þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
Kilroy Realty Corporation
|
Maryland
|
95-4598246
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
Kilroy Realty, L.P.
|
Delaware
|
95-4612685
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064
|
||
(Address of principal executive offices) (Zip Code)
|
||
|
||
(310) 481-8400
|
||
(Registrant's telephone number, including area code)
|
||
|
|
|
N/A
|
||
(Former name, former address and former fiscal year, if changed since last report)
|
Kilroy Realty Corporation
|
|
|
|
Large accelerated filer
þ
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
|||
|
|
|
|
Kilroy Realty, L.P.
|
|
|
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
þ
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
•
|
Combined reports better reflect how management and the analyst community view the business as a single operating unit;
|
•
|
Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
|
•
|
Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
|
•
|
Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
|
•
|
consolidated financial statements;
|
•
|
the following notes to the consolidated financial statements:
|
◦
|
Note 8, Stockholders’ Equity of the Company;
|
◦
|
Note 9, Partners’ Capital of the Operating Partnership;
|
◦
|
Note 13, Net Income Available to Common Stockholders Per Share of the Company; and
|
◦
|
Note 14, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
|
•
|
“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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◦
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—Liquidity and Capital Resources of the Company;” and
|
◦
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—Liquidity and Capital Resources of the Operating Partnership.”
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|
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Page
|
|
|
PART I – FINANCIAL INFORMATION
|
|
Item 1.
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
Item 1.
|
|
||
|
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||
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||
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||
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||
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|
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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, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
(unaudited)
|
|
|
||||
REAL ESTATE ASSETS:
|
|
|
|
||||
Land and improvements
|
$
|
838,927
|
|
|
$
|
877,633
|
|
Buildings and improvements
|
3,880,883
|
|
|
4,059,639
|
|
||
Undeveloped land and construction in progress (Note 2)
|
1,265,659
|
|
|
1,120,660
|
|
||
Total real estate assets held for investment
|
5,985,469
|
|
|
6,057,932
|
|
||
Accumulated depreciation and amortization
|
(921,279
|
)
|
|
(947,664
|
)
|
||
Total real estate assets held for investment, net ($171,120 and $211,755 of VIE, respectively, Note 1)
|
5,064,190
|
|
|
5,110,268
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 3)
|
190,751
|
|
|
8,211
|
|
||
CASH AND CASH EQUIVALENTS
|
50,181
|
|
|
23,781
|
|
||
RESTRICTED CASH (Note 1)
|
8,287
|
|
|
75,185
|
|
||
MARKETABLE SECURITIES (Note 12)
|
13,337
|
|
|
11,971
|
|
||
CURRENT RECEIVABLES, NET (Note 5)
|
8,122
|
|
|
7,229
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 5)
|
168,581
|
|
|
156,416
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 4)
|
182,251
|
|
|
201,926
|
|
||
DEFERRED FINANCING COSTS, NET
|
17,346
|
|
|
18,374
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET
|
22,434
|
|
|
20,375
|
|
||
TOTAL ASSETS
|
$
|
5,725,480
|
|
|
$
|
5,633,736
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt (Notes 6 and 12)
|
$
|
516,725
|
|
|
$
|
546,292
|
|
Unsecured debt, net (Notes 6 and 12)
|
1,783,280
|
|
|
1,783,121
|
|
||
Unsecured line of credit (Notes 6 and 12)
|
130,000
|
|
|
140,000
|
|
||
Accounts payable, accrued expenses and other liabilities
|
217,352
|
|
|
225,830
|
|
||
Accrued distributions (Note 15)
|
33,532
|
|
|
32,899
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Note 4)
|
128,730
|
|
|
132,239
|
|
||
Rents received in advance and tenant security deposits
|
46,887
|
|
|
49,363
|
|
||
Liabilities of real estate assets held for sale (Note 3)
|
9,768
|
|
|
56
|
|
||
Total liabilities
|
2,866,274
|
|
|
2,909,800
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 11)
|
|
|
|
||||
EQUITY:
|
|
|
|
||||
Stockholders’ Equity (Note 8):
|
|
|
|
||||
Preferred stock, $.01 par value, 30,000,000 shares authorized:
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred stock, $.01 par value, 4,600,000 shares authorized, 4,000,000 shares issued and outstanding ($100,000 liquidation preference)
|
96,155
|
|
|
96,155
|
|
||
6.375% Series H Cumulative Redeemable Preferred stock, $.01 par value, 4,000,000 shares authorized, issued and outstanding ($100,000 liquidation preference)
|
96,256
|
|
|
96,256
|
|
||
Common stock, $.01 par value, 150,000,000 shares authorized, 88,031,377 and 86,259,684 shares issued and outstanding, respectively
|
880
|
|
|
863
|
|
||
Additional paid-in capital
|
2,761,176
|
|
|
2,635,900
|
|
||
Distributions in excess of earnings
|
(154,355
|
)
|
|
(162,964
|
)
|
||
Total stockholders’ equity
|
2,800,112
|
|
|
2,666,210
|
|
||
Noncontrolling Interests:
|
|
|
|
||||
Common units of the Operating Partnership (Note 7)
|
53,232
|
|
|
51,864
|
|
||
Noncontrolling interest in consolidated subsidiary (Note 1)
|
5,862
|
|
|
5,862
|
|
||
Total noncontrolling interests
|
59,094
|
|
|
57,726
|
|
||
Total equity
|
2,859,206
|
|
|
2,723,936
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
5,725,480
|
|
|
$
|
5,633,736
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
REVENUES
|
|
|
|
||||
Rental income
|
$
|
130,932
|
|
|
$
|
110,098
|
|
Tenant reimbursements
|
14,425
|
|
|
11,519
|
|
||
Other property income
|
725
|
|
|
2,141
|
|
||
Total revenues
|
146,082
|
|
|
123,758
|
|
||
EXPENSES
|
|
|
|
||||
Property expenses
|
24,714
|
|
|
24,483
|
|
||
Real estate taxes
|
12,715
|
|
|
10,989
|
|
||
Provision for bad debts
|
242
|
|
|
—
|
|
||
Ground leases
|
776
|
|
|
762
|
|
||
General and administrative expenses
|
12,768
|
|
|
10,811
|
|
||
Acquisition-related expenses
|
128
|
|
|
228
|
|
||
Depreciation and amortization
|
51,487
|
|
|
48,536
|
|
||
Total expenses
|
102,830
|
|
|
95,809
|
|
||
OTHER (EXPENSES) INCOME
|
|
|
|
||||
Interest income and other net investment gains (Note 12)
|
360
|
|
|
177
|
|
||
Interest expense (Note 6)
|
(16,878
|
)
|
|
(17,252
|
)
|
||
Total other (expenses) income
|
(16,518
|
)
|
|
(17,075
|
)
|
||
INCOME FROM CONTINUING OPERATIONS BEFORE GAINS ON SALE OF REAL ESTATE
|
26,734
|
|
|
10,874
|
|
||
Gain on sale of land (Note 3)
|
17,268
|
|
|
—
|
|
||
INCOME FROM CONTINUING OPERATIONS
|
44,002
|
|
|
10,874
|
|
||
DISCONTINUED OPERATIONS (Note 1)
|
|
|
|
||||
Income from discontinued operations
|
—
|
|
|
943
|
|
||
Gains on dispositions of discontinued operations
|
—
|
|
|
90,115
|
|
||
Total income from discontinued operations
|
—
|
|
|
91,058
|
|
||
NET INCOME
|
44,002
|
|
|
101,932
|
|
||
Net income attributable to noncontrolling common units of the Operating Partnership
|
(815
|
)
|
|
(2,087
|
)
|
||
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
|
43,187
|
|
|
99,845
|
|
||
PREFERRED DIVIDENDS
|
(3,313
|
)
|
|
(3,313
|
)
|
||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
39,874
|
|
|
$
|
96,532
|
|
Income from continuing operations available to common stockholders per common share – basic (Note 13)
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Income from continuing operations available to common stockholders per common share – diluted (Note 13)
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Net income available to common stockholders per share – basic (Note 13)
|
$
|
0.45
|
|
|
$
|
1.17
|
|
Net income available to common stockholders per share – diluted (Note 13)
|
$
|
0.45
|
|
|
$
|
1.14
|
|
Weighted average common shares outstanding – basic (Note 13)
|
86,896,776
|
|
|
82,124,538
|
|
||
Weighted average common shares outstanding – diluted (Note 13)
|
87,434,366
|
|
|
84,140,070
|
|
||
Dividends declared per common share
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
|
|
Common Stock
|
|
Total
Stock-
holders’
Equity
|
|
Noncontrolling Interests
|
|
Total
Equity
|
|||||||||||||||||||||
|
Preferred
Stock
|
|
Number of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Distributions
in Excess of
Earnings
|
|
||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2013
|
$
|
192,411
|
|
|
82,153,944
|
|
|
$
|
822
|
|
|
$
|
2,478,975
|
|
|
$
|
(210,896
|
)
|
|
$
|
2,461,312
|
|
|
$
|
54,848
|
|
|
$
|
2,516,160
|
|
Net income
|
|
|
|
|
|
|
|
|
99,845
|
|
|
99,845
|
|
|
2,087
|
|
|
101,932
|
|
|||||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
|
|
2,233
|
|
|
|
|
2,233
|
|
|
|
|
2,233
|
|
||||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(26,074
|
)
|
|
|
|
(1,517
|
)
|
|
|
|
(1,517
|
)
|
|
|
|
(1,517
|
)
|
|||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
88,962
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||||||
Exercise of stock options
|
|
|
500
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|
|
|
21
|
|
|||||||||||
Exchange of common units of the Operating Partnership
|
|
|
1,000
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
(28
|
)
|
|
—
|
|
||||||||||
Preferred dividends
|
|
|
|
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||||||
Dividends declared per common share and common unit ($0.35 per share/unit)
|
|
|
|
|
|
|
|
|
(29,272
|
)
|
|
(29,272
|
)
|
|
(634
|
)
|
|
(29,906
|
)
|
|||||||||||
BALANCE AS OF MARCH 31, 2014
|
$
|
192,411
|
|
|
82,218,332
|
|
|
$
|
822
|
|
|
$
|
2,479,740
|
|
|
$
|
(143,636
|
)
|
|
$
|
2,529,337
|
|
|
$
|
56,273
|
|
|
$
|
2,585,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Total
Stock-
holders’
Equity
|
|
Noncontrolling Interests
|
|
Total
Equity
|
||||||||||||||||||||||
|
Preferred
Stock
|
|
Number of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Distributions
in Excess of
Earnings
|
|
||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2014
