 2021 | 193 Resi Units | 195.0 | 141.1 | N/A | ||||||||||||||
San Diego County | |||||||||||||||||||||
One Paseo - Residential Phase III | Del Mar | 4Q 2016 | 2Q 2020 | 146 Resi Units | 95.0 | 93.1 | N/A | ||||||||||||||
TOTAL: | $ | 1,110.0 | $ | 545.1 | 80% | ||||||||||||||||
(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. The timing of completion of our projects may be impacted by factors outside of our control, including government restrictions and/or social distancing requirements on construction projects due to the COVID-19 pandemic. |
(3) | Represents costs incurred as of March 31, 2020, excluding accrued liabilities recorded in accordance with GAAP. Upon adoption of ASC 842 “Leases” effective January 1, 2019, also excludes leasing overhead. |
FUTURE DEVELOPMENT PIPELINE | Location | Approx. Developable Square Feet (1) | Total Cash Costs Incurred as of 3/31/2020 (2) | |||||||||
San Diego County | ||||||||||||
Santa Fe Summit – Phases II and III | 56 Corridor | 600,000 - 650,000 | $ | 79.4 | ||||||||
1335 Broadway & 901 Park Boulevard | East Village | TBD | 45.7 | |||||||||
San Francisco Bay Area | ||||||||||||
Kilroy Oyster Point - Phases II - IV | South San Francisco | 1,750,000 - 1,900,000 | 320.0 | |||||||||
Flower Mart | SOMA | 2,300,000 | 376.3 | |||||||||
Greater Seattle | ||||||||||||
Seattle CBD Project | Seattle CBD | TBD | 131.4 | |||||||||
TOTAL: | $ | 952.8 | ||||||||||
(1) | 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 March 31, 2020, excluding accrued liabilities recorded in accordance with GAAP. |
Shares/Units March 31, 2020 | Aggregate Principal Amount or $ Value Equivalent | % of Total Market Capitalization | |||||||||
DEBT: (1) | |||||||||||
Unsecured Line of Credit | $ | 380,000 | 3.4 | % | |||||||
Unsecured Term Loan Facility | 150,000 | 1.3 | % | ||||||||
Unsecured Senior Notes due 2023 | 300,000 | 2.7 | % | ||||||||
Unsecured Senior Notes due 2024 | 425,000 | 3.8 | % | ||||||||
Unsecured Senior Notes due 2025 | 400,000 | 3.6 | % | ||||||||
Unsecured Senior Notes Series A & B due 2026 | 250,000 | 2.2 | % | ||||||||
Unsecured Senior Notes due 2028 | 400,000 | 3.6 | % | ||||||||
Unsecured Senior Notes due 2029 | 400,000 | 3.6 | % | ||||||||
Unsecured Senior Notes Series A & B due 2027 & 2029 | 250,000 | 2.2 | % | ||||||||
Unsecured Senior Notes due 2030 | 500,000 | 4.5 | % | ||||||||
Secured Debt | 258,236 | 2.3 | % | ||||||||
Total Debt | $ | 3,713,236 | 33.2 | % | |||||||
EQUITY AND NONCONTROLLING INTEREST IN THE OPERATING PARTNERSHIP: (2) | |||||||||||
Common limited partnership units outstanding (3) | 2,021,287 | $ | 128,756 | 1.2 | % | ||||||
Shares of common stock outstanding | 115,067,924 | 7,329,827 | 65.6 | % | |||||||
Total Equity and Noncontrolling Interests in the Operating Partnership | $ | 7,458,583 | 66.8 | % | |||||||
TOTAL MARKET CAPITALIZATION | $ | 11,171,819 | 100.0 | % | |||||||
(1) | Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts. Excludes $350.0 million of 4.27% unsecured senior notes due 2031 the Operating Partnership issued on April 28, 2020 in connection with a private placement offering. |
(2) | Value based on closing share price of $63.70 as of March 31, 2020. |
(3) | Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships. |
TOTAL DEBT COMPOSITION | ||||||||
Percent of Total Debt | Weighted Average | |||||||
Interest Rate | Years to Maturity | |||||||
Secured vs. Unsecured Debt | ||||||||
Unsecured Debt | 93.0% | 3.6% | 6.4 | |||||
Secured Debt | 7.0% | 3.9% | 6.9 | |||||
Floating vs. Fixed-Rate Debt | ||||||||
Floating-Rate Debt | 14.3% | 1.9% | 2.3 | |||||
Fixed-Rate Debt | 85.7% | 3.9% | 7.1 | |||||
Stated Interest Rate | 3.6% | 6.4 | ||||||
GAAP Effective Rate | 3.6% | |||||||
GAAP Effective Rate Including Debt Issuance Costs | 3.8% | |||||||
KEY DEBT COVENANTS | ||||||
Covenant | Actual Performance as of March 31, 2020 | |||||
Unsecured Credit and Term Loan Facility and Private Placement Notes (as defined in the Credit Agreements): | ||||||
Total debt to total asset value | less than 60% | 29% | ||||
Fixed charge coverage ratio | greater than 1.5x | 3.4x | ||||
Unsecured debt ratio | greater than 1.67x | 3.48x | ||||
Unencumbered asset pool debt service coverage | greater than 1.75x | 4.02x | ||||
