QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Kilroy Realty Corporation | |||||||||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
Kilroy Realty, L.P. | |||||||||||
(State or other jurisdiction of incorporation or organization) | (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 |
Securities registered pursuant to Section 12(g) of the Act: | |||||
Registrant | Title of each class | ||||
Kilroy Realty, L.P. |
Page | |||||||||||
PART I – FINANCIAL INFORMATION | |||||||||||
Item 1. | |||||||||||
Item 1. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
PART II – OTHER INFORMATION | |||||||||||
Item 1. | |||||||||||
Item 1A. | |||||||||||
Item 2. | |||||||||||
Item 3. | |||||||||||
Item 4. | |||||||||||
Item 5. | |||||||||||
Item 6. | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
REAL ESTATE ASSETS: | |||||||||||
Land and improvements | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Undeveloped land and construction in progress | |||||||||||
Total real estate assets held for investment | |||||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Total real estate assets held for investment, net | |||||||||||
CASH AND CASH EQUIVALENTS | |||||||||||
MARKETABLE SECURITIES (Note 7) | |||||||||||
CURRENT RECEIVABLES, NET | |||||||||||
DEFERRED RENT RECEIVABLES, NET | |||||||||||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET | |||||||||||
RIGHT OF USE GROUND LEASE ASSETS | |||||||||||
PREPAID EXPENSES AND OTHER ASSETS, NET | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
LIABILITIES: | |||||||||||
Secured debt, net (Notes 2 and 7) | $ | $ | |||||||||
Unsecured debt, net (Notes 2 and 7) | |||||||||||
Accounts payable, accrued expenses and other liabilities | |||||||||||
Ground lease liabilities | |||||||||||
Accrued dividends and distributions (Note 12) | |||||||||||
Deferred revenue and acquisition-related intangible liabilities, net | |||||||||||
Rents received in advance and tenant security deposits | |||||||||||
Total liabilities | |||||||||||
COMMITMENTS AND CONTINGENCIES (Note 6) | |||||||||||
EQUITY: | |||||||||||
Stockholders’ Equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Total stockholders’ equity | |||||||||||
Noncontrolling Interests (Notes 1 and 3): | |||||||||||
Common units of the Operating Partnership | |||||||||||
Noncontrolling interests in consolidated property partnerships | |||||||||||
Total noncontrolling interests | |||||||||||
Total equity | |||||||||||
TOTAL LIABILITIES AND EQUITY | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
REVENUES | |||||||||||
Rental income (Note 5) | $ | $ | |||||||||
Total revenues | |||||||||||
EXPENSES | |||||||||||
Property expenses | |||||||||||
Real estate taxes | |||||||||||
Ground leases | |||||||||||
General and administrative expenses (Note 4) | |||||||||||
Leasing costs | |||||||||||
Depreciation and amortization | |||||||||||
Total expenses | |||||||||||
OTHER INCOME (EXPENSES) | |||||||||||
Interest and other income, net | |||||||||||
Interest expense (Note 2) | ( | ( | |||||||||
Total other expenses | ( | ( | |||||||||
NET INCOME | |||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | ( | ( | |||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||
Total income attributable to noncontrolling interests | ( | ( | |||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | $ | |||||||||
Net income available to common stockholders per share – basic (Note 8) | $ | $ | |||||||||
Net income available to common stockholders per share – diluted (Note 8) | $ | $ | |||||||||
Weighted average common shares outstanding – basic (Note 8) | |||||||||||
Weighted average common shares outstanding – diluted (Note 8) |
Common Stock | Total Stock- holders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||
Number of Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | ||||||||||||||||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Issuance of share-based compensation awards | |||||||||||||||||||||||||||||||||||||||||
Non-cash amortization of share-based compensation (Note 4) | |||||||||||||||||||||||||||||||||||||||||
Settlement of restricted stock units for shares of common stock | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock and restricted stock units | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||||||||||||||||||||||||||||||||
Adjustment for noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||||||||
Dividends declared per common share and common unit ($ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2023 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Common Stock | Total Stock- holders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||||||||||||||||
Number of Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | ||||||||||||||||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2021 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||
Issuance of share-based compensation awards | |||||||||||||||||||||||||||||||||||||||||
Non-cash amortization of share-based compensation | |||||||||||||||||||||||||||||||||||||||||
Settlement of restricted stock units for shares of common stock | ( | ||||||||||||||||||||||||||||||||||||||||
Repurchase of common stock and restricted stock units | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||||||||||||||||||||||||||||||||
Adjustment for noncontrolling interest | ( | ||||||||||||||||||||||||||||||||||||||||
Dividends declared per common share and common unit ($ | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2022 | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization of real estate assets and leasing costs | |||||||||||
Depreciation of non-real estate furniture, fixtures and equipment | |||||||||||
Revenue reversals (recoveries) for doubtful accounts, net (Note 5) | ( | ||||||||||
Non-cash amortization of share-based compensation awards | |||||||||||
Non-cash amortization of deferred financing costs and debt discounts | |||||||||||
Non-cash amortization of net below market rents | ( | ( | |||||||||
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements | ( | ( | |||||||||
Straight-line rents | ( | ( | |||||||||
Amortization of right of use ground lease assets | |||||||||||
Net change in other operating assets | |||||||||||
Net change in other operating liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Expenditures for development and redevelopment properties and undeveloped land | ( | ( | |||||||||
Expenditures for operating properties and other capital assets | ( | ( | |||||||||
Expenditures for acquisitions of development properties and undeveloped land | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings on unsecured debt (Note 2) | |||||||||||
Financing costs | ( | ( | |||||||||
Repurchase of common stock and restricted stock units | ( | ( | |||||||||
Distributions to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||
Dividends and distributions paid to common stockholders and common unitholders | ( | ( | |||||||||
Principal payments and repayments of secured debt | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | ( | ||||||||||
Cash and cash equivalents and restricted cash, beginning of period | |||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
REAL ESTATE ASSETS: | |||||||||||
Land and improvements | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Undeveloped land and construction in progress | |||||||||||
Total real estate assets held for investment | |||||||||||
Accumulated depreciation and amortization | ( | ( | |||||||||
Total real estate assets held for investment, net | |||||||||||
CASH AND CASH EQUIVALENTS | |||||||||||
MARKETABLE SECURITIES (Note 7) | |||||||||||
CURRENT RECEIVABLES, NET | |||||||||||
DEFERRED RENT RECEIVABLES, NET | |||||||||||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET | |||||||||||
RIGHT OF USE GROUND LEASE ASSETS | |||||||||||
PREPAID EXPENSES AND OTHER ASSETS, NET | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND CAPITAL | |||||||||||
LIABILITIES: | |||||||||||
Secured debt, net (Notes 2 and 7) | $ | $ | |||||||||
Unsecured debt, net (Notes 2 and 7) | |||||||||||
Accounts payable, accrued expenses and other liabilities | |||||||||||
Ground lease liabilities | |||||||||||
Accrued distributions (Note 12) | |||||||||||
Deferred revenue and acquisition-related intangible liabilities, net | |||||||||||
Rents received in advance and tenant security deposits | |||||||||||
Total liabilities | |||||||||||
COMMITMENTS AND CONTINGENCIES (Note 6) | |||||||||||
CAPITAL: | |||||||||||
Common units, held by common limited partners issued and outstanding | |||||||||||
Noncontrolling interests in consolidated property partnerships (Note 1) | |||||||||||
Total capital | |||||||||||
TOTAL LIABILITIES AND CAPITAL | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
REVENUES | |||||||||||
Rental income (Note 5) | $ | $ | |||||||||
Total revenues | |||||||||||
EXPENSES | |||||||||||
Property expenses | |||||||||||
Real estate taxes | |||||||||||
Ground leases | |||||||||||
General and administrative expenses (Note 4) | |||||||||||
Leasing costs | |||||||||||
Depreciation and amortization | |||||||||||
Total expenses | |||||||||||
OTHER INCOME (EXPENSES) | |||||||||||
Interest and other income, net | |||||||||||
Interest expense (Note 2) | ( | ( | |||||||||
Total other expenses | ( | ( | |||||||||
NET INCOME | |||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships and subsidiaries | ( | ( | |||||||||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS | $ | $ | |||||||||
Net income available to common unitholders per unit – basic (Note 9) | $ | $ | |||||||||
Net income available to common unitholders per unit – diluted (Note 9) | $ | $ | |||||||||
Weighted average common units outstanding – basic (Note 9) | |||||||||||
Weighted average common units outstanding – diluted (Note 9) |
Partners’ Capital | Noncontrolling Interests in Consolidated Property Partnerships | ||||||||||||||||||||||
Number of Common Units | Common Units | Total Capital | |||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2022 | $ | $ | $ | ||||||||||||||||||||
Net income | |||||||||||||||||||||||
Issuance of share-based compensation awards | |||||||||||||||||||||||
Non-cash amortization of share-based compensation (Note 4) | |||||||||||||||||||||||
Settlement of restricted stock units | — | ||||||||||||||||||||||
Repurchase of common units and restricted stock units | ( | ( | ( | ||||||||||||||||||||
Distributions to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||||||||||||||
Distributions declared per common unit ($ | ( | ( | |||||||||||||||||||||
BALANCE AS OF MARCH 31, 2023 | $ | $ | $ | ||||||||||||||||||||
Partners’ Capital | Noncontrolling Interests in Consolidated Property Partnerships | ||||||||||||||||||||||
Number of Common Units | Common Units | Total Capital | |||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2021 | $ | $ | $ | ||||||||||||||||||||
Net income | |||||||||||||||||||||||
Issuance of share-based compensation awards | |||||||||||||||||||||||
Non-cash amortization of share-based compensation | |||||||||||||||||||||||
Settlement of restricted stock units | — | ||||||||||||||||||||||
Repurchase of common units and restricted stock units | ( | ( | ( | ||||||||||||||||||||
Distributions to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||||||||||||||
Distributions declared per common unit ($ | ( | ( | |||||||||||||||||||||
BALANCE AS OF MARCH 31, 2022 | $ | $ | $ | ||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization of real estate assets and leasing costs | |||||||||||
Depreciation of non-real estate furniture, fixtures and equipment | |||||||||||
Revenue reversals (recoveries) for doubtful accounts, net (Note 5) | ( | ||||||||||
Non-cash amortization of share-based compensation awards | |||||||||||
Non-cash amortization of deferred financing costs and debt discounts | |||||||||||
Non-cash amortization of net below market rents | ( | ( | |||||||||
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements | ( | ( | |||||||||
Straight-line rents | ( | ( | |||||||||
Amortization of right of use ground lease assets | |||||||||||
Net change in other operating assets | |||||||||||
Net change in other operating liabilities | |||||||||||
Net cash provided by operating activities | |||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
Expenditures for development and redevelopment properties and undeveloped land | ( | ( | |||||||||
Expenditures for operating properties and other capital assets | ( | ( | |||||||||
Expenditures for acquisitions of development properties and undeveloped land | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
Borrowings on unsecured debt (Note 2) | |||||||||||
Financing costs | ( | ( | |||||||||
Repurchase of common units and restricted stock units | ( | ( | |||||||||
Distributions to noncontrolling interests in consolidated property partnerships | ( | ( | |||||||||
Distributions paid to common unitholders | ( | ( | |||||||||
Principal payments and repayments of secured debt | ( | ( | |||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | ( | ||||||||||
Cash and cash equivalents and restricted cash, beginning of period | |||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | $ |
Number of Buildings | Rentable Square Feet | Number of Tenants | Percentage Occupied (1) | Percentage Leased | |||||||||||||||||||||||||
Stabilized Office Properties (2) | % | % |
Number of Projects | Number of Units | 2023 Average Occupancy | |||||||||||||||
Stabilized Residential Properties | % |
Number of Properties/Projects | Estimated Rentable Square Feet (1) | ||||||||||
In-process development projects - tenant improvement | |||||||||||
In-process development projects - under construction | |||||||||||
In-process redevelopment projects - under construction | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Outstanding borrowings | $ | $ | |||||||||
Remaining borrowing capacity | |||||||||||
Total borrowing capacity (1) | $ | $ | |||||||||
Interest rate (2) | % | % | |||||||||
Facility fee-annual rate (3) | |||||||||||
Maturity date (4) | July 31, 2025 |
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Outstanding borrowings | $ | $ | |||||||||
Remaining borrowing capacity | |||||||||||
Total borrowing capacity (1) | $ | $ | |||||||||
Interest rate (2) | % | % | |||||||||
Undrawn facility fee-annual rate (3) | |||||||||||
Maturity date (4) | October 3, 2024 |
Year | (in thousands) | ||||
Remaining 2023 | $ | ||||
2024 (1) | |||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total aggregate principal value (2) | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Gross interest expense | $ | $ | |||||||||
Capitalized interest and deferred financing costs | ( | ( | |||||||||
Interest expense | $ | $ |
Fair Value Assumptions | |||||
Valuation date | February 6, 2023 | ||||
Fair value per share on valuation date (1) | $ | ||||
Expected share price volatility | |||||
Risk-free interest rate |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
Fixed lease payments | $ | $ | |||||||||
Variable lease payments | |||||||||||
Net collectability (reversals) recoveries (1) | ( | ||||||||||
Total rental income | $ | $ |
Year Ending | (in thousands) | ||||
Remaining 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
2028 | |||||
Thereafter | |||||
Total (1) | $ |
Fair Value (Level 1) (1) | |||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
Description | (in thousands) | ||||||||||