|
$
|
192,411
|
|
|
86,259,684
|
|
|
$
|
863
|
|
|
$
|
2,635,900
|
|
|
$
|
(162,964
|
)
|
|
$
|
2,666,210
|
|
|
$
|
57,726
|
|
|
$
|
2,723,936
|
|
Net income
|
|
|
|
|
|
|
|
|
43,187
|
|
|
43,187
|
|
|
815
|
|
|
44,002
|
|
|||||||||||
Issuance of common stock (Note 8)
|
|
|
1,507,393
|
|
|
15
|
|
|
113,082
|
|
|
|
|
113,097
|
|
|
|
|
113,097
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
413
|
|
|
|
|
413
|
|
|
|
|
413
|
|
||||||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
|
|
4,302
|
|
|
|
|
4,302
|
|
|
|
|
4,302
|
|
||||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(20,429
|
)
|
|
|
|
(1,821
|
)
|
|
|
|
(1,821
|
)
|
|
|
|
(1,821
|
)
|
|||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
36,699
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||||||
Exercise of stock options (Note 10)
|
|
|
237,000
|
|
|
2
|
|
|
10,480
|
|
|
|
|
10,482
|
|
|
|
|
10,482
|
|
||||||||||
Exchange of common units of the Operating Partnership
|
|
|
11,030
|
|
|
|
|
316
|
|
|
|
|
316
|
|
|
(316
|
)
|
|
—
|
|
||||||||||
Adjustment for noncontrolling interest
|
|
|
|
|
|
|
(1,496
|
)
|
|
|
|
(1,496
|
)
|
|
1,496
|
|
|
—
|
|
|||||||||||
Preferred dividends
|
|
|
|
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||||||
Dividends declared per common share and common unit ($0.35 per share/unit)
|
|
|
|
|
|
|
|
|
(31,265
|
)
|
|
(31,265
|
)
|
|
(627
|
)
|
|
(31,892
|
)
|
|||||||||||
BALANCE AS OF MARCH 31, 2015
|
$
|
192,411
|
|
|
88,031,377
|
|
|
$
|
880
|
|
|
$
|
2,761,176
|
|
|
$
|
(154,355
|
)
|
|
$
|
2,800,112
|
|
|
$
|
59,094
|
|
|
$
|
2,859,206
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
44,002
|
|
|
$
|
101,932
|
|
Adjustments to reconcile net income to net cash provided by operating activities
(including discontinued operations):
|
|
|
|
||||
Depreciation and amortization of building and improvements and leasing costs
|
50,843
|
|
|
48,717
|
|
||
Increase in provision for bad debts
|
242
|
|
|
—
|
|
||
Depreciation of furniture, fixtures and equipment
|
644
|
|
|
485
|
|
||
Noncash amortization of share-based compensation awards
|
3,571
|
|
|
2,502
|
|
||
Noncash amortization of deferred financing costs and debt discounts and premiums
|
454
|
|
|
1,256
|
|
||
Noncash amortization of net below market rents (Note 4)
|
(1,928
|
)
|
|
(1,734
|
)
|
||
Gain on sale of land (Note 3)
|
(17,268
|
)
|
|
—
|
|
||
Gains on dispositions of discontinued operations
|
—
|
|
|
(90,115
|
)
|
||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements
|
(3,013
|
)
|
|
(2,353
|
)
|
||
Straight-line rents
|
(19,692
|
)
|
|
(3,959
|
)
|
||
Net change in other operating assets
|
(8,421
|
)
|
|
(5,949
|
)
|
||
Net change in other operating liabilities
|
5,545
|
|
|
(5,701
|
)
|
||
Net cash provided by operating activities
|
54,979
|
|
|
45,081
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for development and redevelopment properties and undeveloped land
|
(89,810
|
)
|
|
(73,626
|
)
|
||
Expenditures for acquisition of development properties (Note 2)
|
(50,435
|
)
|
|
—
|
|
||
Expenditures for operating properties
|
(24,345
|
)
|
|
(32,016
|
)
|
||
Expenditures for acquisition of operating properties
|
—
|
|
|
(106,125
|
)
|
||
Net proceeds received from dispositions of land and operating properties (Note 3)
|
25,563
|
|
|
309,824
|
|
||
Decrease in acquisition-related deposits
|
3,099
|
|
|
—
|
|
||
Decrease (increase) in restricted cash (Note 1)
|
58,619
|
|
|
(779
|
)
|
||
Net cash (used in) provided by investing activities
|
(77,309
|
)
|
|
97,278
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from issuance of common stock (Note 8)
|
113,097
|
|
|
—
|
|
||
Borrowings on unsecured line of credit
|
150,000
|
|
|
90,000
|
|
||
Repayments on unsecured line of credit
|
(160,000
|
)
|
|
(135,000
|
)
|
||
Principal payments on secured debt
|
(28,472
|
)
|
|
(2,414
|
)
|
||
Financing costs
|
(397
|
)
|
|
(418
|
)
|
||
Repurchase of common stock and restricted stock units
|
(1,821
|
)
|
|
(1,517
|
)
|
||
Proceeds from exercise of stock options (Note 10)
|
10,482
|
|
|
21
|
|
||
Dividends and distributions paid to common stockholders and common unitholders
|
(30,846
|
)
|
|
(29,561
|
)
|
||
Dividends and distributions paid to preferred stockholders and preferred unitholders
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Net cash provided by (used in) financing activities
|
48,730
|
|
|
(82,202
|
)
|
||
Net increase in cash and cash equivalents
|
26,400
|
|
|
60,157
|
|
||
Cash and cash equivalents, beginning of period
|
23,781
|
|
|
35,377
|
|
||
Cash and cash equivalents, end of period
|
$
|
50,181
|
|
|
$
|
95,534
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest of
$10,669
and $10,042 as of March 31, 2015 and 2014, respectively
|
$
|
19,814
|
|
|
$
|
14,106
|
|
NONCASH INVESTING TRANSACTIONS:
|
|
|
|
||||
Accrual for expenditures for operating properties and development and redevelopment properties
|
$
|
85,656
|
|
|
$
|
64,709
|
|
Tenant improvements funded directly by tenants
|
$
|
231
|
|
|
$
|
4,470
|
|
Assumption of other liabilities in connection with development acquisitions
|
$
|
1,478
|
|
|
$
|
—
|
|
Release of holdback funds to third party
|
$
|
8,279
|
|
|
$
|
—
|
|
NONCASH FINANCING TRANSACTIONS:
|
|
|
|
||||
Accrual of dividends and distributions payable to common stockholders and common unitholders
|
$
|
31,892
|
|
|
$
|
29,906
|
|
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders
|
$
|
1,656
|
|
|
$
|
1,656
|
|
Fair value of share-based compensation awards at equity classification date (Note 10)
|
$
|
16,920
|
|
|
$
|
—
|
|
Exchange of common units of the Operating Partnership into shares of the Company’s common stock
|
$
|
316
|
|
|
$
|
28
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
(unaudited)
|
|
|
||||
REAL ESTATE ASSETS:
|
|
|
|
||||
Land and improvements
|
$
|
838,927
|
|
|
$
|
877,633
|
|
Buildings and improvements
|
3,880,883
|
|
|
4,059,639
|
|
||
Undeveloped land and construction in progress (Note 2)
|
1,265,659
|
|
|
1,120,660
|
|
||
Total real estate assets held for investment
|
5,985,469
|
|
|
6,057,932
|
|
||
Accumulated depreciation and amortization
|
(921,279
|
)
|
|
(947,664
|
)
|
||
Total real estate assets held for investment, net ($171,120 and $211,755 of VIE, respectively, Note 1)
|
5,064,190
|
|
|
5,110,268
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 3)
|
190,751
|
|
|
8,211
|
|
||
CASH AND CASH EQUIVALENTS
|
50,181
|
|
|
23,781
|
|
||
RESTRICTED CASH (Note 1)
|
8,287
|
|
|
75,185
|
|
||
MARKETABLE SECURITIES (Note 12)
|
13,337
|
|
|
11,971
|
|
||
CURRENT RECEIVABLES, NET (Note 5)
|
8,122
|
|
|
7,229
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 5)
|
168,581
|
|
|
156,416
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 4)
|
182,251
|
|
|
201,926
|
|
||
DEFERRED FINANCING COSTS, NET
|
17,346
|
|
|
18,374
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET
|
22,434
|
|
|
20,375
|
|
||
TOTAL ASSETS
|
$
|
5,725,480
|
|
|
$
|
5,633,736
|
|
LIABILITIES AND CAPITAL
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt (Notes 6 and 12)
|
$
|
516,725
|
|
|
$
|
546,292
|
|
Unsecured debt, net (Notes 6 and 12)
|
1,783,280
|
|
|
1,783,121
|
|
||
Unsecured line of credit (Notes 6 and 12)
|
130,000
|
|
|
140,000
|
|
||
Accounts payable, accrued expenses and other liabilities
|
217,352
|
|
|
225,830
|
|
||
Accrued distributions (Note 15)
|
33,532
|
|
|
32,899
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Note 4)
|
128,730
|
|
|
132,239
|
|
||
Rents received in advance and tenant security deposits
|
46,887
|
|
|
49,363
|
|
||
Liabilities of real estate assets held for sale (Note 3)
|
9,768
|
|
|
56
|
|
||
Total liabilities
|
2,866,274
|
|
|
2,909,800
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 11)
|
|
|
|
||||
CAPITAL:
|
|
|
|
||||
Partners’ Capital (Note 9):
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred units, 4,000,000 units issued and
outstanding ($100,000 liquidation preference)
|
96,155
|
|
|
96,155
|
|
||
6.375% Series H Cumulative Redeemable Preferred units, 4,000,000 units issued and
outstanding ($100,000 liquidation preference)
|
96,256
|
|
|
96,256
|
|
||
Common units, 88,031,377 and 86,259,684 held by the general partner and 1,793,170 and 1,804,200
held by common limited partners issued and outstanding, respectively
|
2,657,095
|
|
|
2,521,900
|
|
||
Total partners’ capital
|
2,849,506
|
|
|
2,714,311
|
|
||
Noncontrolling interests in consolidated subsidiaries (Note 1)
|
9,700
|
|
|
9,625
|
|
||
Total capital
|
2,859,206
|
|
|
2,723,936
|
|
||
TOTAL LIABILITIES AND CAPITAL
|
$
|
5,725,480
|
|
|
$
|
5,633,736
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
REVENUES
|
|
|
|
||||
Rental income
|
$
|
130,932
|
|
|
$
|
110,098
|
|
Tenant reimbursements
|
14,425
|
|
|
11,519
|
|
||
Other property income
|
725
|
|
|
2,141
|
|
||
Total revenues
|
146,082
|
|
|
123,758
|
|
||
EXPENSES
|
|
|
|
||||
Property expenses
|
24,714
|
|
|
24,483
|
|
||
Real estate taxes
|
12,715
|
|
|
10,989
|
|
||
Provision for bad debts
|
242
|
|
|
—
|
|
||
Ground leases
|
776
|
|
|
762
|
|
||
General and administrative expenses
|
12,768
|
|
|
10,811
|
|
||
Acquisition-related expenses
|
128
|
|
|
228
|
|
||
Depreciation and amortization
|
51,487
|
|
|
48,536
|
|
||
Total expenses
|
102,830
|
|
|
95,809
|
|
||
OTHER (EXPENSES) INCOME
|
|
|
|
||||
Interest income and other net investment gains (Note 12)
|
360
|
|
|
177
|
|
||
Interest expense (Note 6)
|
(16,878
|
)
|
|
(17,252
|
)
|
||
Total other (expenses) income
|
(16,518
|
)
|
|
(17,075
|
)
|
||
INCOME FROM CONTINUING OPERATIONS BEFORE GAINS ON SALE OF REAL ESTATE
|
26,734
|
|
|
10,874
|
|
||
Gain on sale of land (Note 3)
|
17,268
|
|
|
—
|
|
||
INCOME FROM CONTINUING OPERATIONS
|
44,002
|
|
|
10,874
|
|
||
DISCONTINUED OPERATIONS (Note 1)
|
|
|
|
||||
Income from discontinued operations
|
—
|
|
|
943
|
|
||
Gains on dispositions of discontinued operations
|
—
|
|
|
90,115
|
|
||
Total income from discontinued operations
|
—
|
|
|
91,058
|
|
||
NET INCOME
|
44,002
|
|
|
101,932
|
|
||
Net income attributable to noncontrolling interests in consolidated subsidiaries
|
(75
|
)
|
|
(65
|
)
|
||
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.
