x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Kilroy Realty Corporation
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Maryland
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95-4598246
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Kilroy Realty, L.P.
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Delaware
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95-4612685
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064
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(Address of principal executive offices) (Zip Code)
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Registrant’s telephone number, including area code: (310) 481-8400
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Securities registered pursuant to Section 12(b) of the Act:
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Registrant
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Title of each class
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Name of each exchange on which registered
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Kilroy Realty Corporation
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Common Stock, $.01 par value
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New York Stock Exchange
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Kilroy Realty Corporation
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6.875% Series G Cumulative Redeemable
Preferred Stock, $.01 par value
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New York Stock Exchange
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Kilroy Realty Corporation
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6.375% Series H Cumulative Redeemable
Preferred Stock, $.01 par value
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New York Stock Exchange
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Registrant
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Title of each class
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Kilroy Realty, L.P.
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Common Units Representing Limited Partnership Interests
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Kilroy Realty Corporation
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x
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
(Do not check if a smaller reporting company
)
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o
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Smaller reporting company
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Kilroy Realty, L.P.
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|||||||
o
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
(Do not check if a smaller reporting company)
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o
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Smaller reporting company
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•
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Combined reports better reflect how management and the analyst community view the business as a single operating unit;
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•
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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;
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•
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Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
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•
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Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
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•
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Item 6. Selected Financial Data – Kilroy Realty Corporation;
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•
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Item 6. Selected Financial Data – Kilroy Realty, L.P.;
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•
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Item 7. 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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◦
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—Liquidity and Capital Resources of the Operating Partnership;
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•
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consolidated financial statements;
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•
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the following notes to the consolidated financial statements:
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◦
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Note 7, Secured and Unsecured Debt of the Company;
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◦
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Note 8, Secured and Unsecured Debt of the Operating Partnership;
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◦
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Note 10, Noncontrolling Interests on the Company’s Consolidated Financial Statements;
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◦
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Note 11, Stockholders’ Equity of the Company;
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◦
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Note 12, Preferred and Common Units of the Operating Partnership;
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◦
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Note 20, Net Income Available to Common Stockholders Per Share of the Company;
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◦
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Note 21, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
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◦
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Note 22, Supplemental Cash Flow Information of the Company;
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◦
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Note 23, Supplemental Cash Flow Information of the Operating Partnership;
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◦
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Note 25, Quarterly Financial Information of the Company (Unaudited); and
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◦
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Note 26, Quarterly Financial Information of the Operating Partnership (Unaudited).
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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41
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42
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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ITEM 1.
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BUSINESS
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Number of
Buildings
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Rentable
Square Feet
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Number of
Tenants
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Percentage
Occupied
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||||
Stabilized Office Properties
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101
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13,032,406
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517
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94.8
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%
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Number of
Properties/Projects
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Estimated Rentable
Square Feet
(1)
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Properties held for sale
(2)
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4
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465,812
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Development projects in “lease-up”
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1
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73,000
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Development projects under construction
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5
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1,910,000
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(1)
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Estimated rentable square feet upon completion. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That May Influence Future Results of Operations —Completed, In-Process and Future Development Pipeline” for more information.
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(2)
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See Note 4 “Dispositions and Real Estate Assets Held for Sale” to our consolidated financial statements included in this report for additional information.
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•
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Corporate Governance Guidelines;
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•
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Code of Business Conduct and Ethics;
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•
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Audit Committee Charter;
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•
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Executive Compensation Committee Charter; and
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•
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Nominating / Corporate Governance Committee Charter.
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•
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the quality, geographic location, physical characteristics and operating sustainability of our properties;
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•
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our ability to efficiently manage our assets as a low cost provider of commercial real estate through our seasoned management team possessing core capabilities in all aspects of real estate ownership, including property management, leasing, marketing, financing, accounting, legal, and construction and development management;
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•
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our access to development, redevelopment, acquisition and leasing opportunities as a result of our extensive experience and significant working relationships with major West Coast property owners, corporate tenants, municipalities and landowners given our over 65-year presence in the West Coast markets;
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•
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our active development program and our extensive future development pipeline of undeveloped land sites (see “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations —Information on Leases Commenced and Executed” for additional information pertaining to the Company’s in-process, near-term and future development pipeline);
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•
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our capital recycling program (see “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources of the Operating Partnership” for additional information pertaining to the Company’s capital recycling program and related 2015 and 2016 property and land dispositions);
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•
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our ability to capitalize on inflection points in a real estate cycle to add quality assets to our portfolio at substantial discounts to long-term value, through either acquisition, development or redevelopment; and
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•
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our strong financial position that has and will continue to allow us to pursue attractive acquisition and development and redevelopment opportunities.
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•
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maximizing cash flow from our properties through active leasing, early renewals and effective property management;
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•
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structuring leases to maximize returns;
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•
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managing portfolio credit risk through effective underwriting, including the use of credit enhancements and interests in collateral to mitigate portfolio credit risk;
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•
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managing operating expenses through the efficient use of internal property management, leasing, marketing, financing, accounting, legal, and construction and development management functions;
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•
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maintaining and developing long-term relationships with a diverse tenant base;
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•
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managing our properties to offer the maximum degree of utility and operational efficiency to tenants. We offer tenant sustainability programs focused on helping our tenants reduce their energy and water consumption and increase their recycling diversion rates. We also incorporate green lease language into all of our new full-service gross leases, which align tenant and landlord interests on energy, water, and waste efficiency and were honored in 2014 to be part of the inaugural class of Green Lease Leaders, the Institute for Market Transformation's program to encourage green leasing in real estate. 100% of our new full-service gross leases also contain a cost recovery clause for resource efficiency-related capital;
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building our current development projects to Leadership in Energy and Environmental Design (“LEED”) specifications. All of our development projects are now designed to achieve LEED certification, either LEED Platinum or Gold;
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•
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actively pursuing LEED certification for over
1.9 million
square feet of office space under construction. During the past few years we have significantly enhanced the sustainability profile of our portfolio, ending
2015
with 47% of our properties LEED certified and 64% of eligible properties ENERGY STAR certified. During 2015, the Company was recognized for our sustainability efforts with multiple industry leadership awards, including NAREIT’s 2015 Office Leader in the Light Award and ENERGY STAR Partner of the Year award. The company was also recognized by the Global Real Estate Sustainability Benchmark as the North American leader in sustainability for the second year in a row, and was ranked first among 155 North American participants across all asset types;
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•
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continuing to effectively manage capital improvements to enhance our properties’ competitive advantages in their respective markets and improve the efficiency of building systems;
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enhancing our management team with individuals who have extensive regional experience and are highly knowledgeable in their respective markets; and
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attracting and retaining motivated employees by providing financial and other incentives to meet our operating and financial goals.
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maintain a disciplined approach by commencing development when appropriate based on market conditions, favoring pre-leasing, developing in stages or phasing, and cost control;
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be the premier provider of modern and collaborative office buildings on the West Coast with focus on design and environment;
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•
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reinvest capital from dispositions of selective assets into new state-of-the-market development and acquisition assets with higher cash flow and rates of return;
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•
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execute on our development projects under construction and our near-term and future development pipeline, including expanding entitlements; and
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•
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evaluate redevelopment opportunities in supply-constrained markets because such efforts generally achieve similar returns to new development with reduced entitlement risk and shorter construction periods.
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•
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provide attractive yields and significant potential for growth in cash flow from property operations;
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present growth opportunities in our existing or other strategic markets; and
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demonstrate the potential for improved performance through intensive management, repositioning and leasing that should result in increased occupancy and rental revenues.
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maintaining financial flexibility, including a low secured to unsecured debt ratio, to maximize our ability to access a variety of both public and private capital sources;
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•
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maintaining a staggered debt maturity schedule in which the maturity dates of our debt are spread over several years to limit risk exposure at any particular point in the capital and credit market cycles;
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•
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completing financing in advance of the need for capital; and
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managing interest rate exposure by generally maintaining a greater amount of fixed-rate debt as compared to variable-rate debt.
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•
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local oversupply or reduction in demand for office, mixed-use or other commercial space, which may result in decreasing rental rates and greater concessions to tenants;
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•
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inability to collect rent from tenants;
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•
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vacancies or inability to rent space on favorable terms or at all;
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•
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inability to finance property development and acquisitions on favorable terms or at all;
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•
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increased operating costs, including insurance premiums, utilities and real estate taxes;
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•
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costs of complying with changes in governmental regulations;
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•
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the relative illiquidity of real estate investments;
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•
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changing submarket demographics;
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•
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changes in space utilization by our tenants due to technology, economic conditions and business culture;
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•
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the development of harmful mold or other airborne toxins or contaminants that could damage our properties or expose us to third-party liabilities; and
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•
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property damage resulting from seismic activity or other natural disasters.
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•
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95% of the Operating Partnership’s consolidated funds from operations (as defined in the agreements governing the unsecured revolving credit facility, unsecured term loan facility and unsecured term loan) for such year; and
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•
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an amount which results in distributions to us (excluding any preferred partnership distributions to the extent the same have been deducted from consolidated funds from operations (as so defined) for such year) in an amount sufficient to permit us to pay dividends to our stockholders that we reasonably believe are necessary to (a) maintain our qualification as a REIT for federal and state income tax purposes and (b) avoid the payment of federal or state income or excise tax.
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•
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we may potentially be unable to acquire a desired property because of competition from other real estate investors with significant capital, including both publicly traded and private REITs, institutional investment funds and other real estate investors;
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even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;
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even if we enter into agreements for the acquisition of a desired property, we may be unable to complete such acquisitions because they remain subject to customary conditions to closing, including the completion of due diligence investigations to management’s satisfaction;
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we may be unable to finance acquisitions on favorable terms or at all;
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we may spend more than budgeted amounts in operating costs or to make necessary improvements or renovations to acquired properties;
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we may lease acquired properties at economic lease terms different than projected;
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•
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we may acquire properties that are subject to liabilities for which we may have limited or no recourse; and
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•
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we may be unable to complete an acquisition after making a nonrefundable deposit and incurring certain other acquisition-related costs.
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we may be unable to lease acquired, developed or redeveloped properties at projected economic lease terms or within budgeted timeframes;
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•
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we may not complete development or redevelopment properties on schedule or within budgeted amounts;
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•
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we may expend funds on and devote management’s time to acquisition, development or redevelopment properties that we may not complete;
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•
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we may encounter delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, and building, occupancy, and other required governmental permits and authorizations;
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•
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we may encounter delays, refusals, unforeseen cost increases and other impairments resulting from third-party litigation; and
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•
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we may fail to obtain the financial results expected from properties we acquire, develop or redevelop.
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•
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we would not be able to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity, which would allow for impasses on decisions that could restrict our ability to sell or transfer our interests in such entity or such entity’s ability to transfer or sell its assets;
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•
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partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions,
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•
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partners or co-venturers may pursue economic or other business interests, policies or objectives that are competitive or inconsistent with ours;
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•
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if we become a limited partner or non-managing member in any partnership or limited liability company, and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity;
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•
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disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business; and
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•
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we may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers.
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•
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borrowers may fail to make debt service payments or pay the principal when due;
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•
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the value of the mortgaged property may be less than the principal amount of the mortgage note securing the property; and
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•
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interest rates payable on the mortgages may be lower than our cost for the funds used to acquire these mortgages.
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•
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direct obligations issued by the U.S. Treasury;
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•
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obligations issued or guaranteed by the U.S. government or its agencies;
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•
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taxable municipal securities;
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•
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obligations (including certificates of deposits) of banks and thrifts;
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•
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commercial paper and other instruments consisting of short-term U.S. dollar denominated obligations issued by corporations and banks;
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•
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repurchase agreements collateralized by corporate and asset-backed obligations;
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•