Marketable securities (2) | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Carrying Value | Fair Value (1) | Carrying Value | Fair Value (1) | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||
Secured debt, net | $ | $ | $ | $ | |||||||||||||||||||
Unsecured debt, net | $ | $ | $ | $ | |||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands, except share and per share amounts) | |||||||||||
Numerator: | |||||||||||
Net income available to common stockholders | $ | $ | |||||||||
Allocation to participating securities (1) | ( | ( | |||||||||
Numerator for basic and diluted net income available to common stockholders | $ | $ | |||||||||
Denominator: | |||||||||||
Basic weighted average vested shares outstanding | |||||||||||
Effect of dilutive securities | |||||||||||
Diluted weighted average vested shares and common stock equivalents outstanding | |||||||||||
Basic earnings per share: | |||||||||||
Net income available to common stockholders per share | $ | $ | |||||||||
Diluted earnings per share: | |||||||||||
Net income available to common stockholders per share | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands, except unit and per unit amounts) | |||||||||||
Numerator: | |||||||||||
Net income available to common unitholders | $ | $ | |||||||||
Allocation to participating securities (1) | ( | ( | |||||||||
Numerator for basic and diluted net income available to common unitholders | $ | $ | |||||||||
Denominator: | |||||||||||
Basic weighted average vested units outstanding | |||||||||||
Effect of dilutive securities | |||||||||||
Diluted weighted average vested units and common unit equivalents outstanding | |||||||||||
Basic earnings per unit: | |||||||||||
Net income available to common unitholders per unit | $ | $ | |||||||||
Diluted earnings per unit: | |||||||||||
Net income available to common unitholders per unit | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
SUPPLEMENTAL CASH FLOWS INFORMATION: | |||||||||||
Cash paid for interest, net of capitalized interest of $ | $ | $ | |||||||||
Cash paid for amounts included in the measurement of ground lease liabilities | $ | $ | |||||||||
NON-CASH INVESTING TRANSACTIONS: | |||||||||||
Accrual for expenditures for operating properties and development and redevelopment properties | $ | $ | |||||||||
Tenant improvements funded directly by tenants | $ | $ | |||||||||
NON-CASH FINANCING TRANSACTIONS: | |||||||||||
Accrual of dividends and distributions payable to common stockholders and common unitholders (Note 12) | $ | $ | |||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | |||||||||||
Cash and cash equivalents at beginning of period | $ | $ | |||||||||
Restricted cash at beginning of period | |||||||||||
Cash and cash equivalents and restricted cash at beginning of period | $ | $ | |||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Restricted cash at end of period | |||||||||||
Cash and cash equivalents and restricted cash at end of period | $ | $ |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
SUPPLEMENTAL CASH FLOWS INFORMATION: | |||||||||||
Cash paid for interest, net of capitalized interest of $ | $ | $ | |||||||||
Cash paid for amounts included in the measurement of ground lease liabilities | $ | $ | |||||||||
NON-CASH INVESTING TRANSACTIONS: | |||||||||||
Accrual for expenditures for operating properties and development and redevelopment properties | $ | $ | |||||||||
Tenant improvements funded directly by tenants | $ | $ | |||||||||
NON-CASH FINANCING TRANSACTIONS: | |||||||||||
Accrual of distributions payable to common unitholders (Note 12) | $ | $ | |||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(in thousands) | |||||||||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | |||||||||||
Cash and cash equivalents at beginning of period | $ | $ | |||||||||
Restricted cash at beginning of period | |||||||||||
Cash and cash equivalents and restricted cash at beginning of period | $ | $ | |||||||||
Cash and cash equivalents at end of period | $ | $ | |||||||||
Restricted cash at end of period | |||||||||||
Cash and cash equivalents and restricted cash at end of period | $ | $ |
Future Development Pipeline | Location | Approx. Developable Square Feet (1) | Total Costs as of 3/31/2023 ($ in millions) (2) | |||||||||||||||||
Greater Los Angeles | ||||||||||||||||||||
1633 26th Street | West Los Angeles | 190,000 | $ | 14.8 | ||||||||||||||||
San Diego County | ||||||||||||||||||||
Santa Fe Summit South / North | 56 Corridor | 600,000 - 650,000 | 109.6 | |||||||||||||||||
2045 Pacific Highway | Little Italy | 275,000 | 56.4 | |||||||||||||||||
Kilroy East Village | East Village | TBD | 67.1 | |||||||||||||||||
San Francisco Bay Area | ||||||||||||||||||||
Kilroy Oyster Point - Phases 3 and 4 | South San Francisco | 875,000 - 1,000,000 | 220.5 | |||||||||||||||||
Flower Mart | SOMA | 2,300,000 | 551.6 | |||||||||||||||||
Greater Seattle | ||||||||||||||||||||
SIX0 - Office & Residential | Denny Regrade | 925,000 | 182.7 | |||||||||||||||||
Austin | ||||||||||||||||||||
Stadium Tower | Stadium District / Domain | 493,000 | 65.7 | |||||||||||||||||
Total: | $ | 1,268.4 |
Quarter to Date | Number of Leases (2) | Rentable Square Feet (2) | Weighted Average Lease Term (in months) | TI/LC per Sq. Ft. (3) | TI/LC per Sq. Ft. / Year | Changes in Rents (4) | Changes in Cash Rents (5) | ||||||||||||||||||||||||||||||||||||||||||||||
New | Renewal | New | Renewal | ||||||||||||||||||||||||||||||||||||||||||||||||||
2nd Generation (7) | 6 | 9 | 34,634 | 116,595 | 42 | $ | 23.33 | $ | 6.66 | 19.1 | % | 5.4 | % | ||||||||||||||||||||||||||||||||||||||||
Quarter to Date | Number of Leases (2) | Rentable Square Feet (2) | Weighted Average Lease Term (in months) | TI/LC per Sq. Ft. (3) | TI/LC per Sq. Ft. / Year | Changes in Rents (4) | Changes in Cash Rents (5) | Retention Rates (8) | |||||||||||||||||||||||||||||||||||||||||||||||||||
New | Renewal | New | Renewal | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2nd Generation (7) | 12 | 8 | 169,861 | 116,595 | 53 | $ | 58.09 | $ | 13.15 | 4.2 | % | (4.4) | % | 25.1 | % | ||||||||||||||||||||||||||||||||||||||||||||
Year of Lease Expiration | Number of Expiring Leases | Total Square Feet | % of Total Leased Sq. Ft. | Annualized Base Rent (2)(3) | % of Total Annualized Base Rent (2) | Annualized Base Rent per Sq. Ft. (2) | ||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||
Remainder of 2023 (4) | 46 | 1,169,807 | 8.1 | % | $ | 59,404 | 7.3 | % | $ | 50.78 | ||||||||||||||||||||||||||||
2024 | 76 | 1,130,967 | 7.8 | % | 54,555 | 6.7 | % | 48.24 | ||||||||||||||||||||||||||||||
2025 | 63 | 687,480 | 4.8 | % | 33,148 | 4.1 | % | 48.22 | ||||||||||||||||||||||||||||||
2026 | 59 | 1,957,235 | 13.7 | % | 91,545 | 11.3 | % | 46.77 | ||||||||||||||||||||||||||||||
2027 | 63 | 1,114,900 | 7.8 | % | 46,177 | 5.7 | % | 41.42 | ||||||||||||||||||||||||||||||
2028 | 40 | 1,081,203 | 7.6 | % | 67,752 | 8.4 | % | 62.66 | ||||||||||||||||||||||||||||||
Total | 347 | 7,141,592 | 49.8 | % | $ | 352,581 | 43.5 | % | $ | 49.37 |
Year | Region | # of Expiring Leases | Total Square Feet | % of Total Leased Sq. Ft. | Annualized Base Rent (2)(3) | % of Total Annualized Base Rent (2) | Annualized Rent per Sq. Ft. (2) | |||||||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||||||||
2023 (4) | Greater Los Angeles | 31 | 352,000 | 2.5 | % | $ | 18,810 | 2.3 | % | $ | 53.44 | |||||||||||||||||||||||||||||||||
San Diego County | 5 | 134,366 | 0.9 | % | 5,798 | 0.7 | % | 43.15 | ||||||||||||||||||||||||||||||||||||
San Francisco Bay Area | 7 | 296,300 | 2.1 | % | 17,423 | 2.1 | % | 58.80 | ||||||||||||||||||||||||||||||||||||
Greater Seattle | 3 | 387,141 | 2.6 | % | 17,373 | 2.2 | % | 44.88 | ||||||||||||||||||||||||||||||||||||
Total | 46 | 1,169,807 | 8.1 | % | $ | 59,404 | 7.3 | % | $ | 50.78 | ||||||||||||||||||||||||||||||||||
2024 | Greater Los Angeles | 46 | 573,413 | 4.0 | % | $ | 25,110 | 3.1 | % | $ | 43.79 | |||||||||||||||||||||||||||||||||
San Diego County | 9 | 57,303 | 0.3 | % | 3,199 | 0.4 | % | 55.83 | ||||||||||||||||||||||||||||||||||||
San Francisco Bay Area | 11 | 269,858 | 1.9 | % | 18,040 | 2.2 | % | 66.85 | ||||||||||||||||||||||||||||||||||||
Greater Seattle | 10 | 230,393 | 1.6 | % | 8,206 | 1.0 | % | 35.62 | ||||||||||||||||||||||||||||||||||||
Total | 76 | 1,130,967 | 7.8 | % | $ | 54,555 | 6.7 | % | $ | 48.24 | ||||||||||||||||||||||||||||||||||
Number of Properties/Projects | Estimated Rentable Square Feet (1) | ||||||||||
In-process development projects - tenant improvement | 1 | 734,000 | |||||||||
In-process development projects - under construction | 2 | 946,000 | |||||||||
In-process redevelopment projects - under construction | 2 | 100,000 | |||||||||
Number of Buildings | Rentable Square Feet | ||||||||||
Total as of March 31, 2022 | 118 | 15,221,912 | |||||||||
Completed development and redevelopment properties placed in-service | 4 | 1,149,273 | |||||||||
Properties transferred to development and redevelopment | (2) | (92,003) | |||||||||
Dispositions | (1) | (96,085) | |||||||||
Remeasurement | — | 23,202 | |||||||||
Total as of March 31, 2023 (1) | 119 | 16,206,299 |
Region | Number of Buildings | Rentable Square Feet | Occupancy at (1) | |||||||||||||||||||||||||||||
3/31/2023 | 12/31/2022 | 9/30/2022 | ||||||||||||||||||||||||||||||
Greater Los Angeles | 53 | 4,344,361 | 80.8 | % | 85.2 | % | 84.5 | % | ||||||||||||||||||||||||
San Diego County | 23 | 2,698,031 | 85.9 | % | 86.2 | % | 86.3 | % | ||||||||||||||||||||||||
San Francisco Bay Area | 33 | 6,163,729 | 94.7 | % | 95.5 | % | 93.8 | % | ||||||||||||||||||||||||
Greater Seattle | 10 | 3,000,178 | 95.3 | % | 97.7 | % | 97.7 | % | ||||||||||||||||||||||||
Total Stabilized Office Portfolio | 119 | 16,206,299 | 89.6 | % | 91.6 | % | 90.8 | % |
Average Occupancy | |||||||||||
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
Stabilized Office Portfolio (1) | 89.9 | % | 91.4 | % | |||||||
Same Store Portfolio (2) | 90.5 | % | 91.6 | % | |||||||
Residential Portfolio (3) | 93.4 | % | 93.7 | % |
Tenant Name | Region | Annualized Base Rental Revenue (1) (2) | Rentable Square Feet | Percentage of Total Annualized Base Rental Revenue | Percentage of Total Rentable Square Feet | Year(s) of Lease Expiration | ||||||||||||||||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||||||||||||||||
Global technology company | Greater Seattle / San Diego County | $ | 39,631 | 779,210 | 4.9 | % | 4.8 | % | 2032 - 2033 | |||||||||||||||||||||||||||||
Cruise LLC | San Francisco Bay Area | 35,449 | 374,618 | 4.4 | % | 2.3 | % | 2031 | ||||||||||||||||||||||||||||||
Stripe, Inc. | San Francisco Bay Area | 33,110 | 425,687 | 4.1 | % | 2.6 | % | 2034 | ||||||||||||||||||||||||||||||
Amazon.com (3) | Greater Seattle | 31,437 | 709,276 | 3.9 | % | 4.4 | % | 2023 / 2029 - 2030 | ||||||||||||||||||||||||||||||
Salesforce, Inc. / Tableau Software, LLC | San Francisco Bay Area / Greater Seattle | 30,100 | 613,497 | 3.7 | % | 3.8 | % | 2024 / 2029 - 2032 | ||||||||||||||||||||||||||||||
LinkedIn Corporation / Microsoft Corporation | San Francisco Bay Area | 29,752 | 663,460 | 3.7 | % | 4.1 | % | 2024 / 2026 | ||||||||||||||||||||||||||||||
Adobe Systems, Inc. | San Francisco Bay Area / Greater Seattle | 27,897 | 523,416 | 3.4 | % | 3.2 | % | 2027 / 2031 | ||||||||||||||||||||||||||||||
DoorDash, Inc. | San Francisco Bay Area | 23,842 | 236,759 | 2.9 | % | 1.5 | % | 2032 | ||||||||||||||||||||||||||||||
Riot Games, Inc. (4) | Greater Los Angeles | 22,967 | 340,584 | 2.8 | % | 2.1 | % | 2023 - 2024 / 2031 | ||||||||||||||||||||||||||||||
Okta, Inc. | San Francisco Bay Area | 22,387 | 273,371 | 2.8 | % | 1.7 | % | 2028 | ||||||||||||||||||||||||||||||
Netflix, Inc. | Greater Los Angeles | 21,854 | 361,388 | 2.7 | % | 2.2 | % | 2032 | ||||||||||||||||||||||||||||||
Box, Inc. | San Francisco Bay Area | 20,390 | 341,441 | 2.5 | % | 2.1 | % | 2028 | ||||||||||||||||||||||||||||||
Cytokinetics, Inc. | San Francisco Bay Area | 18,167 | 234,892 | 2.2 | % | 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 | 1.9 | % | 2.1 | % | 2030 | ||||||||||||||||||||||||||||||
Total | $ | 388,560 | 6,753,446 | 47.9 | % | 41.6 | % |
Group | # of Buildings | Rentable Square Feet | ||||||||||||
Same Store Properties | 115 | 15,056,915 | ||||||||||||
Stabilized Development Properties (1) | 4 | 1,149,384 | ||||||||||||
Total Stabilized Portfolio | 119 | 16,206,299 |
Three Months Ended March 31, | Dollar Change | Percentage Change | |||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||
Reconciliation of Net Income Available to Common Stockholders to Net Operating Income, as defined: | |||||||||||||||||||||||
Net Income Available to Common Stockholders | $ | 56,608 | $ | 53,128 | $ | 3,480 | 6.6 | % | |||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 560 | 516 | 44 | 8.5 | % | ||||||||||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 8,062 | 5,739 | 2,323 | 40.5 | % | ||||||||||||||||||
Net income | $ | 65,230 | $ | 59,383 | $ | 5,847 | 9.8 | % | |||||||||||||||
Unallocated expense (income): | |||||||||||||||||||||||
General and administrative expenses | 23,936 | 22,781 | 1,155 | 5.1 | % | ||||||||||||||||||
Leasing costs | 1,372 | 1,013 | 359 | 35.4 | % | ||||||||||||||||||
Depreciation and amortization | 93,676 | 88,660 | 5,016 | 5.7 | % | ||||||||||||||||||
Interest and other income, net | (1,460) | (81) | (1,379) | NM* | |||||||||||||||||||
Interest expense | 25,671 | 20,625 | 5,046 | 24.5 | % | ||||||||||||||||||
Net Operating Income, as defined | $ | 208,425 | $ | 192,381 | $ | 16,044 | 8.3 | % |
Three Months Ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Same Store | Development | Disposition | Total | Same Store | Development | Disposition | Total | ||||||||||||||||||||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Rental income | $ | 263,255 | $ | 26,849 | $ | — | $ | 290,104 | $ | 249,720 | $ | 12,388 | $ | 1,100 | $ | 263,208 | |||||||||||||||||||||||||||||||
Other property income | 2,409 | 289 | — | 2,698 | 2,015 | 272 | 6 | 2,293 | |||||||||||||||||||||||||||||||||||||||
Total | 265,664 | 27,138 | — | 292,802 | 251,735 | 12,660 | 1,106 | 265,501 | |||||||||||||||||||||||||||||||||||||||
Property and related expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Property expenses | 50,717 | 3,063 | — | 53,780 | 43,559 | 1,469 | 396 | 45,424 | |||||||||||||||||||||||||||||||||||||||
Real estate taxes | 24,577 | 3,651 | — | 28,228 | 24,497 | 1,309 | 64 | 25,870 | |||||||||||||||||||||||||||||||||||||||
Ground leases | 1,854 | 515 | — | 2,369 | 1,738 | 88 | — | 1,826 | |||||||||||||||||||||||||||||||||||||||
Total | 77,148 | 7,229 | — | 84,377 | 69,794 | 2,866 | 460 | 73,120 | |||||||||||||||||||||||||||||||||||||||
Net Operating Income, as defined | $ | 188,516 | $ | 19,909 | $ | — | $ | 208,425 | $ | 181,941 | $ | 9,794 | $ | 646 | $ | 192,381 |
Three Months Ended March 31, 2023 as compared to the Three Months Ended March 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
Same Store | Development | Disposition | Total | ||||||||||||||||||||||||||||||||||||||||||||
Dollar Change | Percent Change | Dollar Change | Percent Change | Dollar Change | Percent Change | Dollar Change | Percent Change | ||||||||||||||||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
Rental income | $ | 13,535 | 5.4 | % | $ | 14,461 | 116.7 | % | $ | (1,100) | (100.0) | % | $ | 26,896 | 10.2 | % | |||||||||||||||||||||||||||||||
Other property income | 394 | 19.6 | % | 17 | 6.3 | % | (6) | (100.0) | % | 405 | 17.7 | % | |||||||||||||||||||||||||||||||||||