|
43,927
|
|
|
101,867
|
|
||
PREFERRED DISTRIBUTIONS
|
(3,313
|
)
|
|
(3,313
|
)
|
||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS
|
$
|
40,614
|
|
|
$
|
98,554
|
|
Income from continuing operations available to common unitholders per unit – basic (Note 14)
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Income from continuing operations available to common unitholders per unit – diluted (Note 14)
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Net income available to common unitholders per unit – basic (Note 14)
|
$
|
0.45
|
|
|
$
|
1.17
|
|
Net income available to common unitholders per unit – diluted (Note 14)
|
$
|
0.45
|
|
|
$
|
1.14
|
|
Weighted average common units outstanding – basic (Note 14)
|
88,693,306
|
|
|
83,928,993
|
|
||
Weighted average common units outstanding – diluted (Note 14)
|
89,230,896
|
|
|
85,944,525
|
|
||
Dividends declared per common unit
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
Partners’ Capital
|
|
Total
Partners’
Capital
|
|
Noncontrolling Interests in Consolidated Subsidiaries
|
|
|
|||||||||||||||
|
Preferred
Units
|
|
Number of
Common
Units
|
|
Common
Units
|
|
|
|
Total
Capital
|
|||||||||||||
BALANCE AS OF DECEMBER 31, 2013
|
$
|
192,411
|
|
|
83,959,144
|
|
|
$
|
2,315,361
|
|
|
$
|
2,507,772
|
|
|
$
|
8,388
|
|
|
$
|
2,516,160
|
|
Net income
|
|
|
|
|
101,867
|
|
|
101,867
|
|
|
65
|
|
|
101,932
|
|
|||||||
Noncash amortization of share-based compensation
|
|
|
|
|
2,233
|
|
|
2,233
|
|
|
|
|
2,233
|
|
||||||||
Repurchase of common units, stock options and restricted stock units
|
|
|
(26,074
|
)
|
|
(1,517
|
)
|
|
(1,517
|
)
|
|
|
|
(1,517
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
88,962
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Exercise of stock options
|
|
|
500
|
|
|
21
|
|
|
21
|
|
|
|
|
21
|
|
|||||||
Preferred distributions
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||
Distributions declared per common unit ($0.35 per unit)
|
|
|
|
|
(29,906
|
)
|
|
(29,906
|
)
|
|
|
|
(29,906
|
)
|
||||||||
BALANCE AS OF MARCH 31, 2014
|
$
|
192,411
|
|
|
84,022,532
|
|
|
$
|
2,384,746
|
|
|
$
|
2,577,157
|
|
|
$
|
8,453
|
|
|
$
|
2,585,610
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ Capital
|
|
Total
Partners’
Capital
|
|
Noncontrolling Interests in Consolidated Subsidiaries
|
|
|
|||||||||||||||
|
Preferred
Units
|
|
Number of
Common
Units
|
|
Common
Units
|
|
|
Total
Capital
|
||||||||||||||
BALANCE AS OF DECEMBER 31, 2014
|
$
|
192,411
|
|
|
88,063,884
|
|
|
$
|
2,521,900
|
|
|
$
|
2,714,311
|
|
|
$
|
9,625
|
|
|
$
|
2,723,936
|
|
Net income
|
|
|
|
|
43,927
|
|
|
43,927
|
|
|
75
|
|
|
44,002
|
|
|||||||
Issuance of common units (Note 9)
|
|
|
1,507,393
|
|
|
113,097
|
|
|
113,097
|
|
|
|
|
113,097
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
413
|
|
|
413
|
|
|
|
|
413
|
|
||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
4,302
|
|
|
4,302
|
|
|
|
|
4,302
|
|
||||||||
Repurchase of common units, stock options and restricted stock units
|
|
|
(20,429
|
)
|
|
(1,821
|
)
|
|
(1,821
|
)
|
|
|
|
(1,821
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
36,699
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Exercise of stock options (Note 10)
|
|
|
237,000
|
|
|
10,482
|
|
|
10,482
|
|
|
|
|
10,482
|
|
|||||||
Preferred distributions
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||
Distributions declared per common unit ($0.35 per unit)
|
|
|
|
|
(31,892
|
)
|
|
(31,892
|
)
|
|
|
|
(31,892
|
)
|
||||||||
BALANCE AS OF MARCH 31, 2015
|
$
|
192,411
|
|
|
89,824,547
|
|
|
$
|
2,657,095
|
|
|
$
|
2,849,506
|
|
|
$
|
9,700
|
|
|
$
|
2,859,206
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
44,002
|
|
|
$
|
101,932
|
|
Adjustments to reconcile net income to net cash provided by operating activities
(including discontinued operations):
|
|
|
|
||||
Depreciation and amortization of building and improvements and leasing costs
|
50,843
|
|
|
48,717
|
|
||
Increase in provision for bad debts
|
242
|
|
|
—
|
|
||
Depreciation of furniture, fixtures and equipment
|
644
|
|
|
485
|
|
||
Noncash amortization of share-based compensation awards
|
3,571
|
|
|
2,502
|
|
||
Noncash amortization of deferred financing costs and debt discounts and premiums
|
454
|
|
|
1,256
|
|
||
Noncash amortization of net below market rents (Note 4)
|
(1,928
|
)
|
|
(1,734
|
)
|
||
Gain on sale of land (Note 3)
|
(17,268
|
)
|
|
—
|
|
||
Gains on dispositions of discontinued operations
|
—
|
|
|
(90,115
|
)
|
||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements
|
(3,013
|
)
|
|
(2,353
|
)
|
||
Straight-line rents
|
(19,692
|
)
|
|
(3,959
|
)
|
||
Net change in other operating assets
|
(8,421
|
)
|
|
(5,949
|
)
|
||
Net change in other operating liabilities
|
5,545
|
|
|
(5,701
|
)
|
||
Net cash provided by operating activities
|
54,979
|
|
|
45,081
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for development and redevelopment properties and undeveloped land
|
(89,810
|
)
|
|
(73,626
|
)
|
||
Expenditures for acquisition of development properties (Note 2)
|
(50,435
|
)
|
|
—
|
|
||
Expenditures for operating properties
|
(24,345
|
)
|
|
(32,016
|
)
|
||
Expenditures for acquisition of operating properties
|
—
|
|
|
(106,125
|
)
|
||
Net proceeds received from dispositions of land and operating properties (Note 3)
|
25,563
|
|
|
309,824
|
|
||
Decrease in acquisition-related deposits
|
3,099
|
|
|
—
|
|
||
Decrease (increase) in restricted cash (Note 1)
|
58,619
|
|
|
(779
|
)
|
||
Net cash (used in) provided by investing activities
|
(77,309
|
)
|
|
97,278
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from issuance of common stock (Note 8)
|
113,097
|
|
|
—
|
|
||
Borrowings on unsecured line of credit
|
150,000
|
|
|
90,000
|
|
||
Repayments on unsecured line of credit
|
(160,000
|
)
|
|
(135,000
|
)
|
||
Principal payments on secured debt
|
(28,472
|
)
|
|
(2,414
|
)
|
||
Financing costs
|
(397
|
)
|
|
(418
|
)
|
||
Repurchase of common stock and restricted stock units
|
(1,821
|
)
|
|
(1,517
|
)
|
||
Proceeds from exercise of stock options (Note 10)
|
10,482
|
|
|
21
|
|
||
Dividends and distributions paid to common stockholders and common unitholders
|
(30,846
|
)
|
|
(29,561
|
)
|
||
Dividends and distributions paid to preferred stockholders and preferred unitholders
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Net cash provided by (used in) financing activities
|
48,730
|
|
|
(82,202
|
)
|
||
Net increase in cash and cash equivalents
|
26,400
|
|
|
60,157
|
|
||
Cash and cash equivalents, beginning of period
|
23,781
|
|
|
35,377
|
|
||
Cash and cash equivalents, end of period
|
$
|
50,181
|
|
|
$
|
95,534
|
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest of $10,669 and $10,042 as of March 31, 2015 and 2014, respectively
|
$
|
19,814
|
|
|
$
|
14,106
|
|
NONCASH INVESTING TRANSACTIONS:
|
|
|
|
||||
Accrual for expenditures for operating properties and development and redevelopment properties
|
$
|
85,656
|
|
|
$
|
64,709
|
|
Tenant improvements funded directly by tenants
|
$
|
231
|
|
|
$
|
4,470
|
|
Assumption of other liabilities in connection with development acquisitions
|
$
|
1,478
|
|
|
$
|
—
|
|
Release of holdback funds to third party
|
$
|
8,279
|
|
|
$
|
—
|
|
NONCASH FINANCING TRANSACTIONS:
|
|
|
|
||||
Accrual of dividends and distributions payable to common unitholders
|
$
|
31,892
|
|
|
$
|
29,906
|
|
Accrual of dividends and distributions payable to preferred unitholders
|
$
|
1,656
|
|
|
$
|
1,656
|
|
Fair value of share-based compensation awards at equity classification date (Note 10)
|
$
|
16,920
|
|
|
$
|
—
|
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
|
Number of
Tenants
|
|
Percentage
Occupied
|
||||
Stabilized Office Properties
|
101
|
|
|
13,047,720
|
|
|
515
|
|
|
96.1
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
|
|
Properties held for sale
(1)
|
10
|
|
1,044,844
|
|
Development projects under construction
(2)
|
6
|
|
1,732,000
|
|
(1)
|
Includes
one
property located in Redmond, Washington and
nine
properties located in the Sorrento Mesa/UTC submarkets of San Diego, California. For additional information see Note 3.
|
(2)
|
Estimated rentable square feet upon completion.
|
Project
|
|
Date of Acquisition
|
|
Type
|
|
Purchase Price
(in millions)
|
||
333 Dexter
(1)(2)
|
|
February 13, 2015
|
|
Land
|
|
$
|
49.5
|
|
(1)
|
Acquisition comprised of four adjacent parcels in the South Lake Union submarket of Seattle, Washington located at 330 Dexter Avenue North, 333 Dexter Avenue North, 401 Dexter Avenue North, and 400 Aurora Avenue North.
|
(2)
|
In connection with this acquisition, we also assumed
$2.4 million
in accrued liabilities and acquisition costs which are not included in the purchase price above. As of
March 31, 2015
, the underlying assets were included as undeveloped land and construction in progress in our consolidated balance sheets.
|
Location
|
|
City/Submarket
|
|
Property Type
|
|
Number of Buildings
|
|
Rentable Square Feet
|
|
15050 NE 36th Street
|
|
Redmond, WA
|
|
Office
|
|
1
|
|
122,103
|
|
San Diego Properties
(1)
|
|
Sorrento Mesa, CA
|
|
Office
|
|
9
|
|
922,741
|
|
Total properties held for sale
|
|
|
|
|
|
10
|
|
1,044,844
|
|
(1)
|
The San Diego Properties include the following: 6260 Sequence Drive, 6290 Sequence Drive, 6310 Sequence Drive, 6340 Sequence Drive, 6350 Sequence Drive, 10770 Wateridge Circle, 4921 Directors Place, 6200 Greenwich Drive, and 6220 Greenwich Drive. The properties are being sold in two tranches. The Company completed the sale of the first tranche for gross proceeds of approximately
$95.0 million
on April 15, 2015.
|
Real estate assets and other assets held for sale
|
(in thousands)
|
||
Land and improvements
|
$
|
38,706
|
|
Buildings and improvements
|
198,125
|
|
|
Total real estate held for sale
|
236,831
|
|
|
Accumulated depreciation and amortization
|
(66,421
|
)
|
|
Total real estate held for sale, net
|
170,410
|
|
|
Current receivables, net
|
185
|
|
|
Deferred rent receivables, net
|
7,285
|
|
|
Deferred leasing costs and acquisition-related intangible assets, net
|
12,364
|
|
|
Prepaid expenses and other assets, net
|
507
|
|
|
Real estate and other assets held for sale, net
|
$
|
190,751
|
|
|
|
||
Liabilities and deferred revenue of real estate assets held for sale
|
|
||
Accounts payable, accrued expenses and other liabilities
|
$
|
7,376
|
|
Deferred revenue and acquisition-related intangible liabilities, net
|
1,367
|
|
|
Rents received in advance and tenant security deposits
|
1,025
|
|
|
Liabilities and deferred revenue of real estate assets held for sale
|
$
|
9,768
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Deferred Leasing Costs and Acquisition-Related Intangible Assets, net:
(1)
|
|
|
|
||||
Deferred leasing costs
|
$
|
201,548
|
|
|
$
|
216,102
|
|
Accumulated amortization
|
(74,864
|
)
|
|
(74,904
|
)
|
||
Deferred leasing costs, net
|
126,684
|
|
|
141,198
|
|
||
Above-market operating leases
|
19,194
|
|
|
20,734
|
|
||
Accumulated amortization
|
(13,323
|
)
|
|
(13,952
|
)
|
||
Above-market operating leases, net
|
5,871
|
|
|
6,782
|
|
||
In-place leases
|
93,222
|
|
|
97,250
|
|
||
Accumulated amortization
|
(43,993
|
)
|
|
(43,773
|
)
|
||
In-place leases, net
|
49,229
|
|
|
53,477
|
|
||
Below-market ground lease obligation
|
490
|
|
|
490
|
|
||
Accumulated amortization
|
(23
|
)
|
|
(21
|
)
|
||
Below-market ground lease obligation, net
|
467
|
|
|
469
|
|
||
Total deferred leasing costs and acquisition-related intangible assets, net
|
$
|
182,251
|
|
|
$
|
201,926
|
|
Acquisition-Related Intangible Liabilities, net:
(1) (2)
|
|
|
|
||||
Below-market operating leases
|
$
|
64,792
|
|
|
$
|
68,051
|
|
Accumulated amortization
|
(30,222
|
)
|
|
(30,620
|
)
|
||
Below-market operating leases, net
|
34,570
|
|
|
37,431
|
|
||
Above-market ground lease obligation
|
6,320
|
|
|
6,320
|
|
||
Accumulated amortization
|
(349
|
)
|
|
(324
|
)
|
||
Above-market ground lease obligation, net
|
5,971
|
|
|
5,996
|
|
||
Total acquisition-related intangible liabilities, net
|
$
|
40,541
|
|
|
$
|
43,427
|
|
(1)
|
Excludes deferred leasing costs and acquisition-related intangible assets and liabilities related to properties held for sale at
March 31, 2015
.