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both registered and unregistered money market funds; and
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•
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other highly rated short-term securities.
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•
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result in unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, including personally identifiable and account information that could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
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•
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result in unauthorized access to or changes to our financial accounting and reporting systems and related data;
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•
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result in our inability to maintain building systems relied on by our tenants;
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•
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require significant management attention and resources to remedy any damage that result;
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•
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subject us to regulatory penalties or claims for breach of contract, damages, credits, penalties or terminations of leases or other agreements; or
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•
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damage our reputation among our tenants and investors.
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•
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actual or anticipated variations in our operating results, funds from operations, cash flows, liquidity or distributions;
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•
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our ability to successfully execute on our development program;
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•
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our ability to successfully complete acquisitions and operate acquired properties;
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•
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earthquakes;
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•
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changes in our earnings estimates or those of analysts;
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•
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publication of research reports about us, the real estate industry generally or the office and residential sectors in which we operate;
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•
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the failure to maintain our current credit ratings or comply with our debt covenants;
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•
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increases in market interest rates that lead purchasers of our common stock to demand a higher dividend yield;
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•
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changes in market valuations of similar companies;
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•
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adverse market reaction to any debt or equity securities we may issue or additional debt we incur in the future;
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•
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additions or departures of key management personnel;
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•
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actions by institutional stockholders;
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•
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speculation in the press or investment community;
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•
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high levels of volatility in the credit markets;
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•
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general market and economic conditions; and
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•
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the realization of any of the other risk factors included in this report.
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•
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the Company’s charter authorizes the board of directors to issue up to 30,000,000 shares of the Company’s preferred stock, including convertible preferred stock, without stockholder approval. The board of directors may establish the preferences, rights and other terms, including the right to vote and the right to convert into common stock any shares issued. The issuance of preferred stock could delay or prevent a tender offer or a change of control even if a tender offer or a change of control was in our security holders’ interest. As of
December 31, 2015
, 8,000,000 shares of the Company’s preferred stock were issued and outstanding,
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•
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the Company’s charter states that any director, or the entire board of directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of the holders of at least two thirds of the votes of the Company’s capital stock entitled to be cast in the election of directors.
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•
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the Company would not be allowed a deduction for dividends paid to its stockholders in computing the Company’s taxable income and would be subject to federal income tax at regular corporate rates;
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•
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the Company could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and
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•
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unless entitled to relief under statutory provisions, the Company could not elect to be taxed as a REIT for four taxable years following the year during which the Company was disqualified.
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
|
Number of
Tenants
|
|
Percentage
Occupied
|
||||
Stabilized Office Properties
|
101
|
|
|
13,032,406
|
|
|
517
|
|
|
94.8
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
(1)
|
|
Properties held for sale
(2)
|
4
|
|
465,812
|
|
Development projects in “lease-up”
|
1
|
|
73,000
|
|
Development projects under construction
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5
|
|
1,910,000
|
|
(1)
|
Estimated rentable square feet upon completion. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations —Completed, In-Process and Future Development Pipeline” for more information.
|
(2)
|
See Note 4 “Dispositions and Real Estate Assets Held for Sale” to our consolidated financial statements included in this report for additional information.
|
Property Location
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No. of
Buildings
|
|
Year Built/
Renovated
|
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Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2015
(1)
|
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Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
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||||||
Los Angeles and Ventura Counties
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||||||||||||
23925 Park Sorrento,
Calabasas, California |
(3)
|
1
|
|
2001
|
|
11,789
|
|
|
100.0
|
%
|
|
$
|
421
|
|
|
$
|
35.72
|
|
23975 Park Sorrento,
Calabasas, California |
(3)
|
1
|
|
2002
|
|
104,797
|
|
|
95.7
|
%
|
|
3,388
|
|
|
34.69
|
|
||
24025 Park Sorrento,
Calabasas, California |
(3)
|
1
|
|
2000
|
|
108,671
|
|
|
75.0
|
%
|
|
2,807
|
|
|
34.46
|
|
||
2829 Townsgate Road,
Thousand Oaks, California |
(3)
|
1
|
|
1990
|
|
81,067
|
|
|
100.0
|
%
|
|
2,352
|
|
|
29.01
|
|
||
2240 E. Imperial Highway,
El Segundo, California |
(4)
|
1
|
|
1983/ 2008
|
|
122,870
|
|
|
100.0
|
%
|
|
3,950
|
|
|
32.15
|
|
||
2250 E. Imperial Highway,
El Segundo, California |
(8)
|
1
|
|
1983
|
|
298,728
|
|
|
100.0
|
%
|
|
9,448
|
|
|
31.76
|
|
||
2260 E. Imperial Highway,
El Segundo, California |
(4)
|
1
|
|
1983/ 2012
|
|
298,728
|
|
|
100.0
|
%
|
|
10,510
|
|
|
35.18
|
|
||
909 Sepulveda Blvd.,
El Segundo, California |
(3)
|
1
|
|
1972/ 2005
|
|
241,607
|
|
|
97.9
|
%
|
|
6,664
|
|
|
28.52
|
|
||
999 Sepulveda Blvd.,
El Segundo, California |
(3)
|
1
|
|
1962/ 2003
|
|
128,592
|
|
|
95.7
|
%
|
|
3,054
|
|
|
25.58
|
|
||
6115 W. Sunset Blvd.,
Los Angeles, California |
(5)
|
1
|
|
1938/ 2015
|
|
26,075
|
|
|
98.3
|
%
|
|
1,341
|
|
|
52.35
|
|
||
6121 W. Sunset Blvd.,
Los Angeles, California |
(5)
|
1
|
|
1938/ 2015
|
|
82,442
|
|
|
100.0
|
%
|
|
4,133
|
|
|
50.13
|
|
||
6255 Sunset Blvd,
Los Angeles, California |
(9)
|
1
|
|
1971/ 1999
|
|
324,617
|
|
|
97.5
|
%
|
|
11,531
|
|
|
37.70
|
|
||
3750 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1989
|
|
10,457
|
|
|
86.1
|
%
|
|
109
|
|
|
19.95
|
|
||
3760 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1989
|
|
165,278
|
|
|
96.0
|
%
|
|
4,776
|
|
|
30.09
|
|
||
3780 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1989
|
|
219,745
|
|
|
89.2
|
%
|
|
5,213
|
|
|
27.16
|
|
||
3800 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
2000
|
|
192,476
|
|
|
88.6
|
%
|
|
5,411
|
|
|
31.71
|
|
||
3840 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1999
|
|
136,026
|
|
|
100.0
|
%
|
|
4,915
|
|
|
36.13
|
|
||
3880 Kilroy Airport Way,
Long Beach, California |
(10)
|
1
|
|
1987/ 2013
|
|
96,035
|
|
|
100.0
|
%
|
|
2,839
|
|
|
29.56
|
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2015
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
3900 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1987
|
|
126,840
|
|
|
100.0
|
%
|
|
3,105
|
|
|
24.51
|
|
||
12100 W. Olympic Blvd.,
Los Angeles, California |
(3)
|
1
|
|
2003
|
|
150,167
|
|
|
94.2
|
%
|
|
6,098
|
|
|
43.10
|
|
||
12200 W. Olympic Blvd.,
Los Angeles, California |
(3)
|
1
|
|
2000
|
|
150,117
|
|
|
97.6
|
%
|
|
4,573
|
|
|
40.81
|
|
||
12233 W. Olympic Blvd.,
Los Angeles, California |
(11)
|
1
|
|
1980/ 2011
|
|
151,029
|
|
|
85.9
|
%
|
|
4,452
|
|
|
48.48
|
|
||
12312 W. Olympic Blvd.,
Los Angeles, California |
(6)
|
1
|
|
1950/ 1997
|
|
76,644
|
|
|
100.0
|
%
|
|
4,096
|
|
|
53.44
|
|
||
1633 26th Street,
Santa Monica, California |
(4)
|
1
|
|
1972/ 1997
|
|
44,915
|
|
|
100.0
|
%
|
|
1,270
|
|
|
28.28
|
|
||
2100/2110 Colorado Avenue,
Santa Monica, California |
(3)
|
3
|
|
1992/ 2009
|
|
102,864
|
|
|
100.0
|
%
|
|
4,357
|
|
|
42.36
|
|
||
3130 Wilshire Blvd.,
Santa Monica, California |
(3)
|
1
|
|
1969/ 1998
|
|
88,340
|
|
|
88.7
|
%
|
|
2,580
|
|
|
33.93
|
|
||
501 Santa Monica Blvd.,
Santa Monica, California |
(3)
|
1
|
|
1974
|
|
73,115
|
|
|
59.1
|
%
|
|
2,175
|
|
|
50.98
|
|
||
Subtotal/Weighted Average –
Los Angeles and Ventura Counties |
|
29
|
|
|
|
3,614,031
|
|
|
95.1
|
%
|
|
$
|
115,568
|
|
|
$
|
34.68
|
|
Orange County
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2211 Michelson,
Irvine, California
|
(3)
|
1
|
|
2007
|
|
271,556
|
|
|
94.0
|
%
|
|
$
|
9,518
|
|
|
$
|
37.69
|
|
Subtotal/Weighted Average –
Orange County
|
|
1
|
|
|
|
271,556
|
|
|
94.0
|
%
|
|
$
|
9,518
|
|
|
$
|
37.69
|
|
San Diego County
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
12225 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
1998
|
|
58,401
|
|
|
100.0
|
%
|
|
$
|
1,965
|
|
|
$
|
33.64
|
|
12235 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
1998
|
|
54,673
|
|
|
96.4
|
%
|
|
2,372
|
|
|
45.01
|
|
||
12340 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
2002
|
|
87,774
|
|
|
91.4
|
%
|
|
3,506
|
|
|
43.68
|
|
||
12390 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
2000
|
|
72,332
|
|
|
100.0
|
%
|
|
3,069
|
|
|
42.44
|
|
||
12348 High Bluff Drive,
Del Mar, California
|
(12)
|
1
|
|
1999
|
|
38,806
|
|
|
100.0
|
%
|
|
1,292
|
|
|
33.29
|
|
||
12400 High Bluff Drive,
Del Mar, California
|
(4)
|
1
|
|
2004
|
|
209,220
|
|
|
100.0
|
%
|
|
10,671
|
|
|
51.00
|
|
||
3579 Valley Centre Drive,
Del Mar, California
|
(4)
|
1
|
|
1999
|
|
50,677
|
|
|
100.0
|
%
|
|
2,025
|
|
|
39.96
|
|
||
3611 Valley Centre Drive,
Del Mar, California
|
(3)
|
1
|
|
2000
|
|
130,047
|
|
|
100.0
|
%
|
|
5,342
|
|
|
41.08
|
|
||
3661 Valley Centre Drive,
Del Mar, California
|
(13)
|
1
|
|
2001
|
|
129,051
|
|
|
90.2
|
%
|
|
3,415
|
|
|
36.36
|
|
||
3721 Valley Centre Drive,
Del Mar, California
|
(4)
|
1
|
|
2003
|
|
114,780
|
|
|
79.9
|
%
|
|
4,155
|
|
|
45.28
|
|
||
3811 Valley Centre Drive,
Del Mar, California
|
(6)
|
1
|
|
2000
|
|
112,067
|
|
|
100.0
|
%
|
|
5,199
|
|
|
46.39
|
|
||
12780 El Camino Real,
Del Mar, California |
(6)
|
1
|
|
2013
|
|
140,591
|
|
|
100.0
|
%
|
|
6,366
|
|
|
45.28
|
|
||
12790 El Camino Real,
Del Mar, California |
(4)
|
1
|
|
2013
|
|
78,349
|
|
|
97.5
|
%
|
|
3,182
|
|
|
41.63
|
|
||
13280 Evening Creek Drive South,
I-15 Corridor, California |
(3)
|
1
|
|
2008
|
|
41,196
|
|
|
100.0
|
%
|
|
1,058
|
|
|
25.69
|
|
||
13290 Evening Creek Drive South,
I-15 Corridor, California |
(4)
|
1
|
|
2008
|
|
61,180
|
|
|
100.0
|
%
|
|
1,453
|
|
|
23.75
|
|
||
13480 Evening Creek Drive North,
I-15 Corridor, California |
(4)
|
1
|
|
2008
|
|
149,817
|
|
|
100.0
|
%
|
|
7,779
|
|
|
51.92
|
|
||
13500 Evening Creek Drive North,
I-15 Corridor, California |
(4)
|
1
|
|
2004
|
|
147,533
|
|
|
100.0
|
%
|
|
6,286
|
|
|
42.61
|
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2015
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
13520 Evening Creek Drive North,
I-15 Corridor, California |
(4)
|
1
|
|
2004
|
|
141,128
|
|
|
82.0
|
%
|
|
4,167
|
|
|
36.93
|
|
||
2355 Northside Drive,
Mission Valley, California |
(3)
|
1
|
|
1990
|
|
53,610
|
|
|
100.0
|
%
|
|
1,410
|
|
|
27.07
|
|
||
2365 Northside Drive,
Mission Valley, California |
(3)
|
1
|
|
1990
|
|
96,437
|
|
|
83.0
|
%
|
|
2,552
|
|
|
31.88
|
|
||
2375 Northside Drive,
Mission Valley, California |
(14)
|
1
|
|
1990
|
|
51,516
|
|
|
89.4
|
%
|
|
1,350
|
|
|
29.32
|
|
||
2385 Northside Drive,
Mission Valley, California |
(3)
|
1
|
|
2008
|
|
89,023
|
|
|
95.7
|
%
|
|
2,690
|
|
|
31.58
|
|
||
2305 Historic Decatur Road,
Point Loma, California
|
(15)
|
1
|
|
2009
|
|
103,900
|
|
|
67.4
|
%
|
|
2,400
|
|
|
34.25
|
|
||
4939 Directors Place,
Sorrento Mesa, California
|
(6)
|
1
|
|
2002
|
|
60,662
|
|
|
100.0
|
%
|
|
2,276
|
|
|
37.52
|
|
||
4955 Directors Place,
Sorrento Mesa, California
|
(16)
|
1
|
|
2008
|
|
76,246
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
||
10390 Pacific Center Court,
Sorrento Mesa, California
|
(6)
|
1
|
|
2002
|
|
68,400
|
|
|
100.0
|
%
|
|
2,771
|
|
|
40.52
|
|
||
10394 Pacific Center Court,
Sorrento Mesa, California
|
(6)
|
1
|
|
1995
|
|
59,630
|
|
|
100.0
|
%
|
|
1,182
|
|
|
19.83
|
|
||
10398 Pacific Center Court,
Sorrento Mesa, California
|
(6)
|
1
|
|
1995
|
|
43,645
|
|
|
100.0
|
%
|
|
698
|
|
|
15.99
|
|
||
10421 Pacific Center Court,
Sorrento Mesa, California
|
(6)
|
1
|
|
1995/ 2002
|
|
75,899
|
|
|
100.0
|
%
|
|
1,186
|
|
|
15.62
|
|
||
10445 Pacific Center Court,
Sorrento Mesa, California
|
(6)
|
1
|
|
1995
|
|
48,709
|
|
|
100.0
|
%
|
|
936
|
|
|
19.22
|
|
||
10455 Pacific Center Court,
Sorrento Mesa, California
|
(7)
|
1
|
|
1995
|
|
90,000
|
|
|
100.0
|
%
|
|
1,112
|
|
|
12.35
|
|
||
5717 Pacific Center Blvd.,
Sorrento Mesa, California
|
(16)
|
1
|
|
2001/ 2005
|
|
67,995
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
||
4690 Executive Drive,
UTC, California
|
(3)
|
1
|
|
1999
|
|
47,846
|
|
|
58.2
|
%
|
|
693
|
|
|
24.87
|
|
||
Subtotal/Weighted Average –
San Diego County
|
|
33
|
|
|
|
2,851,140
|
|
|
89.6
|
%
|
|
$
|
94,558
|
|
|
$
|
37.40
|
|
San Francisco
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
4100 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1985
|
|
47,379
|
|
|
100.0
|
%
|
|
$
|
1,719
|
|
|
$
|
36.27
|
|
4200 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1987
|
|
45,451
|
|
|
100.0
|
%
|
|
1,834
|
|
|
40.34
|
|
||
4300 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1988
|
|
63,079
|
|
|
100.0
|
%
|
|
2,485
|
|
|
39.39
|
|
||
4400 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1988
|
|
48,146
|
|
|
100.0
|
%
|
|
1,521
|
|
|
33.67
|
|
||
4500 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1990
|
|
63,078
|
|
|
100.0
|
%
|
|
2,041
|
|
|
32.35
|
|
||
4600 Bohannon Drive,
Menlo Park, California
|
(17)
|
1
|
|
1990
|
|
48,147
|
|
|
100.0
|
%
|
|
1,172
|
|
|
40.92
|
|
||
4700 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1989
|
|
63,078
|
|
|
100.0
|
%
|
|
2,275
|
|
|
36.07
|
|
||
331 Fairchild Drive,
Mountain View, California |
(6)
|
1
|
|
2013
|
|
87,147
|
|
|
100.0
|
%
|
|
4,185
|
|
|
48.03
|
|
||
680 E. Middlefield Road,
Mountain View, California
|
(6)
|
1
|
|
2014
|
|
170,090
|
|
|
100.0
|
%
|
|
7,729
|
|
|
45.44
|
|
||
690 E. Middlefield Road,
Mountain View, California
|
(6)
|
1
|
|
2014
|
|
170,823
|
|
|
100.0
|
%
|
|
7,763
|
|
|
45.44
|
|
||
900 Jefferson Avenue,
Redwood City, California |
(5)
|
1
|
|
2015
|
|
226,197
|
|
|
100.0
|
%
|
|
13,670
|
|
|
60.43
|
|
||
900 Middlefield Road,
Redwood City, California |
(5)
|
1
|
|
2015
|
|
113,790
|
|
|
94.9
|
%
|
|
5,808
|
|
|
53.77
|
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2015
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
303 Second Street,
San Francisco, California
|
(18)
|
1
|
|
1988
|
|
740,047
|
|
|
98.5
|
%
|
|
38,147
|
|
|
52.57
|
|
||
100 First Street,
San Francisco, California
|
(19)
|
1
|
|
1988
|
|
467,095
|
|
|
90.8
|
%
|
|
20,500
|
|
|
51.05
|
|
||
250 Brannan Street,
San Francisco, California
|
(4)
|
1
|
|
1907/ 2001
|
|
95,008
|
|
|
100.0
|
%
|
|
5,413
|
|
|
56.98
|
|
||
201 Third Street,
San Francisco, California
|
(3)
|
1
|
|
1983
|
|
346,538
|
|
|
99.7
|
%
|
|
17,931
|
|
|
52.69
|
|
||
301 Brannan Street,
San Francisco, California
|
(4)
|
1
|
|
1909/ 1989
|
|
74,430
|
|
|
100.0
|
%
|
|
3,957
|
|
|
53.16
|
|
||
360 Third Street,
San Francisco, California
|
(20)
|
1
|
|
2013
|
|
429,796
|
|
|
95.2
|
%
|
|
19,877
|
|
|
48.69
|
|
||
1310 Chesapeake Terrace,
Sunnyvale, California
|
(5)
|
1
|
|
1989
|
|
76,244
|
|
|
100.0
|
%
|
|
2,369
|
|
|
31.08
|
|
||
1315 Chesapeake Terrace,
Sunnyvale, California
|
(5)
|
1
|
|
1989
|
|
55,635
|
|
|
100.0
|
%
|
|
1,424
|
|
|
25.60
|
|
||
1320-1324 Chesapeake Terrace,
Sunnyvale, California
|
(5)
|
1
|
|
1989
|
|
79,720
|
|
|
100.0
|
%
|
|
2,421
|
|
|
30.36
|
|
||
1325-1327 Chesapeake Terrace,
Sunnyvale, California
|
(5)
|
1
|
|
1989
|
|
55,383
|
|
|
100.0
|
%
|
|
1,234
|
|
|
22.29
|
|
||
505 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2014
|
|
212,322
|
|
|
100.0
|
%
|
|
9,449
|
|
|
44.50
|
|
||
555 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2014
|
|
212,322
|
|
|
100.0
|
%
|
|
9,449
|
|
|
44.50
|
|
||
605 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2014
|
|
162,785
|
|
|
100.0
|
%
|
|
7,244
|
|
|
44.50
|
|
||
599 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2000
|
|
75,810
|
|
|
100.0
|
%
|
|
2,202
|
|
|
29.04
|
|
||
Subtotal/Weighted Average –
San Francisco
|
|
26
|
|
|
|
4,229,540
|
|
|
98.1
|
%
|
|
$
|
193,819
|
|
|
$
|
47.35
|
|
Greater Seattle
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
601 108th Avenue NE,
Bellevue, Washington
|
(5)
|
1
|
|
2000
|
|
488,470
|
|
|
98.8
|
%
|
|
$
|
16,754
|
|
|
$
|
35.07
|
|
10900 NE 4th Street,
Bellevue, Washington
|
(3)
|
1
|
|
1983
|
|
416,755
|
|
|
94.3
|
%
|
|
14,135
|
|
|
36.11
|
|
||
10210 NE Points Drive,
Kirkland, Washington
|
(5)
|
1
|
|
1988
|
|
84,641
|
|
|
100.0
|
%
|
|
2,081
|
|
|
24.59
|
|
||
10220 NE Points Drive,
Kirkland, Washington
|
(5)
|
1
|
|
1987
|
|
49,851
|
|
|
100.0
|
%
|
|
1,290
|
|
|
26.11
|
|
||
10230 NE Points Drive,
Kirkland, Washington
|
(5)
|
1
|
|
1990
|
|
98,982
|
|
|
82.2
|
%
|
|
2,283
|
|
|
28.57
|
|
||
3933 Lake Washington Blvd NE,
Kirkland, Washington
|
(5)
|
1
|
|
1993
|
|
46,450
|
|
|
65.5
|
%
|
|
836
|
|
|
27.49
|
|
||
837 N. 34th Street,
Lake Union, Washington
|
(5)
|
1
|
|
2008
|
|
111,580
|
|
|
100.0
|
%
|
|
3,257
|
|
|
29.19
|
|
||
701 N. 34th Street,
Lake Union, Washington
|
(5)
|
1
|
|
1998
|
|
138,995
|
|
|
72.4
|
%
|
|
3,008
|
|
|
29.90
|
|
||
801 N. 34th Street,
Lake Union, Washington
|
(6)
|
1
|
|
1998
|
|
169,412
|
|
|
100.0
|
%
|
|
4,423
|
|
|
26.11
|
|
||
320 Westlake Terry Avenue North,
Lake Union, Washington
|
(5)
|
1
|
|
2007
|
|
184,643
|
|
|
100.0
|
%
|
|
6,314
|
|
|
34.20
|
|
||
321 Terry Avenue North,
Lake Union, Washington
|
(5)
|
1
|
|
2013
|
|
135,755
|
|
|
100.0
|
%
|
|
4,465
|
|
|
32.89
|
|
||
401 Terry Avenue North,
Lake Union, Washington
|
(6)
|
1
|
|
2003
|
|
140,605
|
|
|
100.0
|
%
|
|
6,207
|
|
|
44.15
|
|
||
Subtotal/Weighted Average –
Greater Seattle
|
|
12
|
|
|
|
2,066,139
|
|
|
95.1
|
%
|
|
$
|
65,053
|
|
|
$
|
33.26
|
|
TOTAL/WEIGHTED AVERAGE
|
|
101
|
|
|
|
13,032,406
|
|
|
94.8
|
%
|
|
$
|
478,516
|
|
|
$
|
39.34
|
|
(1)
|
Based on all leases at the respective properties in effect as of
December 31, 2015
. Includes month-to-month leases as of
December 31, 2015
.
|
(2)
|
Annualized base rental revenue 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. Excludes month-to-month leases and vacant space as of
December 31, 2015
.
|
(3)
|
For these properties, the leases are written on a full service gross basis.
|
(4)
|
For these properties, the leases are written on a modified gross basis.
|
(5)
|
For these properties, the leases are written on a triple net basis.
|
(6)
|
For these properties, the leases are written on a modified net basis.
|
(7)
|
For this property, the leases are written on a gross basis.
|
(8)
|
For this property, leases of approximately 52,000 rentable square feet are written on a full service gross basis and approximately 246,000 rentable square feet are written on a modified gross basis.
|
(9)
|
For this property, leases of approximately 5,000 rentable square feet are written on a modified gross basis, approximately 294,000 rentable square feet are written on a full service gross basis and approximately 17,000 rentable square feet are written on a triple net basis.
|
(10)
|
For this property, leases of approximately 46,000 rentable square feet are written on a modified gross basis and approximately 50,000 rentable square feet are written on a full service gross basis.
|
(11)
|
For this property, leases of approximately 25,000 rentable square feet are written on a full service gross basis, approximately 71,000 rentable square feet are written on a modified gross basis and approximately 35,000 rentable square feet are written on a gross basis.
|
(12)
|
For this property, leases of approximately 23,000 rentable square feet are written on a full service gross basis and approximately 16,000 rentable square feet are written on a modified gross basis.
|
(13)
|
For this property, leases of approximately 32,000 rentable square feet are written on a full service gross basis, and approximately 84,000 rentable square feet are written on a modified gross basis.
|
(14)
|
For this property, leases of approximately 29,000 rentable square feet are written on a gross basis and approximately 17,000 rentable square feet are written on a full service gross basis.
|
(15)
|
For this property, leases of approximately 48,000 rentable square feet are written on a full service gross basis and approximately 22,000 rentable square feet are written on a gross basis.
|
(16)
|
These properties are vacant.
|
(17)
|
For this property, leases of approximately 19,000 rentable square feet are written on a gross basis and approximately 29,000 rentable square feet are written on a triple net basis.
|
(18)
|
For this property, leases of approximately 491,000 rentable square feet are written on a full service gross basis, approximately 18,000 rentable square feet are written on a triple net basis, approximately 38,000 rentable square feet are written on a gross basis and approximately 182,000 rentable square feet are written on a modified gross basis.
|
(19)
|
For this property, leases of approximately 84,000 rentable square feet are written on a gross basis, approximately 344,000 rentable square feet are written on a full service gross basis and approximately 8,000 rentable square feet is written on a triple net basis.
|
(20)
|
For this property, leases of approximately 370,000 rentable square feet are written on a modified gross basis and approximately 59,000 rentable square feet are written on a full service gross basis.
|
|
|
Construction Period
|
|
|
|
|
||||
Completed Development Project
|
|
Start Date
|
|
Completion / Stabilization Date
|
|
Rentable Square Feet
|
|
Office % Occupied
|
||
Crossing/900
Redwood City, California
(1)
|
|
4Q 2013
|
|
4Q 2015
|
|
339,987
|
|
|
100.0
|
%
|
Columbia Square - Phase 1
Hollywood, California
(2)
|
|
2Q 2013
|
|
3Q 2015
|
|
108,517
|
|
|
100.0
|
%
|
TOTAL:
|
|
|
|
|
|
448,504
|
|
|
100.0
|
%
|
(1)
|
This project is owned by Redwood City Partners, LLC, a consolidated subsidiary.
|
(2)
|
Phase 1 is comprised of 94,969 rentable square feet of office space and 13,548 rentable square feet of retail space.
|
|
|
Construction Period
|
|
|
|
|
||||||
Lease-up Projects
|
|
Start Date
|
|
Completion Date
|
|
Estimated Stabilization Date
|
|
Rentable Square Feet
|
|
% Occupied
|
||
The Heights at Del Mar
Del Mar, California
|
|
4Q 2014
|
|
4Q 2015
|
|
4Q 2016
|
|
73,000
|
|
|
—
|
%
|
|
|
Estimated Construction Period
|
|
Estimated Stabilization Date
|
|
Estimated Rentable Square Feet
|
|
Office % Leased
|
|||
In-Process Development Projects
|
|
Start Date
|
|
Completion Date
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
UNDER CONSTRUCTION:
|
|
|
|
|
|
|
|
|
|
|
|
San Francisco, California
|
|
|
|
|
|
|
|
|
|
|
|
350 Mission Street
|
|
4Q 2012
|
|
3Q 2015
|
|
2Q 2016
|
|
450,000
|
|
|
100%
|
333 Brannan Street
|
|
4Q 2013
|
|
3Q 2015
|
|
2Q 2016
|
|
185,000
|
|
|
100%
|
The Exchange on 16th
(1)
|
|
2Q 2015
|
|
3Q 2017
|
|
3Q 2018
|
|
700,000
|
|
|
—%
|
|
|
|
|
|
|
|
|
|
|
|
|
Los Angeles, California
|
|
|
|
|
|
|
|
|
|
|
|
Columbia Square Phase 2 - Office
|
|
3Q 2013
|
|
1Q 2016
|
|
1Q 2017
|
|
370,000
|
|
|
58%
|
Columbia Square Residential
|
|
3Q 2013
|
|
1Q 2016
|
|
1Q 2017
|
|
205,000
|
|
|
N/A
|
SUBTOTAL:
|
|
|
|
|
|
|
|
1,910,000
|
|
|
50%
|
(1)
|
In the second quarter of 2015, the Company commenced development of the four building complex comprised of two six-story buildings and two twelve-story buildings located in the Mission Bay district of San Francisco.
|
(1)
|
Project developable square feet and scope could change materially from estimated data provided due to one of more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new office supply, regulatory and entitlement processes or project design.
|
(2)
|
In July 2015, the Company closed on a fully-entitled 3.3 acre site for a total purchase price of approximately
$78.0 million
in cash and approximately
$4.1 million
in accrued liabilities and acquisition costs in the south of market area of San Francisco. The Company will develop and own two buildings totaling approximately 400,000 square feet.
|
(3)
|
Consists of four adjacent parcels in the South Lake Union submarket of Seattle which the Company acquired in February 2015.
|
(4)
|
The Company is planning to demolish the existing two-story 45,195 rentable square foot office building and is currently pursuing entitlements to build a new five-story 150,000 rentable square foot building.
|
Tenant Name
|
|
Annualized Base Rental Revenue
(1)
|
|
Percentage of Total Annualized Base Rental Revenue
(1)
|
|
Lease Expiration Date
|
||
|
|
(in thousands)
|
|
|
|
|
||
LinkedIn Corporation
|
|
$
|
28,344
|
|
|
5.9%
|
|
Various
(4)
|
Box, Inc.