Total | 13,929 | 5.5 | % | 14,478 | 114.4 | % | (1,106) | (100.0) | % | 27,301 | 10.3 | % | |||||||||||||||||||||||||||||||||||
Property and related expenses: | |||||||||||||||||||||||||||||||||||||||||||||||
Property expenses | 7,158 | 16.4 | % | 1,594 | 108.5 | % | (396) | (100.0) | % | 8,356 | 18.4 | % | |||||||||||||||||||||||||||||||||||
Real estate taxes | 80 | 0.3 | % | 2,342 | 178.9 | % | (64) | (100.0) | % | 2,358 | 9.1 | % | |||||||||||||||||||||||||||||||||||
Ground leases | 116 | 6.7 | % | 427 | 485.2 | % | — | — | % | 543 | 29.7 | % | |||||||||||||||||||||||||||||||||||
Total | 7,354 | 10.5 | % | 4,363 | 152.2 | % | (460) | (100.0) | % | 11,257 | 15.4 | % | |||||||||||||||||||||||||||||||||||
Net Operating Income, as defined | $ | 6,575 | 3.6 | % | $ | 10,115 | 103.3 | % | $ | (646) | (100.0) | % | $ | 16,044 | 8.3 | % |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | Dollar Change | Percentage Change | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Gross interest expense | $ | 43,402 | $ | 39,723 | $ | 3,679 | 9.3 | % | |||||||||||||||
Capitalized interest and deferred financing costs | (17,731) | (19,098) | 1,367 | (7.2) | % | ||||||||||||||||||
Interest expense | $ | 25,671 | $ | 20,625 | $ | 5,046 | 24.5 | % |
Shares/Units at March 31, 2023 | Aggregate Principal Amount or $ Value Equivalent | % of Total Market Capitalization | |||||||||||||||
($ in thousands) | |||||||||||||||||
Debt: (1)(2) | |||||||||||||||||
Unsecured Term Loan Facility | $ | 350,000 | 4.2 | % | |||||||||||||
Unsecured Senior Notes due 2024 | 425,000 | 5.1 | % | ||||||||||||||
Unsecured Senior Notes due 2025 | 400,000 | 4.8 | % | ||||||||||||||
Unsecured Senior Notes Series A & B due 2026 | 250,000 | 3.1 | % | ||||||||||||||
Unsecured Senior Notes due 2028 | 400,000 | 4.8 | % | ||||||||||||||
Unsecured Senior Notes due 2029 | 400,000 | 4.8 | % | ||||||||||||||
Unsecured Senior Notes Series A & B due 2027 & 2029 | 250,000 | 3.1 | % | ||||||||||||||
Unsecured Senior Notes due 2030 | 500,000 | 6.0 | % | ||||||||||||||
Unsecured Senior Notes due 2031 | 350,000 | 4.2 | % | ||||||||||||||
Unsecured Senior Notes due 2032 | 425,000 | 5.1 | % | ||||||||||||||
Unsecured Senior Notes due 2033 | 450,000 | 5.5 | % | ||||||||||||||
Secured debt | 242,046 | 3.0 | % | ||||||||||||||
Total debt | $ | 4,442,046 | 53.7 | % | |||||||||||||
Equity and Noncontrolling Interests in the Operating Partnership: (3) | |||||||||||||||||
Common limited partnership units outstanding (4) | 1,150,574 | $ | 37,279 | 0.5 | % | ||||||||||||
Shares of common stock outstanding | 117,120,962 | 3,794,719 | 45.8 | % | |||||||||||||
Total Equity and Noncontrolling Interests in the Operating Partnership | $ | 3,831,998 | 46.3 | % | |||||||||||||
Total Market Capitalization | $ | 8,274,044 | 100.0 | % |
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Outstanding borrowings | $ | — | $ | — | |||||||
Remaining borrowing capacity | 1,100,000 | 1,100,000 | |||||||||
Total borrowing capacity (1) | $ | 1,100,000 | $ | 1,100,000 | |||||||
Interest rate (2) | 5.87 | % | 5.20 | % | |||||||
Facility fee-annual rate (3) | 0.200% | ||||||||||
Maturity date (4) | July 31, 2025 |
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Outstanding borrowings | $ | 350,000 | $ | 200,000 | |||||||
Remaining borrowing capacity | 170,000 | 200,000 | |||||||||
Total borrowing capacity (1) | $ | 520,000 | $ | 400,000 | |||||||
Interest rate (2) | 5.77 | % | 5.23 | % | |||||||
Undrawn facility fee-annual rate (3) | 0.200% | ||||||||||
Maturity date (4) | October 3, 2024 |
Aggregate Principal Amount Outstanding | |||||
(in thousands) | |||||
Unsecured Term Loan Facility | $ | 350,000 | |||
Unsecured Senior Notes due 2024 | 425,000 | ||||
Unsecured Senior Notes due 2025 | 400,000 | ||||
Unsecured Senior Notes Series A & B due 2026 | 250,000 | ||||
Unsecured Senior Notes due 2028 | 400,000 | ||||
Unsecured Senior Notes due 2029 | 400,000 | ||||
Unsecured Senior Notes Series A & B due 2027 & 2029 | 250,000 | ||||
Unsecured Senior Notes due 2030 | 500,000 | ||||
Unsecured Senior Notes due 2031 | 350,000 | ||||
Unsecured Senior Notes due 2032 | 425,000 | ||||
Unsecured Senior Notes due 2033 | 450,000 | ||||
Secured Debt | 242,046 | ||||
Total Unsecured and Secured Debt (1) | 4,442,046 | ||||
Less: Unamortized Net Discounts and Deferred Financing Costs (2) | (29,470) | ||||
Total Debt, Net | $ | 4,412,576 |
Percentage of Total Debt (1) | Weighted Average Interest Rate (1) | ||||||||||||||||||||||
March 31, 2023 (2) | December 31, 2022 | March 31, 2023 (2) | December 31, 2022 | ||||||||||||||||||||
Secured vs. unsecured: | |||||||||||||||||||||||
Unsecured | 94.6 | % | 94.3 | % | 3.8 | % | 3.7 | % | |||||||||||||||
Secured | 5.4 | % | 5.7 | % | 3.9 | % | 3.9 | % | |||||||||||||||
Variable-rate vs. fixed-rate: | |||||||||||||||||||||||
Variable-rate | 7.9 | % | 4.7 | % | 5.8 | % | 5.2 | % | |||||||||||||||
Fixed-rate (3) | 92.1 | % | 95.3 | % | 3.7 | % | 3.7 | % | |||||||||||||||
Stated rate (3) | 3.8 | % | 3.7 | % | |||||||||||||||||||
GAAP effective rate (4) | 3.9 | % | 3.8 | % | |||||||||||||||||||
GAAP effective rate including debt issuance costs | 4.1 | % | 4.0 | % |
Development Phase | Number of Projects | Total Estimated Investment (1) | Total Costs Incurred | Remaining Investment (2) | Remaining Costs to be Spent in 2023 | |||||||||||||||||||||||||||||||||
(in millions) | ||||||||||||||||||||||||||||||||||||||
Stabilized | ||||||||||||||||||||||||||||||||||||||
Development | 2 | $ | 675 | $ | 652 | $ | 23 | $5 | to | $10 | ||||||||||||||||||||||||||||
Redevelopment | 2 | 45 | 42 | 3 | 1 | to | 5 | |||||||||||||||||||||||||||||||
Tenant Improvement (3) | ||||||||||||||||||||||||||||||||||||||
Development | 1 | 690 | 641 | 49 | 20 | to | 25 | |||||||||||||||||||||||||||||||
Under Construction | ||||||||||||||||||||||||||||||||||||||
Development | 2 | 1,000 | 466 | 534 | 200 | to | 225 | |||||||||||||||||||||||||||||||
Redevelopment | 2 | 53 | 15 | 38 | 15 | to | 20 | |||||||||||||||||||||||||||||||
Total: | 9 | $ | 2,463 | $ | 1,816 | $ | 647 | $241 | to | $285 |
Unsecured Revolving Credit Facility, Unsecured Term Loan Facility and Private Placement Notes (as defined in the applicable Credit Agreements): | Covenant Level | Actual Performance as of March 31, 2023 | ||||||||||||
Total debt to total asset value | less than 60% | 28% | ||||||||||||
Fixed charge coverage ratio | greater than 1.5x | 3.9x | ||||||||||||
Unsecured debt ratio | greater than 1.67x | 3.47x | ||||||||||||
Unencumbered asset pool debt service coverage | greater than 1.75x | 4.59x | ||||||||||||
Unsecured Senior Notes due 2024, 2025, 2028, 2029, 2030, 2032 and 2033 (as defined in the applicable Indentures): | ||||||||||||||
Total debt to total asset value | less than 60% | 37% | ||||||||||||
Interest coverage | greater than 1.5x | 8.2x | ||||||||||||
Secured debt to total asset value | less than 40% | 2% | ||||||||||||
Unencumbered asset pool value to unsecured debt | greater than 150% | 278% |
Three Months Ended March 31, | |||||||||||||||||||||||
2023 | 2022 | Dollar Change | Percentage Change | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||
Net cash provided by operating activities | $ | 182,136 | $ | 178,659 | $ | 3,477 | 1.9 | % | |||||||||||||||
Net cash used in investing activities | (121,348) | (169,374) | 48,026 | (28.4) | % | ||||||||||||||||||
Net cash provided by (used in) financing activities | 68,191 | (91,676) | 159,867 | (174.4) | % | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 128,979 | $ | (82,391) | $ | 211,370 | (256.5) | % |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(in thousands) | ||||||||||||||
Net income available to common stockholders | $ | 56,608 | $ | 53,128 | ||||||||||
Adjustments: | ||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 560 | 516 | ||||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 8,062 | 5,739 | ||||||||||||
Depreciation and amortization of real estate assets | 91,671 | 87,001 | ||||||||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (10,942) | (8,618) | ||||||||||||
Funds From Operations (1)(2) | $ | 145,959 | $ | 137,766 |
Period | Total Number of Shares of Stock Purchased (1) | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) that May Yet be Purchased Under the Plans or Programs | ||||||||||||||||||||||
January 1, 2023 - January 31, 2023 | 113,538 | $ | 40.52 | — | — | |||||||||||||||||||||
February 1, 2023 - February 28, 2023 | 85,441 | 41.00 | — | — | ||||||||||||||||||||||
March 1, 2023 - March 31, 2023 | 4,063 | 31.52 | — | — | ||||||||||||||||||||||
Total | 203,042 | $ | 40.54 | — | — |
Exhibit Number | Description | |||||||
3.(i)1 | ||||||||
3.(i)2 | ||||||||
3.(i)3 | ||||||||
3.(i)4 | ||||||||
3.(i)5 | ||||||||
3.(ii)1 | ||||||||
3.(ii)2 | ||||||||
10.1*† | ||||||||
10.2* | ||||||||
10.3* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
31.3* | ||||||||
31.4* | ||||||||
32.1* | ||||||||
32.2* | ||||||||
32.3* | ||||||||
32.4* | ||||||||
101.1 | The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended March 31, 2023, formatted in inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Equity (unaudited), (iv) Consolidated Statements of Capital (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to the Consolidated Financial Statements (unaudited).(1) | |||||||
104.1* | Cover Page Interactive Data File - The cover page interactive data file does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. |
* | Filed herewith. | ||||
† | Management contract or compensatory plan or arrangement. | ||||
(1) | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections. |
KILROY REALTY CORPORATION | ||||||||
By: | /s/ John Kilroy | |||||||
John Kilroy Chief Executive Officer (Principal Executive Officer) | ||||||||
By: | /s/ Eliott Trencher | |||||||
Eliott Trencher Executive Vice President, Chief Financial Officer and Chief Investment Officer (Principal Financial Officer) | ||||||||
By: | /s/ Merryl E. Werber | |||||||
Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) |
KILROY REALTY, L.P. | ||||||||
BY: | KILROY REALTY CORPORATION | |||||||
Its general partner | ||||||||
By: | /s/ John Kilroy | |||||||
John Kilroy Chief Executive Officer (Principal Executive Officer) | ||||||||
By: | /s/ Eliott Trencher | |||||||
Eliott Trencher Executive Vice President, Chief Financial Officer and Chief Investment Officer (Principal Financial Officer) | ||||||||
By: | /s/ Merryl E. Werber | |||||||
Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) |
1. Position/Title: | During the Term (as defined below), you will be employed as Executive Vice President, Chief Financial Officer and Chief Investment Officer, and you will have duties and authorities consistent with your position as Chief Financial Officer. You acknowledge and agree, however, that from time to time and at any time the Company and the Operating Partnership may reassign the title of Chief Investment Officer to another executive; provided that any such reassignment shall not reduce your then-current Base Salary or target level of Annual Cash Award. | ||||
2. Term: | The term of your employment under this letter (the “Term”) begins on the Effective Date and will end March 1, 2026, provided that on March 1, 2026 and each March 1 thereafter the Term will be extended for an additional 12 months unless either the Company or you provides notice to the other party at least 90 days before the March 1 extension date electing not to extend the Term further as of that March 1, and in all cases your employment and the Term are subject to earlier termination as provided herein. | ||||
3. Base Salary: | Effective as of January 1, 2023 and continuing during the Term, the Company will pay you a base salary at the annual rate of $500,000. Your annual base salary shall be reviewed by the Executive Compensation Committee (the “Committee”) of the board of directors of the |
Company (the “Board”) each year of the Term, beginning in 2024, and may be increased above, but may not be reduced below, the then-current rate of such base salary. | |||||
4. Bonus and Equity Awards: | During the Term, you will be considered for an annual cash award (the “Annual Cash Award”) and annual equity or equity-based awards (the “Annual Stock Incentive”). The annual target incentive opportunity for the Annual Cash Award for a particular fiscal year of the Company that ends during the Term shall be not less than One Hundred Percent (100%) of the base salary paid to you by the Company for that fiscal year. The grant date fair value (as determined by the Company based on its financial reporting methodology) for the Annual Stock Incentive award(s) granted to you for a particular fiscal year of the Company during the Term will be determined by the Committee in its discretion. The payment and/or vesting requirements applicable to any Annual Cash Award or Annual Stock Incentive will be determined in the Company’s sole discretion, and may include time- and service-based vesting conditions and/or performance-based vesting conditions (which may include corporate, business unit or division, financial, strategic, individual or other objectives). Any Annual Cash Award earned pursuant to this Section 4 shall be subject to your continued employment with the Company through the payment date of the award and paid between January 1 and March 15 of the year following the year for which such Annual Cash Award was earned; provided, however, that if the Committee shall determine that it is administratively impracticable, which may include inability of the Company to gain certification of its financial statements, to make such Annual Cash Award payment by March 15, any such payment shall be made as soon as reasonably practicable after such period and in no event later than December 31 of the year following the year for which such Annual Cash Award was earned. | ||||
5. Benefits: | All employee and executive benefit plans and programs of the Company, as presently in effect or as they may be modified or added to by the Company from time to time, to the extent such plans are generally available to other senior executives or employees of the Company, subject |
to the eligibility and other requirements of such plans and programs. Notwithstanding anything contained in this Agreement to the contrary, the terms and conditions of that certain Indemnification Agreement, dated December 16, 2021, entered into by and between you, the Company and the Operating Partnership, as it may be subsequently amended (the “Indemnification Agreement”), shall continue in full force and effect and in accordance with its terms, and nothing in this Agreement shall be construed as superseding or replacing the terms of the Indemnification Agreement. | |||||
6. Vacation: | During the Term, you will accrue vacation at a rate of four weeks per year, all subject to the Company’s applicable vacation policies as in effect from time to time. | ||||