|
(2)
|
Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Deferred leasing costs
(1)
|
$
|
6,822
|
|
|
$
|
6,780
|
|
Above-market operating leases
(2)
|
911
|
|
|
1,490
|
|
||
In-place leases
(1)
|
4,221
|
|
|
6,136
|
|
||
Below-market ground lease obligation
(3)
|
2
|
|
|
—
|
|
||
Below-market operating leases
(4)
|
(2,839
|
)
|
|
(3,093
|
)
|
||
Above-market ground lease obligation
(5)
|
(25
|
)
|
|
(25
|
)
|
||
Total
|
$
|
9,092
|
|
|
$
|
11,288
|
|
(1)
|
The amortization of deferred leasing costs related to lease incentives is recorded to rental income and other deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.
|
(2)
|
The amortization of above-market operating leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.
|
(3)
|
The amortization of the below-market ground lease obligation is recorded as an increase to ground lease expense in the consolidated statements of operations for the periods presented.
|
(4)
|
The amortization of below-market operating leases is recorded as an increase to rental income in the consolidated statements of operations for the periods presented.
|
(5)
|
The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.
|
Year
|
Deferred Leasing Costs
|
|
Above-Market Operating Leases
(1)
|
|
In-Place Leases
|
|
Below-Market Ground Lease Obligation
(2)
|
|
Below-Market Operating Leases
(3)
|
|
Above-Market Ground Lease Obligation
(4)
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Remaining 2015
|
$
|
19,561
|
|
|
$
|
1,619
|
|
|
$
|
9,829
|
|
|
$
|
6
|
|
|
$
|
(7,239
|
)
|
|
$
|
(76
|
)
|
2016
|
23,763
|
|
|
1,503
|
|
|
10,741
|
|
|
8
|
|
|
(8,189
|
)
|
|
(101
|
)
|
||||||
2017
|
20,881
|
|
|
1,241
|
|
|
9,281
|
|
|
8
|
|
|
(7,337
|
)
|
|
(101
|
)
|
||||||
2018
|
17,275
|
|
|
831
|
|
|
6,373
|
|
|
8
|
|
|
(5,735
|
)
|
|
(101
|
)
|
||||||
2019
|
13,440
|
|
|
643
|
|
|
4,714
|
|
|
8
|
|
|
(3,597
|
)
|
|
(101
|
)
|
||||||
Thereafter
|
31,764
|
|
|
34
|
|
|
8,291
|
|
|
429
|
|
|
(2,473
|
)
|
|
(5,491
|
)
|
||||||
Total
|
$
|
126,684
|
|
|
$
|
5,871
|
|
|
$
|
49,229
|
|
|
$
|
467
|
|
|
$
|
(34,570
|
)
|
|
$
|
(5,971
|
)
|
(1)
|
Represents estimated annual amortization related to above-market operating leases. Amounts will be recorded as a decrease to rental income in the consolidated statements of operations.
|
(2)
|
Represents estimated annual amortization related to below-market ground lease obligations. Amounts will be recorded as an increase to ground lease expense in the consolidated statements of operations.
|
(3)
|
Represents estimated annual amortization related to below-market operating leases. Amounts will be recorded as an increase to rental income in the consolidated statements of operations.
|
(4)
|
Represents estimated annual amortization related to above-market ground lease obligations. Amounts will be recorded as a decrease to ground lease expense in the consolidated statements of operations.
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Current receivables
(1)
|
$
|
10,107
|
|
|
$
|
9,228
|
|
Allowance for uncollectible tenant receivables
(1)
|
(1,985
|
)
|
|
(1,999
|
)
|
||
Current receivables, net
(1)
|
$
|
8,122
|
|
|
$
|
7,229
|
|
(1)
|
Excludes current receivables, net related to properties held for sale.
|
|
March 31, 2015
(1)
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Deferred rent receivables
|
$
|
170,736
|
|
|
$
|
158,405
|
|
Allowance for deferred rent receivables
|
(2,155
|
)
|
|
(1,989
|
)
|
||
Deferred rent receivables, net
|
$
|
168,581
|
|
|
$
|
156,416
|
|
(1)
|
Excludes deferred rent receivables, net related to properties held for sale as of
March 31, 2015
.
|
Type of Debt
|
Annual Stated Interest Rate
(1)
|
|
GAAP
Effective Rate
(1)(2)
|
|
Maturity Date
|
|
March 31, 2015
(3)
|
|
December 31, 2014
(3)
|
||||
|
|
|
|
|
|
|
(in thousands)
|
||||||
Mortgage note payable
|
4.27%
|
|
4.27%
|
|
February 2018
|
|
$
|
130,164
|
|
|
$
|
130,767
|
|
Mortgage note payable
(4)
|
4.48%
|
|
4.48%
|
|
July 2027
|
|
97,000
|
|
|
97,000
|
|
||
Mortgage note payable
(4)
|
6.05%
|
|
3.50%
|
|
June 2019
|
|
88,411
|
|
|
89,242
|
|
||
Mortgage note payable
|
6.51%
|
|
6.51%
|
|
February 2017
|
|
66,383
|
|
|
66,647
|
|
||
Mortgage note payable
(4)
|
5.23%
|
|
3.50%
|
|
January 2016
|
|
52,332
|
|
|
52,793
|
|
||
Mortgage note payable
(4)
|
5.57%
|
|
3.25%
|
|
February 2016
|
|
39,895
|
|
|
40,258
|
|
||
Mortgage note payable
(4)
|
5.09%
|
|
3.50%
|
|
August 2015
|
|
34,178
|
|
|
34,311
|
|
||
Mortgage note payable
(5)
|
4.94%
|
|
4.00%
|
|
April 2015
|
|
—
|
|
|
26,285
|
|
||
Mortgage note payable
|
7.15%
|
|
7.15%
|
|
May 2017
|
|
5,940
|
|
|
6,568
|
|
||
Other
|
Various
|
|
Various
|
|
Various
|
|
2,422
|
|
|
2,421
|
|
||
Total
|
|
|
|
|
|
|
$
|
516,725
|
|
|
$
|
546,292
|
|
(1)
|
All interest rates presented are fixed-rate interest rates.
|
(2)
|
This represents the rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of discounts/premiums, excluding debt issuance costs.
|
(3)
|
Amounts reported include the amounts of unamortized debt premiums of
$9.2 million
and
$10.3 million
as of March 31, 2015 and December 31, 2014, respectively.
|
(4)
|
The secured debt and the related properties that secure the debt are held in a special purpose entity and the properties are not available to satisfy the debts and other obligations of the Company or the Operating Partnership.
|
(5)
|
This mortgage note payable was repaid during the three months ended
March 31, 2015
prior to maturity at par.
|
|
|
|
|
|
|
|
|
|
Principal Amount as of
|
||||||
|
Issuance date
|
|
Maturity date
|
|
Stated
coupon rate
|
|
Effective interest rate
(1)
|
|
March 31,
2015
|
|
December 31,
2014 |
||||
|
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
4.250% Unsecured Senior Notes
(2)
|
July 2014
|
|
August 2029
|
|
4.250%
|
|
4.350%
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(4,273
|
)
|
|
(4,348
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
395,727
|
|
|
$
|
395,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.800% Unsecured Senior Notes
(3)
|
January 2013
|
|
January 2023
|
|
3.800%
|
|
3.804%
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(77
|
)
|
|
(79
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
299,923
|
|
|
$
|
299,921
|
|
|
|||||||||||||||
4.800% Unsecured Senior Notes
(3)
|
July 2011
|
|
July 2018
|
|
4.800%
|
|
4.827%
|
|
$
|
325,000
|
|
|
$
|
325,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(246
|
)
|
|
(265
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
324,754
|
|
|
$
|
324,735
|
|
|
|||||||||||||||
6.625% Unsecured Senior Notes
(4)
|
May 2010
|
|
June 2020
|
|
6.625%
|
|
6.743%
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(1,101
|
)
|
|
(1,154
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
248,899
|
|
|
$
|
248,846
|
|
|
|||||||||||||||
5.000% Unsecured Senior Notes
(5)
|
November 2010
|
|
November 2015
|
|
5.000%
|
|
5.014%
|
|
$
|
325,000
|
|
|
$
|
325,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(23
|
)
|
|
(33
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
324,977
|
|
|
$
|
324,967
|
|
(1)
|
This represents the rate at which interest expense is recorded for financial reporting purposes, which reflects the amortization of initial issuance discounts, excluding debt issuance costs.
|
(2)
|
Interest on these notes is payable semi-annually in arrears on February 15th and August 15th of each year.
|
(3)
|
Interest on these notes is payable semi-annually in arrears on January 15th and July 15th of each year.
|
(4)
|
Interest on these notes is payable semi-annually in arrears on June 1st and December 1st of each year.
|
(5)
|
Interest on these notes is payable semi-annually in arrears on May 3rd and November 3rd of each year.
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
130,000
|
|
|
$
|
140,000
|
|
Remaining borrowing capacity
|
470,000
|
|
|
460,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
1.43
|
%
|
|
1.41
|
%
|
||
Facility fee-annual rate
(3)
|
0.250%
|
||||||
Maturity date
|
July 2019
|
(1)
|
We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional
$311.0 million
under an accordion feature under the terms of the unsecured revolving credit facility and term loan facility.
|
(2)
|
Our revolving credit facility interest rate was calculated based on an annual rate of LIBOR plus
1.250%
.
|
(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, 2015
,
$5.6 million
of deferred financing costs remains to be amortized through the maturity date of our unsecured revolving credit facility.
|
(1)
|
Our unsecured term loan facility interest rate was calculated based on an annual rate of LIBOR plus 1.40%.
|
Year
|
(in thousands)
|
||
Remaining 2015
|
$
|
366,630
|
|
2016
|
99,431
|
|
|
2017
|
71,748
|
|
|
2018
|
451,728
|
|
|
2019
|
395,369
|
|
|
Thereafter
|
1,041,644
|
|
|
Total
(1)
|
$
|
2,426,550
|
|
(1)
|
Includes gross principal balance of outstanding debt before impact of net unamortized premiums totaling approximately
$3.5 million
.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Gross interest expense
|
$
|
27,749
|
|
|
$
|
28,034
|
|
Capitalized interest and loan fees
|
(10,871
|
)
|
|
(10,782
|
)
|
||
Interest expense
|
$
|
16,878
|
|
|
$
|
17,252
|
|
|
Three months
ended March 31, 2015
|
||
|
(in millions, except share
and per share data)
|
||
Shares of common stock sold during the three month period
|
1,507,393
|
|
|
Weighted average price per common share
|
$
|
76.09
|
|
Aggregate gross proceeds
|
$
|
114.7
|
|
Aggregate net proceeds after sales agent compensation
|
$
|
113.2
|
|
|
March 31, 2015
|
|
December 31, 2014
|
|
March 31, 2014
|
|||
Company owned common units in the Operating Partnership
|
88,031,377
|
|
|
86,259,684
|
|
|
82,218,332
|
|
Company owned general partnership interest
|
98.0
|
%
|
|
98.0
|
%
|
|
97.9
|
%
|
Noncontrolling common units of the Operating Partnership
|
1,793,170
|
|
|
1,804,200
|
|
|
1,804,200
|
|
Ownership interest of noncontrolling interest
|
2.0
|
%
|
|
2.0
|
%
|
|
2.1
|
%
|
|
Fair Value Assumptions
|
Fair value per share at January 27, 2015
|
$78.55
|
Expected share price volatility
|
20.00%
|
Risk-free interest rate
|
0.92%
|
Remaining expected life
|
2.9 years
|
|
Fair Value (Level 1)
(1)
|
||||||
|
March 31, 2015
|
|
December 31, 2014
|
||||
Description
|
(in thousands)
|
||||||
Marketable securities
(2)
|
$
|
13,337
|
|
|
$
|
11,971
|
|
(1)
|
Based on quoted prices in active markets for identical securities.
|
(2)
|
The marketable securities are held in a limited rabbi trust.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
Description
|
(in thousands)
|
||||||
Net gain on marketable securities
|
$
|
388
|
|
|
$
|
154
|
|
|
March 31, 2015
|
|
December 31, 2014
|
||||||||||||
|
Carrying
Value |
|
Fair
Value |
|
Carrying
Value |
|
Fair
Value |
||||||||
|
(in thousands)
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Secured debt
(1)
|
$
|
516,725
|
|
|
$
|
525,495
|
|
|
$
|
546,292
|
|
|
$
|
559,483
|
|
Unsecured debt, net
(2)
|
1,783,280
|
|
|
1,870,576
|
|
|
1,783,121
|
|
|
1,858,492
|
|
||||
Unsecured line of credit
(1)
|
130,000
|
|
|
130,032
|
|
|
140,000
|
|
|
145,051
|
|
(1)
|
Fair value calculated using Level II inputs, which are based on model-derived valuations in which significant inputs and significant value drivers are observable in active markets.