(2)
|
|
22,493
|
|
|
4.7%
|
|
Various
(5)
|
|
DIRECTV, LLC
|
|
22,467
|
|
|
4.7%
|
|
September 2027
|
|
Synopsys, Inc.
|
|
15,492
|
|
|
3.2%
|
|
August 2030
|
|
Bridgepoint Education, Inc.
|
|
15,066
|
|
|
3.2%
|
|
Various
(6)
|
|
Delta Dental of California
|
|
10,313
|
|
|
2.2%
|
|
May 2018
|
|
AMN Healthcare, Inc.
|
|
9,001
|
|
|
1.9%
|
|
July 2027
|
|
Concur Technologies
|
|
8,225
|
|
|
1.7%
|
|
December 2025
|
|
Zenefits Insurance Service
|
|
7,314
|
|
|
1.5%
|
|
Various
(7)
|
|
Scan Group
(3)
|
|
6,487
|
|
|
1.4%
|
|
Various
(8)
|
|
Group Health Cooperative
|
|
6,372
|
|
|
1.3%
|
|
September 2017
|
|
Neurocrine Biosciences, Inc.
|
|
6,366
|
|
|
1.3%
|
|
December 2019
|
|
Riot Games, Inc.
|
|
6,223
|
|
|
1.3%
|
|
Various
(9)
|
|
Institute for Systems Biology
|
|
6,207
|
|
|
1.3%
|
|
March 2021
|
|
Fish & Richardson, P.C.
|
|
6,071
|
|
|
1.3%
|
|
October 2018
|
|
Total
|
|
$
|
176,441
|
|
|
36.9%
|
|
|
(1)
|
Annualized base rental revenue 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. Excludes month-to-month leases and vacant space as of
December 31, 2015
.
|
(2)
|
Includes 100% of annualized base rental revenues from Redwood City Partners, LLC, a consolidated subsidiary.
|
(3)
|
The Company has entered into leases with various affiliates of the tenant
.
|
(4)
|
The LinkedIn Corporation leases, which contribute $2.2 million and $26.1 million, expire in July 2019 and September 2026, respectively.
|
(5)
|
The Box, Inc. leases, which contribute $2.1 million and $20.4 million, expire in August 2021 and June 2028, respectively.
|
(6)
|
The Bridgepoint Education Inc. leases, which contribute $1.0 million, $6.3 million and $7.8 million, expire in February 2017, July 2018 and September 2018, respectively.
|
(7)
|
The Zenefits Insurance Service leases, which contribute $1.3 million and $6.0 million, expire in January 2017 and March 2023, respectively.
|
(8)
|
The Scan Group leases, which contribute $0.3 million and $6.2 million, expire in January 2016 and April 2026, respectively.
|
(9)
|
The Riot Games, Inc. leases, which contribute $0.5 million, $1.6 million, and $4.1 million, expire in September 2020, November 2020, and November 2024, respectively.
|
Year of Lease Expiration
|
# of Expiring Leases
|
|
Total Square Feet
|
|
% of Total Leased Square Feet
|
|
Annualized Base
Rent (000’s)
(1) (2)
|
|
% of Total Annualized
Base Rent
(1)
|
|
Annualized Rent per Square Foot
(1)
|
||||||||
2016
|
94
|
|
|
700,875
|
|
|
5.8
|
%
|
|
$
|
20,844
|
|
|
4.3
|
%
|
|
$
|
29.74
|
|
2017
|
104
|
|
|
1,260,852
|
|
|
10.4
|
%
|
|
47,192
|
|
|
9.9
|
%
|
|
37.43
|
|
||
2018
|
75
|
|
|
1,361,052
|
|
|
11.2
|
%
|
|
54,644
|
|
|
11.4
|
%
|
|
40.15
|
|
||
2019
|
88
|
|
|
1,534,421
|
|
|
12.6
|
%
|
|
56,113
|
|
|
11.7
|
%
|
|
36.57
|
|
||
2020
|
89
|
|
|
1,899,476
|
|
|
15.7
|
%
|
|
71,094
|
|
|
14.9
|
%
|
|
37.43
|
|
||
2021
|
50
|
|
|
906,739
|
|
|
7.5
|
%
|
|
38,270
|
|
|
8.0
|
%
|
|
42.21
|
|
||
2022
|
17
|
|
|
398,968
|
|
|
3.3
|
%
|
|
16,910
|
|
|
3.5
|
%
|
|
42.38
|
|
||
2023
|
18
|
|
|
563,794
|
|
|
4.6
|
%
|
|
26,778
|
|
|
5.6
|
%
|
|
47.50
|
|
||
2024
|
17
|
|
|
554,293
|
|
|
4.6
|
%
|
|
21,432
|
|
|
4.5
|
%
|
|
38.67
|
|
||
2025
|
8
|
|
|
101,610
|
|
|
0.8
|
%
|
|
4,676
|
|
|
1.0
|
%
|
|
46.02
|
|
||
2026 and beyond
|
28
|
|
|
2,854,723
|
|
|
23.5
|
%
|
|
120,563
|
|
|
25.2
|
%
|
|
42.23
|
|
||
Total
(3)
|
588
|
|
|
12,136,803
|
|
|
100.0
|
%
|
|
$
|
478,516
|
|
|
100.0
|
%
|
|
$
|
39.43
|
|
(1)
|
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. Amounts represent percentage of total portfolio annualized contractual base rental revenue.
|
(2)
|
Includes 100% of annualized base rent from Redwood City Partners, LLC, a consolidated subsidiary.
|
(3)
|
The information presented for all lease expiration activity reflects leasing activity through
December 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, vacant space and lease renewal options not executed as of
December 31, 2015
.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR KILROY REALTY CORPORATION’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2015
|
High
|
|
|
Low
|
|
|
Close
|
|
|
Per Share Common
Stock Dividends
Declared
|
|
||||
First quarter
|
$
|
78.86
|
|
|
$
|
70.48
|
|
|
$
|
76.17
|
|
|
$
|
0.3500
|
|
Second quarter
|
77.92
|
|
|
67.15
|
|
|
67.15
|
|
|
0.3500
|
|
||||
Third quarter
|
73.45
|
|
|
63.41
|
|
|
65.16
|
|
|
0.3500
|
|
||||
Fourth quarter
|
69.92
|
|
|
62.83
|
|
|
63.28
|
|
|
0.3500
|
|
||||
2014
|
High
|
|
|
Low
|
|
|
Close
|
|
|
Per Share Common
Stock Dividends
Declared
|
|
||||
First quarter
|
$
|
59.53
|
|
|
$
|
49.72
|
|
|
$
|
58.58
|
|
|
$
|
0.3500
|
|
Second quarter
|
62.88
|
|
|
57.29
|
|
|
62.28
|
|
|
0.3500
|
|
||||
Third quarter
|
63.96
|
|
|
58.03
|
|
|
59.44
|
|
|
0.3500
|
|
||||
Fourth quarter
|
71.47
|
|
|
58.73
|
|
|
69.07
|
|
|
0.3500
|
|
Period
|
|
Total Number of Shares (or Units) Purchased
|
|
Average Price Paid per Share (or Unit)
|
|
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) that May Yet to be Purchased Under the Plans or Programs
|
|||||
October 1 - October 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
November 1 - November 30, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
December 1 - December 31, 2015
|
|
62,072
|
|
|
$
|
63.80
|
|
|
—
|
|
|
—
|
|
Total
|
|
62,072
|
|
|
$
|
63.80
|
|
|
—
|
|
|
—
|
|
2015
|
|
Per Unit Common
Unit Distribution
Declared
|
|
|
First quarter
|
|
$
|
0.3500
|
|
Second quarter
|
|
0.3500
|
|
|
Third quarter
|
|
0.3500
|
|
|
Fourth quarter
|
|
0.3500
|
|
|
2014
|
|
Per Unit Common
Unit Distribution
Declared
|
|
|
First quarter
|
|
$
|
0.3500
|
|
Second quarter
|
|
0.3500
|
|
|
Third quarter
|
|
0.3500
|
|
|
Fourth quarter
|
|
0.3500
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA – KILROY REALTY CORPORATION
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues from continuing operations
|
$
|
581,275
|
|
|
$
|
521,725
|
|
|
$
|
457,111
|
|
|
$
|
373,318
|
|
|
$
|
304,574
|
|
Income (loss) from continuing operations
|
238,604
|
|
|
59,313
|
|
|
14,935
|
|
|
(5,475
|
)
|
|
(16,664
|
)
|
|||||
Income from discontinued operations
(1)
|
—
|
|
|
124,495
|
|
|
29,630
|
|
|
282,576
|
|
|
84,153
|
|
|||||
Net income available to common stockholders
|
220,831
|
|
|
166,969
|
|
|
30,630
|
|
|
249,826
|
|
|
50,819
|
|
|||||
Per-Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares of common stock outstanding – basic
|
89,854,096
|
|
|
83,090,235
|
|
|
77,343,853
|
|
|
69,639,623
|
|
|
56,717,121
|
|
|||||
Weighted average shares of common stock outstanding – diluted
|
90,395,775
|
|
|
84,967,720
|
|
|
77,343,853
|
|
|
69,639,623
|
|
|
56,717,121
|
|
|||||
Income (loss) from continuing operations available to common stockholders per share of common stock – basic
|
$
|
2.44
|
|
|
$
|
0.52
|
|
|
$
|
0.00
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.57
|
)
|
Income (loss) from continuing operations available to common stockholders per share of common stock – diluted
|
$
|
2.42
|
|
|
$
|
0.51
|
|
|
$
|
0.00
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.57
|
)
|
Net income available to common stockholders per share – basic
|
$
|
2.44
|
|
|
$
|
1.99
|
|
|
$
|
0.37
|
|
|
$
|
3.56
|
|
|
$
|
0.87
|
|
Net income available to common stockholders per share – diluted
|
$
|
2.42
|
|
|
$
|
1.95
|
|
|
$
|
0.37
|
|
|
$
|
3.56
|
|
|
$
|
0.87
|
|
Dividends declared per common share
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.40
|
|
(1)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 2 “Basis of Presentation and Significant Accounting Policies” 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.
|
|
December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total real estate held for investment, before accumulated depreciation and amortization
|
$
|
6,328,146
|
|
|
$
|
6,057,932
|
|
|
$
|
5,264,947
|
|
|
$
|
4,757,394
|
|
|
$
|
3,798,690
|
|
Total assets
|
5,939,469
|
|
|
5,633,736
|
|
|
5,111,028
|
|
|
4,616,084
|
|
|
3,446,795
|
|
|||||
Total debt
|
2,238,508
|
|
|
2,469,413
|
|
|
2,204,938
|
|
|
2,040,935
|
|
|
1,821,286
|
|
|||||
Total noncontrolling interest – preferred units
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,638
|
|
|||||
Total preferred stock
|
192,411
|
|
|
192,411
|
|
|
192,411
|
|
|
192,411
|
|
|
121,582
|
|
|||||
Total equity
(2)
|
3,234,586
|
|
|
2,723,936
|
|
|
2,516,160
|
|
|
2,235,933
|
|
|
1,327,482
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Funds From Operations
(3) (4)
|
$
|
316,612
|
|
|
$
|
250,744
|
|
|
$
|
218,621
|
|
|
$
|
165,455
|
|
|
$
|
136,173
|
|
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
272,008
|
|
|
$
|
245,253
|
|
|
$
|
240,576
|
|
|
$
|
180,724
|
|
|
$
|
138,256
|
|
Investing activities
|
(262,752
|
)
|
|
(501,436
|
)
|
|
(506,520
|
)
|
|
(706,506
|
)
|
|
(634,283
|
)
|
|||||
Financing activities
|
23,471
|
|
|
244,587
|
|
|
284,621
|
|
|
537,705
|
|
|
485,964
|
|
|||||
Office Property Data:
(5)
|
|
|
|
|
|
|
|
|
|
||||||||||
Rentable square footage
|
13,032,406
|
|
|
14,096,617
|
|
|
12,736,099
|
|
|
13,249,780
|
|
|
11,421,112
|
|
|||||
Occupancy
|
94.8
|
%
|
|
94.4
|
%
|
|
93.4
|
%
|
|
92.8
|
%
|
|
90.1
|
%
|
(1)
|
Represents the redemption value, less issuance costs of our 1,500,000 7.45% Series A Cumulative Preferred Units (“Series A Preferred Units”). The Series A Preferred Units were redeemed in 2012.
|
(2)
|
Includes the noncontrolling interest of the common units of the Operating Partnership and Redwood City Partners, LLC (a consolidated subsidiary created during 2013, see Note 2 “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in this report for additional information).
|
(3)
|
We calculate FFO in accordance with the White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets), and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.
|
(4)
|
FFO includes amortization of deferred revenue related to tenant-funded tenant improvements of
$13.3 million
,
$11.0 million
,
$10.7 million
,
$9.1 million
and
$9.3 million
for the years ended
December 31, 2015
,
2014
,
2013
,
2012
and
2011
, respectively.
|
(5)
|
Occupancy percentages and total square feet reported are based on the Company’s stabilized office portfolio for the periods presented.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues from continuing operations
|
$
|
581,275
|
|
|
$
|
521,725
|
|
|
$
|
457,111
|
|
|
$
|
373,318
|
|
|
$
|
304,574
|
|
Income (loss) from continuing operations
|
238,604
|
|
|
59,313
|
|
|
14,935
|
|
|
(5,475
|
)
|
|
(16,664
|
)
|
|||||
Income from discontinued operations
(1)
|
—
|
|
|
124,495
|
|
|
29,630
|
|
|
282,576
|
|
|
84,153
|
|
|||||
Net income available to common unitholders
|
224,887
|
|
|
170,298
|
|
|
31,091
|
|
|
255,375
|
|
|
51,764
|
|
|||||
Per Unit Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common units outstanding – basic
|
91,645,578
|
|
|
84,894,498
|
|
|
79,166,260
|
|
|
71,403,258
|
|
|
58,437,444
|
|
|||||
Weighted average common units outstanding – diluted
|
92,187,257
|
|
|
86,771,983
|
|
|
79,166,260
|
|
|
71,403,258
|
|
|
58,437,444
|
|
|||||
Income (loss) from continuing operations available to common unitholders per common unit – basic
|
$
|
2.44
|
|
|
$
|
0.52
|
|
|
$
|
0.00
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.58
|
)
|
Income (loss) from continuing operations available to common unitholders per common unit – diluted
|
$
|
2.42
|
|
|
$
|
0.51
|
|
|
$
|
0.00
|
|
|
$
|
(0.40
|
)
|
|
$
|
(0.58
|
)
|
Net income available to common unitholders per unit – basic
|
$
|
2.44
|
|
|
$
|
1.99
|
|
|
$
|
0.37
|
|
|
$
|
3.56
|
|
|
$
|
0.86
|
|
Net income available to common unitholders per unit – diluted
|
$
|
2.42
|
|
|
$
|
1.94
|
|
|
$
|
0.37
|
|
|
$
|
3.56
|
|
|
$
|
0.86
|
|
Distributions declared per common unit
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.40
|
|
|
$
|
1.40
|
|
(1)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 2 “Basis of Presentation and Significant Accounting Policies” 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.
|
|
December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total real estate held for investment, before accumulated depreciation and amortization
|
$
|
6,328,146
|
|
|
$
|
6,057,932
|
|
|
$
|
5,264,947
|
|
|
$
|
4,757,394
|
|
|
$
|
3,798,690
|
|
Total assets
|
5,939,469
|
|
|
5,633,736
|
|
|
5,111,028
|
|
|
4,616,084
|
|
|
3,446,795
|
|
|||||
Total debt
|
2,238,508
|
|
|
2,469,413
|
|
|
2,204,938
|
|
|
2,040,935
|
|
|
1,821,286
|
|
|||||
Series A redeemable preferred units
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,638
|
|
|||||
Total preferred capital
|
192,411
|
|
|
192,411
|
|
|
192,411
|
|
|
192,411
|
|
|
121,582
|
|
|||||
Total capital
(2)
|
3,234,586
|
|
|
2,723,936
|
|
|
2,516,160
|
|
|
2,235,933
|
|
|
1,327,482
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
272,008
|
|
|
245,253
|
|
|
240,576
|
|
|
180,724
|
|
|
138,256
|
|
|||||
Investing activities
|
(262,752
|
)
|
|
(501,436
|
)
|
|
(506,520
|
)
|
|
(706,506
|
)
|
|
(634,283
|
)
|
|||||
Financing activities
|
23,471
|
|
|
244,587
|
|
|
284,621
|
|
|
537,705
|
|
|
485,964
|
|
|||||
Office Property Data:
(3)
|
|
|
|
|
|
|
|
|
|
||||||||||
Rentable square footage
|
13,032,406
|
|
|
14,096,617
|
|
|
12,736,099
|
|
|
13,249,780
|
|
|
11,421,112
|
|
|||||
Occupancy
|
94.8
|
%
|
|
94.4
|
%
|
|
93.4
|
%
|
|
92.8
|
%
|
|
90.1
|
%
|
(1)
|
Represents the redemption value, less issuance costs of the Operating Partnership’s issued and outstanding 1,500,000 Series A Preferred Units. All Series A Preferred Units were redeemed in 2012.
|
(2)
|
Includes the noncontrolling interests in consolidated subsidiaries and Redwood City Partners, LLC (a consolidated subsidiary created during 2013, see Note 2 “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in this report for additional information).
|
(3)
|
Occupancy percentages and total square feet reported are based on the Company’s stabilized office portfolio for the periods presented.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
global market and general economic conditions and their effect on our liquidity and financial conditions and those of our tenants;
|
•
|
adverse economic or real estate conditions in California and Washington;
|
•
|
risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry;
|
•
|
defaults on or non-renewal of leases by tenants;
|
•
|
any significant downturn in tenants’ businesses;
|
•
|
our ability to re-lease property at or above current market rates;
|
•
|
costs to comply with government regulations, including environmental remediations;
|
•
|
the availability of cash for distribution and debt service and exposure of risk of default under debt obligations;
|
•
|
significant competition, which may decrease the occupancy and rental rates of properties;
|
•
|
potential losses that may not be covered by insurance;
|
•
|
the ability to successfully complete acquisitions and dispositions on announced terms;
|
•
|
the ability to successfully operate acquired properties;
|
•
|
the ability to successfully complete development and redevelopment properties on schedule and within budgeted amounts;
|
•
|
defaults on leases for land on which some of our properties are located;
|
•
|
adverse changes to, or implementations of, applicable laws, regulations or legislation;
|
•
|
environmental uncertainties and risks related to natural disasters; and
|
•
|
the Company’s ability to maintain its status as a REIT.
|
•
|
Issued common stock for aggregate net proceeds of
$138.2 million
under the Company’s at-the-market (ATM) offering program;
|
•
|
Issued
$400.0 million
aggregate principal amount of 10-year,
4.375%
senior unsecured notes maturing in October 2025;
|
•
|
Received an upgrade in our debt ratings from Moody’s Investors Service (“Moody’s”) and Standard and Poor’s Rating Service (“S&P”) to Baa2 and BBB, respectively.
|
•
|
whether the lease agreement requires landlord approval of how the tenant improvement allowance is spent prior to installation of the tenant improvements;
|
•
|
whether the lease agreement requires the tenant to provide evidence to the landlord supporting the cost and what the tenant improvement allowance was spent on prior to payment by the landlord for such tenant improvements;
|
•
|
whether the tenant improvements are unique to the tenant or reusable by other tenants;
|
•
|
whether the tenant is permitted to alter or remove the tenant improvements without the consent of the landlord or without compensating the landlord for any lost utility or diminution in fair value; and
|
•
|
whether the ownership of the tenant improvements remains with the landlord or remains with the tenant at the end of the lease term.
|
•
|
estimating the final expenses, net of accruals, that are recoverable;
|
•
|
estimating the fixed and variable components of operating expenses for each building;
|
•
|
conforming recoverable expense pools to those used in establishing the base year or base allowance for the applicable underlying lease; and
|
•
|
concluding whether an expense or capital expenditure is recoverable pursuant to the terms of the underlying lease.
|
•
|
low occupancy levels, forecasted low occupancy levels or near term lease expirations at a specific property;
|
•
|
current period operating or cash flow losses combined with a historical pattern or future projection of potential continued operating or cash flow losses at a specific property;
|
•
|
deterioration in rental rates for a specific property as evidenced by sudden significant rental rate decreases or continuous rental rate decreases over numerous quarters, which could signal a continued decrease in future cash flow for that property;
|
•
|
deterioration of a given rental submarket as evidenced by significant increases in market vacancy and/or negative absorption rates or continuous increases in market vacancy and/or negative absorption rates over numerous quarters, which could signal a decrease in future cash flow for properties within that submarket;
|
•
|
significant increases in property sales yields, continuous increases in property sales yields over several quarters, or recent property sales at a loss within a given submarket, each of which could signal a decrease in the market value of properties;
|
•
|
significant change in strategy or use of a specific property or any other event that could result in a decreased holding period, including classifying a property as held for sale, or significant development delay;
|
•
|
evidence of material physical damage to the property; and
|
•
|
default by a significant tenant when any of the other indicators above are present.
|
•
|
provide benefit in future periods;
|
•
|
extend the useful life of the asset beyond our original estimates; and
|
•
|
increase the quality of the asset beyond our original estimates.
|
•
|
Crossing/900, Redwood City, California, a development project which has a total estimated investment of approximately
$190.0 million
and encompasses
339,987
rentable square feet. The office component of this project was
100%
occupied at stabilization.
|
•
|
Columbia Square Historic Phase 1, which is the first phase of a three phase development project in Hollywood, California. Phase I of this project has a total estimated investment of approximately
$81.0 million
and encompasses
108,517
rentable square feet. The office component of this project was
100%
occupied at stabilization.
|
•
|
The Heights at Del Mar, Del Mar, California, a
73,000
square foot office project that has a total estimated investment of approximately
$45 million
.
|
•
|
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
$285 million
and will encompass approximately
450,000
rentable square feet upon completion. The building core and shell were completed in the third quarter of 2015, tenant improvements are in process, and the tenant is currently expected to take possession in the second quarter of 2016.
|
•
|
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 building core and shell were completed in the third quarter of 2015, tenant improvements are in process, and the tenant is currently expected to take possession in the second quarter of 2016.
|
•
|
The Exchange on 16th, Mission Bay, San Francisco, California, which we acquired in May 2014 and commenced construction on in June 2015. This project is comprised of four buildings encompassing approximately
700,000
rentable square feet and represents a total estimated investment of approximately
$485 million
. Construction is currently in process and is currently expected to be completed in the second half of 2017. This project is not currently pre-leased.
|
•
|
Columbia Square Office Phase 2, Hollywood, California, which we acquired in September 2012. During 2013, we commenced development on this phase of the project comprising approximately
370,000
rentable square feet with an estimated investment of
$220 million
. The building core and shell of the project, which is currently 58% pre-leased, is expected to be completed in the first quarter of 2016, and the project is expected to be stabilized in the first quarter of 2017.
|
•
|
Columbia Square Residential, the third phase and residential component of the Columbia Square project, will encompass approximately
205,000
rentable square feet upon completion and has an estimated investment of approximately
$145 million
. Construction of this project is currently expected to be completed in the first quarter of 2016, and the project is expected to be leased in phases through the first quarter of 2017.
|
Near-Term Development Pipeline
(1)
|
|
Location
|
|
Potential Start Date
(2)
|
|
Approx. Developable Square Feet
|
|
Total Estimated Investment
|
|
Total Costs as of 12/31/2015
(3)
(in millions)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
100 Hooper
(4)
|
|
San Francisco
|
|
2016
|
|
400,000
|
|
$
|
250
|
|
|
$
|
88.1
|
|
Academy Project
|
|
Hollywood
|
|
2016
|
|
545,000
|
|
385
|
|
|
61.2
|
|
||
333 Dexter
(5)
|
|
South Lake Union
|
|
2016
|
|
700,000
|
|
380
|
|
|
58.4
|
|
||
One Paseo
|
|
Del Mar
|
|
2016
|
|
TBD
|
|
TBD
|
|
|
182.1
|
|
||
Total Near-Term Development Pipeline
|
|
|
|
|
|
|
|
|
|
$
|
389.8
|
|
(1)
|
Project timing, costs, developable square feet and scope could change materially from estimated data provided due to one of more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new office supply, regulatory and entitlement processes, and project design.
|
(2)
|
Potential start dates assume successfully obtaining all entitlements and approvals necessary to commence construction. Actual commencement is subject to extensive consideration of market conditions and economic factors. 100 Hooper is fully-entitled with Proposition M allocation.
|
(3)
|
Represents cash paid and costs incurred as of
December 31, 2015
.
|
(4)
|
In July 2015, the Company closed on a fully-entitled 3.3 acre site for approximately
$78.0 million
in cash
and approximately
$4.1 million
in accrued liabilities and acquisition costs in SOMA, San Francisco. The Company will develop and own two buildings totaling approximately 400,000 square feet.
|
(5)
|
In February 2015, the Company closed on four adjacent parcels in the South Lake Union district for a total purchase price of
$49.5 million
in cash and approximately
$2.4 million
in transaction costs and accrued liabilities.
|
|
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
|
|
|||||||||||||||||||
Year Ended December 31, 2015
|
81
|
|
|
72
|
|
|
915,773
|
|
|
627,783
|
|
|
$
|
44.02
|
|
|
32.9
|
%
|
|
20.5
|
%
|
|
42.0
|
%
|
|
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
|
|
|
|
||||||||||||||
Year Ended December 31, 2015
|
84
|
|
|
71
|
|
|
805,483
|
|
|
627,264
|
|
|
$
|
38.88
|
|
|
33.0
|
%
|
|
22.3
|
%
|
|
66
|
|
(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)
|
Amounts 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 235,255
and 170,910 rentable square feet, respectively, for the year ended
December 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 cash 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 year ended
December 31, 2015
, 23 new leases totaling 258,670 rentable square feet were signed but not commenced as of
December 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)
|
||||||||
2016
|
|
94
|
|
|
700,875
|
|
|
5.8
|
%
|
|
$
|
20,844
|
|
|
4.3
|
%
|
|
$
|
29.74
|
|
2017
|
|
104
|
|
|
1,260,852
|
|
|
10.4
|
%
|
|
47,192
|
|
|
9.9
|
%
|
|
37.43
|
|
||
2018
|
|
75
|
|
|
1,361,052
|
|
|
11.2
|
%
|
|
54,644
|
|
|
11.4
|
%
|
|
40.15
|
|
||
2019
|
|
88
|
|
|
1,534,421
|
|
|
12.6
|
%
|
|
56,113
|
|
|
11.7
|
%
|
|
36.57
|
|
||
2020
|
|
89
|
|
|
1,899,476
|
|
|
15.7
|
%
|
|
71,094
|
|
|
14.9
|
%
|
|
37.43
|
|
||
Total
|
|
450
|
|
|
6,756,676
|
|
|
55.7
|
%
|
|
$
|
249,887
|
|
|
52.2
|
%
|
|
$
|
36.98
|
|
(1)
|
The information presented for all lease expiration activity reflects leasing activity through
December 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
December 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)
|
4
|
|
465,812
|
|
Development projects in “lease-up”
(2)
|
1
|
|
73,000
|
|
Development projects under construction
(2)
|
5
|
|
1,910,000
|
|
(1)
|
Includes
four
properties located in the Del Mar submarket of San Diego, California. See Note 4 “Dispositions and Real Estate Assets Held for Sale” to our consolidated financial statements included in this report for additional information.
|
(2)
|
Excludes
2015
property acquisitions.