7. Severance: | You or the Company may terminate your employment (and the Term) at any time and for any reason, with or without cause. However, if your employment is terminated during the Term either (i) by the Company without Cause (and other than due to your death or Disability) or (ii) by you for Good Reason, you shall receive your earned and accrued (and unpaid) base salary and vacation pay as of such termination of employment (the effective date of such termination of employment, the “Date of Termination”, and such earned and accrued (and unpaid) base salary and vacation pay, the “Accrued Compensation”) as well as (subject to the release condition below) the following severance payments ("the Severance Benefits"): •Severance pay equal, in the aggregate, to the sum of (a) one times your annual rate of base salary from the Company as in effect immediately prior to the Date of Termination plus (b) one times your target Annual Cash Award amount as in effect immediately prior to the Date of Termination, with such amount to be paid, subject to Section 13 of this Agreement, in a single lump sum on or within five business days following the date that is 60 days after the Date of Termination; •All equity awards held by you at termination which vest based on time shall become fully |
•vested and all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted; •Unless otherwise expressly provided for in an applicable award agreement, any performance objectives upon which the earning of performance-based restricted stock, RSUs, and other equity awards and other long-term incentive awards (including cash awards) is conditioned shall be deemed to have been met at the greater of (A) target level al the Date of Termination, or (B) actual performance and reasonably anticipated performance at the date of termination, and such amounts shall become fully vested and non-forfeitable as a result of termination of employment at the date of such termination, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted; •The Company will pay or reimburse you for your premiums charged to continue medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), at the same or reasonably equivalent medical coverage for you (and, if applicable, your eligible dependents) as in effect immediately prior to the Date of Termination, to the extent that you elect such continued coverage; provided that the Company’s obligation to make any payment or reimbursement pursuant to this section shall, subject to Section 13 of this Agreement, commence with continuation coverage for the month following the month in which your “separation from service” (as defined in Section 13 of this Agreement) occurs and shall cease with continuation coverage for the eighteenth (18th) month following the month in which your separation from service occurs (or, if earlier, shall cease upon the first to occur of the date you become eligible for coverage under the health plan of a future employer, the date the Company ceases to offer group medical coverage to its active executive employees, or the date the |
Company is no longer obligated to provide COBRA coverage to you). To the extent you elect COBRA coverage, you shall notify the Company in writing of such election prior to such coverage taking effect and complete any other continuation coverage enrollment procedures the Company may then have in place. All other rights under any other compensatory or benefit plan, including any deferrals, shall be governed by such plan. To the extent that Annual Cash Awards had not yet been paid for the prior fiscal year, you shall be entitled to any Annual Cash Award that you earned for such prior fiscal year as though you had remained employed through the actual payment date. If the Company enters into or amends or renews employment or severance arrangements (exclusive of renewals of contracts that exist on the date of this letter) that generally provide the Company’s officers with similarly-situated or less senior positions (exclusive of arrangements with any officers holding more senior positions) with severance benefits that, in the aggregate in the case of each officer, are more beneficial to the officer than the aggregate level of your Severance Benefits provided for above, your Severance Benefits shall be adjusted to reflect the level of severance benefits generally provided to officers with similarly-situated positions (or, if no officer with a similarly-situated position, the officer with the most senior officer position below your position who receives such other arrangement). | |||||
8. Cause; Death; Disability: | If your employment terminates due to Cause, by you for any reason other than for Good Reason, due to your death or disability, or for any reason upon or after the end of the Term, you will receive your Accrued Compensation as of the date of termination and no additional amounts other than what you are entitled to pursuant to the terms of any Company benefit plans. (other than what you are entitled to pursuant to the terms of any Company benefit plans and, if the termination was due to your death or Disability, as provided in the next sentence). If your employment terminates due to your death or Disability, you will be entitled to: (a) a pro-rated Annual Cash Award for the year in which your employment terminates, to be calculated and paid at the same time as though your employment had not terminated (but in all cases paid not |
later than March 15 of the year following the year in which your employment terminates) and pro-rated based on the portion of the year that you were actually employed with the Company; and (b) to the extent that Annual Cash Awards had not yet been paid for the prior fiscal year, any Annual Cash Award that you earned for such prior fiscal year as though you had remained employed through the actual payment date. For purposes of this Agreement, “Cause” shall mean: •You commit (or you enter a plea of guilty, nolo contendere, or a similar plea to) a felony or a crime involving moral turpitude; •you engage in any act of theft, fraud, embezzlement or misappropriation against the Company or its subsidiaries or affiliates; •you breach your Non-Competition, Non-Solicitation and Non-Disclosure agreement with the Company, dated July 19, 2017 and as the same may be amended from time to time (the “Confidentiality Agreement”), in any material respect; •you willfully fail to substantially perform your duties or to follow the directive of an officer to whom you directly or indirectly report (other than, in each case, such failure resulting from your incapacity due to physical or mental illness), which failure is not remedied within 30 calendar days after written demand for substantial performance is delivered by the Company (except in no case shall multiple notices be required for the same or similar conduct or failures); or •you breach in any material respect any policy of the Company (or any of its subsidiaries or affiliates) which is applicable to you. No act, or failure to act, on the part of you shall be deemed “willful” unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company. |
For purposes of this Agreement, “Disability” means your disability within the meaning of Internal Revenue Code Section 409A. | |||||
9. Good Reason: | For purposes of this Agreement, “Good Reason” shall mean, without your express written consent, the occurrence of any of the following circumstances unless, if correctable, such circumstances are fully corrected within 30 days of the notice of termination given in respect thereof which notice must be given within 90 days of the occurrence: •a material reduction by the Company in your annual rate of base salary from the Company or in the target level of your Annual Cash Award; •a material diminution of your position with the Company (for clarity, you no longer serving as Chief Investment Officer shall not constitute Good Reason); •a breach by the Company in any material respect of the terms of this letter; •the failure of the Company to obtain a satisfactory agreement from any successor to the Company to fully assume the Company’s obligations and to perform under this Agreement; or •a material relocation by the Company of your principal place of employment with the Company. Notwithstanding the foregoing, you will not be entitled to any of the termination payments or benefits provided in Section 7 as a result of a termination of your employment by you for Good Reason unless such termination becomes effective within 90 days following the expiration of the 30 day cure period described above. | ||||
10. Release of Claims: | Notwithstanding anything to the contrary above, you agree as a condition precedent to receipt of any termination payments and benefits provided for in Section 7 herein (other than Accrued Compensation), that you must timely execute, deliver to the Company, and not revoke, a general release of claims in a form |
provided by the Company (“General Release”). Such General Release shall be provided to you not later than five (5) business days after the Date of Termination (for clarity, in circumstances for which you may be eligible to receive the severance benefits provided in Section 7) and you shall execute, and deliver to the Company, the General Release within 21 days (or 45 days, if 45 days is required pursuant to applicable law) of the date you receive the General Release. In the event the General Release (and the expiration of any revocation rights provided therein) could become effective in one of two (2) of your taxable years depending on when you execute and deliver the release, any payment conditioned on execution of the release shall not be made earlier than the first business day of the later of such tax years. | |||||
11. Covenants: | You agree that the Confidentiality Agreement continues in effect and that you have not breached the Confidentiality Agreement. | ||||
12. Governing Law/ Arbitration: | This Agreement is governed by and is to be construed, administered, and enforced in accordance with the laws of the State of California, without regard to conflicts of law principles. Any dispute or controversy arising under or in connection with this Agreement or your employment or any other relationship between you and the Company or the Operating Partnership shall be settled exclusively by final and binding arbitration in Los Angeles, California by three arbitrators in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association in effect at the time of submission to arbitration, available at www.adr.org. You agree that either you, the Company, or the Operating Partnership may bring and pursue grievances, disputes, claims or causes of action against the other only in their individual capacities, and may not represent other individuals or their interests or bring, pursue, or act as a plaintiff, class member, class representative, or named plaintiff in any purported class or representative proceeding. This section does not apply to any proceeding that cannot be waived or compelled to arbitration under this agreement as a matter of law (including the Federal Arbitration Act). Either party may initiate arbitration by delivering a written request to arbitrate to the other party. You shall not be required to pay any cost or expense of the arbitration that you would not be required to pay if the |
matter had been heard in court. The arbitrators shall decide all issues submitted by the parties and may not decide any issue not submitted. The arbitrator is authorized to award any remedy or relief that would have been available to the parties, in their individual capacity, had the matter been heard in court. The decision of the arbitrators shall be in writing and shall provide the reasons for the arbitrators’ award unless the parties otherwise agree in writing. Judgment may be entered on the arbitrators’ award in any court having jurisdiction. For purposes of entering any judgment upon an award rendered by the arbitrators, the Company and you hereby consent to the jurisdiction of any or all of the following courts: (i) the United States District Court for the Southern District of California, (ii) any of the courts of the State of California, or (iii) any other court having jurisdiction. The Company and you further agree that any service of process or notice requirements in any such proceeding shall be satisfied if the rules of such court relating thereto have been substantially satisfied. The Company and you hereby waive, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to such jurisdiction and any defense of inconvenient forum. The Company and you hereby agree that a judgment upon an award rendered by the arbitrators may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. | |||||
13. Tax Withholding; Section 409A: | All compensation provided in this Agreement is subject to applicable tax withholding. Except for such withholding, you will be responsible for all tax liabilities with respect to such compensation. In addition, the following provisions shall apply to such compensation: (i) Anything in this Agreement to the contrary notwithstanding, to the maximum extent permitted by applicable law, amounts payable to you pursuant to Section 7 shall be made in reliance upon Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans) or Treas. Reg. Section 1.409A-1(b)(4) (Short-Term Deferrals). However, if (A) on the date of termination of your employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”)), (B) you are determined to be |
a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii), if applicable, and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this Section 13(i), would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be made prior to (and such payment shall be made on or within five (5) business days following) the date that is the earliest of (1) six (6) months and one day after your termination date, (2) your death or (3) such other date (the “Delay Period”) as will cause such payment not to be subject to such interest and additional tax (with a catchup payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment). In particular, with respect to any lump sum payment otherwise required hereunder, in the event of any delay in the payment date as a result of Code Section 409A(a)(2)(A)(i) and (B)(i), the Company will adjust the payments to reflect the deferred payment date by crediting interest thereon at the prime rate in effect at the time such amount first becomes payable, as quoted by the Company’s principal bank. (ii) To the extent that any benefits to be provided during the Delay Period are considered deferred compensation under Code Section 409A provided on account of a “separation from service.” and such benefits are not otherwise exempt from Code Section 409A, you shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse you, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to you, the Company’s share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein. (iii) In addition, other provisions of this Agreement or any other such plan notwithstanding, the Company shall have no right to accelerate any such payment or to make |
any such payment as the result of any specific event except to the extent permitted under Section 409A. (iv) For purposes of Section 409A of the Code, each payment made after termination of your employment, including each health insurance continuation payment or reimbursement, will be considered one of a series of separate payments. (v) To the extent any cash payments to be made to you upon a termination of your employment would be deemed to be nonqualified deferred compensation under Code Section 409A, then with respect to such cash payments, a termination of employment shall not be deemed to have occurred unless such termination is also a “separation from service” within the meaning of Section 409A of the Code and, for purposes of any such provision of this Agreement with respect to such cash payments, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” (vi) Any amount that you are entitled to be reimbursed under this Agreement that may be treated as taxable compensation will be reimbursed to you as promptly as practical and in any event not later than sixty (60) days after the end of the calendar year in which the expenses are incurred; provided, that, you shall have provided a reimbursement request to the Company no later than thirty (30) days prior to the date the reimbursement is due. The amount of the expenses eligible for reimbursement during any calendar year will not affect the amount of expenses eligible for reimbursement in any other calendar year, except as may be required pursuant to an arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code. (vii) The Company shall not be obligated to reimburse you for any tax penalty or interest or provide a gross-up in connection with any tax liability you may incur under Section 409A of the Code. (viii) Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date |