|
(2)
|
Fair value calculated using Level I and Level II inputs. Level I inputs are based on quoted prices for identical instruments in active markets. The carrying value and fair value of the Level I instruments was
$1,269.5 million
and
$1,335.2 million
, respectively, as of
March 31, 2015
. The carrying value and fair value of the Level I instruments as of
December 31, 2014
, was
$1,269.4 million
and
$1,322.2 million
, respectively. The carrying value and fair value of the Level II instruments was
$513.8 million
and
$535.4 million
, respectively, as of
March 31, 2015
. The carrying value and fair value of the Level II instruments as of
December 31, 2014
, was
$513.7 million
and
$536.3 million
, respectively.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands, except share and per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Income from continuing operations
|
$
|
44,002
|
|
|
$
|
10,874
|
|
Income from continuing operations attributable to noncontrolling common units of the Operating Partnership
|
(815
|
)
|
|
(160
|
)
|
||
Preferred dividends
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Allocation to participating securities
(1)
|
(415
|
)
|
|
(427
|
)
|
||
Numerator for basic and diluted income from continuing operations available to common stockholders
|
39,459
|
|
|
6,974
|
|
||
Income from discontinued operations
(2)
|
—
|
|
|
91,058
|
|
||
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership
(2)
|
—
|
|
|
(1,927
|
)
|
||
Numerator for basic and diluted net income available to common stockholders
|
$
|
39,459
|
|
|
$
|
96,105
|
|
Denominator:
|
|
|
|
||||
Basic weighted average vested shares outstanding
|
86,896,776
|
|
|
82,124,538
|
|
||
Effect of dilutive securities
|
537,590
|
|
|
2,015,532
|
|
||
Diluted weighted average vested shares and common share equivalents outstanding
|
87,434,366
|
|
|
84,140,070
|
|
||
Basic earnings per share:
|
|
|
|
||||
Income from continuing operations available to common stockholders per share
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Income from discontinued operations per common share
(2)
|
0.00
|
|
|
1.09
|
|
||
Net income available to common stockholders per share
|
$
|
0.45
|
|
|
$
|
1.17
|
|
Diluted earnings per share:
|
|
|
|
||||
Income from continuing operations available to common stockholders per share
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Income from discontinued operations per common share
(2)
|
0.00
|
|
|
1.06
|
|
||
Net income available to common stockholders per share
|
$
|
0.45
|
|
|
$
|
1.14
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
(2)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 1). As a result, properties classified as held for sale and/or disposed of subsequent to January 1, 2015 that do not represent a strategic shift are no longer presented as discontinued operations.
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands, except unit and per unit amounts)
|
||||||
Numerator:
|
|
|
|
||||
Income from continuing operations
|
$
|
44,002
|
|
|
$
|
10,874
|
|
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries
|
(75
|
)
|
|
(65
|
)
|
||
Preferred distributions
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Allocation to participating securities
(1)
|
(415
|
)
|
|
(427
|
)
|
||
Numerator for basic and diluted income from continuing operations available to common unitholders
|
40,199
|
|
|
7,069
|
|
||
Income from discontinued operations
(2)
|
—
|
|
|
91,058
|
|
||
Numerator for basic and diluted net income available to common unitholders
|
$
|
40,199
|
|
|
$
|
98,127
|
|
Denominator:
|
|
|
|
||||
Basic weighted average vested units outstanding
|
88,693,306
|
|
|
83,928,993
|
|
||
Effect of dilutive securities
|
537,590
|
|
|
2,015,532
|
|
||
Diluted weighted average vested units and common unit equivalents outstanding
|
89,230,896
|
|
|
85,944,525
|
|
||
Basic earnings per unit:
|
|
|
|
||||
Income from continuing operations available to common unitholders per unit
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Income from discontinued operations per common unit
(2)
|
0.00
|
|
|
1.09
|
|
||
Net income available to common unitholders per unit
|
$
|
0.45
|
|
|
$
|
1.17
|
|
Diluted earnings per unit:
|
|
|
|
||||
Income from continuing operations available to common unitholders per unit
|
$
|
0.45
|
|
|
$
|
0.08
|
|
Income from discontinued operations per common unit
(2)
|
0.00
|
|
|
1.06
|
|
||
Net income available to common unitholders per unit
|
$
|
0.45
|
|
|
$
|
1.14
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
(2)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 1). As a result, properties classified as held for sale and/or disposed of subsequent to January 1, 2015 that do not represent a strategic shift are no longer presented as discontinued operations.
|
•
|
350 Mission Street, SOMA, San Francisco, California, which we acquired in October 2012. This development project, which is 100% pre-leased to salesforce.com, Inc., has a total estimated investment of approximately
$280 million
and will encompass approximately
450,000
rentable square feet upon completion. The property is expected to be LEED platinum certified, the first ground up high-rise development property in the city expected to receive this designation. Construction is currently in process and is expected to be completed towards the end of 2015, and the tenant is currently expected to occupy in phases.
|
•
|
333 Brannan Street, SOMA, San Francisco, California, which we acquired in July 2012. This development project is 100% pre-leased to Dropbox, has a total estimated investment of approximately
$105 million
and will encompass
185,000
rentable square feet upon completion. The property is expected to be LEED platinum certified and construction is currently in process and is expected to be completed at the end of the fourth quarter in 2015.
|
•
|
Crossing/900, Redwood City, California, which we acquired in June 2013 with a local partner. This development project is 100% pre-leased to Box, Inc., has a total estimated investment of approximately
$190 million
and will encompass approximately
339,000
rentable square feet upon completion. Construction is currently in process and the first of two office buildings will be delivered early in the fourth quarter of 2015.
|
•
|
Columbia Square, Hollywood, California, which we acquired in September 2012. This development project is comprised of two phases, historical and new office and residential, and is located in the heart of Hollywood, California, two blocks from the corner of Sunset Boulevard and Vine Street. During 2013, we commenced development on both phases comprising approximately
685,000
rentable square feet. The two office components comprising
480,000
square feet have an estimated investment of approximately
$300 million
and are expected to be completed in phases between the second quarter of 2015 and the first quarter of 2016, and the project is expected to be stabilized in phases between the second quarter of 2015 and the first quarter of 2017.
|
•
|
The Heights at Del Mar, Del Mar, California, which we acquired in September 2013. The project is a
73,000
square foot office project and has a total estimated investment of approximately
$45 million
. Construction on this project is currently in process and is expected to be completed in the fourth quarter of 2015.
|
|
1st & 2nd Generation
(1)
|
|
2nd Generation
(1)
|
||||||||||||||||||||||||
|
Number of Leases
(2)
|
|
Rentable Square Feet
(2)
|
|
TI/LC per
Sq. Ft.
(3)
|
|
Changes in
Rents
(4)(5)
|
|
Changes in
Cash Rents
(6)
|
|
Retention Rates
(7)
|
|
Weighted Average Lease Term (in months)
|
||||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|||||||||||||||||||
Three Months Ended
March 31, 2015
|
16
|
|
|
20
|
|
|
254,166
|
|
|
182,293
|
|
|
$
|
38.09
|
|
|
19.9
|
%
|
|
10.6
|
%
|
|
57.8
|
%
|
|
72
|
|
|
1st & 2nd Generation
(1)
|
|
2nd Generation
(1)
|
|||||||||||||||||||||
|
Number of Leases
(2)
|
|
Rentable Square Feet
(2)
|
|
TI/LC per Sq. Ft.
(3)
|
|
Changes in
Rents
(4)(5)
|
|
Changes in
Cash Rents
(6)
|
|
Weighted Average Lease Term
(in months)
|
|||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|
|
||||||||||||||
Three Months Ended
March 31, 2015 |
22
|
|
|
20
|
|
|
215,232
|
|
|
186,942
|
|
|
$
|
40.65
|
|
|
26.7
|
%
|
|
18.5
|
%
|
|
61
|
|
(1)
|
First generation leasing includes space where we have made capital expenditures that result in additional revenue generated when the space is re-leased. Second generation leasing includes space where we have made capital expenditures to maintain the current market revenue stream.
|
(2)
|
Represents leasing activity for leases that commenced or signed during the period, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction.
|
(3)
|
Tenant improvements and leasing commissions per square foot exclude tenant-funded tenant improvements.
|
(4)
|
Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space. Excludes leases for which the space was vacant longer than one year or vacant when the property was acquired.
|
(5)
|
Excludes commenced and executed leases of approximately 122,538 square feet for the
three
months ended
March 31, 2015
and 41,465 rentable square feet for the
three
months ended
March 31, 2015
, for which the space was vacant longer than one year or being leased for the first time. Space vacant for more than one year is excluded from our change in rents calculations to provide a meaningful market comparison.
|
(6)
|
Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space. Excludes leases for which the space was vacant longer than one year or vacant when the property was acquired.
|
(7)
|
Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
|
(8)
|
For the
three
months ended
March 31, 2015
,
16
new leases totaling
152,489
rentable square feet were signed but not commenced as of
March 31, 2015
.
|
Year of Lease Expiration
|
|
Number of
Expiring
Leases
|
|
Total Square Feet
|
|
% of Total Leased Sq. Ft.
|
|
Annualized Base Rent
(2)
|
|
% of Total Annualized Base Rent
(2)
|
|
Annualized Base Rent per Sq. Ft.
(2)
|
||||||||
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
||||||||
Remainder of 2015
|
|
81
|
|
|
866,580
|
|
|
7.1
|
%
|
|
$
|
27,479
|
|
|
6.0
|
%
|
|
$
|
31.71
|
|
2016
|
|
88
|
|
|
816,586
|
|
|
6.7
|
%
|
|
24,978
|
|
|
5.5
|
%
|
|
30.59
|
|
||
2017
|
|
108
|
|
|
1,783,139
|
|
|
14.6
|
%
|
|
60,639
|
|
|
13.3
|
%
|
|
34.01
|
|
||
2018
|
|
68
|
|
|
1,337,276
|
|
|
10.8
|
%
|
|
53,752
|
|
|
11.7
|
%
|
|
40.20
|
|
||
2019
|
|
81
|
|
|
1,487,170
|
|
|
12.0
|
%
|
|
54,077
|
|
|
11.8
|
%
|
|
36.36
|
|
||
2020
|
|
74
|
|
|
1,778,318
|
|
|
14.5
|
%
|
|
64,444
|
|
|
14.1
|
%
|
|
36.24
|
|
||
Total
|
|
500
|
|
|
8,069,069
|
|
|
65.7
|
%
|
|
$
|
285,369
|
|
|
62.4
|
%
|
|
$
|
35.37
|
|
(1)
|
The information presented for all lease expiration activity reflects leasing activity through
March 31, 2015
for our stabilized portfolio. For leases that have been renewed early or space that has been re-leased to a new tenant, the expiration date and annualized base rent information presented takes into consideration the renewed or re-leased lease terms. Excludes space leased under month-to-month leases, intercompany leases, vacant space and lease renewal options not executed as of
March 31, 2015
.
|
(2)
|
Annualized base rent includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Percentages represent percentage of total portfolio annualized contractual base rental revenue. For additional information on tenant improvement and leasing commission costs incurred by the Company for the current reporting period, please see further discussion under the caption “Information on Leases Commenced and Executed.”
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
|
|
Properties held for sale
(1)
|
10
|
|
1,044,844
|
|
Development projects under construction
(2)
|
6
|
|
1,732,000
|
|
(1)
|
Includes
one
property located in Redmond, Washington and
nine
properties located in the Sorrento Mesa/UTC submarkets of San Diego, California. For additional information see Note 3.
|
(2)
|
Estimated rentable square feet upon completion.