Unsecured Senior Notes due 2023, 2024, 2025, 2028, 2029 and 2030 (as defined in the Indentures): | ||||||
Total debt to total asset value | less than 60% | 34% | ||||
Interest coverage | greater than 1.5x | 10.4x | ||||
Secured debt to total asset value | less than 40% | 2% | ||||
Unencumbered asset pool value to unsecured debt | greater than 150% | 304% | ||||
DEBT MATURITY SCHEDULE | ||||||||||||||||||||||||||||||||||
Floating/ Fixed Rate | Stated Rate | Maturity Date | 2020 | 2021 | 2022 | 2023 | 2024 | After 2024 | Total (1) | |||||||||||||||||||||||||
Unsecured Debt: | ||||||||||||||||||||||||||||||||||
Floating | 1.85% | 7/31/2022 | $ | 380,000 | $ | 380,000 | ||||||||||||||||||||||||||||
Floating | 2.03% | 7/31/2022 | 150,000 | 150,000 | ||||||||||||||||||||||||||||||
Fixed | 3.80% | 1/15/2023 | 300,000 | 300,000 | ||||||||||||||||||||||||||||||
Fixed | 3.45% | 12/15/2024 | 425,000 | 425,000 | ||||||||||||||||||||||||||||||
Fixed | 4.38% | 10/1/2025 | 400,000 | 400,000 | ||||||||||||||||||||||||||||||
Fixed | 4.30% | 7/18/2026 | 50,000 | 50,000 | ||||||||||||||||||||||||||||||
Fixed | 4.35% | 10/18/2026 | 200,000 | 200,000 | ||||||||||||||||||||||||||||||
Fixed | 3.35% | 2/17/2027 | 175,000 | 175,000 | ||||||||||||||||||||||||||||||
Fixed | 4.75% | 12/15/2028 | 400,000 | 400,000 | ||||||||||||||||||||||||||||||
Fixed | 3.45% | 2/17/2029 | 75,000 | 75,000 | ||||||||||||||||||||||||||||||
Fixed | 4.25% | 8/15/2029 | 400,000 | 400,000 | ||||||||||||||||||||||||||||||
Fixed | 3.05% | 2/15/2030 | 500,000 | 500,000 | ||||||||||||||||||||||||||||||
Total unsecured debt | 3.59% | — | — | 530,000 | 300,000 | 425,000 | 2,200,000 | 3,455,000 | ||||||||||||||||||||||||||
Secured Debt: | ||||||||||||||||||||||||||||||||||
Fixed | 3.57% | 12/1/2026 | 2,428 | 3,341 | 3,462 | 3,587 | 3,718 | 152,668 | 169,204 | |||||||||||||||||||||||||
Fixed | 4.48% | 7/1/2027 | 1,443 | 2,001 | 2,092 | 2,188 | 2,288 | 79,020 | 89,032 | |||||||||||||||||||||||||
Total secured debt | 3.88% | 3,871 | 5,342 | 5,554 | 5,775 | 6,006 | 231,688 | 258,236 | ||||||||||||||||||||||||||
Total | 3.61% | $ | 3,871 | $ | 5,342 | $ | 535,554 | $ | 305,775 | $ | 431,006 | $ | 2,431,688 | $ | 3,713,236 | |||||||||||||||||||
(1) | Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts. Excludes $350.0 million of 4.27% unsecured senior notes due 2031 the Operating Partnership issued on April 28, 2020 in connection with a private placement offering. |
Three Months Ended March 31, | ||||||||||
2020 | 2019 | |||||||||
Net Income Available to Common Stockholders | $ | 39,817 | $ | 36,903 | ||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 705 | 700 | ||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,896 | 4,191 | ||||||||
Net Income | 45,418 | 41,794 | ||||||||
Adjustments: | ||||||||||
General and administrative expenses | 19,010 | 23,341 | ||||||||
Leasing costs | 1,456 | 1,757 | ||||||||
Depreciation and amortization | 74,370 | 66,135 | ||||||||
Interest income and other net investment loss (gain) | 3,128 | (1,828 | ) | |||||||
Interest expense | 14,444 | 11,243 | ||||||||
Net Operating Income, as defined (1) | 157,826 | 142,442 | ||||||||
Wholly-Owned Properties | 136,316 | 122,834 | ||||||||
Consolidated property partnerships: (2) | ||||||||||
100 First Street (3) | 5,460 | 6,015 | ||||||||
303 Second Street (3) | 10,261 | 7,798 | ||||||||
Crossing/900 (4) | 5,789 | 5,795 | ||||||||
Net Operating Income, as defined (1) | 157,826 | 142,442 | ||||||||
Non-Same Store GAAP Net Operating Income (5) | (23,345 | ) | (7,667 | ) | ||||||
Same Store GAAP Net Operating Income | 134,481 | 134,775 | ||||||||
GAAP to Cash Adjustments: | ||||||||||
GAAP Operating Revenues Adjustments, net (6) | (5,367 | ) | (22,430 | ) | ||||||
GAAP Operating Expenses Adjustments, net (7) | (17 | ) | (4 | ) | ||||||
Same Store Cash Net Operating Income | $ | 129,097 | $ | 112,341 | ||||||
(1) | Please refer to pages 29-30 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income. |