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
||
Total as of December 31, 2014
|
111
|
|
|
14,096,617
|
|
Completed development properties placed in-service
|
4
|
|
|
448,504
|
|
Dispositions and properties held for sale at December 31, 2015
|
(14
|
)
|
|
(1,512,206
|
)
|
Remeasurement
|
—
|
|
|
(509
|
)
|
Total as of December 31, 2015
|
101
|
|
|
13,032,406
|
|
Region
|
Number of
Buildings |
|
Rentable Square Feet
|
|
Occupancy at
(1)
|
|||||||||
|
12/31/2015
|
|
12/31/2014
|
|
12/31/2013
|
|||||||||
Los Angeles and Ventura Counties
|
29
|
|
|
3,614,031
|
|
|
95.1
|
%
|
|
92.8
|
%
|
|
93.7
|
%
|
Orange County
|
1
|
|
|
271,556
|
|
|
94.0
|
%
|
|
98.7
|
%
|
|
92.8
|
%
|
San Diego County
|
33
|
|
|
2,851,140
|
|
|
89.6
|
%
|
|
90.9
|
%
|
|
90.8
|
%
|
San Francisco Bay Area
|
26
|
|
|
4,229,540
|
|
|
98.1
|
%
|
|
97.3
|
%
|
|
94.8
|
%
|
Greater Seattle
|
12
|
|
|
2,066,139
|
|
|
95.1
|
%
|
|
98.1
|
%
|
|
96.7
|
%
|
Total Stabilized Portfolio
|
101
|
|
|
13,032,406
|
|
|
94.8
|
%
|
|
94.4
|
%
|
|
93.4
|
%
|
|
Average Occupancy
|
||||
|
Year Ended December 31,
|
||||
|
2015
|
|
2014
|
||
Stabilized Portfolio
(1)
|
95.6
|
%
|
|
93.5
|
%
|
Same Store Portfolio
(2)
|
95.0
|
%
|
|
94.6
|
%
|
(1)
|
Occupancy percentages reported are based on our stabilized office portfolio as of the end of the period presented.
|
(2)
|
Occupancy percentages reported are based on office properties owned and stabilized as of January 1,
2014
and still owned and stabilized as of
December 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
December 31, 2015
;
|
•
|
Stabilized Development and Redevelopment Properties – which includes the results generated by the following:
|
◦
|
Two office development projects comprising four office buildings that were completed and stabilized in the fourth quarter of 2015;
|
◦
|
One office development project comprising two office buildings that was completed and stabilized in the fourth quarter of 2014;
|
◦
|
One office development project consisting of three office buildings that was completed and stabilized in the third quarter of 2014; and
|
◦
|
One office redevelopment property that was stabilized in the first quarter of 2014 following its one year lease-up period.
|
•
|
2014 Acquisition Properties – which includes the results, from the dates of acquisition through the periods presented, for the
five
office buildings we acquired during 2014;
|
•
|
2015 Disposition and Held for Sale Properties and Other – which includes the results for both periods presented of the
ten
properties disposed of in 2015, the
four
properties held for sale at
December 31, 2015
, and expenses for certain of our in-process, near-term and future development projects.
|
Group
|
|
# of Buildings
|
|
Rentable
Square Feet
|
||
Same Store Properties
|
|
86
|
|
|
10,818,177
|
|
Stabilized Development and Redevelopment Properties
|
|
10
|
|
|
1,806,642
|
|
2014 Acquisition Properties
|
|
5
|
|
|
407,587
|
|
Total Stabilized Portfolio
|
|
101
|
|
13,032,406
|
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2015
|
|
2014
|
|
||||||||||
|
($ in thousands)
|
|||||||||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|||||||
Net Operating Income, as defined
|
$
|
422,033
|
|
|
$
|
372,881
|
|
|
$
|
49,152
|
|
|
13.2
|
%
|
Unallocated (expense) income:
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
(48,265
|
)
|
|
(46,152
|
)
|
|
(2,113
|
)
|
|
4.6
|
|
|||
Acquisition-related expenses
|
(497
|
)
|
|
(1,479
|
)
|
|
982
|
|
|
(66.4
|
)
|
|||
Depreciation and amortization
|
(204,294
|
)
|
|
(202,417
|
)
|
|
(1,877
|
)
|
|
0.9
|
|
|||
Interest income and other net investment gains
|
243
|
|
|
561
|
|
|
(318
|
)
|
|
(56.7
|
)
|
|||
Interest expense
|
(57,682
|
)
|
|
(67,571
|
)
|
|
9,889
|
|
|
(14.6
|
)
|
|||
Gains on sale of land, net
|
17,116
|
|
|
3,490
|
|
|
13,626
|
|
|
390.4
|
|
|||
Gains on sales of depreciable operating properties
|
109,950
|
|
|
—
|
|
|
109,950
|
|
|
100.0
|
|
|||
Income from continuing operations
|
238,604
|
|
|
59,313
|
|
|
179,291
|
|
|
302.3
|
|
|||
Income from discontinued operations
(1)
|
—
|
|
|
124,495
|
|
|
(124,495
|
)
|
|
(100.0
|
)
|
|||
Net income
|
$
|
238,604
|
|
|
$
|
183,808
|
|
|
$
|
54,796
|
|
|
29.8
|
%
|
|
|
|
|
|
|
|
|
(1)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 2 “Basis of Presentation and Significant Accounting Policies” 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.
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
2015
|
|
2014
|
||||||||||||||||||||||||||||||||||||
|
Same
Store
|
|
Stabilized Develop-ment & Redevel-opment
|
|
2014
Acquisitions
|
|
2015 Held for Sale Disposi-tions & Other
|
|
Total
|
|
Same
Store
|
|
Stabilized Develop-ment & Redevel-opment
|
|
2014
Acquisitions
|
|
2015 Held for Sale Disposi-tions & Other
|
|
Total
|
||||||||||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Rental income
|
$
|
411,089
|
|
|
$
|
73,949
|
|
|
$
|
15,621
|
|
|
$
|
24,696
|
|
|
$
|
525,355
|
|
|
$
|
392,567
|
|
|
$
|
31,625
|
|
|
$
|
7,153
|
|
|
$
|
34,983
|
|
|
$
|
466,328
|
|
Tenant reimbursements
|
37,144
|
|
|
9,827
|
|
|
2,566
|
|
|
4,237
|
|
|
53,774
|
|
|
38,673
|
|
|
1,850
|
|
|
593
|
|
|
5,601
|
|
|
46,717
|
|
||||||||||
Other property income
|
2,021
|
|
|
112
|
|
|
—
|
|
|
13
|
|
|
2,146
|
|
|
8,498
|
|
|
2
|
|
|
—
|
|
|
180
|
|
|
8,680
|
|
||||||||||
Total
|
450,254
|
|
|
83,888
|
|
|
18,187
|
|
|
28,946
|
|
|
581,275
|
|
|
439,738
|
|
|
33,477
|
|
|
7,746
|
|
|
40,764
|
|
|
521,725
|
|
||||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Property expenses
|
93,868
|
|
|
6,049
|
|
|
1,054
|
|
|
4,407
|
|
|
105,378
|
|
|
91,526
|
|
|
3,529
|
|
|
289
|
|
|
5,170
|
|
|
100,514
|
|
||||||||||
Real estate taxes
|
35,851
|
|
|
9,546
|
|
|
1,328
|
|
|
3,498
|
|
|
50,223
|
|
|
36,516
|
|
|
3,569
|
|
|
336
|
|
|
4,776
|
|
|
45,197
|
|
||||||||||
Provision for bad debts
|
695
|
|
|
(98
|
)
|
|
—
|
|
|
(52
|
)
|
|
545
|
|
|
(103
|
)
|
|
98
|
|
|
—
|
|
|
63
|
|
|
58
|
|
||||||||||
Ground leases
|
3,096
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,096
|
|
|
3,075
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,075
|
|
||||||||||
Total
|
133,510
|
|
|
15,497
|
|
|
2,382
|
|
|
7,853
|
|
|
159,242
|
|
|
131,014
|
|
|
7,196
|
|
|
625
|
|
|
10,009
|
|
|
148,844
|
|
||||||||||
Net Operating Income, as defined
|
$
|
316,744
|
|
|
$
|
68,391
|
|
|
$
|
15,805
|
|
|
$
|
21,093
|
|
|
$
|
422,033
|
|
|
$
|
308,724
|
|
|
$
|
26,281
|
|
|
$
|
7,121
|
|
|
$
|
30,755
|
|
|
$
|
372,881
|
|
|
Year Ended December 31, 2015 as compared to the Year Ended December 31, 2014
|
|||||||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized Development & Redevelopment
|
|
2014 Acquisitions
|
|
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
|
$
|
18,522
|
|
|
4.7
|
%
|
|
$
|
42,324
|
|
|
133.8
|
%
|
|
$
|
8,468
|
|
|
118.4
|
%
|
|
$
|
(10,287
|
)
|
|
(29.4
|
)%
|
|
$
|
59,027
|
|
|
12.7
|
%
|
Tenant reimbursements
|
(1,529
|
)
|
|
(4.0
|
)
|
|
7,977
|
|
|
431.2
|
|
|
1,973
|
|
|
332.7
|
|
|
(1,364
|
)
|
|
(24.4
|
)
|
|
7,057
|
|
|
15.1
|
|
|||||
Other property income
|
(6,477
|
)
|
|
(76.2
|
)
|
|
110
|
|
|
5,500.0
|
|
|
—
|
|
|
—
|
|
|
(167
|
)
|
|
(92.8
|
)
|
|
(6,534
|
)
|
|
(75.3
|
)
|
|||||
Total
|
10,516
|
|
|
2.4
|
|
|
50,411
|
|
|
150.6
|
|
|
10,441
|
|
|
134.8
|
|
|
(11,818
|
)
|
|
(29.0
|
)
|
|
59,550
|
|
|
11.4
|
|
|||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property expenses
|
2,342
|
|
|
2.6
|
|
|
2,520
|
|
|
71.4
|
|
|
765
|
|
|
264.7
|
|
|
(763
|
)
|
|
(14.8
|
)
|
|
4,864
|
|
|
4.8
|
|
|||||
Real estate taxes
|
(665
|
)
|
|
(1.8
|
)
|
|
5,977
|
|
|
167.5
|
|
|
992
|
|
|
295.2
|
|
|
(1,278
|
)
|
|
(26.8
|
)
|
|
5,026
|
|
|
11.1
|
|
|||||
Provision for bad debts
|
798
|
|
|
(774.8
|
)
|
|
(196
|
)
|
|
(200.0
|
)
|
|
—
|
|
|
—
|
|
|
(115
|
)
|
|
(182.5
|
)
|
|
487
|
|
|
839.7
|
|
|||||
Ground leases
|
21
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
0.7
|
|
|||||
Total
|
2,496
|
|
|
1.9
|
|
|
8,301
|
|
|
115.4
|
|
|
1,757
|
|
|
281.1
|
|
|
(2,156
|
)
|
|
(21.5
|
)
|
|
10,398
|
|
|
7.0
|
|
|||||
Net Operating Income,
as defined
|
$
|
8,020
|
|
|
2.6
|
%
|
|
$
|
42,110
|
|
|
160.2
|
%
|
|
$
|
8,684
|
|
|
121.9
|
%
|
|
$
|
(9,662
|
)
|
|
(31.4
|
)%
|
|
$
|
49,152
|
|
|
13.2
|
%
|
•
|
An increase of
$42.1 million
attributable to the Stabilized Development and Redevelopment Properties primarily due to the following:
|
•
|
$6.3 million increase from the properties completed and/or stabilized in the fourth quarter of 2015;
|
•
|
$13.8 million increase from the properties completed and/or stabilized in the fourth quarter of 2014;
|
•
|
$18.6 million increase from the properties completed and/or stabilized in the third quarter of 2014; and
|
•
|
$3.4 million increase from the properties completed and/or stabilized in the first quarter of 2014;
|
•
|
An increase of
$8.0 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase in rental income of
$18.5 million
primarily due to the following:
|
◦
|
$16.7 million increase due to new leases at higher rates and increased occupancy;
|
◦
|
$1.0 million increase due to amortization of tenant funded improvements revenue; and
|
◦
|
$1.0 million increase in parking income resulting from increased occupancy and rates at certain of our buildings;
|
•
|
A partially offsetting decrease in tenant reimbursements of
$1.5 million
primarily due to base year resets for a number of tenants across the portfolio;
|
•
|
A partially offsetting decrease in other property income of
$6.5 million
due to $6.8 million of lease termination fees, primarily related to one tenant, that were recognized during the year ended December 31, 2014; and
|
•
|
A partially offsetting increase in property and related expenses of
$2.5 million
primarily resulting from:
|
•
|
An increase of
$2.3 million
in
property expenses primarily resulting from:
|
◦
|
$3.3 million increase in certain recurring operating costs related to security, parking, other contract services, repairs and maintenance, and various other reimbursable expenses;
|
◦
|
A partially offsetting decrease of $1.0 million due to a property damage settlement received in 2015 and lower non-recurring legal fees in 2015; and
|
•
|
An increase of
$0.8 million
in provision for bad debts primarily related to two tenants;
|
•
|
A partially offsetting net decrease of
$0.7 million
in real estate taxes primarily due to property tax refunds related to successful assessment reductions net of customary annual property tax increases at other properties; and
|
•
|
An increase of
$8.7 million
attributable to the 2014 Acquisition Properties.
|
•
|
An increase of $3.3 million in compensation related expense primarily related to the growth of the Company; partially offset by
|
•
|
A decrease of $1.2 million primarily related to a decrease in professional services fees.
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2015
|
|
2014
|
|
|
|||||||||
|
($ in thousands)
|
|||||||||||||
Gross interest expense
|
$
|
109,647
|
|
|
$
|
114,661
|
|
|
$
|
(5,014
|
)
|
|
(4.4
|
)%
|
Capitalized interest
|
(51,965
|
)
|
|
(47,090
|
)
|
|
(4,875
|
)
|
|
(10.4
|
)
|
|||
Interest expense
|
$
|
57,682
|
|
|
$
|
67,571
|
|
|
$
|
(9,889
|
)
|
|
(14.6
|
)%
|
•
|
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,
2013
and still owned and included in the stabilized portfolio as of
December 31, 2014
;
|
•
|
Acquisition Properties – which includes the results, from the dates of acquisition through the periods presented, for the four office buildings we acquired during
2013
and the five office buildings we acquired during the year ended
December 31, 2014
;
|
•
|
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
|
◦
|
Two office redevelopment buildings and one office development building that were stabilized in 2013.
|
•
|
Other Properties – which includes the results of three office properties and certain of our in-process and future development projects.
|
Group
|
|
# of Buildings
|
|
Rentable
Square Feet
|
||
Same Store Properties
|
|
93
|
|
|
11,309,444
|
|
Acquisition Properties
|
|
9
|
|
|
946,925
|
|
Stabilized Development and Redevelopment Properties
|
|
9
|
|
|
1,840,248
|
|
Total Stabilized Portfolio
|
|
111
|
|
14,096,617
|
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2014
|
|
2013
|
|
||||||||||
|
($ in thousands)
|
|||||||||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|||||||
Net Operating Income, as defined
|
$
|
372,881
|
|
|
$
|
319,679
|
|
|
$
|
53,202
|
|
|
16.6
|
%
|
Unallocated (expense) income:
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
(46,152
|
)
|
|
(39,660
|
)
|
|
(6,492
|
)
|
|
16.4
|
|
|||
Acquisition-related expenses
|
(1,479
|
)
|
|
(1,962
|
)
|
|
483
|
|
|
(24.6
|
)
|
|||
Depreciation and amortization
|
(202,417
|
)
|
|
(188,887
|
)
|
|
(13,530
|
)
|
|
7.2
|
|
|||
Interest income and other net investment gains
|
561
|
|
|
1,635
|
|
|
(1,074
|
)
|
|
(65.7
|
)
|
|||
Interest expense
|
(67,571
|
)
|
|
(75,870
|
)
|
|
8,299
|
|
|
(10.9
|
)
|
|||
Gain on sale of land
|
3,490
|
|
|
—
|
|
|
3,490
|
|
|
100.0
|
|
|||
Income from continuing operations
|
59,313
|
|
|
14,935
|
|
|
44,378
|
|
|
297.1
|
|
|||
Income from discontinued operations
|
124,495
|
|
|
29,630
|
|
|
94,865
|
|
|
320.2
|
|
|||
Net income
|
$
|
183,808
|
|
|
$
|
44,565
|
|
|
$
|
139,243
|
|
|
312.4
|
%
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
2014
|
|
2013
|
||||||||||||||||||||||||||||||||||||
|
Same
Store
|
|
Acqui-
sitions
|
|
Stabilized Redevel-opment
|
|
Other
|
|
Total
|
|
Same
Store
|
|
Acqui-
sitions
|
|
Stabilized Redevel-opment
|
|
Other
|
|
Total
|
||||||||||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Rental income
|
$
|
386,456
|
|
|
$
|
29,423
|
|
|
$
|
49,617
|
|
|
$
|
832
|
|
|
$
|
466,328
|
|
|
$
|
370,128
|
|
|
$
|
14,810
|
|
|
$
|
23,685
|
|
|
$
|
3,276
|
|
|
$
|
411,899
|
|
Tenant reimbursements
|
38,264
|
|
|
5,182
|
|
|
3,151
|
|
|
120
|
|
|
46,717
|
|
|
33,704
|
|
|
2,981
|
|
|
937
|
|
|
425
|
|
|
38,047
|
|
||||||||||
Other property income
|
8,656
|
|
|
—
|
|
|
11
|
|
|
13
|
|
|
8,680
|
|
|
7,155
|
|
|
7
|
|
|
1
|
|
|
2
|
|
|
7,165
|
|
||||||||||
Total
|
433,376
|
|
|
34,605
|
|
|
52,779
|
|
|
965
|
|
|
521,725
|
|
|
410,987
|
|
|
17,798
|
|
|
24,623
|
|
|
3,703
|
|
|
457,111
|
|
||||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Property expenses
|
90,468
|
|
|
2,695
|
|
|
6,818
|
|
|
533
|
|
|
100,514
|
|
|
86,844
|
|
|
1,953
|
|
|
4,170
|
|
|
1,148
|
|
|
94,115
|
|
||||||||||
Real estate taxes
|
35,583
|
|
|
2,996
|
|
|
5,482
|
|
|
1,136
|
|
|
45,197
|
|
|
34,331
|
|
|
1,397
|
|
|
2,124
|
|
|
1,565
|
|
|
39,417
|
|
||||||||||
Provision for bad debts
|
(181
|
)
|
|
13
|
|
|
226
|
|
|
—
|
|
|
58
|
|
|
383
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
396
|
|
||||||||||
Ground leases
|
2,932
|
|
|
—
|
|
|
143
|
|
|
—
|
|
|
3,075
|
|
|
2,900
|
|
|
—
|
|
|
604
|
|
|
—
|
|
|
3,504
|
|
||||||||||
Total
|
128,802
|
|
|
5,704
|
|
|
12,669
|
|
|
1,669
|
|
|
148,844
|
|
|
124,458
|
|
|
3,363
|
|
|
6,898
|
|
|
2,713
|
|
|
137,432
|
|
||||||||||
Net Operating Income, as defined
|
$
|
304,574
|
|
|
$
|
28,901
|
|
|
$
|
40,110
|
|
|
$
|
(704
|
)
|
|
$
|
372,881
|
|
|
$
|
286,529
|
|
|
$
|
14,435
|
|
|
$
|
17,725
|
|
|
$
|
990
|
|
|
$
|
319,679
|
|
|
Year Ended December 31, 2014 as compared to the Year Ended December 31, 2013
|
|||||||||||||||||||||||||||||||||
|
Same Store
|
|
Acquisitions
|
|
Stabilized Redevelopment
|
|
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
|
$
|
16,328
|
|
|
4.4
|
%
|
|
$
|
14,613
|
|
|
98.7
|
%
|
|
$
|
25,932
|
|
|
109.5
|
%
|
|
$
|
(2,444
|
)
|
|
(74.6
|
)%
|
|
$
|
54,429
|
|
|
13.2
|
%
|
Tenant reimbursements
|
4,560
|
|
|
13.5
|
|
|
2,201
|
|
|
73.8
|
|
|
2,214
|
|
|
236.3
|
|
|
(305
|
)
|
|
(71.8
|
)
|
|
8,670
|
|
|
22.8
|
|
|||||
Other property income
|
1,501
|
|
|
21.0
|
|
|
(7
|
)
|
|
(100.0
|
)
|
|
10
|
|
|
1,000.0
|
|
|
11
|
|
|
550.0
|
|
|
1,515
|
|
|
21.1
|
|
|||||
Total
|
22,389
|
|
|
5.4
|
|
|
16,807
|
|
|
94.4
|
|
|
28,156
|
|
|
114.3
|
|
|
(2,738
|
)
|
|
(73.9
|
)
|
|
64,614
|
|
|
14.1
|
|
|||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property expenses
|
3,624
|
|
|
4.2
|
|
|
742
|
|
|
38.0
|
|
|
2,648
|
|
|
63.5
|
|
|
(615
|
)
|
|
(53.6
|
)
|
|
6,399
|
|
|
6.8
|
|
|||||
Real estate taxes
|
1,252
|
|
|
3.6
|
|
|
1,599
|
|
|
114.5
|
|
|
3,358
|
|
|
158.1
|
|
|
(429
|
)
|
|
(27.4
|
)
|
|
5,780
|
|
|
14.7
|
|
|||||
Provision for bad debts
|
(564
|
)
|
|
(147.3
|
)
|
|
—
|
|
|
—
|
|
|
226
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
(338
|
)
|
|
(85.4
|
)
|
|||||
Ground leases
|
32
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
(461
|
)
|
|
(76.3
|
)
|
|
—
|
|
|
—
|
|
|
(429
|
)
|
|
(12.2
|
)
|
|||||
Total
|
4,344
|
|
|
3.5
|
|
|
2,341
|
|
|
69.6
|
|
|
5,771
|
|
|
83.7
|
|
|
(1,044
|
)
|
|
(38.5
|
)
|
|
11,412
|
|
|
8.3
|
|
|||||
Net Operating Income,
as defined
|
$
|
18,045
|
|
|
6.3
|
%
|
|
$
|
14,466
|
|
|
100.2
|
%
|
|
$
|
22,385
|
|
|
126.3
|
%
|
|
$
|
(1,694
|
)
|
|
(171.1
|
)%
|
|
$
|
53,202
|
|
|
16.6
|
%
|
•
|
An increase of
$22.4 million
attributable to the Stabilized Development and Redevelopment Properties, of which $17.0 million was attributable to the properties completed and/or stabilized in September and October of 2014 and $5.4 million was attributable to properties completed and/or stabilized in 2013;
|
•
|
An increase of
$18.0 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase in rental income of
$16.3 million
primarily resulting from an increase in tenant renewals and new leases at higher rental rates;
|
•
|
An increase in tenant reimbursements of
$4.6 million
primarily due to higher reimbursable property expenses and real estate taxes and increased occupancy;
|
•
|
An increase in other property income of
$1.5 million
. During the year ended
December 31, 2014
, we recognized lease termination fees of $6.3 million. During the year ended
December 31, 2013
, we received a $5.2 million property damage settlement payment at one of our properties;
|
•
|
A partially offsetting increase in property and related expenses of
$4.3 million
primarily resulting from:
|
•
|
An increase of $3.6 million in property expenses primarily as a result of a $2.6 million increase in certain recurring operating costs related to utilities, parking, janitorial, repairs and maintenance, and other service-related costs and $1.0 million of non-recurring expenses related to a property damage settlement;
|
•
|
A net increase in real estate taxes of $1.3 million primarily as a result of higher assessment of value at several properties; and
|
•
|
A decrease in the provision for bad debt of $0.6 million primarily due to an improvement in collections of tenant receivables.