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
||
Total as of March 31, 2014
|
107
|
|
|
13,305,145
|
|
Acquisitions
(1)
|
4
|
|
|
266,982
|
|
Completed development projects placed in-service
|
5
|
|
|
928,342
|
|
Dispositions and properties held for sale
|
(15
|
)
|
|
(1,467,128
|
)
|
Remeasurement
|
—
|
|
|
14,379
|
|
Total as of March 31, 2015
|
101
|
|
|
13,047,720
|
|
(1)
|
Excludes redevelopment and development property acquisitions.
|
Region
|
Number of
Buildings
|
|
Rentable Square Feet
|
|
Occupancy at
(1)
|
|||||||||
|
3/31/2015
|
|
12/31/2014
|
|
9/30/2014
|
|||||||||
Los Angeles and Ventura Counties
|
27
|
|
|
3,505,514
|
|
|
94.3
|
%
|
|
92.8
|
%
|
|
92.7
|
%
|
Orange County
|
1
|
|
|
271,556
|
|
|
96.0
|
%
|
|
98.7
|
%
|
|
97.8
|
%
|
San Diego
|
37
|
|
|
3,317,350
|
|
|
95.8
|
%
|
|
90.9
|
%
|
|
90.8
|
%
|
San Francisco Bay Area
|
24
|
|
|
3,887,161
|
|
|
97.3
|
%
|
|
97.3
|
%
|
|
98.8
|
%
|
Greater Seattle
|
12
|
|
|
2,066,139
|
|
|
97.5
|
%
|
|
98.1
|
%
|
|
95.2
|
%
|
Total Stabilized Portfolio
|
101
|
|
|
13,047,720
|
|
|
96.1
|
%
|
|
94.4
|
%
|
|
94.1
|
%
|
|
Average Occupancy
|
||||
|
Three Months Ended March 31,
|
||||
|
2015
|
|
2014
|
||
Stabilized Portfolio
(1)
|
95.4
|
%
|
|
93.1
|
%
|
Same Store Portfolio
(2)
|
95.5
|
%
|
|
94.6
|
%
|
(1)
|
Occupancy percentages reported are based on our stabilized office portfolio as of the end of the period presented, and excludes occupancy percentages of properties held for sale.
|
(2)
|
Occupancy percentages reported are based on office properties owned and stabilized as of January 1,
2014
and still owned and stabilized as of
March 31, 2015
, and excludes occupancy percentages of properties held for sale at
March 31, 2015
. See discussion under “Results of Operations” for additional information.
|
•
|
Same Store Properties – which includes the results of all of the office properties that were owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1,
2014
and still owned and included in the stabilized portfolio as of
March 31, 2015
;
|
•
|
Stabilized Development and Redevelopment Properties – which includes the results generated by the following:
|
◦
|
One development project comprising three office buildings that was completed and stabilized in the third quarter of 2014;
|
◦
|
One development project consisting of two office buildings that was completed and stabilized in the fourth quarter of 2014;
|
◦
|
One redevelopment property that was stabilized in 2014 following its one year lease-up period; and
|
•
|
Acquisition Properties – which includes the results, from the dates of acquisition through the periods presented, for the five office buildings we acquired during 2014;
|
•
|
Held for Sale, Disposition and Other Properties – which includes the results for both periods presented of ten properties held for sale at
March 31, 2015
and expenses for certain of our in-process and future development projects.
|
Group
|
|
# of Buildings
|
|
Rentable
Square Feet
|
||
Same Store Properties
|
|
90
|
|
|
11,281,795
|
|
Stabilized Development and Redevelopment Properties
|
|
6
|
|
|
1,358,338
|
|
Acquisition Properties
|
|
5
|
|
|
407,587
|
|
Total Stabilized Portfolio
(1)
|
|
101
|
|
13,047,720
|
|
(1)
|
The stabilized portfolio excludes ten properties held for sale that encompass
1,044,844
rentable square feet at
March 31, 2015
.
|
|
Three Months Ended March 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2015
|
|
2014
|
|
||||||||||
|
($ in thousands)
|
|||||||||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|||||||
Net Operating Income, as defined
|
$
|
107,635
|
|
|
$
|
87,524
|
|
|
$
|
20,111
|
|
|
23.0
|
%
|
Unallocated (expense) income:
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
(12,768
|
)
|
|
(10,811
|
)
|
|
(1,957
|
)
|
|
18.1
|
|
|||
Acquisition-related expenses
|
(128
|
)
|
|
(228
|
)
|
|
100
|
|
|
(43.9
|
)
|
|||
Depreciation and amortization
|
(51,487
|
)
|
|
(48,536
|
)
|
|
(2,951
|
)
|
|
6.1
|
|
|||
Interest income and other net investment gains
|
360
|
|
|
177
|
|
|
183
|
|
|
103.4
|
|
|||
Interest expense
|
(16,878
|
)
|
|
(17,252
|
)
|
|
374
|
|
|
(2.2
|
)
|
|||
Gain on sale of land
|
17,268
|
|
|
—
|
|
|
17,268
|
|
|
100.0
|
|
|||
Income from continuing operations
|
44,002
|
|
|
10,874
|
|
|
33,128
|
|
|
304.7
|
|
|||
Income from discontinued operations
(1)
|
—
|
|
|
91,058
|
|
|
(91,058
|
)
|
|
(100.0
|
)
|
|||
Net income
|
$
|
44,002
|
|
|
$
|
101,932
|
|
|
$
|
(57,930
|
)
|
|
(56.8
|
)%
|
(1)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 1 to our consolidated financial statements included in this report for additional information). As a result, results of operations for properties classified as held for sale and/or disposed of subsequent to January 1, 2015 are presented in continuing operations. Prior to January 1, 2015, properties classified as held for sale and/or disposed of are presented in discontinued operations.
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized
Develop-ment &
Redevel-opment
|
|
Acquisition Properties
|
|
2015 Held for Sale, Disposit-ions & Other
|
|
Total
|
|
Same Store
|
|
Stabilized
Develop-ment & Redevel-opment |
|
Acquisition Properties
|
|
2015 Held for Sale, Disposit-ions & Other
|
|
Total
|
||||||||||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Rental income
|
$
|
105,382
|
|
|
$
|
16,551
|
|
|
$
|
3,899
|
|
|
$
|
5,100
|
|
|
$
|
130,932
|
|
|
$
|
100,139
|
|
|
$
|
4,350
|
|
|
$
|
407
|
|
|
$
|
5,202
|
|
|
$
|
110,098
|
|
Tenant reimbursements
|
10,942
|
|
|
2,090
|
|
|
484
|
|
|
909
|
|
|
14,425
|
|
|
10,615
|
|
|
192
|
|
|
22
|
|
|
690
|
|
|
11,519
|
|
||||||||||
Other property income
|
725
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
725
|
|
|
2,135
|
|
|
5
|
|
|
—
|
|
|
1
|
|
|
2,141
|
|
||||||||||
Total
|
117,049
|
|
|
18,641
|
|
|
4,383
|
|
|
6,009
|
|
|
146,082
|
|
|
112,889
|
|
|
4,547
|
|
|
429
|
|
|
5,893
|
|
|
123,758
|
|
||||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Property expenses
|
22,078
|
|
|
1,392
|
|
|
248
|
|
|
996
|
|
|
24,714
|
|
|
23,069
|
|
|
647
|
|
|
3
|
|
|
764
|
|
|
24,483
|
|
||||||||||
Real estate taxes
|
9,646
|
|
|
1,951
|
|
|
321
|
|
|
797
|
|
|
12,715
|
|
|
9,718
|
|
|
479
|
|
|
9
|
|
|
783
|
|
|
10,989
|
|
||||||||||
Provision for bad debts
|
218
|
|
|
1
|
|
|
—
|
|
|
23
|
|
|
242
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Ground leases
|
776
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
776
|
|
|
762
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
762
|
|
||||||||||
Total
|
32,718
|
|
|
3,344
|
|
|
569
|
|
|
1,816
|
|
|
38,447
|
|
|
33,549
|
|
|
1,126
|
|
|
12
|
|
|
1,547
|
|
|
36,234
|
|
||||||||||
Net Operating Income,
as defined
|
$
|
84,331
|
|
|
$
|
15,297
|
|
|
$
|
3,814
|
|
|
$
|
4,193
|
|
|
$
|
107,635
|
|
|
$
|
79,340
|
|
|
$
|
3,421
|
|
|
$
|
417
|
|
|
$
|
4,346
|
|
|
$
|
87,524
|
|
|
Three Months Ended March 31, 2015 as compared to the Three Months Ended March 31, 2014
|
|||||||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized Development & Redevelopment
|
|
Acquisition Properties
|
|
2015 Held for Sale, Dispositions & Other
|
|
Total
|
|||||||||||||||||||||||||
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|||||||||||||||
|
($ in thousands)
|
|||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Rental income
|
$
|
5,243
|
|
|
5.2
|
%
|
|
$
|
12,201
|
|
|
280.5
|
%
|
|
$
|
3,492
|
|
|
858.0
|
%
|
|
$
|
(102
|
)
|
|
(2.0
|
)%
|
|
$
|
20,834
|
|
|
18.9
|
%
|
Tenant reimbursements
|
327
|
|
|
3.1
|
|
|
1,898
|
|
|
988.5
|
|
|
462
|
|
|
2,100.0
|
|
|
219
|
|
|
31.7
|
|
|
2,906
|
|
|
25.2
|
|
|||||
Other property income
|
(1,410
|
)
|
|
(66.0
|
)
|
|
(5
|
)
|
|
(100.0
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(100.0
|
)
|
|
(1,416
|
)
|
|
(66.1
|
)
|
|||||
Total
|
4,160
|
|
|
3.7
|
|
|
14,094
|
|
|
310.0
|
|
|
3,954
|
|
|
921.7
|
|
|
116
|
|
|
2.0
|
|
|
22,324
|
|
|
18.0
|
|
|||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Property expenses
|
(991
|
)
|
|
(4.3
|
)
|
|
745
|
|
|
115.1
|
|
|
245
|
|
|
8,166.7
|
|
|
232
|
|
|
30.4
|
|
|
231
|
|
|
0.9
|
|
|||||
Real estate taxes
|
(72
|
)
|
|
(0.7
|
)
|
|
1,472
|
|
|
307.3
|
|
|
312
|
|
|
3,466.7
|
|
|
14
|
|
|
1.8
|
|
|
1,726
|
|
|
15.7
|
|
|||||
Provision for bad debts
|
218
|
|
|
100.0
|
|
|
1
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
23
|
|
|
100.0
|
|
|
242
|
|
|
100.0
|
|
|||||
Ground leases
|
14
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
1.8
|
|
|||||
Total
|
(831
|
)
|
|
(2.5
|
)
|
|
2,218
|
|
|
197.0
|
|
|
557
|
|
|
4,641.7
|
|
|
269
|
|
|
17.4
|
|
|
2,213
|
|
|
6.1
|
|
|||||
Net Operating Income,
as defined
|
$
|
4,991
|
|
|
6.3
|
%
|
|
$
|
11,876
|
|
|
347.1
|
%
|
|
$
|
3,397
|
|
|
814.6
|
%
|
|
$
|
(153
|
)
|
|
(3.5
|
)%
|
|
$
|
20,111
|
|
|
23.0
|
%
|
•
|
An increase of
$5.0 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase in rental income of
$5.2 million
, of which $3.4 million is due to new leases at higher rates primarily in the San Francisco Bay Area and Greater Seattle regions and $1.4 million is due to an increase in occupancy primarily in the Los Angeles and San Diego regions;
|
•
|
An increase in tenant reimbursements of
$0.3 million
primarily due to an increase in recurring property operating expenses;
|
•
|
A partially offsetting decrease in other property income of
$1.4 million
primarily due to $1.8 million of lease termination fees recognized mainly from one tenant during the three months ended
March 31, 2014
as compared with $0.4 million of other property income during the three months ended
March 31, 2015
;
|
•
|
A decrease in property and related expenses of
$0.8 million
primarily resulting from a decrease of
$1.0 million
in property expenses due to the following:
|
◦
|
$1.0 million decrease in non-recurring legal fees;
|
◦
|
$0.6 million insurance reimbursement received in 2015, offset by;
|
◦
|
$0.6 million increase to contract services, repairs and maintenance, and various other reimbursable expenses;
|
•
|
An increase of
$11.9 million
attributable to the Stabilized Development and Redevelopment Properties primarily attributable to the properties completed and/or stabilized in September and October of 2014; and
|
•
|
An increase of
$3.4 million
attributable to the Acquisition Properties.