(2) | Reflects GAAP 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 property disposed of during the second quarter of 2019, one property disposed of during the fourth quarter or 2019, one office property we acquired in the third quarter of 2019, our completed residential development that is not yet stabilized 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 and amortization of above and below market lease intangibles. |
(7) | Includes the amortization of above and below market lease intangibles for ground leases and the provision for bad debts. |
Three Months Ended March 31, | ||||||||||
2020 | 2019 | |||||||||
Net Income Available to Common Stockholders | $ | 39,817 | $ | 36,903 | ||||||
Interest expense | 14,444 | 11,243 | ||||||||
Depreciation and amortization | 74,370 | 66,135 | ||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 705 | 700 | ||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,896 | 4,191 | ||||||||
EBITDA, as adjusted (1) | $ | 134,232 | $ | 119,172 | ||||||
(1) | Please refer to page 30 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. |
Contact: | FOR RELEASE: |
Tyler H. Rose | April 29, 2020 |
Executive Vice President | |
and Chief Financial Officer | |
(310) 481-8484 or | |
Michelle Ngo | |
Senior Vice President | |
and Treasurer | |
(310) 481-8581 |
• | As of the date of this release, the company has approximately $1.0 billion of cash and cash equivalents on hand |
• | In March, fully physically settled equity forward sale agreements in connection with the February 2020 common stock offering and ATM transactions executed throughout 2019, resulting in the issuance of an aggregate of 8,897,110 shares of common stock for aggregate net proceeds of $722.2 million |
• | In April, completed a private placement of $350.0 million aggregate principal amount of ten-year, 4.27% unsecured senior notes |
• | Current availability under the company’s revolving credit facility totals $370.0 million |
• | No material debt maturities until 2023, excluding the company’s revolving credit facility and term loan facility, which mature in the third quarter of 2022 |
• | Weighted average debt maturity of approximately seven years |
• | All stabilized properties remain open and operational, with essential staff and key procedures in place to manage through the COVID-19 pandemic |
• | As of the date of this release, across all property types, collected approximately 96% of our April 2020 contractual rent billings, excluding a rent relief program with certain retail tenants. Adjusted for the retail rent relief program, collected 93% of contractual rent billings |
• | Limited lease expirations in 2020 and 2021, with only one expiration greater than 125,000 square feet in the fourth quarter of 2020 |
• | $2.0 billion of projects under development |
◦ | Remaining spending to complete the projects of approximately $725.0 million |
◦ | Projects fully funded with the liquidity reported under “Balance Sheet/Liquidity Highlights” |
◦ | Projects 90% leased across office and life science space |
◦ | As of the date of this release, all the projects are under active construction |
• | Net income available to common stockholders per share of $0.37 |
• | Funds from operations available to common stockholders and unitholders (“FFO”) per share of $1.00 |
• | Net income and FFO per share include a reduction in revenue of approximately $0.06 per share related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic |
• | Revenues of $221.3 million |
• | Stabilized portfolio was 93.5% occupied and 97.3% leased at March 31, 2020 |
• | Signed approximately 222,000 square feet of new or renewing leases |
◦ | Rents were up 57.5% on a GAAP basis and 45.3% on a cash basis |
• | In January, transferred 333 Dexter, a 635,000 square foot office development project located in the South Lake Union submarket of Seattle from the under construction phase to the tenant improvement phase. The project is 100% leased to a Fortune 50 publicly-traded company |
• | In January, transferred Netflix // On Vine, a 355,000 square foot office development project located in the Hollywood submarket of Los Angeles, from the under construction phase to the tenant improvement phase. The project is 100% leased to Netflix, Inc. |
• | In February, completed construction on 225 residential units, the second of three phases of the residential development at our One Paseo mixed-use project in the Del Mar submarket of San Diego. Together, Phases I and II were 44% leased and are in lease-up |