|
•
|
An increase of
$14.5 million
was attributable to the Acquisition Properties, of which $7.4 million was attributable to properties acquired in
2013
, $6.1 million was attributable to a property acquired in the first quarter of
2014
and $1.0 million was attributable to a property acquired in the fourth quarter of
2014
.
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2014
|
|
2013
|
|
|
|||||||||
|
($ in thousands)
|
|||||||||||||
Gross interest expense
|
$
|
114,661
|
|
|
$
|
111,238
|
|
|
$
|
3,423
|
|
|
3.1
|
%
|
Capitalized interest
|
(47,090
|
)
|
|
(35,368
|
)
|
|
(11,722
|
)
|
|
33.1
|
|
|||
Interest expense
|
$
|
67,571
|
|
|
$
|
75,870
|
|
|
$
|
(8,299
|
)
|
|
(10.9
|
)%
|
|
Shares/Units at
December 31, 2015
|
|
Aggregate
Principal
Amount or
$ Value
Equivalent
|
|
% of Total
Market
Capitalization
|
||||
|
($ in thousands)
|
||||||||
Debt:
|
|
|
|
|
|
||||
Unsecured Term Loan Facility
|
|
|
$
|
150,000
|
|
|
1.8
|
%
|
|
Unsecured Term Loan
|
|
|
39,000
|
|
|
0.4
|
|
||
Unsecured Senior Notes due 2018
(1)
|
|
|
325,000
|
|
|
3.9
|
|
||
Unsecured Senior Notes due 2020
(1)
|
|
|
250,000
|
|
|
3.0
|
|
||
Unsecured Senior Notes due 2023
(1)
|
|
|
300,000
|
|
|
3.6
|
|
||
Unsecured Senior Notes due 2025
(1)
|
|
|
400,000
|
|
|
4.8
|
|
||
Unsecured Senior Notes due 2029
(1)
|
|
|
400,000
|
|
|
4.8
|
|
||
Secured debt
(1) (2)
|
|
|
375,696
|
|
|
4.4
|
|
||
Total debt
|
|
|
2,239,696
|
|
|
26.7
|
|
||
Equity and Noncontrolling Interests:
|
|
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred stock
(3)
|
4,000,000
|
|
|
100,000
|
|
|
1.2
|
|
|
6.375% Series H Cumulative Redeemable Preferred stock
(3)
|
4,000,000
|
|
|
100,000
|
|
|
1.2
|
|
|
Common limited partnership units outstanding
(4)(5)
|
1,764,775
|
|
|
111,675
|
|
|
1.3
|
|
|
Shares of common stock outstanding
(5)
|
92,258,690
|
|
|
5,838,130
|
|
|
69.6
|
|
|
Total equity and noncontrolling interests
|
|
|
6,149,805
|
|
|
73.3
|
|
||
Total Market Capitalization
|
|
|
$
|
8,389,501
|
|
|
100.0
|
%
|
(1)
|
Represents gross aggregate principal amount due at maturity before the effect of net unamortized discounts as of
December 31, 2015
. The aggregate net unamortized discounts totaled approximately
$1.2 million
as of
December 31, 2015
.
|
(2)
|
Excludes $0.6 million of secured debt related to real estate assets held for sale as of
December 31, 2015
.
|
(3)
|
Value based on $25.00 per share liquidation preference.
|
(4)
|
Represents common units not owned by the Company.
|
(5)
|
Value based on closing price per share of our common stock of
$63.28
as of
December 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;
|
•
|
Repurchases of outstanding common stock of the Company; and
|
•
|
Outstanding debt repayments.
|
•
|
During
2015
, we issued and sold a total of
1,866,267
shares of our common stock under our at-the-market stock offering programs at a weighted average price of
$75.06
per share before selling commissions. The net offering proceeds (after deducting underwriting discounts) were approximately
$138.2 million
(see “—Liquidity Sources” below for additional information).
|
•
|
In July 2015, we issued and sold
3,773,766
shares of common stock at a price of
$66.19
per share for aggregate net proceeds after offering costs of
$249.6 million
through a registered direct placement with an institutional investor.
|
•
|
In September 2015, the Operating Partnership issued unsecured senior notes in an underwritten public offering with an aggregate principal balance of
$400.0 million
that are scheduled to mature in
October 2025
. The unsecured senior notes require semi-annual interest payments each April and October based on a stated annual interest rate of
4.375%
.
|
•
|
In November 2015, we repaid unsecured senior notes with an outstanding principal balance of
$325.0 million
upon maturity (see Note 8 “Secured and Unsecured Debt of the Operating Partnership” to our consolidated financial statements included in this report for additional information). During
2015
, we also repaid $150.1 million of secured debt at par.
|
•
|
In May 2015, we received an upgrade in our debt ratings from Moody’s and S&P to Baa2 and BBB, respectively.
|
•
|
During the
year
ended
December 31, 2015
, we completed the sale of
ten
operating properties and one undeveloped land parcel to unaffiliated third parties for gross sales proceeds of
$335.2 million
. In January 2016, we also completed the sale of
four
operating properties located in San Diego, California and
one
land parcel located in Carlsbad, California that were classified as held for sale at
December 31, 2015
for gross sales proceeds of
$266.8 million
.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
—
|
|
|
$
|
140,000
|
|
Remaining borrowing capacity
|
600,000
|
|
|
460,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
—
|
%
|
|
1.41
|
%
|
||
Facility fee-annual rate
(3)
|
0.200%
|
|
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 unsecured term loan facility.
|
(2)
|
Our unsecured revolving credit facility interest rate was calculated based on an annual rate of LIBOR plus
1.050%
as of
December 31, 2015
and LIBOR plus
1.250%
as of
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
December 31, 2015
,
$4.6 million
of deferred financing costs remains to be amortized through the amended maturity date of our unsecured revolving credit facility.
|
|
Year Ended December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in millions, except share and per share data)
|
||||||
Shares of common stock sold during the year
|
1,866,267
|
|
|
1,599,123
|
|
||
Weighted average price per common share
|
$
|
75.06
|
|
|
$
|
65.49
|
|
Aggregate gross proceeds
|
$
|
140.1
|
|
|
$
|
104.7
|
|
Aggregate net proceeds after underwriting discounts
|
$
|
138.2
|
|
|
$
|
103.1
|
|
|
Aggregate Principal
Amount Outstanding
|
||
|
(in thousands)
|
||
Unsecured Term Loan Facility
|
$
|
150,000
|
|
Unsecured Term Loan
|
39,000
|
|
|
Unsecured Senior Notes due 2018
|
325,000
|
|
|
Unsecured Senior Notes due 2020
|
250,000
|
|
|
Unsecured Senior Notes due 2023
|
300,000
|
|
|
Unsecured Senior Notes due 2025
|
400,000
|
|
|
Unsecured Senior Notes due 2029
|
400,000
|
|
|
Secured Debt
(1)
|
375,696
|
|
|
Total Unsecured and Secured Debt
|
2,239,696
|
|
|
Less: Unamortized Net Discounts
|
(1,188
|
)
|
|
Total Debt, Net of Unamortized Net Discounts
|
$
|
2,238,508
|
|
(1)
|
Excludes $0.6 million of secured debt related to real estate assets held for sale as of
December 31, 2015
.
|
|
Percentage of Total Debt
|
|
Weighted Average Interest Rate
(1)
|
||||||||
|
December 31, 2015
|
|
December 31, 2014
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
Secured vs. unsecured:
|
|
|
|
|
|
|
|
||||
Unsecured
(2)
|
83.2
|
%
|
|
78.3
|
%
|
|
4.3
|
%
|
|
4.2
|
%
|
Secured
|
16.8
|
|
|
21.7
|
|
|
5.1
|
%
|
|
5.2
|
%
|
Variable-rate vs. fixed-rate:
|
|
|
|
|
|
|
|
||||
Variable-rate
|
8.4
|
|
|
13.4
|
|
|
1.4
|
%
|
|
1.5
|
%
|
Fixed-rate
(2)
|
91.6
|
|
|
86.6
|
|
|
4.7
|
%
|
|
4.9
|
%
|
Stated rate
(2)
|
|
|
|
|
4.5
|
%
|
|
4.4
|
%
|
||
GAAP effective rate
(3)
|
|
|
|
|
4.4
|
%
|
|
4.3
|
%
|
||
GAAP effective rate including debt issuance costs
|
|
|
|
|
4.6
|
%
|
|
4.5
|
%
|
(1)
|
As of the end of the period presented.
|
(2)
|
Excludes the impact of the amortization of any debt discounts/premiums.
|
|
Payment Due by Period
|
|
|
||||||||||||||||
|
Less than
1 Year
(2016)
|
|
2-3 Years
(2017-2018)
|
|
4-5 Years
(2019-2020)
|
|
More than
5 Years
(After 2020)
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Principal payments: secured debt
(1)
|
$
|
9,734
|
|
|
$
|
198,447
|
|
|
$
|
78,317
|
|
|
$
|
89,198
|
|
|
$
|
375,696
|
|
Principal payments: unsecured debt
(2)
|
—
|
|
|
325,000
|
|
|
439,000
|
|
|
1,100,000
|
|
|
1,864,000
|
|
|||||
Interest payments: fixed-rate debt
(3)
|
97,083
|
|
|
172,929
|
|
|
125,411
|
|
|
277,886
|
|
|
673,309
|
|
|||||
Interest payments: variable-rate debt
(4)
|
2,654
|
|
|
5,308
|
|
|
1,316
|
|
|
—
|
|
|
9,278
|
|
|||||
Ground lease obligations
(5)
|
3,144
|
|
|
6,288
|
|
|
6,288
|
|
|
151,738
|
|
|
167,458
|
|
|||||
Lease and other contractual commitments
(6)
|
76,967
|
|
|
24,178
|
|
|
—
|
|
|
—
|
|
|
101,145
|
|
|||||
Development commitments
(7)
|
230,000
|
|
|
99,000
|
|
|
—
|
|
|
—
|
|
|
329,000
|
|
|||||
Total
|
$
|
419,582
|
|
|
$
|
831,150
|
|
|
$
|
650,332
|
|
|
$
|
1,618,822
|
|
|
$
|
3,519,886
|
|
(1)
|
Represents gross aggregate principal amount before the effect of the unamortized premium of approximately
$6.2 million
as of
December 31, 2015
.
|
(2)
|
Represents gross aggregate principal amount before the effect of the unamortized discount of approximately
$7.4 million
as of
December 31, 2015
.
|
(3)
|
As of
December 31, 2015
,
91.6%
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 on accrual basis and scheduled maturity dates.
|
(4)
|
As of
December 31, 2015
,
8.4%
of our debt bore interest at variable rates which was incurred under the unsecured term loan facility and unsecured term loan. The variable interest rate payments are based on LIBOR plus a spread of
1.150%
as of
December 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
December 31, 2015
, the scheduled interest payment dates and the contractual maturity dates.
|
(5)
|
Reflects minimum lease payments through the contractual lease expiration date before the impact of extension options.
|
(6)
|
Amounts represent commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements, and for other contractual commitments. The timing of these expenditures may fluctuate.
|
(7)
|
Amounts represent commitments under signed leases for pre-leased development projects and contractual commitments for projects under construction as of
December 31, 2015
. The timing of these expenditures may fluctuate based on the ultimate progress of construction. We may start additional construction in 2016 (see “—Development” for additional information).
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
Office Properties:
(1)
|
|
|
|
|
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
Capital expenditures per square foot
|
$
|
1.23
|
|
|
$
|
0.84
|
|
|
$
|
0.73
|
|
Tenant Improvement and Leasing Costs
(2)
|
|
|
|
|
|
||||||
Replacement tenant square feet
(3)
|
797,560
|
|
|
741,573
|
|
|
850,295
|
|
|||
Tenant improvements per square foot commenced
|
$
|
42.25
|
|
|
$
|
39.06
|
|
|
$
|
39.24
|
|
Leasing commissions per square foot commenced
|
$
|
14.53
|
|
|
$
|
11.42
|
|
|
$
|
12.25
|
|
Total per square foot
|
$
|
56.78
|
|
|
$
|
50.48
|
|
|
$
|
51.48
|
|
Renewal tenant square feet
|
627,783
|
|
|
1,333,231
|
|
|
1,188,308
|
|
|||
Tenant improvements per square foot commenced
|
$
|
18.44
|
|
|
$
|
14.23
|
|
|
$
|
16.90
|
|
Leasing commissions per square foot commenced
|
$
|
9.36
|
|
|
$
|
9.71
|
|
|
$
|
10.32
|
|
Total per square foot
|
$
|
27.80
|
|
|
$
|
23.94
|
|
|
$
|
27.22
|
|
Total per square foot per year
|
$
|
7.34
|
|
|
$
|
5.81
|
|
|
$
|
5.97
|
|
Average remaining lease term (in years)
|
6.0
|
|
|
5.8
|
|
|
6.3
|
|
(1)
|
Excludes development properties.
|
(2)
|
Includes only tenants with lease terms of 12 months or longer. Excludes leases for month-to-month and first generation tenants.
|
(3)
|
Excludes leases for which the space was vacant for longer than one year, or vacant when the property was acquired by the Company.
|
•
|
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 December 31, 2015
|
Total debt to total asset value
|
|
less than 60%
|
|
27%
|
Fixed charge coverage ratio
|
|
greater than 1.5x
|
|
2.5x
|
Unsecured debt ratio
|
|
greater than 1.67x
|
|
3.25x
|
Unencumbered asset pool debt service coverage
|
|
greater than 1.75x
|
|
3.55x
|
|
|
|
|
|
Unsecured Senior Notes due 2018, 2020, 2023, 2025 and 2029
(as defined in the applicable Indentures):
|
|
|
|
|
Total debt to total asset value
|
|
less than 60%
|
|
34%
|
Interest coverage
|
|
greater than 1.5x
|
|
6.7x
|
Secured debt to total asset value
|
|
less than 40%
|
|
6%
|
Unencumbered asset pool value to unsecured debt
|
|
greater than 150%
|
|
309%
|
|
Year Ended December 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
($ in thousands)
|
|||||||||||||
Net cash provided by operating activities
|
$
|
272,008
|
|
|
$
|
245,253
|
|
|
$
|
26,755
|
|
|
10.9
|
%
|
Net cash used in investing activities
|
(262,752
|
)
|
|
(501,436
|
)
|
|
238,684
|
|
|
(47.6
|
)%
|
|||
Net cash provided by financing activities
|
23,471
|
|
|
244,587
|
|
|
(221,116
|
)
|
|
(90.4
|
)%
|
|
Year ended December 31,
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net income available to common stockholders
|
$
|
220,831
|
|
|
$
|
166,969
|
|
|
$
|
30,630
|
|
|
$
|
249,826
|
|
|
$
|
50,819
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership
|
4,339
|
|
|
3,589
|
|
|
685
|
|
|
6,187
|
|
|
1,474
|
|
|||||
Depreciation and amortization of real estate assets
|
201,392
|
|
|
202,108
|
|
|
199,558
|
|
|
168,687
|
|
|
135,467
|
|
|||||
Gains on sale of depreciable real estate
|
(109,950
|
)
|
|
(121,922
|
)
|
|
(12,252
|
)
|
|
(259,245
|
)
|
|
(51,587
|
)
|
|||||
Funds From Operations
(1)
|
$
|
316,612
|
|
|
$
|
250,744
|
|
|
$
|
218,621
|
|
|
$
|
165,455
|
|
|
$
|
136,173
|
|
(1)
|
Includes amortization of deferred revenue related to tenant-funded tenant improvements of
$13.3 million
,
$11.0 million
,
$10.7 million
,
$9.1 million
and
$9.3 million
for the years ended
December 31, 2015
,
2014
,
2013
,
2012
and
2011
, respectively. Reported amounts are attributable to common stockholders and common unitholders.