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2015
|
|
2014
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||
Gross interest expense
|
$
|
27,749
|
|
|
$
|
28,034
|
|
|
$
|
(285
|
)
|
|
(1.0
|
)%
|
Capitalized interest and loan fees
|
(10,871
|
)
|
|
(10,782
|
)
|
|
(89
|
)
|
|
0.8
|
%
|
|||
Interest expense
|
$
|
16,878
|
|
|
$
|
17,252
|
|
|
$
|
(374
|
)
|
|
(2.2
|
)%
|
|
Shares/Units at
March 31, 2015
|
|
Aggregate
Principal
Amount or
$ Value
Equivalent
|
|
% of Total
Market
Capitalization
|
||||
|
($ in thousands)
|
||||||||
Debt:
|
|
|
|
|
|
||||
Unsecured Revolving Credit Facility
|
|
|
$
|
130,000
|
|
|
1.4
|
%
|
|
Unsecured Term Loan Facility
|
|
|
150,000
|
|
|
1.6
|
|
||
Unsecured Term Loan
|
|
|
39,000
|
|
|
0.4
|
|
||
Unsecured Senior Notes due 2015
(1)
|
|
|
325,000
|
|
|
3.4
|
|
||
Unsecured Senior Notes due 2018
(1)
|
|
|
325,000
|
|
|
3.4
|
|
||
Unsecured Senior Notes due 2020
(1)
|
|
|
250,000
|
|
|
2.6
|
|
||
Unsecured Senior Notes due 2023
(1)
|
|
|
300,000
|
|
|
3.2
|
|
||
Unsecured Senior Notes due 2029
(1)
|
|
|
400,000
|
|
|
4.2
|
|
||
Secured debt
(3)
|
|
|
507,550
|
|
|
5.4
|
|
||
Total debt
|
|
|
2,426,550
|
|
|
25.6
|
|
||
Equity and Noncontrolling Interests:
|
|
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred stock
(2)
|
4,000,000
|
|
|
100,000
|
|
|
1.1
|
|
|
6.375% Series H Cumulative Redeemable Preferred stock
(2)
|
4,000,000
|
|
|
100,000
|
|
|
1.1
|
|
|
Common limited partnership units outstanding
(3)(4)
|
1,793,170
|
|
|
136,586
|
|
|
1.4
|
|
|
Common shares outstanding
(4)
|
88,031,377
|
|
|
6,705,350
|
|
|
70.8
|
|
|
Total equity and noncontrolling interests
|
|
|
7,041,936
|
|
|
74.4
|
|
||
Total Market Capitalization
|
|
|
$
|
9,468,486
|
|
|
100.0
|
%
|
(1)
|
Represents gross aggregate principal amount due at maturity before the effect of net unamortized premiums as of
March 31, 2015
.
The aggregate net unamortized premiums totaled approximately
$3.5 million
as of
March 31, 2015
.
|
(2)
|
Value based on $25.00 per share liquidation preference.
|
(3)
|
Represents common units not owned by the Company.
|
(4)
|
Value based on closing price per share of our common stock of
$76.17
as of
March 31, 2015
.
|
•
|
Net cash flow from operations;
|
•
|
Borrowings under the Operating Partnership’s unsecured revolving credit facility and term loan facility;
|
•
|
Proceeds from additional secured or unsecured debt financings;
|
•
|
Proceeds from public or private issuance of debt or equity securities; and
|
•
|
Proceeds from the disposition of assets through our capital recycling program.
|
•
|
Development and redevelopment costs;
|
•
|
Property or undeveloped land acquisitions;
|
•
|
Property operating and corporate expenses;
|
•
|
Capital expenditures, tenant improvement and leasing costs;
|
•
|
Debt service and principal payments, including debt maturities;
|
•
|
Distributions to common and preferred security holders; and
|
•
|
Outstanding debt repurchases.
|
|
March 31,
2015 |
|
December 31,
2014 |
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
130,000
|
|
|
$
|
140,000
|
|
Remaining borrowing capacity
|
470,000
|
|
|
460,000
|
|
||
Total borrowing capacity
(1)(2)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
1.43
|
%
|
|
1.41
|
%
|
||
Facility fee-annual rate
(3)
|
0.250%
|
||||||
Maturity date
(2)
|
July 2019
|
(1)
|
We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional
$311.0 million
under an accordion feature under the terms of the unsecured revolving credit facility and unsecured term loan facility.
|
(2)
|
Our unsecured revolving credit facility interest rate was calculated based on an annual rate of LIBOR plus
1.250%
as of
March 31, 2015
and
December 31, 2014
.
|
(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, 2015
,
$5.6 million
of deferred financing costs remains to be amortized through the maturity date of our unsecured revolving credit facility.
|
|
Three months
ended March 31, 2015
|
||
|
(in millions, except share
and per share data)
|
||
Shares of common stock sold during the three month period
|
1,507,393
|
|
|
Weighted average price per common share
|
$
|
76.09
|
|
Aggregate gross proceeds
|
$
|
114.7
|
|
Aggregate net proceeds after sales agent compensation
|
$
|
113.2
|
|
|
Aggregate Principal
Amount Outstanding
|
||
|
(in thousands)
|
||
Unsecured Revolving Credit Facility
|
$
|
130,000
|
|
Unsecured Term Loan Facility
|
150,000
|
|
|
Unsecured Term Loan
|
39,000
|
|
|
Unsecured Senior Notes due 2015
(1)
|
325,000
|
|
|
Unsecured Senior Notes due 2018
(1)
|
325,000
|
|
|
Unsecured Senior Notes due 2020
(1)
|
250,000
|
|
|
Unsecured Senior Notes due 2023
(1)
|
300,000
|
|
|
Unsecured Senior Notes due 2029
(1)
|
400,000
|
|
|
Secured Debt
(1)
|
507,550
|
|
|
Total Unsecured and Secured Debt
|
$
|
2,426,550
|
|
(1)
|
Represents gross aggregate principal amount before the effect of the unamortized discounts and premiums as of
March 31, 2015
. The aggregate net unamortized premiums totaled approximately
$3.5 million
as of
March 31, 2015
.
|
|
Percentage of Total Debt
|
|
Weighted Average Interest Rate
|
||||||||
|
March 31, 2015
|
|
December 31, 2014
|
|
March 31, 2015
|
|
December 31, 2014
|
||||
Secured vs. unsecured
(1)
:
|
|
|
|
|
|
|
|
||||
Unsecured
|
79.1
|
%
|
|
78.3
|
%
|
|
4.3
|
%
|
|
4.2
|
%
|
Secured
|
20.9
|
%
|
|
21.7
|
%
|
|
5.2
|
%
|
|
5.2
|
%
|
Variable-rate vs. fixed-rate
(1)
:
|
|
|
|
|
|
|
|
||||
Variable-rate
|
13.2
|
%
|
|
13.4
|
%
|
|
1.5
|
%
|
|
1.5
|
%
|
Fixed-rate
|
86.8
|
%
|
|
86.6
|
%
|
|
4.9
|
%
|
|
4.9
|
%
|
Stated rate
(1)
|
|
|
|
|
4.4
|
%
|
|
4.4
|
%
|
||
GAAP effective rate
(2)
|
|
|
|
|
4.3
|
%
|
|
4.3
|
%
|
||
GAAP effective rate including debt issuance costs
|
|
|
|
|
4.5
|
%
|
|
4.5
|
%
|
(1)
|
Excludes the impact of the amortization of any debt discounts/premiums.
|
(2)
|
Includes the impact of the amortization of any debt discounts/premiums, excluding debt issuance costs.
|
|
Payment Due by Period
|
|
|
||||||||||||||||
|
Less than
1 Year
(Remainder
of 2015)
|
|
2-3 Years
(2016-2017)
|
|
4-5 Years
(2018-2019)
|
|
More than
5 years
(After 2019)
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Principal payments: secured debt
(1)
|
$
|
41,630
|
|
|
$
|
171,179
|
|
|
$
|
203,097
|
|
|
$
|
91,644
|
|
|
$
|
507,550
|
|
Principal payments: unsecured debt
(2)
|
325,000
|
|
|
—
|
|
|
644,000
|
|
|
950,000
|
|
|
1,919,000
|
|
|||||
Interest payments: fixed-rate debt
(3)
|
75,332
|
|
|
118,902
|
|
|
95,594
|
|
|
235,539
|
|
|
525,367
|
|
|||||
Interest payments: variable-rate debt
(4)
|
2,250
|
|
|
5,972
|
|
|
4,467
|
|
|
—
|
|
|
12,689
|
|
|||||
Interest payments: unsecured revolving credit facility
(5)
|
1,401
|
|
|
3,718
|
|
|
2,781
|
|
|
—
|
|
|
7,900
|
|
|||||
Ground lease obligations
(6)
|
2,340
|
|
|
6,240
|
|
|
6,240
|
|
|
154,358
|
|
|
169,178
|
|
|||||
Lease and contractual commitments
(7)
|
74,625
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,625
|
|
|||||
Development commitments
(8)
|
292,000
|
|
|
46,000
|
|
|
—
|
|
|
—
|
|
|
338,000
|
|
|||||
Total
|
$
|
814,578
|
|
|
$
|
352,011
|
|
|
$
|
956,179
|
|
|
$
|
1,431,541
|
|
|
$
|
3,554,309
|
|
(1)
|
Represents gross aggregate principal amount before the effect of the unamortized premium of approximately
$9.2 million
as of
March 31, 2015
.
|
(2)
|
Represents gross aggregate principal amount before the effect of the unamortized discount of approximately
$5.7 million
as of
March 31, 2015
.
|
(3)
|
As of
March 31, 2015
,
86.8%
of our debt was contractually fixed. The information in the table above reflects our projected interest rate obligations for these fixed-rate payments based on the contractual interest rates, interest payment dates and scheduled maturity dates.
|
(4)
|
As of
March 31, 2015
,
7.8%
of our debt bore interest at variable rates which was incurred under the term loan facility. The variable interest rate payments are based on LIBOR plus a spread of
1.400%
as of
March 31, 2015
. The information in the table above reflects our projected interest rate obligations for these variable-rate payments based on outstanding principal balances as of
March 31, 2015
, the scheduled interest payment dates and the contractual maturity dates.
|
(5)
|
As of
March 31, 2015
,
5.4%
of our debt bore interest at variable rates which was incurred under the unsecured revolving credit facility. The variable interest rate payments are based on LIBOR plus a spread of
1.250%
as of
March 31, 2015
. The information in the table above reflects our projected interest rate obligations for these variable-rate payments based on outstanding principal balances as of
March 31, 2015
, the scheduled interest payment dates and the contractual maturity dates.
|
(6)
|
Reflects minimum lease payments through the contractual lease expiration date before the impact of extension options.
|
(7)
|
Amounts represent commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements. The timing of these expenditures may fluctuate.
|
(8)
|
Amounts represent commitments under signed leases for pre-leased development projects and contractual commitments for projects under construction as of
March 31, 2015
. The timing of these expenditures may fluctuate based on the ultimate progress of construction. We may start additional construction during the remainder of 2015 (see “—Development” for additional information).
|
•
|
Decreases in our cash flows from operations, which could create further dependence on the unsecured revolving credit facility;
|
•
|
An increase in the proportion of variable-rate debt, which could increase our sensitivity to interest rate fluctuations in the future; and
|
•
|
A decrease in the value of our properties, which could have an adverse effect on the Operating Partnership’s ability to incur additional debt, refinance existing debt at competitive rates or comply with its existing debt obligations.
|
Unsecured Credit Facility, Unsecured Term Loan Facility and Unsecured Term Loan
(as defined in the applicable Credit Agreements):
|
|
Covenant Level
|
|
Actual Performance
as of March 31, 2015
|
Total debt to total asset value
|
|
less than 60%
|
|
31%
|
Fixed charge coverage ratio
|
|
greater than 1.5x
|
|
2.6x
|
Unsecured debt ratio
|
|
greater than 1.67x
|
|
2.89x
|
Unencumbered asset pool debt service coverage
|
|
greater than 1.75x
|
|
3.62x
|
|
|
|
|
|
Unsecured Senior Notes due 2015, 2018, 2020, 2023 and 2029
(as defined in the applicable Indentures):
|
|
|
|
|
Total debt to total asset value
|
|
less than 60%
|
|
38%
|
Interest coverage
|
|
greater than 1.5x
|
|
5.4x
|
Secured debt to total asset value
|
|
less than 40%
|
|
8%
|
Unencumbered asset pool value to unsecured debt
|
|
greater than 150%
|
|
275%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
($ in thousands)
|
|||||||||||||
Net cash provided by operating activities
|
$
|
54,979
|
|
|
$
|
45,081
|
|
|
$
|
9,898
|
|
|
22.0
|
%
|
Net cash (used in) provided by investing activities
|
(77,309
|
)
|
|
97,278
|
|
|
(174,587
|
)
|
|
(179.5
|
)%
|
|||
Net cash provided by (used in) financing activities
|
48,730
|
|
|
(82,202
|
)
|
|
130,932
|
|
|
159.3
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Net income available to common stockholders
|
$
|
39,874
|
|
|
$
|
96,532
|
|
Adjustments:
|
|
|
|
||||
Net income attributable to noncontrolling common units of the Operating Partnership
|
815
|
|
|
2,087
|
|
||
Depreciation and amortization of real estate assets
|
50,843
|
|
|
48,717
|
|
||
Gains on dispositions of depreciable real estate
|
—
|
|
|
(90,115
|
)
|
||
Funds From Operations
(1)(2)
|
$
|
91,532
|
|
|
$
|
57,221
|
|
(1)
|
Reported amounts are attributable to common stockholders and common unitholders.