of payment within the specified period shall be within the sole discretion of the Company. (ix) Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of base salary or other compensation is to be paid for a specified continuing period of time beyond the date of termination of your employment in accordance with the Company’s payroll practices (or other similar term), the payments of such base salary or other compensation shall be made on a monthly basis. | |||||
14. Integration and Severability: | This Agreement cancels and supersedes any and all prior agreements and understandings (whether written or oral) between the parties hereto with respect to your employment by the Company, any parent or predecessor company, and the Company’s subsidiaries, but excluding (1) existing written award agreements evidencing the terms and conditions of equity awards granted by the Company under the Plan, (2) the Confidentiality Agreement, and (3) the Indemnification Agreement. If any section of this agreement is deemed to be unenforceable for any reason, this agreement will still be fully enforceable as to any and all other provisions. |
KILROY REALTY CORPORATION | ||||||||
a Maryland Corporation | ||||||||
By: | /s/ Heidi R. Roth | |||||||
Name: Heidi R. Roth | ||||||||
Title: EVP, Chief Administrative Officer and Secretary | ||||||||
By: | /s/ Lauren N. Stadler | |||||||
Name: Lauren N. Stadler | ||||||||
Title: SVP, Corporate Counsel | ||||||||
KILROY REALTY, L.P. , | ||||||||
a Delaware Limited Partnership | ||||||||
By: | KILROY REALTY CORPORATION, | |||||||
a Maryland Corporation, | ||||||||
Its: | General Partner | |||||||
By: | /s/ Heidi R. Roth | |||||||
Name: Heidi R. Roth | ||||||||
Title: EVP, Chief Administrative Officer and Secretary | ||||||||
By: | /s/ Lauren N. Stadler | |||||||
Name: Lauren N. Stadler | ||||||||
Title: SVP, Corporate Counsel | ||||||||
EXECUTIVE | ||||||||
/s/ Eliott Trencher | ||||||||
Eliott Trencher |
KILROY REALTY, L.P., a Delaware limited | ||||||||
partnership | ||||||||
By: | Kilroy Realty Corporation, a Maryland | |||||||
corporation, its general partner | ||||||||
By: | /s/ Tyler H. Rose | |||||||
Name: | Tyler H. Rose | |||||||
Title: | President and Secretary | |||||||
By: | /s/ Taylor Friend | |||||||
Name: | Taylor Friend | |||||||
Title: | Senior Vice President, Finance and | |||||||
Treasurer |
JPMORGAN CHASE BANK, N.A., as | ||||||||||||||
Administrative Agent and as a Bank | ||||||||||||||
By: | /s/ Delia Rodillas | |||||||||||||
Name: | Delia Rodillas | |||||||||||||
Title: | Vice President |
BANK OF AMERICA, N.A. | ||||||||||||||
By: | /s/ Helen Chan | |||||||||||||
Name: | Helen Chan | |||||||||||||
Title: | Vice President |
PNC BANK, NATIONAL ASSOCIATION | ||||||||||||||
By: | /s/ David C. Drouillard | |||||||||||||
Name: | David C. Drouillard | |||||||||||||
Title: | Senior Vice President |
BARCLAYS BANK PLC | ||||||||||||||
By: | /s/ Warren Veech III | |||||||||||||
Name: | Warren Veech III | |||||||||||||
Title: | Vice President |
MUFG UNION BANK, N.A. | ||||||||||||||
By: | /s/ Kathryn Gilliland | |||||||||||||
Name: | Kathryn Gilliland | |||||||||||||
Title: | Director |
SUMITOMO MITSUI BANKING CORPORATION | ||||||||||||||
By: | /s/ Irlen Mak | |||||||||||||
Name: | Irlen Mak | |||||||||||||
Title: | Director |
COMERICA BANK | ||||||||||||||
By: | /s/ Ariel Zeidner | |||||||||||||
Name: | Ariel Zeidner | |||||||||||||
Title: | AVP |
KEYBANK, NATIONAL ASSOCIATION | ||||||||||||||
By: | /s/ Michael P. Szuba | |||||||||||||
Name: | Michael P. Szuba | |||||||||||||
Title: | Senior Vice President |
THE BANK OF NOVA SCOTIA | ||||||||||||||
By: | /s/ Chelsea McCune | |||||||||||||
Name: | Chelsea McCune | |||||||||||||
Title: | Director, Corporate Banking - U.S. Real | |||||||||||||
Estate, Gaming & Leisure |
THE BANK OF NEW YORK MELLON | ||||||||||||||
By: | /s/ Cody Mainc | |||||||||||||
Name: | Cody Mainc | |||||||||||||
Title: | Vice President |
WELLS FARGO BANK, N.A. | ||||||||||||||
By: | /s/ Cristina Johnnie | |||||||||||||
Name: | Cristina Johnnie | |||||||||||||
Title: | Vice President |
GUARANTOR: | |||||||||||
KILROY REALTY CORPORATION | |||||||||||
By: | /s/ Tyler H. Rose | ||||||||||
Name: | Tyler H. Rose | ||||||||||
Title: | President and Secretary | ||||||||||
By: | /s/ Taylor Friend | ||||||||||
Name: | Taylor Friend | ||||||||||
Title: | Senior Vice President, Finance and | ||||||||||
Treasurer |
Lender | Initial Term Loan Commitment | Amendment No. 1 Incremental Commitment | Term Loan Commitment | ||||||||
JPMorgan Chase Bank, N.A. | $40,000,000.00 | $10,000,000.00 | $50,000,000.00 | ||||||||
Bank of America, N.A. | $40,000,000.00 | $10,000,000.00 | $50,000,000.00 | ||||||||
PNC Bank, National Association | $40,000,000.00 | $10,000,000.00 | $50,000,000.00 | ||||||||
U.S. Bank National Association | $40,000,000.00 | $0.00 | $40,000,000.00 | ||||||||
The Bank of Nova Scotia | $40,000,000.00 | $20,000,000.00 | $60,000,000.00 | ||||||||
The Bank of New York Mellon | $32,000,000.00 | $0.00 | $32,000,000.00 | ||||||||
Bank of the West, a California Banking Corporation | $32,000,000.00 | $0.00 | $32,000,000.00 | ||||||||
Barclays Bank PLC | $32,000,000.00 | $0.00 | $32,000,000.00 | ||||||||
KeyBank National Association | $32,000,000.00 | $10,000,000.00 | $42,000,000.00 | ||||||||
Sumitomo Mitsui Banking Corporation | $32,000,000.00 | $0.00 | $32,000,000.00 | ||||||||
Associated Bank, National Association | $15,000,000.00 | $0.00 | $15,000,000.00 | ||||||||
MUFG Union Bank, N.A. | $15,000,000.00 | $0.00 | $15,000,000.00 | ||||||||
Comerica Bank | $10,000,000.00 | $0.00 | $10,000,000.00 | ||||||||
Wells Fargo Bank, N.A. | $0.00 | $40,000,000.00 | $40,000,000.00 | ||||||||
TOTAL | $400,000,000.00 | $100,000.000.00 | $500,000.000.00 |
KILROY REALTY, L.P., a Delaware limited | ||||||||
partnership | ||||||||
By: | Kilroy Realty Corporation, a Maryland | |||||||
corporation, its general partner | ||||||||
By: | /s/ Eliott Trencher | |||||||
Name: | Eliott Trencher | |||||||
Title: | Executive Vice President, Chief Investment | |||||||
Officer and Chief Financial Officer | ||||||||
By: | /s/ Taylor Friend | |||||||
Name: | Taylor Friend | |||||||
Title: | Senior Vice President, Finance and | |||||||
Treasurer |
JPMORGAN CHASE BANK, N.A., as | ||||||||||||||
Administrative Agent and as a Bank | ||||||||||||||
By: | /s/ Delia Rodillas | |||||||||||||
Name: | Delia Rodillas | |||||||||||||
Title: | Vice President |
BANK OF AMERICA, N.A. | ||||||||||||||
By: | /s/ Helen Chan | |||||||||||||
Name: | Helen Chan | |||||||||||||
Title: | Vice President |
PNC BANK, NATIONAL ASSOCIATION | ||||||||||||||
By: | /s/ David C. Drouillard | |||||||||||||
Name: | David C. Drouillard | |||||||||||||
Title: | Senior Vice President |
BMO HARRIS BANK N.A., | ||||||||||||||
a national banking association | ||||||||||||||
successor in interest to | ||||||||||||||
BANK OF THE WEST | ||||||||||||||
By: | /s/ Sarah J. Burns | |||||||||||||
Name: | Sarah J. Burns | |||||||||||||
Title: | Vice President |
BARCLAYS BANK PLC | ||||||||||||||
By: | /s/ Warren Veech III | |||||||||||||
Name: | Warren Veech III | |||||||||||||
Title: | VP Bank Debt Management |
MUFG UNION BANK, N.A. | ||||||||||||||
By: | /s/ Kathryn Gilliland | |||||||||||||
Name: | Kathryn Gilliland | |||||||||||||
Title: | Director |
SUMITOMO MITSUI BANKING CORPORATION | ||||||||||||||
By: | /s/ Mary Harold | |||||||||||||
Name: | Mary Harold | |||||||||||||
Title: | Executive Director |
COMERICA BANK | ||||||||||||||
By: | /s/ Charles Weddell | |||||||||||||
Name: | Charles Weddell | |||||||||||||
Title: | Senior Vice President |
KEYBANK, NATIONAL ASSOCIATION | ||||||||||||||
By: | /s/ Michael P. Szuba | |||||||||||||
Name: | Michael P. Szuba | |||||||||||||
Title: | Senior Vice President |
THE BANK OF NOVA SCOTIA | ||||||||||||||
By: | /s/ Chelsea McCune | |||||||||||||
Name: | Chelsea McCune | |||||||||||||
Title: | Director, Corporate Banking | |||||||||||||
U.S. Real Estate, Gaming & Leisure |
THE BANK OF NEW YORK MELLON | ||||||||||||||
By: | /s/ Cody Mainc | |||||||||||||
Name: | Cody Mainc | |||||||||||||
Title: | Vice President |
ASSOCIATED BANK, NATIONAL | ||||||||||||||
ASSOCIATION | ||||||||||||||
By: | /s/ Mitchell Vega | |||||||||||||
Name: | Mitchell Vega | |||||||||||||
Title: | Senior Vice President |
WELLS FARGO BANK, N.A. | ||||||||||||||
By: | /s/ Cristina Johnnie | |||||||||||||
Name: | Cristina Johnnie | |||||||||||||
Title: | Vice President |
GUARANTOR: | |||||||||||
KILROY REALTY CORPORATION | |||||||||||
By: | /s/ Eliott Trencher | ||||||||||
Name: | Eliott Trencher | ||||||||||
Title: | Executive Vice President, Chief Investment | ||||||||||
Officer and Chief Financial Officer | |||||||||||
By: | /s/ Taylor Friend | ||||||||||
Name: | Taylor Friend | ||||||||||
Title: | Senior Vice President, Finance and | ||||||||||
Treasurer |
Lender | Initial Term Loan Commitment | Amendment No. 1 Incremental Commitment | Amendment No. 2 Incremental Commitments | Term Loan Commitment | ||||||||||
JPMorgan Chase Bank, N.A. | $40,000,000.00 | $10,000,000.00 | $0.00 | $50,000,000.00 | ||||||||||
Bank of America, N.A. | $40,000,000.00 | $10,000,000.00 | $0.00 | $50,000,000.00 | ||||||||||
PNC Bank, National Association | $40,000,000.00 | $10,000,000.00 | $0.00 | $50,000,000.00 | ||||||||||
U.S. Bank National Association | $40,000,000.00 | $0.00 | $0.00 | $40,000,000.00 | ||||||||||
The Bank of Nova Scotia | $40,000,000.00 | $20,000,000.00 | $0.00 | $60,000,000.00 | ||||||||||
The Bank of New York Mellon | $32,000,000.00 | $0.00 | $0.00 | $32,000,000.00 | ||||||||||
BMO Harris Bank N.A., a national banking association (successor in interest to Bank of the West) | $32,000,000.00 | $0.00 | $20,000,000.00 | $52,000,000.00 | ||||||||||
Barclays Bank PLC | $32,000,000.00 | $0.00 | $0.00 | $32,000,000.00 | ||||||||||
KeyBank National Association | $32,000,000.00 | $10,000,000.00 | $0.00 | $42,000,000.00 | ||||||||||
Sumitomo Mitsui Banking Corporation | $32,000,000.00 | $0.00 | $0.00 | $32,000,000.00 | ||||||||||
Associated Bank, National Association | $15,000,000.00 | $0.00 | $0.00 | $15,000,000.00 | ||||||||||
MUFG Union Bank, N.A. | $15,000,000.00 | $0.00 | $0.00 | $15,000,000.00 | ||||||||||
Comerica Bank | $10,000,000.00 | $0.00 | $0.00 | $10,000,000.00 | ||||||||||
Wells Fargo Bank, N.A. | $0.00 | $40,000,000.00 | $0.00 | $40,000,000.00 | ||||||||||
TOTAL | $400,000,000.00 | $100,000.000.00 | $20,000,000.00 | $520,000.000.00 |
/s/ John Kilroy | ||
John Kilroy | ||
Chief Executive Officer |
/s/ Eliott Trencher | ||
Eliott Trencher | ||
Executive Vice President, Chief Financial Officer and Chief Investment Officer |
/s/ John Kilroy | ||
John Kilroy | ||
Chief Executive Officer | ||
Kilroy Realty Corporation, sole general partner of Kilroy Realty, L.P. |
/s/ Eliott Trencher | ||
Eliott Trencher | ||
Executive Vice President, Chief Financial Officer and Chief Investment Officer | ||
Kilroy Realty Corporation, sole general partner of Kilroy Realty, L.P. |
/s/ John Kilroy | |||||
John Kilroy | |||||
Chief Executive Officer | |||||
Date: | April 27, 2023 |
/s/ Eliott Trencher | |||||
Eliott Trencher | |||||
Executive Vice President, Chief Financial Officer and Chief Investment Officer | |||||
Date: | April 27, 2023 |
/s/ John Kilroy | |||||
John Kilroy | |||||
Chief Executive Officer | |||||
Kilroy Realty Corporation, sole general partner of Kilroy Realty, L.P. | |||||
Date: | April 27, 2023 |
/s/ Eliott Trencher | |||||
Eliott Trencher | |||||
Executive Vice President, Chief Financial Officer and Chief Investment Officer | |||||
Kilroy Realty Corporation, sole general partner of Kilroy Realty, L.P. | |||||
Date: | April 27, 2023 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized (in shares) | 280,000,000 | 280,000,000 |
Common stock, issued (in shares) | 117,120,962 | 116,878,031 |
Common stock, outstanding (in shares) | 117,120,962 | 116,878,031 |
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2022 |
Mar. 31, 2021 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends declared per common share and common unit (in dollars per share) | $ 0.54 | $ 0.52 |
CONSOLIDATED BALANCE SHEETS (KILROY REALTY, L.P.)(Parenthetical) - Common Units - Kilroy Realty L.P. - shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
General partner, units issued (in shares) | 117,120,962 | 116,878,031 |
General partners, units outstanding (in shares) | 117,120,962 | 116,878,031 |
Limited partners, units issued (in shares) | 1,150,574 | 1,150,574 |
Limited partners, units outstanding (in shares) | 1,150,574 | 1,150,574 |
CONSOLIDATED STATEMENTS OF CAPITAL (KILROY REALTY, L.P.) (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
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Kilroy Realty L.P. | ||
Dividends declared per common unit (in dollars per unit) | $ 0.54 | $ 0.52 |
Organization, Ownership and Basis of Presentation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Ownership and Basis of Presentation | Organization, Ownership and Basis of Presentation Organization and Ownership Kilroy Realty Corporation (the “Company”) is a self-administered real estate investment trust (“REIT”) active in premier office, life science and mixed-use submarkets in the United States. We own, develop, acquire and manage real estate assets, consisting primarily of Class A properties in Greater Los Angeles, San Diego County, the San Francisco Bay Area, Greater Seattle and Austin, Texas, which we believe have strategic advantages and strong barriers to entry. Class A real estate encompasses attractive and efficient buildings of high quality that are attractive to tenants, are well-designed and constructed with above-average material, workmanship and finishes and are well-maintained and managed. We qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”). The Company’s common stock is publicly traded on the New York Stock Exchange (“NYSE”) under the ticker symbol “KRC.” We own our interests in all of our real estate assets through Kilroy Realty, L.P. (the “Operating Partnership”). We generally conduct substantially all of our operations through the Operating Partnership. Unless stated otherwise or the context indicates otherwise, the terms “Kilroy Realty Corporation” or the “Company,” “we,” “our,” and “us” refer to Kilroy Realty Corporation and its consolidated subsidiaries and the term “Operating Partnership” refers to Kilroy Realty, L.P. and its consolidated subsidiaries. The descriptions of our business, employees, and properties apply to both the Company and the Operating Partnership. Our stabilized portfolio of operating properties was comprised of the following properties at March 31, 2023:
________________________ (1)Represents economic occupancy. (2)Includes stabilized life science and retail space.
Our stabilized portfolio includes all of our properties with the exception of development properties currently committed for construction, under construction, or in the tenant improvement phase, redevelopment properties under construction, undeveloped land and real estate assets held for sale. We define redevelopment properties as those properties for which we expect to spend significant development and construction costs on the existing or acquired buildings pursuant to a formal plan, the intended result of which is a higher economic return on the property. We define properties in the tenant improvement phase as office and life science properties that we are developing or redeveloping where the project has reached cold shell condition and is ready for tenant improvements, which may require additional major base building construction before being placed in service. Projects in the tenant improvement phase are added to our stabilized portfolio once the project reaches the earlier of 95% occupancy or one year from the date of the cessation of major base building construction activities. Costs capitalized to construction in progress for development and redevelopment properties are transferred to land and improvements, buildings and improvements, and deferred leasing costs on our consolidated balance sheets at the historical cost of the property as the projects or phases of projects are placed in service. As of March 31, 2023, the following properties were excluded from our stabilized portfolio:
________________________ (1)Estimated rentable square feet upon completion. We did not have any properties held for sale at March 31, 2023. Our stabilized portfolio also excludes our future development pipeline, which as of March 31, 2023 was comprised of eight future development sites, representing approximately 64 gross acres of undeveloped land. As of March 31, 2023, all of our properties, development projects and redevelopment projects were owned and all of our business was conducted in the state of California with the exception of ten stabilized office properties and one future development project located in the state of Washington, and one development project in the tenant improvement phase and one future development project in Austin, Texas. All of our properties, development projects and redevelopment projects are 100% owned, excluding four office properties owned by three consolidated property partnerships. Two of the three consolidated property partnerships, 100 First Street Member, LLC (“100 First LLC”) and 303 Second Street Member, LLC (“303 Second LLC”), each owned one office property in San Francisco, California through subsidiary REITs. As of March 31, 2023, the Company owned a 56% common equity interest in both 100 First LLC and 303 Second LLC. The third consolidated property partnership, Redwood City Partners, LLC (“Redwood LLC”) owned two office properties in Redwood City, California. As of March 31, 2023, the Company owned an approximate 93% common equity interest in Redwood LLC. The remaining interests in all three property partnerships were owned by unrelated third parties. Ownership and Basis of Presentation The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC and all of our wholly-owned and controlled subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC and all of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. As of March 31, 2023, the Company owned an approximate 99.0% common general partnership interest in the Operating Partnership. The remaining approximate 1.0% common limited partnership interest in the Operating Partnership as of March 31, 2023 was owned by non-affiliated investors and certain of our executive officers and directors. Both the general and limited common partnership interests in the Operating Partnership are denominated in common units. Generally, the number of common units held by the Company is equivalent to the number of outstanding shares of the Company’s common stock, and the rights of all the common units to quarterly distributions and payments in liquidation mirror those of the Company’s common stockholders. The common limited partners have certain redemption rights as provided in the Operating Partnership’s Seventh Amended and Restated Agreement of Limited Partnership, as amended, the “Partnership Agreement”. With the exception of the Operating Partnership and our consolidated property partnerships, all of our subsidiaries are wholly-owned. The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022. Variable Interest Entities The Operating Partnership is a variable interest entity (“VIE”) that is consolidated by the Company as the primary beneficiary as the Operating Partnership is a limited partnership in which the common limited partners do not have substantive kick-out or participating rights. At March 31, 2023, the consolidated financial statements of the Company included two VIEs in addition to the Operating Partnership: 100 First LLC and 303 Second LLC. At March 31, 2023, the Company and the Operating Partnership were determined to be the primary beneficiaries of these two VIEs since we had the ability to control the activities that most significantly impact each of the VIEs’ economic performance. As of March 31, 2023, the two VIEs’ total assets, liabilities and noncontrolling interests included on our consolidated balance sheet were approximately $439.0 million (of which $358.6 million related to real estate held for investment), approximately $29.2 million and approximately $180.5 million, respectively. Revenues, income and net assets generated by 100 First LLC and 303 Second LLC may only be used to settle their contractual obligations, which primarily consist of operating expenses, capital expenditures and required distributions. At December 31, 2022, the consolidated financial statements of the Company included two VIEs in addition to the Operating Partnership: 100 First LLC and 303 Second LLC. At December 31, 2022, the Company and the Operating Partnership were determined to be the primary beneficiaries of these two VIEs since we had the ability to control the activities that most significantly impact each of the VIEs’ economic performance. At December 31, 2022, the impact of consolidating the VIEs increased the Company’s total assets, liabilities and noncontrolling interests on our consolidated balance sheet by approximately $438.7 million (of which $362.7 million related to real estate held for investment), approximately $31.5 million and approximately $179.4 million, respectively.
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Secured and Unsecured Debt of the Operating Partnership |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Secured and Unsecured Debt of the Operating Partnership | Secured and Unsecured Debt of the Operating Partnership The Company generally guarantees all of the Operating Partnership’s unsecured debt obligations including the unsecured revolving credit facility, the unsecured term loan facility and all of the unsecured senior notes. Unsecured Revolving Credit Facility and Term Loan Facility The following table summarizes the balance and terms of our unsecured revolving credit facility as of March 31, 2023 and December 31, 2022:
________________________ (1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million under an accordion feature under the terms of the unsecured revolving credit facility. (2)Our unsecured revolving credit facility interest rate was calculated using a contractual rate of Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% (“Adjusted SOFR”) and a margin of 0.900% based on our credit rating as of March 31, 2023 and December 31, 2022. (3)Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of March 31, 2023 and December 31, 2022, $4.8 million and $5.3 million of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the respective maturity dates presented of our unsecured revolving credit facility. (4)The maturity date may be extended by two six-month periods, at the Company’s option. The Company intends to borrow under the unsecured revolving credit facility from time to time for general corporate purposes, to finance development and redevelopment expenditures, to fund potential acquisitions and to potentially repay long-term debt and to supplement cash balances given uncertainties and volatility in market conditions. In January 2023, the Operating Partnership entered into the first amendment to its existing unsecured term loan facility agreement to (i) exercise the accordion feature under the term loan agreement to provide for $100.0 million of additional term loan commitments and (ii) increase the borrowing capacity under the accordion feature to provide additional term loan commitments or add one or more tranches of term loans up to an aggregate amount of $650.0 million. In March 2023, the Operating Partnership further amended the unsecured term loan facility agreement to exercise the accordion feature to provide for $20.0 million of additional term loan commitments, bringing the total borrowing capacity of the unsecured term loan facility to $520.0 million. The following table summarizes the balance and terms of our unsecured term loan facility as of March 31, 2023 and December 31, 2022:
(1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $130.0 million and $100.0 million as of March 31, 2023 and December 31, 2022, respectively, under an accordion feature under the terms of the unsecured term loan facility. (2)Our unsecured term loan facility interest rate was calculated using a contractual rate of Adjusted SOFR plus a margin of 0.950% based on our credit rating as of March 31, 2023 and December 31, 2022. (3)Our undrawn facility fee is paid on a quarterly basis and is calculated based on the remaining borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of March 31, 2023 and December 31, 2022, $4.6 million and $4.5 million, respectively, of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility. (4)The maturity date may be extended by two twelve-month periods, at the Company’s option. Debt Covenants and Restrictions The unsecured revolving credit facility, unsecured term loan facility, the unsecured senior notes, including the private placement notes, and certain other secured debt arrangements contain covenants and restrictions requiring us to meet certain financial ratios and reporting requirements. Some of the more restrictive financial covenants include a maximum ratio of total debt to total asset value, a minimum fixed-charge coverage ratio, a maximum ratio of secured debt to total asset value, a minimum unsecured debt ratio and a minimum unencumbered asset pool debt service coverage ratio. Noncompliance with one or more of the covenants and restrictions could result in the full principal balance of the associated debt becoming immediately due and payable. We were in compliance with all of our debt covenants as of March 31, 2023. Debt Maturities The following table summarizes the stated debt maturities and scheduled amortization payments for all outstanding debt as of March 31, 2023:
(1)Includes the $350.0 million outstanding as of March 31, 2023 on the unsecured term loan facility maturing on October 3, 2024, for which the Company has two twelve-month extension options. (2)Includes gross principal balance of outstanding debt before the effect of the following at March 31, 2023: $23.4 million of unamortized deferred financing costs for the unsecured term loan facility, unsecured senior notes and secured debt and $6.1 million of unamortized discounts for the unsecured senior notes. Capitalized Interest and Loan Fees The following table sets forth gross interest expense, including debt discount and deferred financing cost amortization, net of capitalized interest, for the three months ended March 31, 2023 and 2022. The interest expense capitalized was recorded as a cost of development and redevelopment and increased the carrying value of undeveloped land and construction in progress.
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Noncontrolling Interests on the Company's Consolidated Financial Statements |
3 Months Ended |
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Mar. 31, 2023 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interests on the Company's Consolidated Financial Statements | Noncontrolling Interests on the Company’s Consolidated Financial Statements Common Units of the Operating Partnership The Company owned an approximate 99.0% common general partnership interest in the Operating Partnership as of March 31, 2023, December 31, 2022 and March 31, 2022. The remaining approximate 1.0% common limited partnership interest as of March 31, 2023, December 31, 2022 and March 31, 2022 was owned by non-affiliated investors and certain of our executive officers and directors in the form of noncontrolling common units. There were 1,150,574 common units outstanding held by these investors, executive officers and directors as of March 31, 2023, December 31, 2022 and March 31, 2022. The noncontrolling common units may be redeemed by unitholders for cash. Except under certain circumstances, we, at our option, may satisfy the cash redemption obligation with shares of the Company’s common stock on a one-for-one basis. If satisfied in cash, the value for each noncontrolling common unit upon redemption is the amount equal to the average of the closing quoted price per share of the Company’s common stock, par value $0.01 per share, as reported on the NYSE for the ten trading days immediately preceding the applicable redemption date. The aggregate value upon redemption of the then-outstanding noncontrolling common units was $34.7 million and $44.7 million as of March 31, 2023 and December 31, 2022, respectively. This redemption value does not necessarily represent the amount that would be distributed with respect to each noncontrolling common unit in the event of our termination or liquidation. In the event of our termination or liquidation, it is expected in most cases that each common unit would be entitled to a liquidating distribution equal to the liquidating distribution payable in respect of each share of the Company’s common stock.