|
|
Year Ended December 31,
|
|||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|||||
Weighted average shares of common stock outstanding
|
89,854,096
|
|
|
83,090,235
|
|
|
77,343,853
|
|
|
69,639,623
|
|
|
56,717,121
|
|
Weighted average common units outstanding
|
1,791,482
|
|
|
1,804,263
|
|
|
1,822,407
|
|
|
1,763,635
|
|
|
1,720,323
|
|
Effect of participating securities – nonvested shares and restricted stock units
|
1,170,571
|
|
|
1,228,807
|
|
|
1,224,208
|
|
|
1,127,534
|
|
|
924,747
|
|
Total basic weighted average shares / units outstanding
|
92,816,149
|
|
|
86,123,305
|
|
|
80,390,468
|
|
|
72,530,792
|
|
|
59,362,191
|
|
Effect of dilutive securities – Exchangeable Notes, stock options and contingently issuable shares
|
541,679
|
|
|
1,877,485
|
|
|
1,765,025
|
|
|
1,123,482
|
|
|
187,134
|
|
Total diluted weighted average shares / units outstanding
|
93,357,828
|
|
|
88,000,790
|
|
|
82,155,493
|
|
|
73,654,274
|
|
|
59,549,325
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
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 August 15, 2012, as amended (previously filed by Kilroy Realty Corporation on Form 10-Q for the quarter ended June 30, 2014)
|
Exhibit
Number
|
|
Description
|
4.1
|
|
Kilroy Realty Corporation Form of Certificate for Common Stock (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
4.2
|
|
Specimen Certificate for Kilroy Realty Corporation’s 6.875% Series G Cumulative Redeemable Preferred Stock (previously filed by Kilroy Realty Corporation on Form 8-A as filed with the Securities and Exchange Commission on March 22, 2012)
|
4.3
|
|
Specimen Certificate for 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)
|
4.4
|
|
Registration Rights Agreement, dated January 31, 1997 (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
4.5
|
|
Registration Rights Agreement, dated October 31, 1997 (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K/A as filed with the Securities and Exchange Commission on December 19, 1997)
|
4.6
|
|
Registration Rights Agreement, dated October 6, 2000 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2000)
|
4.7
|
|
Form of Certificate for Partnership Units 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)
|
4.8
|
|
Indenture, dated May 24, 2010, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, including the form of 6.625% Senior Notes due 2020 and the form of the related guarantee (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 25, 2010)
|
4.9
|
|
Registration Rights Agreement, dated May 24, 2010, among Kilroy Realty, L.P., Kilroy Realty Corporation, J.P. Morgan Securities Inc., Banc of America Securities LLC and Barclays Capital Inc. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8−K as filed with the Securities and Exchange Commission on May 25, 2010)
|
4.10
|
|
Officers’ Certificate pursuant to Sections 101, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.800% Notes due 2018,” including the form of 4.800% Notes due 2018 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on July 6, 2011)
|
4.11
|
|
Registration Rights Agreement, dated July 31, 2012 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2012)
|
4.12
|
|
Officers’ Certificate pursuant to Sections 101, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “3.800% Notes due 2023,” including the form of 3.800% Notes due 2023 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 14, 2013)
|
4.13
|
|
Indenture, dated March 1, 2011, by and among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit to the Registration Statement on Form S-3 as filed with the Securities and Exchange Commission on October 2, 2013)
|
4.14
|
|
Supplemental Indenture, dated July 5, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit to the Registration Statement on Form S-3 as filed with the Securities and Exchange Commission on October 2, 2013)
|
4.15
|
|
Officers’ Certificate pursuant to Sections 102, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.25% Senior Notes due 2029,” including the form of 4.25% Senior Notes due 2029 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on August 6, 2014)
|
Exhibit
Number
|
|
Description
|
4.16
|
|
Officers’ Certificate, dated September 16, 2015, pursuant to Sections 102, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.375% Senior Notes due 2025,” including the form of 4.375% Senior Notes due 2025 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on September 16, 2015)
|
4.17
|
|
The Company is party to agreements in connection with long-term debt obligations, none of which individually exceeds ten percent of the total assets of the Company on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Company agrees to furnish copies of these agreements to the Commission upon request
|
10.1
|
|
Pledge Agreement by and among Kilroy Realty, L.P., John B. Kilroy, Sr., John B. Kilroy, Jr. and Kilroy Industries (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
10.2†
|
|
1997 Stock Option and Incentive Plan of the Registrant and Kilroy Realty, L.P. (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
10.3
|
|
Lease Agreement, dated January 24, 1989, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 2 to Form S-11 (No. 333-15553))
|
10.4
|
|
First Amendment to Lease Agreement, dated December 28, 1990, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 2 to Form S-11 (No. 333-15553))
|
10.5
|
|
Second Amendment to Lease Agreement, dated April 28, 1997, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I
|
10.6
|
|
Third Amendment to Lease Agreement, dated June 20, 2002, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I
|
10.7
|
|
Lease Agreement, dated December 30, 1988, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase II (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.8
|
|
First Amendment to Lease Agreement, dated December 28, 1990, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase II (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.9
|
|
Second Amendment to Lease Agreement, dated April 28, 1997, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase II
|
10.10
|
|
Lease Agreement, dated July 17, 1985, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.11
|
|
First Amendment to Lease, dated January 24, 1989, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.12
|
|
Second Amendment to Lease Agreement, dated December 28, 1990, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.13
|
|
Third Amendment to Lease Agreement, dated October 10, 1994, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.14
|
|
Fourth Amendment to Lease Agreement, dated June 20, 2002, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III
|
Exhibit
Number
|
|
Description
|
10.15
|
|
Development Agreement by and between Kilroy Long Beach Associates and the City of Long Beach (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.16
|
|
Amendment No. 1 to Development Agreement by and between Kilroy Long Beach Associates and the City of Long Beach (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.17
|
|
License Agreement by and among the Registrant and the other persons named therein (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 4 to Form S-11 (No. 333-15553))
|
10.18
|
|
Contribution Agreement, dated October 21, 1997, by and between Kilroy Realty, L.P., Kilroy Realty Corporation, The Allen Group and the Allens (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on November 21, 1997)
|
10.19
|
|
Amendment to the Contribution Agreement, dated October 14, 1998, by and between Kilroy Realty, L.P., Kilroy Realty Corporation, The Allen Group and the Allens dated October 21, 1997 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended September 30, 1998)
|
10.20†
|
|
Form of Restricted Stock Award Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on February 8, 2007)
|
10.21†
|
|
Kilroy Realty Corporation 2007 Deferred Compensation Plan (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2007)
|
10.22†
|
|
Employment Agreement by and among Kilroy Realty Corporation, Kilroy Realty, L.P. and Tyler H. Rose effective as of January 1, 2007 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2007)
|
10.23†
|
|
Amendment No. 1 to Employment Agreement by and among Kilroy Realty Corporation, Kilroy Realty, L.P. and Tyler H. Rose effective as of December 31, 2009 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2008)
|
10.24†
|
|
Kilroy Realty Corporation Stock Award Deferral Program (previously filed by Kilroy Realty Corporation as an exhibit to Form 8-K as filed with the Securities and Exchange Commission on January 2, 2008)
|
10.25†
|
|
Form of Indemnification Agreement of Kilroy Realty Corporation with certain officers and directors (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009)
|
10.26†
|
|
Separation Agreement and Release, dated December 16, 2009, by and between Richard E. Moran Jr., Kilroy Realty, L.P. and Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009)
|
10.27
|
|
Deed of Trust and Security Agreement, dated January 26, 2010, between Kilroy Realty, L.P. and The Northwestern Mutual Life Insurance Company; related Promissory Note, dated January 26, 2010 for $71 million payable to The Northwestern Mutual Life Insurance Company; and related Guarantee of Recourse Obligations, dated January 26, 2010 by Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009)
|
10.28
|
|
Promissory Note, dated January 12, 2011, executed by Kilroy Realty 303, LLC (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.29
|
|
Deed of Trust, Security Agreement and Fixture Filing, dated January 12, 2011, executed by Kilroy Realty 303, LLC (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.30
|
|
Guaranty, dated January 12, 2011, executed by Kilroy Realty, L.P. (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.31
|
|
Unsecured Indemnity Agreement, dated January 12, 2011, executed by Kilroy Realty 303, LLC (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8−K as filed with the Securities and Exchange Commission on January 13, 2011)
|
Exhibit
Number
|
|
Description
|
10.32†
|
|
Kilroy Realty Corporation Form of Stock Option Grant Notice and Stock Option Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on February 24, 2012)
|
10.33†
|
|
Amended and Restated Employment Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr. (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 4, 2012)
|
10.34†
|
|
Noncompetition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr. (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 4, 2012)
|
10.35
|
|
Term Loan Agreement, dated March 29, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 2, 2012)
|
10.36
|
|
First Amendment to Term Loan Agreement, dated November 28, 2012 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2012)
|
10.37
|
|
Guaranty of Payment of Kilroy Realty Corporation, dated March 29, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 2, 2012)
|
10.38
|
|
Promissory Note, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.39
|
|
Loan Agreement, dated June 28, 2012, by and between KR MML 12701, LLC and Massachusetts Mutual Life Insurance Company (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.40
|
|
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Irvine) for 2211 Michelson Drive, Irvine, California, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.41
|
|
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Santa Monica) for 2100-2110 Colorado Avenue, Santa Monica, California, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.42
|
|
Recourse Guaranty Agreement, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.43
|
|
Environmental Indemnification Agreement, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.44†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and Jeffrey C. Hawken, dated April 4, 2013 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.45†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and John Kilroy, Jr., dated March 30, 2012 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.46†
|
|
Form of Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.47†
|
|
Form of Stock Award Deferral Program Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.48†
|
|
Form of Performance-Vest Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2014)
|
10.49†
|
|
Form of Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2014)
|
10.50†
|
|
Form of Restricted Stock Unit Agreement for Non-Employee Members of the Board of Directors (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2014)
|
10.51†
|
|
Kilroy Realty 2006 Incentive Award Plan (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on May 21, 2015)
|
Exhibit
Number
|
|
Description
|
10.52
|
|
Amended and Restated Revolving Credit Agreement, dated June 23, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2014)
|
10.53
|
|
Amended and Restated Guaranty, dated June 23, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2014)
|
10.54
|
|
Term Loan Agreement, dated July 31, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended September 30, 2014)
|
10.55
|
|
Guaranty, dated July 31, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended September 30, 2014)
|
10.56
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and RBC Capital Markets, LLC (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.57
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and Jefferies LLC (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.58
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and KeyBanc Capital Markets Inc. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.59
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and BNP Paribas Securities Corp. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.60
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and J.P. Morgan Securities LLC (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.61
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and Barclays Capital Inc. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.62†
|
|
Form of Performance-Vest Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2015)
|
10.63†
|
|
Form of Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2015)
|
10.64†
|
|
Form of Restricted Stock Unit Agreement for Non-Employee Members of the Board of Directors (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2015)
|
10.65†*
|
|
Amended and Restated Employment Agreement and Non-Competition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and Jeffrey C. Hawken effective as of December 31, 2015
|
10.66†*
|
|
Kilroy Realty Corporation Director Compensation Policy effective as of January 1, 2016
|
12.1*
|
|
Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges and Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Dividends of Kilroy Realty Corporation
|
12.2*
|
|
Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges of Kilroy Realty, L.P.
|
21.1*
|
|
List of Subsidiaries of Kilroy Realty Corporation
|
21.2*
|
|
List of Subsidiaries of Kilroy Realty, L.P.
|
23.1*
|
|
Consent of Deloitte & Touche LLP for Kilroy Realty Corporation
|
23.2*
|
|
Consent of Deloitte & Touche LLP for Kilroy Realty, L.P.
|
24.1*
|
|
Power of Attorney (included on the signature page of this Form 10-K)
|
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.
|
Exhibit
Number
|
|
Description
|
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 year ended December 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Capital, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.
(1)
|
*
|
Filed herewith
|
†
|
Management contract or compensatory plan or arrangement.
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
|
|
KILROY REALTY CORPORATION
|
||
|
|
|
|
|
By
|
|
/s/ Heidi R. Roth
|
|
|
|
Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
|
Name
|
|
Title
|
Date
|
|
|
|
|
/s/ John Kilroy
|
|
Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
|
February 12, 2016
|
John Kilroy
|
|
|
|
/s/ Tyler H. Rose
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 12, 2016
|
Tyler H. Rose
|
|
|
|
/s/ Heidi R. Roth
|
|
Executive Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
|
February 12, 2016
|
Heidi R. Roth
|
|
|
|
/s/ Edward F. Brennan, Ph.D.
|
|
Director
|
February 11, 2016
|
Edward F. Brennan, Ph.D.
|
|
|
|
/s/ Jolie Hunt
|
|
Director
|
February 11, 2016
|
Jolie Hunt
|
|
|
|
/s/ Scott S. Ingraham
|
|
Director
|
February 11, 2016
|
Scott S. Ingraham
|
|
|
|
/s/ Gary R. Stevenson
|
|
Director
|
February 11, 2016
|
Gary R. Stevenson
|
|
|
|
/s/ Peter B. Stoneberg
|
|
Director
|
February 11, 2016
|
Peter B. Stoneberg
|
|
|
|
|
KILROY REALTY, L.P.
|
||
|
|
|
|
|
By
|
|
/s/ Heidi R. Roth
|
|
|
|
Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
|
Name
|
|
Title
|
Date
|
|
|
|
|
/s/ John Kilroy
|
|
Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
|
February 12, 2016
|
John Kilroy
|
|
|
|
/s/ Tyler H. Rose
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 12, 2016
|
Tyler H. Rose
|
|
|
|
/s/ Heidi R. Roth
|
|
Executive Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer)
|
February 12, 2016
|
Heidi R. Roth
|
|
|
|
/s/ Edward F. Brennan, Ph.D.
|
|
Director
|
February 11, 2016
|
Edward F. Brennan, Ph.D.
|
|
|
|
/s/ Jolie Hunt
|
|
Director
|
February 11, 2016
|
Jolie Hunt
|
|
|
|
/s/ Scott S. Ingraham
|
|
Director
|
February 11, 2016
|
Scott S. Ingraham
|
|
|
|
/s/ Gary R. Stevenson
|
|
Director
|
February 11, 2016
|
Gary R. Stevenson
|
|
|
|
/s/ Peter B. Stoneberg
|
|
Director
|
February 11, 2016
|
Peter B. Stoneberg
|
|
|
|
|
Page
|
FINANCIAL STATEMENTS OF KILROY REALTY CORPORATION:
|
|
FINANCIAL STATEMENTS OF KILROY REALTY, L.P.:
|
|
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
|
|
|
||||
REAL ESTATE ASSETS (Notes 3 and 4):
|
|
|
|
||||
Land and improvements
|
$
|
875,794
|
|
|
$
|
877,633
|
|
Buildings and improvements
|
4,091,012
|
|
|
4,059,639
|
|
||
Undeveloped land and construction in progress
|
1,361,340
|
|
|
1,120,660
|
|
||
Total real estate held for investment
|
6,328,146
|
|
|
6,057,932
|
|
||
Accumulated depreciation and amortization
|
(994,241
|
)
|
|
(947,664
|
)
|
||
Total real estate held for investment, net ($187,254 and $211,755 of VIE, Note 2)
|
5,333,905
|
|
|
5,110,268
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 4)
|
117,666
|
|
|
8,211
|
|
||
CASH AND CASH EQUIVALENTS
|
56,508
|
|
|
23,781
|
|
||
RESTRICTED CASH (Note 4)
|
696
|
|
|
75,185
|
|
||
MARKETABLE SECURITIES (Notes 14 and 17)
|
12,882
|
|
|
11,971
|
|
||
CURRENT RECEIVABLES, NET (Note 6)
|
11,153
|
|
|
7,229
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 6)
|
189,704
|
|
|
156,416
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 3 and 5)
|
176,683
|
|
|
201,926
|
|
||
DEFERRED FINANCING COSTS, NET (Notes 2 and 8)
|
17,628
|
|
|
18,374
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET
|
22,644
|
|
|
20,375
|
|
||
TOTAL ASSETS
|
$
|
5,939,469
|
|
|
$
|
5,633,736
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt (Notes 3, 7, 8 and 17)
|
$
|
381,918
|
|
|
$
|
546,292
|
|
Unsecured debt, net (Notes 7, 8 and 17)
|
1,856,590
|
|
|
1,783,121
|
|
||
Unsecured line of credit (Notes 7, 8 and 17)
|
—
|
|
|
140,000
|
|
||
Accounts payable, accrued expenses and other liabilities (Note 16)
|
246,323
|
|
|
225,830
|
|
||
Accrued dividends and distributions (Note 11)
|
34,992
|
|
|
32,899
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 3, 5 and 9)
|
128,156
|
|
|
132,239
|
|
||
Rents received in advance and tenant security deposits
|
49,361
|
|
|
49,363
|
|
||
Liabilities and deferred revenue of real estate assets held for sale (Note 4)
|
7,543
|
|
|
56
|
|
||
Total liabilities
|
2,704,883
|
|
|
2,909,800
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 16)
|
|
|
|
||||
EQUITY (Notes 10 and 11):
|
|
|
|
||||
Stockholders’ Equity:
|
|
|
|
||||
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,
92,258,690 and 86,259,684 shares issued and outstanding, respectively
|
923
|
|
|
863
|
|
||
Additional paid-in capital
|
3,047,894
|
|
|
2,635,900
|
|
||
Distributions in excess of earnings
|
(70,262
|
)
|
|
(162,964
|
)
|
||
Total stockholders’ equity
|
3,170,966
|
|
|
2,666,210
|
|
||
Noncontrolling Interests:
|
|
|
|
||||
Common units of the Operating Partnership
|
57,100
|
|
|
51,864
|
|
||
Noncontrolling interest in consolidated subsidiary (Notes 2 and 10)
|
6,520
|
|
|
5,862
|
|
||
Total noncontrolling interests
|
63,620
|
|
|
57,726
|
|
||
Total equity
|
3,234,586
|
|
|
2,723,936
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
5,939,469
|
|
|
$
|
5,633,736
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Rental income
|
$
|
525,355
|
|
|
$
|
466,328
|
|
|
$
|
411,899
|
|
Tenant reimbursements
|
53,774
|
|
|
46,717
|
|
|
38,047
|
|
|||
Other property income (Notes 16 and 18)
|
2,146
|
|
|
8,680
|
|
|
7,165
|
|
|||
Total revenues
|
581,275
|
|
|
521,725
|
|
|
457,111
|
|
|||
EXPENSES:
|
|
|
|
|
|
||||||
Property expenses
|
105,378
|
|
|
100,514
|
|
|
94,115
|
|
|||
Real estate taxes
|
50,223
|
|
|
45,197
|
|
|
39,417
|
|
|||
Provision for bad debts
|
545
|
|
|
58
|
|
|
396
|
|
|||
Ground leases (Note 5 and 16)
|
3,096
|
|
|
3,075
|
|
|
3,504
|
|
|||
General and administrative expenses
|
48,265
|
|
|
46,152
|
|
|
39,660
|
|
|||
Acquisition-related expenses
|
497
|
|
|
1,479
|
|
|
1,962
|
|
|||
Depreciation and amortization (Notes 2 and 5)
|
204,294
|
|
|
202,417
|
|
|
188,887
|
|
|||
Total expenses
|
412,298
|
|
|
398,892
|
|
|
367,941
|
|
|||
OTHER (EXPENSES) INCOME:
|
|
|
|
|
|
||||||
Interest income and other net investment gains (Note 17)
|
243
|
|
|
561
|
|
|
1,635
|
|
|||
Interest expense (Note 8)
|
(57,682
|
)
|
|
(67,571
|
)
|
|
(75,870
|
)
|
|||
Total other (expenses) income
|
(57,439
|
)
|
|
(67,010
|
)
|
|
(74,235
|
)
|
|||
INCOME FROM CONTINUING OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
111,538
|
|
|
55,823
|
|
|
14,935
|
|
|||
Gains on sale of land, net (Note 4)
|
17,116
|
|
|
3,490
|
|
|
—
|
|
|||
Gains on sales of depreciable operating properties (Note 4)
|
109,950
|
|
|
—
|
|
|
—
|
|
|||
INCOME FROM CONTINUING OPERATIONS
|
238,604
|
|
|
59,313
|
|
|
14,935
|
|
|||
DISCONTINUED OPERATIONS (Note 19)
|
|
|
|
|
|
||||||
Income from discontinued operations
|
—
|
|
|
2,573
|
|
|
17,378
|
|
|||
Net gain on dispositions of discontinued operations
|
—
|
|
|
121,922
|
|
|
12,252
|
|
|||
Total income from discontinued operations
|
—
|
|
|
124,495
|
|
|
29,630
|
|
|||
NET INCOME
|
238,604
|
|
|
183,808
|
|
|
44,565
|
|
|||
Net income attributable to noncontrolling common units of the Operating Partnership
|
(4,339
|
)
|
|
(3,589
|
)
|
|
(685
|
)
|
|||
Net income attributable to noncontrolling interest in consolidated subsidiary
|
(184
|
)
|
|
—
|
|
|
—
|
|
|||
Total income attributable to noncontrolling interests
|
(4,523
|
)
|
|
(3,589
|
)
|
|
(685
|
)
|
|||
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
|
234,081
|
|
|
180,219
|
|
|
43,880
|
|
|||
PREFERRED DIVIDENDS (NOTE 11)
|
(13,250
|
)
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
220,831
|
|
|
$
|
166,969
|
|
|
$
|
30,630
|
|
Income from continuing operations available to common stockholders per share of
common stock – basic (Note 20)
|
$
|
2.44
|
|
|
$
|
0.52
|
|
|
$
|
0.00
|
|
Income from continuing operations available to common stockholders per share of
common stock – diluted (Note 20)
|
$
|
2.42
|
|
|
$
|
0.51
|
|
|
$
|
0.00
|
|
Net income available to common stockholders per share – basic (Note 20)
|
$
|
2.44
|
|
|
$
|
1.99
|
|
|
$
|
0.37
|
|
Net income available to common stockholders per share – diluted (Note 20)
|
$
|
2.42
|
|
|
$
|
1.95
|
|
|
$
|
0.37
|
|
Weighted average shares of common stock outstanding – basic (Note 20)
|
89,854,096
|
|
|
83,090,235
|
|
|
77,343,853
|
|
|||
Weighted average shares of common stock outstanding – diluted (Note 20)
|
90,395,775
|
|
|
84,967,720
|
|
|
77,343,853
|
|
|
Preferred
Stock
|
|
Common Stock
|
|
Total
Stock-
holders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|||||||||||||||||||||
Number
of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Distributions
in Excess of
Earnings
|
|
|||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2012