• | In March, added The Exchange on 16th, a $585.0 million, 750,000 square foot development project located in San Francisco’s Mission Bay district, to the stabilized portfolio. The office component of the project is 100% leased to Dropbox |
• | In March, added One Paseo Retail, a 96,000 square foot retail development project, part of the One Paseo mixed-use project located in San Diego’s Del Mar submarket, to the stabilized portfolio |
• | In March, transferred One Paseo Office, a 285,000 square foot development project located in the Del Mar submarket of San Diego from the under construction phase to the tenant improvement phase |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Revenues | $ | 221,328 | $ | 201,202 | ||||
Net income available to common stockholders | $ | 39,817 | $ | 36,903 | ||||
Weighted average common shares outstanding – basic | 106,875 | 100,901 | ||||||
Weighted average common shares outstanding – diluted | 107,390 | 101,443 | ||||||
Net income available to common stockholders per share – basic | $ | 0.37 | $ | 0.36 | ||||
Net income available to common stockholders per share – diluted | $ | 0.37 | $ | 0.36 | ||||
Funds From Operations (1)(2) | $ | 110,173 | $ | 99,812 | ||||
Weighted average common shares/units outstanding – basic (3) | 110,031 | 104,062 | ||||||
Weighted average common shares/units outstanding – diluted (4) | 110,546 | 104,603 | ||||||
Funds From Operations per common share/unit – basic (2) | $ | 1.00 | $ | 0.96 | ||||
Funds From Operations per common share/unit – diluted (2) | $ | 1.00 | $ | 0.95 | ||||
Common shares outstanding at end of period | 115,068 | 100,967 | ||||||
Common partnership units outstanding at end of period | 2,021 | 2,023 | ||||||
Total common shares and units outstanding at end of period | 117,089 | 102,990 | ||||||
March 31, 2020 | March 31, 2019 | |||||||
Stabilized office portfolio occupancy rates: (5) | ||||||||
Greater Los Angeles | 94.0 | % | 95.6 | % | ||||
Orange County | N/A | 90.3 | % | |||||
San Diego County | 88.3 | % | 90.2 | % | ||||
San Francisco Bay Area | 94.3 | % | 92.5 | % | ||||
Greater Seattle | 95.5 | % | 88.8 | % | ||||
Weighted average total | 93.5 | % | 92.5 | % | ||||
Total square feet of stabilized office properties owned at end of period: (5) | ||||||||
Greater Los Angeles | 4,027 | 3,956 | ||||||
Orange County | N/A | 272 | ||||||
San Diego County | 2,145 | 2,046 | ||||||
San Francisco Bay Area | 6,350 | 5,160 | ||||||
Greater Seattle | 1,802 | 1,802 | ||||||
Total | 14,324 | 13,236 |
(1) | Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and management statement on Funds From Operations are included after the Consolidated Statements of Operations. |
(2) | Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders. |
(3) | Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) 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 stock options, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding. |
(5) | Occupancy percentages and total square feet reported are based on the company’s stabilized office portfolio for the periods presented. Occupancy percentages and total square feet shown for March 31, 2019 include the office properties that were sold subsequent to March 31, 2019. |
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements | $ | 1,506,357 | $ | 1,466,166 | |||
Buildings and improvements | 5,997,523 | 5,866,477 | |||||
Undeveloped land and construction in progress | 2,318,236 | 2,296,130 | |||||
Total real estate assets held for investment | 9,822,116 | 9,628,773 | |||||
Accumulated depreciation and amortization | (1,622,369 | ) | (1,561,361 | ) | |||
Total real estate assets held for investment, net | 8,199,747 | 8,067,412 | |||||
Cash and cash equivalents | 762,134 | 60,044 | |||||
Restricted cash | 16,300 | 16,300 | |||||
Marketable securities | 19,984 | 27,098 | |||||
Current receivables, net | 16,534 | 26,489 | |||||
Deferred rent receivables, net | 352,352 | 337,937 | |||||
Deferred leasing costs and acquisition-related intangible assets, net | 204,392 | 212,805 | |||||
Right of use ground lease assets | 96,145 | 96,348 | |||||