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Share-Based Compensation |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Stockholder Approved Share-Based Incentive Compensation Plan As of March 31, 2023, we maintained one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan, as amended (the “2006 Plan”). The Company has a currently effective registration statement registering 10.7 million shares of our common stock for possible issuance under our 2006 Plan. As of March 31, 2023, approximately 1.0 million shares were available for grant under the 2006 Plan. The calculation of shares available for grant is presented after taking into account a reserve for a sufficient number of shares to cover the vesting and payment of 2006 Plan awards that were outstanding on that date, including performance-based vesting awards at (i) levels actually achieved for the performance conditions (as defined below) for which the performance period has been completed and (ii) at maximum levels for the other performance and market conditions (as defined below) for awards still in a performance period. Executive Transitions On March 30, 2023, our Chief Executive Officer (“CEO”) announced his retirement effective December 31, 2023. Additionally, as previously disclosed, the Company and our former President entered into a separation agreement in 2022 under which he continued to serve as an officer of the Company until the scheduled expiration date of his employment agreement on March 1, 2023. For our CEO, the vesting of all unvested share-based compensation awards will be accelerated through December 31, 2023 and the final number of any restricted stock units (“RSUs”) subject to market and/or performance-based vesting requirements that vest will be based upon a shortened performance period ending on December 31, 2023. Share-based compensation expense for these awards will be recognized based on our current assumption of the achievement of market and/or performance-based vesting requirements for the shortened performance periods. For our former President, the vesting of all unvested share-based compensation awards was accelerated through March 1, 2023 and the final number of RSUs earned that were subject to market and/or performance-based vesting requirements was based upon the actual achievement of the market and/or performance conditions for a shortened performance period ending on March 1, 2023. For the three months ended March 31, 2023, we recognized $4.5 million of stock compensation expense related to the accelerated vesting of awards for our CEO and former President. 2023 Share-Based Compensation Grants In February 2023, the Executive Compensation Committee of the Company’s Board of Directors awarded 517,066 restricted stock units to certain officers of the Company under the 2006 Plan, which included 300,007 RSUs (at the target level of performance) that are subject to market and/or performance-based vesting requirements (the “2023 Performance-Based RSUs”) and 217,059 RSUs that are subject to time-based vesting requirements (the “2023 Time-Based RSUs”). 2023 Performance-Based RSU Grant The 2023 Performance-Based RSUs are scheduled to vest at the end of a three year period (consisting of calendar years 2023-2025), except for our CEO, whose RSUs are scheduled to vest on his announced retirement date of December, 31, 2023. A target number of 2023 Performance-Based RSUs were awarded, and the final number of 2023 Performance-Based RSUs that vest (which may be more or less than the target number) will be based upon (1) during the first calendar year of the three year performance measurement period, the achievement of pre-set FFO per share goals that applies to 100% of the Performance-Based RSUs awarded (the “FFO Performance Condition”) and (2) a performance measure that applies to 50% of the award based upon a measure of the Company’s average debt to EBITDA ratio for the three year performance period (the “Debt to EBITDA Ratio Performance Condition”) and a market measure that applies to the other 50% of the award based upon the relative ranking of the Company’s total stockholder return for the three year performance period compared to the total stockholder returns of an established comparison group of companies over the same period (the “Market Condition”). The 2023 Performance-Based RSUs are also subject to a three year service vesting provision (the “service vesting condition”) and are scheduled to cliff vest on the date the final vesting percentage is determined following the end of the three year performance period under the awards. The number of 2023 Performance-Based RSUs ultimately earned could fluctuate from the target number of 2023 Performance-Based RSUs granted based upon the levels of achievement for the FFO Performance Condition, the Debt to EBITDA Ratio Performance Condition, the Market Condition, and the extent to which the service vesting condition is satisfied. The estimate of the number of 2023 Performance-Based RSUs earned is evaluated quarterly during the performance period based on our estimate for each of the performance conditions measured against the applicable goals. Compensation expense for the 2023 Performance-Based RSU grant is recognized on a straight-line basis over the requisite service period for each participant, which is generally the three year service period, except for our CEO, whose compensation expense is recognized on an accelerated basis through his announced retirement date of December 31, 2023. During the three months ended March 31, 2023, we recognized $1.1 million of compensation expense for the 2023 Performance-Based RSU grant assuming the target level of achievement for both the FFO Performance Condition and Debt to EBITDA Ratio Performance Condition. In the event we achieve a lower level of performance or fail to meet the FFO performance condition, we would reverse a portion or all of the $1.1 million of compensation expense. Each 2023 Performance-Based RSU represents the right to receive one share of our common stock in the future, subject to, and as modified by the Company’s level of achievement of the applicable performance and market conditions. The fair value of the portion of the award subject to the Debt to EBITDA Ratio Performance Condition was calculated using the closing price of the Company’s common stock on the valuation date noted below. The fair value of the portion of the award subject to the Market Condition was calculated using a Monte Carlo simulation pricing model based on the assumptions in the table below, which resulted in the following grant date fair value per share.
________________________ (1)For one participant, the fair value per share on the valuation date for their 2023 Performance-Based RSUs is $40.43. The computation of expected volatility was based on a blend of the historical volatility of our shares of common stock over a period of twice the remaining performance period as of the grant date and implied volatility data based on the observed pricing of six month publicly-traded options on shares of our common stock. The risk-free interest rate was based on the yield curve on zero-coupon U.S. Treasury STRIP securities in effect at February 6, 2023. The fair value of the 2023 Performance-Based RSU grant as of the valuation date noted above, based on a target level of achievement, was $12.0 million. For the three months ended March 31, 2023, we recorded compensation expense based upon the grant date fair value per share for each component multiplied by the estimated number of RSUs to be earned. 2023 Time-Based RSU Grant The 2023 Time-Based RSUs are scheduled to vest in three equal annual installments beginning on January 5, 2023 through January 5, 2026. Compensation expense for the 2023 Time-Based RSUs is recognized on a straight-line basis over the requisite service period, which is generally the explicit service period except for our CEO, whose compensation expense is recognized on an accelerated basis through his announced retirement date of December 31, 2023. Each 2023 Time-Based RSU represents the right to receive one share of our common stock in the future, subject to continued employment through the applicable vesting date, unless accelerated upon separation of employment, provided certain conditions are met. The total grant date fair value of the 2023 Time-Based RSU awards was $8.6 million, which was based on the $39.65 closing share price of the Company’s common stock on the NYSE on the February 6, 2023 grant date. 2022 and 2021 Performance-Based RSUs Compensation cost for the 2022 performance-based RSUs for the three months ended March 31, 2023 assumes the 2022 Debt to EBITDA Ratio Performance Condition is met at 125% of the target level of achievement (175.0% for our CEO). Compensation cost for the 2021 performance-based RSUs for the three months ended March 31, 2023 assumes the 2021 Debt to EBITDA Ratio Performance Condition is met at 150% of the target level of achievement (175.0% for our CEO). Share-Based Compensation Cost Recorded During the Period The total compensation cost for all share-based compensation programs was $11.6 million and $6.6 million for the three months ended March 31, 2023 and 2022, respectively. Share-based compensation costs for the three months ended March 31, 2023 include $4.5 million of accelerated share-based compensation costs for our CEO and former President as discussed above. Of the total share-based compensation costs, $1.5 million and $1.3 million was capitalized as part of the real estate assets for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, there was approximately $38.0 million of total unrecognized compensation cost related to nonvested RSUs granted under share-based compensation arrangements. Such amount is based in part upon the estimated future outcome of the performance metrics as of March 31, 2023, and the actual compensation cost ultimately recognized could increase or decrease from this estimate based upon actual performance results. These costs are expected to be recognized over a weighted-average period of 1.7 years, which includes the shortened vesting period for our CEO due to his announced retirement on December 31, 2023. The remaining compensation cost related to these nonvested RSU awards had been recognized in periods prior to March 31, 2023.
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Rental Income and Future Minimum Rent |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Rental Income and Future Minimum Rent | Rental Income and Future Minimum Rent Our rental income is primarily comprised of payments defined under leases and are subject to scheduled fixed increases. Additionally, rental income includes variable payments for tenant reimbursements of property-related expenses and payments based on a percentage of tenant’s sales. The table below sets forth the allocation of rental income between fixed and variable payments and net collectability reversals or recoveries for the three months ended March 31, 2023 and 2022:
_____________________ (1)Represents adjustments to rental income related to our assessment of the collectability of amounts due under leases with our tenants, including recognition of deferred rent balances associated with tenants restored from a cash basis of revenue recognition to an accrual basis of revenue recognition and allowances for uncollectible receivables and leases deemed not probable of collection. We have operating leases with tenants that expire at various dates through 2048 and are subject to scheduled fixed increases. Generally, the leases grant tenants renewal options. Leases also provide for additional rents based on certain operating expenses. Future contractual minimum rent under operating leases, which includes amounts contractually due from leases that are on a cash basis of reporting due to creditworthiness considerations, as of March 31, 2023 for future periods is summarized as follows:
_____________________ (1)Excludes residential leases and leases with a term of one year or less.
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies General As of March 31, 2023, we had commitments of approximately $561.2 million, excluding our ground lease commitments, for contracts and executed leases directly related to our operating, development and redevelopment properties. Environmental Matters As of March 31, 2023, we had accrued environmental remediation liabilities of approximately $78.3 million recorded on our consolidated balance sheets in connection with certain of our in-process and future development projects.
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Fair Value Measurements and Disclosures |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Disclosures | Fair Value Measurements and Disclosures Assets and Liabilities Reported at Fair Value The only assets we record at fair value on our consolidated financial statements are the marketable securities related to our Deferred Compensation Plan. The following table sets forth the fair value of our marketable securities as of March 31, 2023 and December 31, 2022:
(1) Based on quoted prices in active markets for identical securities. (2) The marketable securities are held in a limited rabbi trust. Financial Instruments Disclosed at Fair Value The following table sets forth the carrying value and the fair value of our other financial instruments as of March 31, 2023 and December 31, 2022:
(1)Fair value calculated using Level 2 inputs, which are based on model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
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Net Income Available to Common Stockholders Per Share of the Company |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Stockholders Per Share of the Company | Net Income Available to Common Stockholders Per Share of the Company The following table reconciles the numerator and denominator in computing the Company’s basic and diluted per-share computations for net income available to common stockholders for the three months ended March 31, 2023 and 2022:
________________________ (1)Participating securities include certain time-based RSUs and vested market measure-based RSUs. Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common shares, including stock options and RSUs are considered in our diluted earnings per share calculation for the three months ended March 31, 2023 and 2022. Certain market measure-based RSUs are not included in dilutive securities for the three months ended March 31, 2023 and 2022, as not all performance metrics had been met by the end of the applicable reporting periods. See Note 4 “Share-Based Compensation” for additional information regarding share-based compensation.
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Net Income Available to Common Unitholders Per Unit of the Operating Partnership |
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Net Income Available To Common Unitholders [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Unitholders Per Unit of the Operating Partnership | Net Income Available to Common Stockholders Per Share of the Company The following table reconciles the numerator and denominator in computing the Company’s basic and diluted per-share computations for net income available to common stockholders for the three months ended March 31, 2023 and 2022:
________________________ (1)Participating securities include certain time-based RSUs and vested market measure-based RSUs. Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common shares, including stock options and RSUs are considered in our diluted earnings per share calculation for the three months ended March 31, 2023 and 2022. Certain market measure-based RSUs are not included in dilutive securities for the three months ended March 31, 2023 and 2022, as not all performance metrics had been met by the end of the applicable reporting periods. See Note 4 “Share-Based Compensation” for additional information regarding share-based compensation.
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Kilroy Realty L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available To Common Unitholders [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Unitholders Per Unit of the Operating Partnership | Net Income Available to Common Unitholders Per Unit of the Operating Partnership The following table reconciles the numerator and denominator in computing the Operating Partnership’s basic and diluted per-unit computations for net income available to common unitholders for the three months ended March 31, 2023 and 2022:
________________________ (1)Participating securities include certain time-based RSUs and vested market measure-based RSUs. Share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities. The impact of potentially dilutive common units, including stock options and RSU are considered in our diluted earnings per share calculation for the three months ended March 31, 2023 and 2022. Certain market measure-based RSUs are not included in dilutive securities for the three months ended March 31, 2023 and 2022, as not all performance metrics had been met by the end of the applicable reporting periods. See Note 4 “Share-Based Compensation” for additional information regarding share-based compensation.
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Supplemental Cash Flow Information of the Company |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information of the Company | Supplemental Cash Flow Information of the Company Supplemental cash flow information follows (in thousands):
The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Supplemental Cash Flow Information of the Operating Partnership |
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Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information of the Operating Partnership | Supplemental Cash Flow Information of the Company Supplemental cash flow information follows (in thousands):
The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Supplemental Cash Flow Information of the Operating Partnership | Supplemental Cash Flow Information of the Operating Partnership: Supplemental cash flow information follows (in thousands):
The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Subsequent Events |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 12, 2023, aggregate dividends, distributions and dividend equivalents of $64.4 million were paid to common stockholders, common unitholders and RSU holders of record on March 31, 2023. |
Organization, Ownership and Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidation Policy | The consolidated financial statements of the Company include the consolidated financial position and results of operations of the Company, the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC and all of our wholly-owned and controlled subsidiaries. The consolidated financial statements of the Operating Partnership include the consolidated financial position and results of operations of the Operating Partnership, 303 Second LLC, 100 First LLC, Redwood LLC and all of our wholly-owned and controlled subsidiaries. All intercompany balances and transactions have been eliminated in the consolidated financial statements. |
Basis of Accounting | The accompanying interim financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in conjunction with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the accompanying interim financial statements reflect all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim periods presented. However, the results of operations for the interim periods are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. The interim financial statements for the Company and the Operating Partnership should be read in conjunction with the audited consolidated financial statements and notes thereto included in our annual report on Form 10-K for the year ended December 31, 2022. |
Organization, Ownership and Basis of Presentation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Real Estate Properties | Our stabilized portfolio of operating properties was comprised of the following properties at March 31, 2023:
________________________ (1)Represents economic occupancy. (2)Includes stabilized life science and retail space.
As of March 31, 2023, the following properties were excluded from our stabilized portfolio:
________________________ (1)Estimated rentable square feet upon completion.
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Secured and Unsecured Debt of the Operating Partnership (Tables) - Kilroy Realty L.P. |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instrument [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Unsecured Revolving Credit Facility | The following table summarizes the balance and terms of our unsecured revolving credit facility as of March 31, 2023 and December 31, 2022:
________________________ (1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $500.0 million under an accordion feature under the terms of the unsecured revolving credit facility. (2)Our unsecured revolving credit facility interest rate was calculated using a contractual rate of Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% (“Adjusted SOFR”) and a margin of 0.900% based on our credit rating as of March 31, 2023 and December 31, 2022. (3)Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of March 31, 2023 and December 31, 2022, $4.8 million and $5.3 million of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the respective maturity dates presented of our unsecured revolving credit facility. (4)The maturity date may be extended by two six-month periods, at the Company’s option. The following table summarizes the balance and terms of our unsecured term loan facility as of March 31, 2023 and December 31, 2022:
(1)We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional $130.0 million and $100.0 million as of March 31, 2023 and December 31, 2022, respectively, under an accordion feature under the terms of the unsecured term loan facility. (2)Our unsecured term loan facility interest rate was calculated using a contractual rate of Adjusted SOFR plus a margin of 0.950% based on our credit rating as of March 31, 2023 and December 31, 2022. (3)Our undrawn facility fee is paid on a quarterly basis and is calculated based on the remaining borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of March 31, 2023 and December 31, 2022, $4.6 million and $4.5 million, respectively, of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility. (4)The maturity date may be extended by two twelve-month periods, at the Company’s option.