|
$
|
192,411
|
|
|
74,926,981
|
|
|
$
|
749
|
|
|
$
|
2,126,005
|
|
|
$
|
(129,535
|
)
|
|
$
|
2,189,630
|
|
|
$
|
46,303
|
|
|
$
|
2,235,933
|
|
Net income
|
|
|
|
|
|
|
|
|
43,880
|
|
|
43,880
|
|
|
685
|
|
|
44,565
|
|
|||||||||||
Issuance of common stock
|
|
|
7,215,838
|
|
|
72
|
|
|
349,879
|
|
|
|
|
349,951
|
|
|
|
|
349,951
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
—
|
|
|
|
|
|
1,448
|
|
|
|
|
1,448
|
|
|
|
|
1,448
|
|
||||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
|
|
9,563
|
|
|
|
|
9,563
|
|
|
|
|
9,563
|
|
||||||||||||
Repurchase of common stock and restricted stock units
|
|
|
(42,896
|
)
|
|
|
|
(2,521
|
)
|
|
|
|
(2,521
|
)
|
|
|
|
(2,521
|
)
|
|||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
37,245
|
|
|
1
|
|
|
—
|
|
|
|
|
1
|
|
|
|
|
1
|
|
||||||||||
Exercise of stock options
|
|
|
473
|
|
|
|
|
128
|
|
|
|
|
128
|
|
|
|
|
128
|
|
|||||||||||
Exchange of common units of the Operating Partnership
|
|
|
16,303
|
|
|
|
|
450
|
|
|
|
|
450
|
|
|
(450
|
)
|
|
—
|
|
||||||||||
Adjustment for noncontrolling interest in the Operating Partnership
|
|
|
|
|
|
|
(5,977
|
)
|
|
|
|
(5,977
|
)
|
|
5,977
|
|
|
—
|
|
|||||||||||
Contribution by noncontrolling interest in the Operating Partnership
|
|
|
|
|
|
|
|
|
|
|
|
|
4,885
|
|
|
4,885
|
|
|||||||||||||
Preferred dividends and distributions
|
|
|
|
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||||||
Dividends declared per share of common stock and common unit ($1.40 per share/unit)
|
|
|
|
|
|
|
|
|
(111,991
|
)
|
|
(111,991
|
)
|
|
(2,552
|
)
|
|
(114,543
|
)
|
|||||||||||
BALANCE AT DECEMBER 31, 2013
|
192,411
|
|
|
82,153,944
|
|
|
822
|
|
|
2,478,975
|
|
|
(210,896
|
)
|
|
2,461,312
|
|
|
54,848
|
|
|
2,516,160
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
180,219
|
|
|
180,219
|
|
|
3,589
|
|
|
183,808
|
|
|||||||||||
Issuance of common stock
|
|
|
1,950,599
|
|
|
20
|
|
|
123,840
|
|
|
|
|
123,860
|
|
|
|
|
123,860
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
1,692
|
|
|
|
|
1,692
|
|
|
|
|
1,692
|
|
||||||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
|
|
14,471
|
|
|
|
|
14,471
|
|
|
|
|
14,471
|
|
||||||||||||
Exercise of stock options
|
|
|
495,000
|
|
|
5
|
|
|
21,087
|
|
|
|
|
21,092
|
|
|
|
|
21,092
|
|
||||||||||
Repurchase of common stock and restricted stock units
|
|
|
(58,045
|
)
|
|
|
|
(3,533
|
)
|
|
|
|
(3,533
|
)
|
|
|
|
(3,533
|
)
|
|||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
141,205
|
|
|
—
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||
Common shares issued in connection with settlement of 4.25% Exchangeable Senior Notes
|
|
|
2,091,323
|
|
|
21
|
|
|
202
|
|
|
|
|
223
|
|
|
|
|
223
|
|
||||||||||
Common shares received in connection with capped call option transactions
|
|
|
(515,342
|
)
|
|
(5
|
)
|
|
5
|
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Exchange of common units of the Operating Partnership
|
|
|
1,000
|
|
|
|
|
28
|
|
|
|
|
28
|
|
|
(28
|
)
|
|
—
|
|
||||||||||
Adjustment for noncontrolling interest in the Operating Partnership
|
|
|
|
|
|
|
(866
|
)
|
|
|
|
(866
|
)
|
|
866
|
|
|
—
|
|
|||||||||||
Contribution by noncontrolling interest in consolidated subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
977
|
|
|
977
|
|
|||||||||||||
Preferred dividends and distributions
|
|
|
|
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||||||
Dividends declared per share of common stock and common unit ($1.40 per share/unit)
|
|
|
|
|
|
|
|
|
(119,037
|
)
|
|
(119,037
|
)
|
|
(2,526
|
)
|
|
(121,563
|
)
|
|||||||||||
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
|
|
|
|
|
|
|
|
|
234,081
|
|
|
234,081
|
|
|
4,523
|
|
|
238,604
|
|
|||||||||||
Issuance of common stock (Note 11)
|
|
|
5,640,033
|
|
|
56
|
|
|
387,342
|
|
|
|
|
387,398
|
|
|
|
|
387,398
|
|
||||||||||
Issuance of share-based compensation awards (Note 13)
|
|
|
|
|
|
|
1,692
|
|
|
|
|
1,692
|
|
|
|
|
1,692
|
|
||||||||||||
Noncash amortization of share-based compensation (Note 13)
|
|
|
|
|
|
|
18,869
|
|
|
|
|
18,869
|
|
|
|
|
18,869
|
|
||||||||||||
Exercise of stock options (Note 13)
|
|
|
342,000
|
|
|
4
|
|
|
14,569
|
|
|
|
|
14,573
|
|
|
|
|
14,573
|
|
||||||||||
Repurchase of common stock, stock options and restricted stock units (Note 13)
|
|
|
(101,389
|
)
|
|
—
|
|
|
(7,081
|
)
|
|
|
|
(7,081
|
)
|
|
|
|
(7,081
|
)
|
||||||||||
Settlement of restricted stock units for shares of common stock (Note 13)
|
|
|
78,937
|
|
|
—
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||
Exchange of common units of the Operating Partnership
|
|
|
39,425
|
|
|
|
|
1,223
|
|
|
|
|
1,223
|
|
|
(1,223
|
)
|
|
—
|
|
||||||||||
Adjustment for noncontrolling interest in the Operating Partnership (Note 2)
|
|
|
|
|
|
|
(4,619
|
)
|
|
|
|
(4,619
|
)
|
|
4,619
|
|
|
—
|
|
|||||||||||
Contribution by noncontrolling interest in consolidated subsidiary (Note 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
474
|
|
|
474
|
|
|||||||||||||
Preferred dividends
|
|
|
|
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||||||
Dividends declared per share of common stock and common unit ($1.40 per share/unit)
|
|
|
|
|
|
|
|
|
(128,129
|
)
|
|
(128,129
|
)
|
|
(2,499
|
)
|
|
(130,628
|
)
|
|||||||||||
BALANCE AS OF DECEMBER 31, 2015
|
$
|
192,411
|
|
|
92,258,690
|
|
|
$
|
923
|
|
|
$
|
3,047,894
|
|
|
$
|
(70,262
|
)
|
|
$
|
3,170,966
|
|
|
$
|
63,620
|
|
|
$
|
3,234,586
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
238,604
|
|
|
$
|
183,808
|
|
|
$
|
44,565
|
|
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
|
|
|
|
|
|
||||||
Depreciation and amortization of buildings and improvements and leasing costs
|
201,482
|
|
|
202,108
|
|
|
199,558
|
|
|||
Increase in provision for bad debts
|
545
|
|
|
58
|
|
|
396
|
|
|||
Depreciation of furniture, fixtures and equipment
|
2,812
|
|
|
2,370
|
|
|
1,929
|
|
|||
Noncash amortization of share-based compensation awards (Note 13)
|
15,537
|
|
|
12,095
|
|
|
8,616
|
|
|||
Noncash amortization of deferred financing costs and debt discounts and premiums
|
1,853
|
|
|
4,315
|
|
|
5,315
|
|
|||
Noncash amortization of net below market rents (Note 5)
|
(8,449
|
)
|
|
(8,328
|
)
|
|
(7,777
|
)
|
|||
Net gain on dispositions of depreciable operating properties (Note 4)
|
(109,950
|
)
|
|
—
|
|
|
—
|
|
|||
Net gain on dispositions of discontinued operations (Note 19)
|
—
|
|
|
(121,922
|
)
|
|
(12,252
|
)
|
|||
Net gain on sales of land (Note 4)
|
(17,116
|
)
|
|
(3,490
|
)
|
|
—
|
|
|||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements (Note 9)
|
(13,338
|
)
|
|
(10,979
|
)
|
|
(10,713
|
)
|
|||
Straight-line rents
|
(44,383
|
)
|
|
(31,782
|
)
|
|
(24,135
|
)
|
|||
Net change in other operating assets
|
(8,085
|
)
|
|
367
|
|
|
(4,615
|
)
|
|||
Net change in other operating liabilities
|
12,496
|
|
|
16,633
|
|
|
40,137
|
|
|||
Insurance proceeds received for property damage and other, net
|
—
|
|
|
—
|
|
|
(448
|
)
|
|||
Net cash provided by operating activities
|
272,008
|
|
|
245,253
|
|
|
240,576
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Expenditures for development and redevelopment properties and undeveloped land
|
(407,969
|
)
|
|
(417,784
|
)
|
|
(320,141
|
)
|
|||
Expenditures for acquisitions of development and redevelopment properties (Note 3)
|
(139,073
|
)
|
|
(147,182
|
)
|
|
(102,769
|
)
|
|||
Expenditures for operating properties
|
(99,557
|
)
|
|
(132,080
|
)
|
|
(129,873
|
)
|
|||
Expenditures for acquisitions of operating properties, net of cash acquired (Note 3)
|
—
|
|
|
(204,546
|
)
|
|
(202,682
|
)
|
|||
Net proceeds received from dispositions of operating properties and land (Notes 4 and 19)
|
319,639
|
|
|
427,544
|
|
|
21,178
|
|
|||
Issuance of note receivable
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|||
Net decrease (increase) in acquisition-related deposits
|
1,998
|
|
|
(1,983
|
)
|
|
(2,596
|
)
|
|||
Net decrease (increase) in restricted cash (Note 4)
|
65,210
|
|
|
(25,405
|
)
|
|
229,915
|
|
|||
Insurance proceeds received for property damage
|
—
|
|
|
—
|
|
|
448
|
|
|||
Net cash used in investing activities
|
(262,752
|
)
|
|
(501,436
|
)
|
|
(506,520
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from issuance of common stock (Note 11)
|
387,398
|
|
|
102,229
|
|
|
349,951
|
|
|||
Borrowings on unsecured line of credit
|
250,000
|
|
|
505,000
|
|
|
55,000
|
|
|||
Repayments on unsecured line of credit
|
(390,000
|
)
|
|
(410,000
|
)
|
|
(195,000
|
)
|
|||
Proceeds from the issuance of unsecured debt (Note 8)
|
397,776
|
|
|
395,528
|
|
|
299,901
|
|
|||
Repayments of unsecured debt (Note 8)
|
(325,000
|
)
|
|
(83,000
|
)
|
|
—
|
|
|||
Principal payments and repayments of secured debt (Note 8)
|
(159,766
|
)
|
|
(9,845
|
)
|
|
(93,688
|
)
|
|||
Repayments of exchangeable senior notes (Note 8)
|
—
|
|
|
(172,500
|
)
|
|
—
|
|
|||
Borrowings on unsecured debt (Note 8)
|
—
|
|
|
39,000
|
|
|
—
|
|
|||
Financing costs
|
(4,814
|
)
|
|
(8,648
|
)
|
|
(4,384
|
)
|
|||
Proceeds from exercise of stock options (Note 13)
|
14,573
|
|
|
21,092
|
|
|
128
|
|
|||
Repurchase of common stock and restricted stock units
|
(7,081
|
)
|
|
(3,533
|
)
|
|
(2,520
|
)
|
|||
Contributions from noncontrolling interests in consolidated subsidiary (Note 2)
|
474
|
|
|
977
|
|
|
—
|
|
|||
Dividends and distributions paid to common stockholders and common unitholders
|
(126,839
|
)
|
|
(118,463
|
)
|
|
(111,517
|
)
|
|||
Dividends and distributions paid to preferred stockholders and preferred unitholders
|
(13,250
|
)
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|||
Net cash provided by financing activities
|
23,471
|
|
|
244,587
|
|
|
284,621
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
32,727
|
|
|
(11,596
|
)
|
|
18,677
|
|
|||
Cash and cash equivalents, beginning of year
|
23,781
|
|
|
35,377
|
|
|
16,700
|
|
|||
Cash and cash equivalents, end of year
|
$
|
56,508
|
|
|
$
|
23,781
|
|
|
$
|
35,377
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
ASSETS
|
|
|
|
||||
REAL ESTATE ASSETS (Notes 3 and 4):
|
|
|
|
||||
Land and improvements
|
$
|
875,794
|
|
|
$
|
877,633
|
|
Buildings and improvements
|
4,091,012
|
|
|
4,059,639
|
|
||
Undeveloped land and construction in progress
|
1,361,340
|
|
|
1,120,660
|
|
||
Total real estate held for investment
|
6,328,146
|
|
|
6,057,932
|
|
||
Accumulated depreciation and amortization
|
(994,241
|
)
|
|
(947,664
|
)
|
||
Total real estate held for investment, net ($187,254 and $211,755 of VIE, Note 2)
|
5,333,905
|
|
|
5,110,268
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 4)
|
117,666
|
|
|
8,211
|
|
||
CASH AND CASH EQUIVALENTS
|
56,508
|
|
|
23,781
|
|
||
RESTRICTED CASH (Note 4)
|
696
|
|
|
75,185
|
|
||
MARKETABLE SECURITIES (Notes 14 and 17)
|
12,882
|
|
|
11,971
|
|
||
CURRENT RECEIVABLES, NET (Note 6)
|
11,153
|
|
|
7,229
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 6)
|
189,704
|
|
|
156,416
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 3 and 5)
|
176,683
|
|
|
201,926
|
|
||
DEFERRED FINANCING COSTS, NET (Notes 2 and 8)
|
17,628
|
|
|
18,374
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET
|
22,644
|
|
|
20,375
|
|
||
TOTAL ASSETS
|
$
|
5,939,469
|
|
|
$
|
5,633,736
|
|
LIABILITIES AND CAPITAL
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt (Notes 3, 8 and 17)
|
$
|
381,918
|
|
|
$
|
546,292
|
|
Unsecured debt, net (Notes 8 and 17)
|
1,856,590
|
|
|
1,783,121
|
|
||
Unsecured line of credit (Notes 8 and 17)
|
—
|
|
|
140,000
|
|
||
Accounts payable, accrued expenses and other liabilities (Note 16)
|
246,323
|
|
|
225,830
|
|
||
Accrued distributions (Note 12)
|
34,992
|
|
|
32,899
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 3, 5 and 9)
|
128,156
|
|
|
132,239
|
|
||
Rents received in advance and tenant security deposits
|
49,361
|
|
|
49,363
|
|
||
Liabilities and deferred revenue of real estate assets held for sale (Note 4)
|
7,543
|
|
|
56
|
|
||
Total liabilities
|
2,704,883
|
|
|
2,909,800
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 16)
|
|
|
|
||||
CAPITAL (Notes 10 and 12):
|
|
|
|
||||
Partners’ Capital:
|
|
|
|
||||
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, 92,258,690 and 86,259,684 held by the general partner and 1,764,775
and 1,804,200 held by common limited partners issued and outstanding,
respectively
|
3,031,609
|
|
|
2,521,900
|
|
||
Total Partners’ Capital
|
3,224,020
|
|
|
2,714,311
|
|
||
Noncontrolling interests in consolidated subsidiaries (Note 2)
|
10,566
|
|
|
9,625
|
|
||
Total capital
|
3,234,586
|
|
|
2,723,936
|
|
||
TOTAL LIABILITIES AND CAPITAL
|
$
|
5,939,469
|
|
|
$
|
5,633,736
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Rental income
|
$
|
525,355
|
|
|
$
|
466,328
|
|
|
$
|
411,899
|
|
Tenant reimbursements
|
53,774
|
|
|
46,717
|
|
|
38,047
|
|
|||
Other property income (Notes 16 and 18)
|
2,146
|
|
|
8,680
|
|
|
7,165
|
|
|||
Total revenues
|
581,275
|
|
|
521,725
|
|
|
457,111
|
|
|||
EXPENSES:
|
|
|
|
|
|
|
|||||
Property expenses
|
105,378
|
|
|
100,514
|
|
|
94,115
|
|
|||
Real estate taxes
|
50,223
|
|
|
45,197
|
|
|
39,417
|
|
|||
Provision for bad debts
|
545
|
|
|
58
|
|
|
396
|
|
|||
Ground leases (Notes 5 and 16)
|
3,096
|
|
|
3,075
|
|
|
3,504
|
|
|||
General and administrative expenses
|
48,265
|
|
|
46,152
|
|
|
39,660
|
|
|||
Acquisition-related expenses
|
497
|
|
|
1,479
|
|
|
1,962
|
|
|||
Depreciation and amortization (Notes 2 and 5)
|
204,294
|
|
|
202,417
|
|
|
188,887
|
|
|||
Total expenses
|
412,298
|
|
|
398,892
|
|
|
367,941
|
|
|||
OTHER (EXPENSES) INCOME:
|
|
|
|
|
|
|
|||||
Interest income and other net investment gains (Note 17)
|
243
|
|
|
561
|
|
|
1,635
|
|
|||
Interest expense (Note 8)
|
(57,682
|
)
|
|
(67,571
|
)
|
|
(75,870
|
)
|
|||
Total other (expenses) income
|
(57,439
|
)
|
|
(67,010
|
)
|
|
(74,235
|
)
|
|||
INCOME FROM CONTINUING OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
111,538
|
|
|
55,823
|
|
|
14,935
|
|
|||
Gains on sale of land, net (Note 4)
|
17,116
|
|
|
3,490
|
|
|
—
|
|
|||
Gains on sales of depreciable operating properties (Note 4)
|
109,950
|
|
|
—
|
|
|
—
|
|
|||
INCOME FROM CONTINUING OPERATIONS
|
238,604
|
|
|
59,313
|
|
|
14,935
|
|
|||
DISCONTINUED OPERATIONS (Note 19)
|
|
|
|
|
|
||||||
Income from discontinued operations
|
—
|
|
|
2,573
|
|
|
17,378
|
|
|||
Net gain on dispositions of discontinued operations
|
—
|
|
|
121,922
|
|
|
12,252
|
|
|||
Total income from discontinued operations
|
—
|
|
|
124,495
|
|
|
29,630
|
|
|||
NET INCOME
|
238,604
|
|
|
183,808
|
|
|
44,565
|
|
|||
Net income attributable to noncontrolling interests in consolidated subsidiaries (Notes 2 and 10)
|
(467
|
)
|
|
(260
|
)
|
|
(224
|
)
|
|||
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.
|
238,137
|
|
|
183,548
|
|
|
44,341
|
|
|||
PREFERRED DISTRIBUTIONS (NOTE 12)
|
(13,250
|
)
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS
|
$
|
224,887
|
|
|
$
|
170,298
|
|
|
$
|
31,091
|
|
Income from continuing operations available to common unitholders per unit – basic
(Note 21)
|
$
|
2.44
|
|
|
$
|
0.52
|
|
|
$
|
0.00
|
|
Income from continuing operations available to common unitholders per unit – diluted
(Note 21)
|
$
|
2.42
|
|
|
$
|
0.51
|
|
|
$
|
0.00
|
|
Net income available to common unitholders per unit – basic (Note 21)
|
$
|
2.44
|
|
|
$
|
1.99
|
|
|
$
|
0.37
|
|
Net income available to common unitholders per unit – diluted (Note 21)
|
$
|
2.42
|
|
|
$
|
1.94
|
|
|
$
|
0.37
|
|
Weighted average common units outstanding – basic (Note 21)
|
91,645,578
|
|
|
84,894,498
|
|
|
79,166,260
|
|
|||
Weighted average common units outstanding – diluted (Note 21)
|
92,187,257
|
|
|
86,771,983
|
|
|
79,166,260
|
|
|
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, 2012
|
$
|
192,411
|
|
|
76,753,484
|
|
|
$
|
2,040,243
|
|
|
$
|
2,232,654
|
|
|
$
|
3,279
|
|
|
$
|
2,235,933
|
|
Net income
|
|
|
|
|
44,341
|
|
|
44,341
|
|
|
224
|
|
|
44,565
|
|
|||||||
Issuance of common units
|
|
|
7,210,838
|
|
|
349,951
|
|
|
349,951
|
|
|
|
|
349,951
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
—
|
|
|
1,448
|
|
|
1,448
|
|
|
|
|
1,448
|
|
|||||||
Noncash amortization of share-based compensation
|
|
|
|
|
9,563
|
|
|
9,563
|
|
|
|
|
9,563
|
|
||||||||
Repurchase of common units and restricted stock units
|
|
|
(42,896
|
)
|
|
(2,521
|
)
|
|
(2,521
|
)
|
|
|
|
(2,521
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
37,245
|
|
|
1
|
|
|
1
|
|
|
|
|
1
|
|
|||||||
Exercise of stock options
|
|
|
473
|
|
|
128
|
|
|
128
|
|
|
|
|
128
|
|
|||||||
Contribution by noncontrolling interest in consolidated subsidiary
|
|
|
|
|
|
|
|
|
4,885
|
|
|
4,885
|
|
|||||||||
Preferred distributions
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||
Distributions declared per common unit ($1.40 per unit)
|
|
|
|
|
(114,543
|
)
|
|
(114,543
|
)
|
|
|
|
(114,543
|
)
|
||||||||
BALANCE AS OF DECEMBER 31, 2013
|
192,411
|
|
|
83,959,144
|
|
|
2,315,361
|
|
|
2,507,772
|
|
|
8,388
|
|
|
2,516,160
|
|
|||||
Net income
|
|
|
|
|
183,548
|
|
|
183,548
|
|
|
260
|
|
|
183,808
|
|
|||||||
Issuance of common units
|
|
|
1,950,599
|
|
|
123,860
|
|
|
123,860
|
|
|
|
|
123,860
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
1,692
|
|
|
1,692
|
|
|
|
|
1,692
|
|
||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
14,471
|
|
|
14,471
|
|
|
|
|
14,471
|
|
||||||||
Exercise of stock options
|
|
|
495,000
|
|
|
21,092
|
|
|
21,092
|
|
|
|
|
21,092
|
|
|||||||
Repurchase of common units and restricted stock units
|
|
|
(58,045
|
)
|
|
(3,533
|
)
|
|
(3,533
|
)
|
|
|
|
(3,533
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
141,205
|
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|||||||
Common shares issued in connection with settlement of 4.25% Exchangeable Senior Notes
|
|
|
2,091.323
|
|
|
223
|
|
|
223
|
|
|
|
|
223
|
|
|||||||
Common shares received in connection with capped call option transactions
|
|
|
(515.342
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||
Contribution by noncontrolling interest in consolidated subsidiary
|
|
|
|
|
|
|
|
|
977
|
|
|
977
|
|
|||||||||
Preferred distributions
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||
Distributions declared per common unit ($1.40 per unit)
|
|
|
|
|
(121,563
|
)
|
|
(121,563
|
)
|
|
|
|
(121,563
|
)
|
||||||||
BALANCE AS OF DECEMBER 31, 2014
|
192,411
|
|
|
88,063,884
|
|
|
2,521,900
|
|
|
2,714,311
|
|
|
9,625
|
|
|
2,723,936
|
|
|||||
Net income
|
|
|
|
|
238,137
|
|
|
238,137
|
|
|
467
|
|
|
238,604
|
|
|||||||
Issuance of common units (Note 12)
|
|
|
5,640,033
|
|
|
387,398
|
|
|
387,398
|
|
|
|
|
387,398
|
|
|||||||
Issuance of share-based compensation awards (Note 13)
|
|
|
|
|
1,692
|
|
|
1,692
|
|
|
|
|
1,692
|
|
||||||||
Noncash amortization of share-based compensation
(Note 13)
|
|
|
|
|
18,869
|
|
|
18,869
|
|
|
|
|
18,869
|
|
||||||||
Exercise of stock options (Note 13)
|
|
|
342,000
|
|
|
14,573
|
|
|
14,573
|
|
|
|
|
14,573
|
|
|||||||
Repurchase of common units and restricted stock units (Note 13)
|
|
|
(101,389
|
)
|
|
(7,081
|
)
|
|
(7,081
|
)
|
|
|
|
(7,081
|
)
|
|||||||
Settlement of restricted stock units (Note 13)
|
|
|
78,937
|
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|||||||
Contribution by noncontrolling interest in consolidated subsidiary (Note 2)
|
|
|
|
|
|
|
|
|
|
474
|
|
|
474
|
|
||||||||
Preferred distributions
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||
Distributions declared per common unit ($1.40 per unit)
|
|
|
|
|
(130,628
|
)
|
|
(130,628
|
)
|
|
|
|
(130,628
|
)
|
||||||||
BALANCE AS OF DECEMBER 31, 2015
|
$
|
192,411
|
|
|
94,023,465
|
|
|
$
|
3,031,609
|
|
|
$
|
3,224,020
|
|
|
$
|
10,566
|
|
|
$
|
3,234,586
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
238,604
|
|
|
$
|
183,808
|
|
|
$
|
44,565
|
|
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations):
|
|
|
|
|
|
||||||
Depreciation and amortization of buildings and improvements and leasing costs
|
201,482
|
|
|
202,108
|
|
|
199,558
|
|
|||
Increase in provision for bad debts
|
545
|
|
|
58
|
|
|
396
|
|
|||
Depreciation of furniture, fixtures and equipment
|
2,812
|
|
|
2,370
|
|
|
1,929
|
|
|||
Noncash amortization of share-based compensation awards (Note 13)
|
15,537
|
|
|
12,095
|
|
|
8,616
|
|
|||
Noncash amortization of deferred financing costs and debt discounts and premiums
|
1,853
|
|
|
4,315
|
|
|
5,315
|
|
|||
Noncash amortization of net below market rents (Note 5)
|
(8,449
|
)
|
|
(8,328
|
)
|
|
(7,777
|
)
|
|||
Net gain on dispositions of depreciable operating properties (Note 4)
|
(109,950
|
)
|
|
—
|
|
|
—
|
|
|||
Net gain on dispositions of discontinued operations (Note 19)
|
—
|
|
|
(121,922
|
)
|
|
(12,252
|
)
|
|||
Net gain on sales of land (Note 4)
|
(17,116
|
)
|
|
(3,490
|
)
|
|
—
|
|
|||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements (Note 9)
|
(13,338
|
)
|
|
(10,979
|
)
|
|
(10,713
|
)
|
|||
Straight-line rents
|
(44,383
|
)
|
|
(31,782
|
)
|
|
(24,135
|
)
|
|||
Net change in other operating assets
|
(8,085
|
)
|
|
367
|
|
|
(4,615
|
)
|
|||
Net change in other operating liabilities
|
12,496
|
|
|
16,633
|
|
|
40,137
|
|
|||
Insurance proceeds received for property damage and other, net
|
—
|
|
|
—
|
|
|
(448
|
)
|
|||
Net cash provided by operating activities
|
272,008
|
|
|
245,253
|
|
|
240,576
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Expenditures for development and redevelopment properties and undeveloped land
|
(407,969
|
)
|
|
(417,784
|
)
|
|
(320,141
|
)
|
|||
Expenditures for acquisitions of development and redevelopment properties (Note 3)
|
(139,073
|
)
|
|
(147,182
|
)
|
|
(102,769
|
)
|
|||
Expenditures for operating properties
|
(99,557
|
)
|
|
(132,080
|
)
|
|
(129,873
|
)
|
|||
Expenditures for acquisitions of operating properties, net of cash acquired (Note 3)
|
—
|
|
|
(204,546
|
)
|
|
(202,682
|
)
|
|||
Net proceeds received from dispositions of operating properties and land (Notes 4 and 19)
|
319,639
|
|
|
427,544
|
|
|
21,178
|
|
|||
Issuance of note receivable
|
(3,000
|
)
|
|
—
|
|
|
—
|
|
|||
Net decrease (increase) in acquisition-related deposits
|
1,998
|
|
|
(1,983
|
)
|
|
(2,596
|
)
|
|||
Net decrease (increase) in restricted cash (Note 4)
|
65,210
|
|
|
(25,405
|
)
|
|
229,915
|
|
|||
Insurance proceeds received for property damage
|
—
|
|
|
—
|
|
|
448
|
|
|||
Net cash used in investing activities
|
(262,752
|
)
|
|
(501,436
|
)
|
|
(506,520
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from issuance of common units (Note 12)
|
387,398
|
|
|
102,229
|
|
|
349,951
|
|
|||
Borrowings on unsecured line of credit
|
250,000
|
|
|
505,000
|
|
|
55,000
|
|
|||
Repayments on unsecured line of credit
|
(390,000
|
)
|
|
(410,000
|
)
|
|
(195,000
|
)
|
|||
Proceeds from the issuance of unsecured debt (Note 8)
|
397,776
|
|
|
395,528
|
|
|
299,901
|
|
|||
Repayments of unsecured debt (Note 8)
|
(325,000
|
)
|
|
(83,000
|
)
|
|
—
|
|
|||
Principal payments and repayments of secured debt (Note 8)
|
(159,766
|
)
|
|
(9,845
|
)
|
|
(93,688
|
)
|
|||
Repayments of exchangeable senior notes (Note 8)
|
—
|
|
|
(172,500
|
)
|
|
—
|
|
|||
Borrowings on unsecured debt (Note 8)
|
—
|
|
|
39,000
|
|
|
—
|
|
|||
Financing costs
|
(4,814
|
)
|
|
(8,648
|
)
|
|
(4,384
|
)
|
|||
Proceeds from exercise of stock options (Note 13)
|
14,573
|
|
|
21,092
|
|
|
128
|
|
|||
Repurchase of common units and restricted stock units
|
(7,081
|
)
|
|
(3,533
|
)
|
|
(2,520
|
)
|
|||
Contributions from noncontrolling interests in consolidated subsidiary (Note 2)
|
474
|
|
|
977
|
|
|
—
|
|
|||
Distributions paid to common unitholders
|
(126,839
|
)
|
|
(118,463
|
)
|
|
(111,517
|
)
|
|||
Distributions paid to preferred unitholders
|
(13,250
|
)
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|||
Net cash provided by financing activities
|
23,471
|
|
|
244,587
|
|
|
284,621
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
32,727
|
|
|
(11,596
|
)
|
|
18,677
|
|
|||
Cash and cash equivalents, beginning of year
|
23,781
|
|
|
35,377
|
|
|
16,700
|
|
|||
Cash and cash equivalents, end of year
|
$
|
56,508
|
|
|
$
|
23,781
|
|
|
$
|
35,377
|
|
1.