Prepaid expenses and other assets, net | 67,559 | 55,661 | |||||
TOTAL ASSETS | $ | 9,735,147 | $ | 8,900,094 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES: | |||||||
Secured debt, net | $ | 257,359 | $ | 258,593 | |||
Unsecured debt, net | 3,050,103 | 3,049,185 | |||||
Unsecured line of credit | 380,000 | 245,000 | |||||
Accounts payable, accrued expenses and other liabilities | 417,547 | 418,848 | |||||
Ground lease liabilities | 98,247 | 98,400 | |||||
Accrued dividends and distributions | 57,620 | 53,219 | |||||
Deferred revenue and acquisition-related intangible liabilities, net | 130,843 | 139,488 | |||||
Rents received in advance and tenant security deposits | 65,913 | 66,503 | |||||
Total liabilities | 4,457,632 | 4,329,236 | |||||
EQUITY: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,151 | 1,060 | |||||
Additional paid-in capital | 5,067,181 | 4,350,917 | |||||
Distributions in excess of earnings | (76,182 | ) | (58,467 | ) | |||
Total stockholders’ equity | 4,992,150 | 4,293,510 | |||||
Noncontrolling Interests | |||||||
Common units of the Operating Partnership | 87,655 | 81,917 | |||||
Noncontrolling interests in consolidated property partnerships | 197,710 | 195,431 | |||||
Total noncontrolling interests | 285,365 | 277,348 | |||||
Total equity | 5,277,515 | 4,570,858 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 9,735,147 | $ | 8,900,094 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
REVENUES | |||||||
Rental income | $ | 218,633 | $ | 199,382 | |||
Other property income | 2,695 | 1,820 | |||||
Total revenues | 221,328 | 201,202 | |||||
EXPENSES | |||||||
Property expenses | 38,983 | 38,149 | |||||
Real estate taxes | 22,202 | 18,639 | |||||
Ground leases | 2,317 | 1,972 | |||||
General and administrative expenses | 19,010 | 23,341 | |||||
Leasing costs | 1,456 | 1,757 | |||||
Depreciation and amortization | 74,370 | 66,135 | |||||
Total expenses | 158,338 | 149,993 | |||||
OTHER (EXPENSES) INCOME | |||||||
Interest income and other net investment (loss) gain | (3,128 | ) | 1,828 | ||||
Interest expense | (14,444 | ) | (11,243 | ) | |||
Total other (expenses) income | (17,572 | ) | (9,415 | ) | |||
NET INCOME | 45,418 | 41,794 | |||||
Net income attributable to noncontrolling common units of the Operating Partnership | (705 | ) | (700 | ) | |||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,896 | ) | (4,191 | ) | |||
Total income attributable to noncontrolling interests | (5,601 | ) | (4,891 | ) | |||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 39,817 | $ | 36,903 | |||
Weighted average common shares outstanding – basic | 106,875 | 100,901 | |||||
Weighted average common shares outstanding – diluted | 107,390 | 101,443 | |||||
Net income available to common stockholders per share – basic | $ | 0.37 | $ | 0.36 | |||
Net income available to common stockholders per share – diluted | $ | 0.37 | $ | 0.36 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income available to common stockholders | $ | 39,817 | $ | 36,903 | |||
Adjustments: | |||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 705 | 700 | |||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,896 | 4,191 | |||||
Depreciation and amortization of real estate assets | 72,438 | 64,971 | |||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (7,683 | ) | (6,953 | ) | |||
Funds From Operations(1)(2)(3) | $ | 110,173 | $ | 99,812 | |||
Weighted average common shares/units outstanding – basic (4) | 110,031 | 104,062 | |||||
Weighted average common shares/units outstanding – diluted (5) | 110,546 | 104,603 | |||||
Funds From Operations per common share/unit – basic (2) | $ | 1.00 | $ | 0.96 | |||
Funds From Operations per common share/unit – diluted (2) | $ | 1.00 | $ | 0.95 |
(1) | We calculate 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. |
(2) | Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders. |
(3) | FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $5.0 million and $3.8 million for the three months ended March 31, 2020 and 2019, respectively. |
(4) | Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding. |
(5) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding. |
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