|
(2)
|
FFO includes amortization of deferred revenue related to tenant-funded tenant improvements of
$3.0 million
and
$2.4 million
for the
three
months ended
March 31, 2015
and
2014
, respectively.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
|
|
|
3.(i)1
|
|
Kilroy Realty Corporation Articles of Restatement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2012)
|
|
|
|
3.(i)2
|
|
Certificate of Limited Partnership of Kilroy Realty, L.P. (previously filed by Kilroy Realty, L.P., as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010)
|
|
|
|
3.(i)3
|
|
Amendment to the Certificate of Limited Partnership of Kilroy Realty, L.P. (previously filed by Kilroy Realty, L.P., as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010)
|
|
|
|
3.(i)4
|
|
Articles Supplementary designating Kilroy Realty Corporation's 6.375% Series H Cumulative Redeemable Preferred Stock (previously filed by Kilroy Realty Corporation on Form 8-A as filed with the Securities and Exchange Commission on August 10, 2012)
|
|
|
|
3.(ii)1
|
|
Third Amended and Restated Bylaws of Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 11, 2014)
|
|
|
|
3.(ii)2
|
|
Seventh Amended and Restated Agreement of Limited Partnership of Kilroy Realty, L.P. dated as of August 15, 2012, as amended (previously filed by Kilroy Realty Corporation on Form 10-Q for the quarter ended June 30, 2014)
|
|
|
|
10.1*
|
|
Form of Performance-Vest Restricted Stock Unit Agreement
|
|
|
|
10.2*
|
|
Form of Restricted Stock Unit Agreement
|
|
|
|
10.3*
|
|
Form of Restricted Stock Unit Agreement for Non-Employee Members of the Board of Directors
|
|
|
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty Corporation
|
|
|
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty Corporation
|
|
|
|
31.3*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty, L.P.
|
|
|
|
31.4*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty, L.P.
|
|
|
|
32.1*
|
|
Section 1350 Certification of Chief Executive Officer of Kilroy Realty Corporation
|
|
|
|
32.2*
|
|
Section 1350 Certification of Chief Financial Officer of Kilroy Realty Corporation
|
|
|
|
32.3*
|
|
Section 1350 Certification of Chief Executive Officer of Kilroy Realty, L.P.
|
|
|
|
32.4*
|
|
Section 1350 Certification of Chief Financial Officer of Kilroy Realty, L.P.
|
|
|
|
101.1
|
|
The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended March 31, 2015, formatted in 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)
|
*
|
Filed herewith
|
(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
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Tyler H. Rose
|
|
|
Tyler H. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
By:
|
/s/ Heidi R. Roth
|
|
|
Heidi R. Roth
Executive 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
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Tyler H. Rose
|
|
|
Tyler H. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
By:
|
/s/ Heidi R. Roth
|
|
|
Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
|
Participant
:
|
[_______] (the “
Participant
”)
|
Grant Date
:
|
[_______] (the “
Grant Date
”)
|
Total Number of RSUs
:
|
[_____]
|
Vesting Dates
:
|
[
The Time-Vest RSUs shall vest in three (3) substantially equal installments (rounded down to the nearest whole RSU until the last installment) on each of [January 5, 2016], [January 5, 2017] and [January 5, 2018].
]
|
Time-Vest RSUs Deferral Election
:
|
Participant elected [not to defer any distribution of the Time-Vest RSUs] [a deferred distribution of the Time-Vest RSUs but with no fixed-date election] [a deferred distribution of the RSUs with a fixed-date election of ____________, ___] pursuant to Participant’s
[
2015
]
Restricted Stock Unit Deferral Election Form dated
[
December __, 2014
]
(the “
Deferral Election Form
”).
|
Performance-Vest RSUs Deferral
Election
:
|
Participant elected [not to defer any distribution of the Performance-Vest RSUs] [a deferred distribution of the Performance-Vest RSUs but with no fixed-date election] [a deferred distribution of the Performance-Vest RSUs with a fixed-date election of ____________, ___] pursuant to the Deferral Election Form.
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
PARTICIPANT
:
____________________________________
Printed Name: ________________________
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
|
•
|
The unvested Time-Vest RSUs that are outstanding immediately prior to such Qualifying Termination shall fully vest and become nonforfeitable immediately prior to such Qualifying Termination, and, as to the time-based vesting requirements applicable to the unvested Performance-Vest RSUs that are outstanding immediately prior to such Qualifying Termination, such time-based vesting requirements shall be considered fully satisfied immediately prior to such Qualifying Termination.
|
•
|
In the event of a Qualifying Termination before
[
December 31, 2017
]
and prior to a 409A Change in Control Event, the performance period applicable to the Performance-Vest RSUs shall end in connection with such Qualifying Termination and the number of Eligible Performance-Vest RSUs shall be determined in accordance with
Appendix B
hereto, as modified by this paragraph. If the Qualifying Termination occurs on or before
[
June 30, 2015
]
, the applicable percentage based on the Company’s FFO Per Share performance shall be deemed to be 100%. If the Qualifying Termination occurs after
[
June 30, 2015
]
, and before
[
December 31, 2015
]
, the FFO Per Share measurement/target levels set forth in
Appendix B
shall be pro-rated for a short performance period ending with the quarter prior to the quarter in which the Qualifying Termination occurs, and the applicable percentage based on the Company’s FFO Per Share performance shall be determined based on the Company’s actual FFO Per Share for that short performance period against such pro-rated measurement/target levels. In addition, the applicable percentage determined based on the Company’s TSR Percentile Ranking shall be based on each year of the three (3)-year period relevant for such determinations that is completed prior to the date of the Qualifying Termination, and the short year in which the Qualifying Termination occurs (with the applicable Ending Prices determined as of the date of the Qualifying Termination for purposes of determining TSRs and the TSR Percentile for such short year). For purposes of clarity, if a Qualifying Termination occurred on
[
June 30, 2015
]
, for example, there would be no completed year of the three (3)-year period and the TSR Percentile Ranking would be determined solely with respect to the short period of approximately six (6) months ending with the date of the Qualifying Termination.
|
•
|
The benefits provided by the preceding two paragraphs are subject to the condition that the Participant (or, in the event of the Participant’s death or disability, the Participant’s estate or personal representative, as the case may be) provide the Company with, and the Participant (or his estate or personal representative, as the case may be) does not revoke, a general release
[
in substantially the form attached to the Participant’s Employment Agreement (or, if no such form is attached to the Employment Agreement,
]
in a form prescribed by the Company). Such general release shall be provided to the Participant (or his estate or personal representative, as the case may be) within five (5) days of the Qualifying Termination date and the Participant (or his estate or personal representative, as the case may be) shall execute and deliver to the Company the general release within thirty (30) days after the Company provides the release to the Participant (or forty-five (45) days if such longer period of time is required to make the release maximally enforceable under applicable law). In the event this paragraph applies and the general release (and the expiration of any revocation rights provided therein or pursuant to applicable law) could become effective in one of two taxable years depending on when the Participant (or his estate or personal representative, as the case may be) executes and delivers the release, any payment conditioned on the release shall not be made earlier than the first business day of the later of such two tax years. For purposes of this Agreement, “
business day
” means a calendar day other than a Saturday, Sunday or Federal holiday.
|
(1)
|
the number of Performance-Vest RSUs (as set forth in or determined under the Grant Notice) will be multiplied by the applicable percentage determined in accordance with the following table based on the Company’s FFO Per Share for
[
2015
]
:
|
(2)
|
the number of RSUs determined as provided in
clause (1)
above will be multiplied by the applicable percentage determined in accordance with the following table based on the Company’s TSR Percentile Ranking (for the period
[
2015-2017
]
):
|
If the Company’s TSR Percentile Ranking is:
|
The applicable percentage is:
|
The [__]
th
percentile or greater.
|
[___]%
|
The [__]
th
percentile or greater, but equal to or less than the [__]
th
percentile.
|
100% (no modification)
|
The [__]
th
percentile or lower.
|
[___]%
|
(3)
|
the number of RSUs determined as provided in
clause (2)
above will be rounded down to the nearest whole RSU.
|
•
|
exclude expenses associated with variable accounting for equity-based awards to the extent that such expenses exceed the expense that would have been produced had such awards originally been granted as equity awards accounted for under FASB ASC Topic 718;
|
•
|
exclude unbudgeted compensation expenses;
|
•
|
exclude non-cash charges;
|
•
|
exclude acquisition-related expenses;
|
•
|
include revenue that would have been included in earnings but is not recognized due to tenant delays;
|
•
|
exclude the impact of mergers and similar corporate transactions; and
|
•
|
exclude the impact of similar extraordinary items not contemplated by the Committee on the Grant Date.
|
Participant
:
|
[_______] (the “
Participant
”)
|
Grant Date
:
|
[_______] (the “
Grant Date
”)
|
Total Number of RSUs
:
|
[_____]
|
Vesting Dates
:
|
[
The RSUs shall vest in three (3) substantially equal installments (rounded down to the nearest whole RSU until the last installment) on each of [January 5, 2016], [January 5, 2017] and [January 5, 2018].
]
|
[
Deferral Election
:
|
Participant elected [not to defer any distribution of the RSUs] [a deferred distribution of the RSUs but with no fixed-date election] [a deferred distribution of the RSUs with a fixed-date election of ____________, ___] pursuant to Participant’s 2015 Restricted Stock Unit Deferral Election Form dated December __, 2014 (the “
Deferral Election Form
”).
]
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
PARTICIPANT
:
____________________________________
Printed Name: ________________________
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
|
Participant
:
|
[_______] (the “
Participant
”)
|
Grant Date
:
|
[_______] (the “
Grant Date
”)
|
Total Number of RSUs
:
|
[_____]
|
Vesting Dates
:
|
The RSUs shall vest in one (1) installment on the date of the Company’s
[
2016
]
Annual Meeting of Stockholders or, if earlier, upon the occurrence of a Change in Control,
provided
,
however
, that if the Participant’s employment or service with the Company terminates due to the Participant’s death or “disability” (within the meaning of Code Section 409A), the then-outstanding and unvested RSUs will fully vest upon such termination of employment or service.
|
Deferral Election
:
|
Participant elected [not to defer any distribution of the RSUs] [a deferred distribution of the RSUs but with no fixed-date election] [a deferred distribution of the RSUs with a fixed-date election of ____________, ___] pursuant to Participant’s
[
2015
]
Restricted Stock Unit Deferral Election Form dated
[
December __, 2014
]
(the “
Deferral Election Form
”).
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
PARTICIPANT
:
____________________________________
Printed Name: ________________________
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ John Kilroy
|
John Kilroy
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Tyler H. Rose
|
Tyler H. Rose
|
Executive Vice President and
Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ John Kilroy
|
John Kilroy
|
President and Chief Executive Officer
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Tyler H. Rose
|
Tyler H. Rose
|
Executive Vice President and
Chief Financial Officer
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended
March 31, 2015
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John Kilroy
|
|
John Kilroy
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
April 30, 2015
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended
March 31, 2015
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Tyler H. Rose
|
|
Tyler H. Rose
|
|
Executive Vice President and
Chief Financial Officer
|
|
|
|
Date:
|
April 30, 2015
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended
March 31, 2015
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
|
/s/ John Kilroy
|
|
John Kilroy
|
|
President and Chief Executive Officer
|
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
|
|
|
Date:
|
April 30, 2015
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended
March 31, 2015
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
|
/s/
Tyler H. Rose
|
|
Tyler H. Rose
|
|
Executive Vice President and
Chief Financial Officer
|
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
|
|
|
Date:
|
April 30, 2015
|