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Schedule of Debt Maturities | The following table summarizes the stated debt maturities and scheduled amortization payments for all outstanding debt as of March 31, 2023:
(1)Includes the $350.0 million outstanding as of March 31, 2023 on the unsecured term loan facility maturing on October 3, 2024, for which the Company has two twelve-month extension options. (2)Includes gross principal balance of outstanding debt before the effect of the following at March 31, 2023: $23.4 million of unamortized deferred financing costs for the unsecured term loan facility, unsecured senior notes and secured debt and $6.1 million of unamortized discounts for the unsecured senior notes.
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Schedule of Capitalized Interest and Loan Fees | The following table sets forth gross interest expense, including debt discount and deferred financing cost amortization, net of capitalized interest, for the three months ended March 31, 2023 and 2022. The interest expense capitalized was recorded as a cost of development and redevelopment and increased the carrying value of undeveloped land and construction in progress.
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Share-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Share-Based Payment Award, Restricted Stock Units, Valuation Assumptions | The fair value of the portion of the award subject to the Market Condition was calculated using a Monte Carlo simulation pricing model based on the assumptions in the table below, which resulted in the following grant date fair value per share.
________________________ (1)For one participant, the fair value per share on the valuation date for their 2023 Performance-Based RSUs is $40.43.
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Rental Income and Future Minimum Rent (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rental Income | The table below sets forth the allocation of rental income between fixed and variable payments and net collectability reversals or recoveries for the three months ended March 31, 2023 and 2022:
_____________________ (1)Represents adjustments to rental income related to our assessment of the collectability of amounts due under leases with our tenants, including recognition of deferred rent balances associated with tenants restored from a cash basis of revenue recognition to an accrual basis of revenue recognition and allowances for uncollectible receivables and leases deemed not probable of collection.
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Schedule of Future Contractual Minimum Rent Under Operating Lease | Future contractual minimum rent under operating leases, which includes amounts contractually due from leases that are on a cash basis of reporting due to creditworthiness considerations, as of March 31, 2023 for future periods is summarized as follows:
_____________________ (1)Excludes residential leases and leases with a term of one year or less.
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Fair Value Measurements and Disclosures (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value of the Company's Marketable Securities | The following table sets forth the fair value of our marketable securities as of March 31, 2023 and December 31, 2022:
(1) Based on quoted prices in active markets for identical securities. (2) The marketable securities are held in a limited rabbi trust.
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Schedule of Carrying Value and Fair Value of Other Financial Instruments | The following table sets forth the carrying value and the fair value of our other financial instruments as of March 31, 2023 and December 31, 2022:
(1)Fair value calculated using Level 2 inputs, which are based on model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
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Net Income Available to Common Stockholders Per Share of the Company (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Stockholders | The following table reconciles the numerator and denominator in computing the Company’s basic and diluted per-share computations for net income available to common stockholders for the three months ended March 31, 2023 and 2022:
________________________ (1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.
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Net Income Available to Common Unitholders Per Unit of the Operating Partnership (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Net Income Available To Common Unitholders [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Stockholders | The following table reconciles the numerator and denominator in computing the Company’s basic and diluted per-share computations for net income available to common stockholders for the three months ended March 31, 2023 and 2022:
________________________ (1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.
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Kilroy Realty L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available To Common Unitholders [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income Available to Common Stockholders | The following table reconciles the numerator and denominator in computing the Operating Partnership’s basic and diluted per-unit computations for net income available to common unitholders for the three months ended March 31, 2023 and 2022:
________________________ (1)Participating securities include certain time-based RSUs and vested market measure-based RSUs.
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Supplemental Cash Flow Information of the Company (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flows | Supplemental cash flow information follows (in thousands):
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Schedule of Reconciliation of Cash and Cash Equivalents and Restricted Cash | The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Schedule of Reconciliation of Cash and Cash Equivalents and Restricted Cash | The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Supplemental Cash Flow Information of the Operating Partnership (Tables) |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flows | Supplemental cash flow information follows (in thousands):
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Schedule of Reconciliation of Cash and Cash Equivalents and Restricted Cash | The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Schedule of Reconciliation of Cash and Cash Equivalents and Restricted Cash | The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Kilroy Realty L.P. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Significant Noncash Transactions [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flows | Supplemental cash flow information follows (in thousands):
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Schedule of Reconciliation of Cash and Cash Equivalents and Restricted Cash | The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Schedule of Reconciliation of Cash and Cash Equivalents and Restricted Cash | The following is a reconciliation of our cash and cash equivalents and restricted cash at the beginning and end of the three months ended March 31, 2023 and 2022.
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Organization, Ownership and Basis of Presentation - Operating Properties (Details) |
3 Months Ended |
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Mar. 31, 2023
ft²
tenant
project
building
property
| |
Stabilized Office Properties | |
Real Estate Properties [Line Items] | |
Number of Buildings | building | 119 |
Rentable Square Feet | 16,206,299 |
Number of Tenants | tenant | 403 |
Percentage Occupied | 89.60% |
Percentage Leased | 91.60% |
Stabilized Residential Properties | |
Real Estate Properties [Line Items] | |
Number of Projects | property | 3 |
Number of Units | property | 1,001 |
2023 Average Occupancy | 93.40% |
In-process development projects - tenant improvement | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | 734,000 |
Number of Projects | project | 1 |
In-process development projects - under construction | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | 946,000 |
Number of Projects | project | 2 |
In-process redevelopment projects - under construction | |
Real Estate Properties [Line Items] | |
Rentable Square Feet | 100,000 |
Number of Projects | project | 2 |
Secured and Unsecured Debt of the Operating Partnership - Debt Maturities (Details) - Kilroy Realty L.P. $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
extension_option
| |
Stated debt maturities and scheduled amortization payments | |
Remaining 2023 | $ 4,352 |
2024 | 781,006 |
2025 | 406,246 |
2026 | 401,317 |
2027 | 249,125 |
2028 | 400,000 |
Thereafter | 2,200,000 |
Total aggregate principal value | $ 4,442,046 |
Unsecured Debt | Unsecured Term Loan Facility | |
Stated debt maturities and scheduled amortization payments | |
Number of extension options | extension_option | 2 |
Extension period (in months) | 12 months |
Unsecured Term Loan Facility, Unsecured Senior Notes and Secured Debt | |
Stated debt maturities and scheduled amortization payments | |
Unamortized debt issuance expense | $ 23,400 |
Senior Notes | |
Stated debt maturities and scheduled amortization payments | |
Debt issuance discount | $ 6,100 |
Secured and Unsecured Debt of the Operating Partnership - Capitalized Interest and Loan Fees (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Capitalized Interest and Loan Fees [Line Items] | ||
Interest expense | $ 25,671 | $ 20,625 |
Kilroy Realty L.P. | ||
Capitalized Interest and Loan Fees [Line Items] | ||
Gross interest expense | 43,402 | 39,723 |
Capitalized interest and deferred financing costs | (17,731) | (19,098) |
Interest expense | $ 25,671 | $ 20,625 |
Secured and Unsecured Debt of the Operating Partnership - Additional Information (Details) - USD ($) |
Mar. 31, 2023 |
Jan. 31, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Term Loan | |||
Debt Instrument [Line Items] | |||
Line of credit facility, additional borrowing capacity | $ 100,000,000 | ||
Line of credit facility, maximum borrowing capacity | $ 650,000,000 | ||
Line of credit facility, additional borrowing capacity | $ 20,000,000 | ||
Kilroy Realty L.P. | Revolving credit facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility, maximum borrowing capacity | 1,100,000,000 | $ 1,100,000,000 | |
Kilroy Realty L.P. | Term Loan Facility | Unsecured Term Loan Facility | |||
Debt Instrument [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 520,000,000 | $ 400,000,000 |
Share-Based Compensation - Fair Value Assumptions (Details) - 2023 Performance-Based RSUs |
Feb. 06, 2023
$ / shares
|
---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value per share on valuation date (in dollars per share) | $ 40.10 |
Expected share price volatility | 35.00% |
Risk-free interest rate | 4.12% |
One Participant | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value per share on valuation date (in dollars per share) | $ 40.43 |
Rental Income and Future Minimum Rent - Rental income (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Leases [Abstract] | ||
Fixed lease payments | $ 245,835 | $ 224,816 |
Variable lease payments | 46,707 | 37,081 |
Net collectability (reversals) recoveries | (2,438) | 1,311 |
Total rental income | $ 290,104 | $ 263,208 |
Rental Income and Future Minimum Rent - Future Contractual Minimum Rent (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Future contractual minimum rent under operating lease | |
Remaining 2023 | $ 605,426 |
2024 | 803,728 |
2025 | 784,671 |
2026 | 732,810 |
2027 | 667,417 |
2028 | 621,716 |
Thereafter | 1,861,469 |
Total | $ 6,077,237 |
Commitments and Contingencies - Narrative (Details) $ in Millions |
Mar. 31, 2023
USD ($)
|
---|---|
Long-term Purchase Commitment [Line Items] | |
Commitments for contracts and executed leases directly related to operating and development properties | $ 561.2 |
Environmental matters | |
Long-term Purchase Commitment [Line Items] | |
Accrued environmental remediation liabilities | $ 78.3 |
Fair Value Measurements and Disclosures - Assets and Liabilities Reported at Fair Value (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair value, measurements, recurring | Fair Value (Level 1) | ||
Assets and Liabilities Reported at Fair Value | ||
Marketable securities | $ 23,288 | $ 23,547 |
Fair Value Measurements and Disclosures - Financial Instruments Disclosed at Fair Value (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Value | Secured debt, net | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt, net | $ 241,547 | $ 242,938 |
Carrying Value | Unsecured debt, net | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt, net | 4,171,029 | 4,020,058 |
Fair Value | Secured debt, net | Fair value (level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt, net | 229,667 | 225,847 |
Fair Value | Unsecured debt, net | Fair value (level 2) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Fair value of debt, net | $ 3,414,708 | $ 3,500,420 |
Net Income Available to Common Stockholders Per Share of the Company (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Numerator: | ||
Net income available to common stockholders | $ 56,608 | $ 53,128 |
Allocation to participating securities | (364) | (413) |
Numerator for basic and diluted net income available to common stockholders | $ 56,244 | $ 52,715 |
Denominator: | ||
Basic weighted average vested shares outstanding (in shares) | 117,059,329 | 116,650,228 |
Effect of dilutive securities (in shares) | 347,189 | 409,866 |
Diluted weighted average vested shares and common stock/ unit equivalents outstanding (in shares) | 117,406,518 | 117,060,094 |
Basic earnings per share: | ||
Net income available to common stockholders per share (in dollars per share) | $ 0.48 | $ 0.45 |
Diluted earnings per share: | ||
Net income available to common stockholders per share (in dollars per share) | $ 0.48 | $ 0.45 |
Supplemental Cash Flow Information of the Company - Supplemental Cash Flow (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
SUPPLEMENTAL CASH FLOWS INFORMATION: | ||
Capitalized interest | $ 16,467 | $ 18,029 |
Cash paid for interest, net of capitalized interest of $16,467 and $18,029 as of March 31, 2023 and 2022, respectively | 8,980 | 4,736 |
Cash paid for amounts included in the measurement of ground lease liabilities | 1,704 | 1,532 |
NON-CASH INVESTING TRANSACTIONS: | ||
Accrual for expenditures for operating properties and development and redevelopment properties | 81,706 | 47,101 |
Tenant improvements funded directly by tenants | 4,329 | 1,908 |
NON-CASH FINANCING TRANSACTIONS: | ||
Accrual of dividends and distributions payable to common stockholders and common unitholders (Note 12) | $ 64,461 | $ 61,951 |
Supplemental Cash Flow Information of the Company - Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | ||||
Cash and cash equivalents | $ 476,358 | $ 347,379 | $ 331,685 | $ 414,077 |
Restricted cash | 0 | 0 | 13,007 | 13,006 |
Cash and cash equivalents and restricted cash | $ 476,358 | $ 347,379 | $ 344,692 | $ 427,083 |
Supplemental Cash Flow Information of the Operating Partnership - Reconciliation of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | ||||
Cash and cash equivalents | $ 476,358 | $ 347,379 | $ 331,685 | $ 414,077 |
Restricted cash | 0 | 0 | 13,007 | 13,006 |
Cash and cash equivalents and restricted cash | 476,358 | 347,379 | 344,692 | 427,083 |
Kilroy Realty L.P. | ||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | ||||
Cash and cash equivalents | 476,358 | 347,379 | 331,685 | 414,077 |
Restricted cash | 0 | 0 | 13,007 | 13,006 |
Cash and cash equivalents and restricted cash | $ 476,358 | $ 347,379 | $ 344,692 | $ 427,083 |
Subsequent Events (Details) $ in Millions |
Apr. 12, 2023
USD ($)
|
---|---|
Subsequent Event | |
Subsequent Event [Line Items] | |
Payment of dividends | $ 64.4 |
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