|
Organization and Ownership
|
|
Number of
Buildings
|
|
Rentable
Square Feet
(unaudited)
|
|
Number of
Tenants
|
|
Percentage
Occupied
(unaudited)
|
||||
Stabilized Office Properties
|
101
|
|
|
13,032,406
|
|
|
517
|
|
|
94.8
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet (unaudited)
(1)
|
|
Properties held for sale
(2)
|
4
|
|
465,812
|
|
Development projects in
“
lease-up"
|
1
|
|
73,000
|
|
Development projects under construction
|
5
|
|
1,910,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
(2)
|
See Note 4 “Dispositions and Real Estate Assets Held for Sale” for additional information.
|
2.
|
Basis of Presentation and Significant Accounting Policies
|
•
|
For development and redevelopment properties that are pre-leased, we cease capitalization when revenue recognition commences, which is upon substantial completion of tenant improvements.
|
•
|
For development and redevelopment properties that are not pre-leased, we may not immediately build out the tenant improvements. Therefore we cease capitalization when revenue recognition commences upon substantial completion of the tenant improvements, but in any event, no later than one year after the cessation of major construction activities. We also cease capitalization on a development or redevelopment property when activities necessary to prepare the property for its intended use have been suspended.
|
•
|
For development or redevelopment properties with multiple tenants and staged leasing, we cease capitalization and begin depreciation on the portion of the development or redevelopment property for which revenue recognition has commenced.
|
Asset Description
|
|
Depreciable Lives
|
Buildings and improvements
|
|
25 – 40 years
|
Tenant improvements
|
|
1 – 20 years
(1)
|
(1)
|
Tenant improvements are amortized over the shorter of the lease term or the estimated useful life.
|
•
|
Level 1 –
quoted prices for identical instruments in active markets;
|
•
|
Level 2 –
quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3 –
fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
3.
|
Acquisitions
|
Project
|
|
Date of
Acquisition
|
|
City/Submarket
|
|
Type
|
|
Purchase Price
(1)
(in millions)
|
||
2015 Acquisitions
|
|
|
|
|
|
|
|
|
||
333 Dexter
(2)
|
|
February 13, 2015
|
|
Seattle, WA
|
|
Land
|
|
$
|
49.5
|
|
100 Hooper
(3)
|
|
July 7, 2015
|
|
San Francisco, CA
|
|
Land
|
|
78.0
|
|
|
Total
|
|
|
|
|
|
|
|
$
|
127.5
|
|
|
|
|
|
|
|
|
|
|
||
2014 Acquisitions
|
|
|
|
|
|
|
|
|
||
The Exchange on 16th
(4)
|
|
May 23, 2014
|
|
San Francisco, CA
|
|
Land
|
|
$
|
95.0
|
|
Flower Mart
(5)
|
|
October 23, 2014
|
|
San Francisco, CA
|
|
Land
|
|
|
||
|
December 19, 2014
|
|
|
|
71.0
|
|
||||
Total
|
|
|
|
|
|
|
|
$
|
166.0
|
|
(1)
|
See Note 16 “Commitments and Contingencies” for additional information on certain accrued liabilities for these acquisitions.
|
(2)
|
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. In connection with this acquisition, we also assumed
$2.4 million
in accrued liabilities and acquisition costs that are not included in the purchase price above.
|
(3)
|
In connection with this acquisition, we assumed
$4.1 million
in accrued liabilities and acquisition costs that are not included in the purchase price above.
|
(4)
|
In connection with this acquisition, we assumed
$2.3 million
in accrued liabilities that are not included in the purchase price above.
|
(5)
|
In the fourth quarter of 2014, the Company closed on two adjacent land sites for a total purchase price of
$71.0 million
and approximately
$13.4 million
in transaction costs and accrued liabilities, net. The acquisitions, which were completed through the execution of two merger transactions, were partially funded through the issuance of
351,476
shares of the Company’s common stock valued at approximately
$21.6 million
and the remainder was paid in cash.
|
Property
|
|
Date of Acquisition
|
|
Number of Buildings
|
|
Rentable Square Feet (unaudited)
|
|
Occupancy as of December 31, 2015 (unaudited)
|
|
Purchase Price (in millions)
(1)
|
|||
2014 Acquisitions
|
|
|
|
|
|
|
|
|
|
|
|||
401 Terry Ave. N., Seattle, WA
|
|
March 13, 2014
|
|
1
|
|
140,605
|
|
|
100.0%
|
|
$
|
106.1
|
|
1310, 1315, 1320-1324, 1325-1327 Chesapeake Terrace, Sunnyvale, CA
(2)
|
|
November 5, 2014
|
|
4
|
|
266,982
|
|
|
100.0%
|
|
100.5
|
|
|
Total
(3)
|
|
|
|
5
|
|
407,587
|
|
|
|
|
$
|
206.6
|
|
(1)
|
Excludes acquisition-related costs and non-lease related accrued liabilities assumed. Includes assumed unpaid leasing commissions and tenant improvements.
|
(2)
|
As of
December 31, 2014
, these properties, together the “Chesapeake Commons” project, were temporarily being held in a separate VIE to facilitate potential Section 1031 Exchanges. During January 2015, the Company closed out the Section 1031 Exchange related to this VIE. (See Note 2 “Basis of Presentation and Significant Accounting Policies”).
|
(3)
|
The results of operations for the properties acquired during 2014 contributed
$7.7 million
and
$2.8 million
to revenues and net income from continuing operations, respectively, for the year ended
December 31, 2014
.
|
Acquisitions
|
Total 2014
Acquisitions
(1)
|
||
|
|
||
Assets
|
|
||
Land and improvements
|
$
|
81,430
|
|
Buildings and improvements
(2)
|
114,876
|
|
|
Deferred leasing costs and acquisition-related intangible assets
(3)
|
17,259
|
|
|
Total assets acquired
|
213,565
|
|
|
Liabilities
|
|
||
Deferred revenue and acquisition-related intangible liabilities
(4)
|
6,990
|
|
|
Accounts payable, accrued expenses and other liabilities
|
2,029
|
|
|
Total liabilities assumed
|
9,019
|
|
|
Net assets and liabilities acquired
(5)
|
$
|
204,546
|
|
(1)
|
The purchase price of the two acquisitions completed during the year ended
December 31, 2014
were individually less than
5%
and in aggregate less than
10%
of the Company’s total assets as of
December 31, 2014
.
|
(2)
|
Represents buildings, building improvements and tenant improvements.
|
(3)
|
Represents in-place leases (approximately
$12.3 million
with a weighted average amortization period of
7.0
years) and leasing commissions (approximately
$4.9 million
with a weighted average amortization period of
7.0
years).
|
(4)
|
Represents below-market leases (approximately
$7.0 million
with a weighted average amortization period of
6.1
years).
|
(5)
|
Reflects the purchase price net of assumed secured debt and other lease-related obligations.
|
Location
|
|
Month of Disposition
|
|
Number of Buildings
|
|
Rentable
Square Feet (unaudited)
|
|
Sales Price
(in millions)
(1)
|
|||
2015 Dispositions
|
|
|
|
|
|
|
|
|
|||
15050 NE 36th Street, Redmond, WA
|
|
April
|
|
1
|
|
122,103
|
|
|
$
|
51.2
|
|
San Diego Properties - Tranches 1 and 2
(2)
|
|
April/July
|
|
9
|
|
924,291
|
|
|
258.0
|
|
|
Total 2015 Dispositions
|
|
|
|
10
|
|
1,046,394
|
|
|
$
|
309.2
|
|
|
|
|
|
|
|
|
|
|
|||
2014 Dispositions
(3)
|
|
|
|
|
|
|
|
|
|||
San Diego Properties, San Diego, CA
(4)
|
|
January
|
|
12
|
|
1,049,035
|
|
|
$
|
294.7
|
|
9785 & 9791 Towne Centre Drive, San Diego, CA
|
|
June
|
|
2
|
|
126,000
|
|
|
29.5
|
|
|
111 Pacifica, Irvine, CA
|
|
September
|
|
1
|
|
67,496
|
|
|
15.1
|
|
|
4040 Civic Center Drive, San Rafael, CA
|
|
October
|
|
1
|
|
130,237
|
|
|
34.9
|
|
|
999 Town & Country Road, Orange, CA
|
|
December
|
|
1
|
|
98,551
|
|
|
25.3
|
|
|
Total 2014 Dispositions
|
|
|
|
17
|
|
1,471,319
|
|
|
$
|
399.5
|
|
|
|
|
|
|
|
|
|
|
|||
2013 Dispositions
(3)
|
|
|
|
|
|
|
|
|
|||
26541 Agoura Road, Calabasas, CA
|
|
June
|
|
1
|
|
90,156
|
|
|
$
|
14.7
|
|
8101 Kaiser Boulevard, Anaheim, CA
|
|
October
|
|
1
|
|
59,790
|
|
|
9.6
|
|
|
4910 Directors Place, San Diego CA
|
|
December
|
|
1
|
|
50,360
|
|
|
32.6
|
|
|
Total 2013 Dispositions
|
|
|
|
3
|
|
200,306
|
|
|
$
|
56.9
|
|
(1)
|
Represents gross sales price before the impact of broker commissions and closing costs.
|
(2)
|
The San Diego Properties - Tranche 1 includes the following properties: 10770 Wateridge Circle, 6200 Greenwich Drive, and 6220 Greenwich Drive. The San Diego Properties - Tranche 2 includes the following properties: 6260 Sequence Drive, 6290, Sequence Drive, 6310 Sequence Drive, 6340 Sequence Drive, 6350 Sequence Drive and 4921 Directors Place.
|
(3)
|
The Company adopted ASU 2014-08 effective January 1, 2015 (see Note 2 “Basis of Presentation and Significant Accounting Policies” for additional information). As a result, results of operations for properties disposed of subsequent of January 1, 2015 are presented in continuing operations because they did not represent strategic shifts. Properties disposed of prior to January 1, 2015 are presented in discontinued operations.
|
(4)
|
The San Diego Properties included the following: 10020 Pacific Mesa Boulevard, 6055 Lusk Avenue, 5010 and 5005 Wateridge Vista Drive, 15435 and 15445 Innovation Drive, and 15051, 15073, 15231, 15253, 15333 and 15378 Avenue of Science. These properties were held for sale as of December 31, 2013.
|
Properties
|
|
Submarket
|
|
Property Type
|
|
Number of Buildings
|
|
Rentable Square Feet (unaudited)
|
|
Torrey Santa Fe Properties
(1)(2)
|
|
Del Mar
|
|
Office
|
|
4
|
|
465,812
|
|
(1)
|
The Torrey Santa Fe Properties include the following properties: 7525 Torrey Santa Fe, 7535 Torrey Santa Fe, 7545 Torrey Santa Fe, and 7555 Torrey Santa Fe.
|
(2)
|
In January 2016, the Company completed the sale of these properties for a total sales price of
$262.3 million
.
|
Real estate assets and other assets held for sale
|
(in thousands)
|
||
Land and improvements
|
$
|
10,534
|
|
Buildings and improvements
|
144,716
|
|
|
Undeveloped land and construction in progress
|
4,824
|
|
|
Total real estate held for sale
|
160,074
|
|
|
Accumulated depreciation and amortization
|
(46,191
|
)
|
|
Total real estate held for sale, net
|
113,883
|
|
|
Deferred rent receivables, net
|
2,500
|
|
|
Deferred leasing costs and acquisition-related intangible assets, net
|
1,115
|
|
|
Prepaid expenses and other assets, net
|
168
|
|
|
Real estate and other assets held for sale, net
|
$
|
117,666
|
|
|
|
||
Liabilities and deferred revenue of real estate assets held for sale
|
|
||
Secured debt
|
$
|
561
|
|
Accounts payable, accrued expenses and other liabilities
|
2,497
|
|
|
Deferred revenue and acquisition-related intangible liabilities, net
|
2,899
|
|
|
Rents received in advance and tenant security deposits
|
1,586
|
|
|
Liabilities and deferred revenue of real estate assets held for sale
|
$
|
7,543
|
|
Properties
|
|
Submarket
|
|
Month of Disposition
|
|
Gross Site Acreage
(unaudited)
|
|
Sales Price
(1)
(in millions)
|
||
2015 Land Disposition
|
|
|
|
|
|
|
|
|
||
17150 Von Karman
(2)
|
|
Irvine
|
|
January
|
|
8.5
|
|
$
|
26.0
|
|
|
|
|
|
|
|
|
|
|
||
2014 Land Disposition
|
|
|
|
|
|
|
|
|
||
10850 Via Frontera
(3)
|
|
Rancho Bernardo
|
|
April
|
|
21.0
|
|
$
|
33.1
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents gross sales price before the impact of commissions and closing costs.
|
(2)
|
This transaction resulted in a gain on sale of
$17.3 million
.
|
(3)
|
This transaction resulted in a gain on sale of
$3.5 million
.
|
Properties
|
|
Submarket
|
|
Gross Site Acreage
(unaudited)
|
|
Sales Price
(in millions) |
||
2015 Held for Sale
|
|
|
|
|
|
|
||
Carlsbad Oaks - Lot 7
(1)(2)
|
|
Carlsbad
|
|
7.6
|
|
$
|
4.5
|
|
|
|
|
|
|
|
|
||
2014 Held for Sale
|
|
|
|
|
|
|
||
17150 Von Karman
|
|
Irvine
|
|
8.5
|
|
$
|
26.0
|
|
(1)
|
During the year ended
December 31, 2015
, the Company recognized a loss relating to selling costs of approximately
$0.2 million
.
|
(2)
|
In January 2016, the Company completed the sale of the Carlsbad Oaks - Lot 7 land parcel.
|
5.
|
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Deferred Leasing Costs and Acquisition-related Intangible Assets, net:
(1)
|
|
|
|
||||
Deferred leasing costs
|
$
|
205,888
|
|
|
$
|
216,102
|
|
Accumulated amortization
|
(72,745
|
)
|
|
(74,904
|
)
|
||
Deferred leasing costs, net
|
133,143
|
|
|
141,198
|
|
||
Above-market operating leases
|
10,989
|
|
|
20,734
|
|
||
Accumulated amortization
|
(6,739
|
)
|
|
(13,952
|
)
|
||
Above-market operating leases, net
|
4,250
|
|
|
6,782
|
|
||
In-place leases
|
72,639
|
|
|
97,250
|
|
||
Accumulated amortization
|
(33,810
|
)
|
|
(43,773
|
)
|
||
In-place leases, net
|
38,829
|
|
|
53,477
|
|
||
Below-market ground lease obligation
|
490
|
|
|
490
|
|
||
Accumulated amortization
|
(29
|
)
|
|
(21
|
)
|
||
Below-market ground lease obligation, net
|
461
|
|
|
469
|
|
||
Total deferred leasing costs and acquisition-related intangible assets, net
|
$
|
176,683
|
|
|
$
|
201,926
|
|
Acquisition-related Intangible Liabilities, net:
(2)
|
|
|
|
||||
Below-market operating leases
|
$
|
53,502
|
|
|
$
|
68,051
|
|
Accumulated amortization
|
(27,074
|
)
|
|
(30,620
|
)
|
||
Below-market operating leases, net
|
26,428
|
|
|
37,431
|
|
||
Above-market ground lease obligation
|
6,320
|
|
|
6,320
|
|
||
Accumulated amortization
|
(424
|
)
|
|
(324
|
)
|
||
Above-market ground lease obligation, net
|
5,896
|
|
|
5,996
|
|
||
Total acquisition-related intangible liabilities, net
|
$
|
32,324
|
|
|
$
|
43,427
|
|
(1)
|
Excludes deferred leasing costs and acquisition-related intangible assets, net related to properties held for sale as of
December 31, 2015
.
|
(2)
|
Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Deferred leasing costs
(1)
|
$
|
27,866
|
|
|
$
|
27,555
|
|
|
$
|
25,902
|
|
Above-market operating leases
(2)
|
2,532
|
|
|
5,303
|
|
|
5,664
|
|
|||
In-place leases
(1)
|
14,622
|
|
|
21,628
|
|
|
29,363
|
|
|||
Below-market ground lease obligation
(3)
|
8
|
|
|
8
|
|
|
8
|
|
|||
Below-market operating leases
(4)
|
(10,980
|
)
|
|
(13,238
|
)
|
|
(13,441
|
)
|
|||
Above-market ground lease obligation
(5)
|
(101
|
)
|
|
(101
|
)
|
|
(101
|
)
|
|||
Total
|
$
|
33,947
|
|
|
$
|
41,155
|
|
|
$
|
47,395
|
|
(1)
|
The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense and the amortization of lease incentives is recorded as a reduction to rental income 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)
|
||||||||||||||||||||||
2016
|
$
|
25,637
|
|
|
$
|
1,501
|
|
|
$
|
10,542
|
|
|
$
|
8
|
|
|
$
|
(7,664
|
)
|
|
$
|
(101
|
)
|
2017
|
22,790
|
|
|
1,241
|
|
|
9,108
|
|
|
8
|
|
|
(7,017
|
)
|
|
(101
|
)
|
||||||
2018
|
19,580
|
|
|
831
|
|
|
6,296
|
|
|
8
|
|
|
(5,713
|
)
|
|
(101
|
)
|
||||||
2019
|
15,649
|
|
|
643
|
|
|
4,637
|
|
|
8
|
|
|
(3,574
|
)
|
|
(101
|
)
|
||||||
2020
|
11,720
|
|
|
16
|
|
|
2,789
|
|
|
8
|
|
|
(2,035
|
)
|
|
(101
|
)
|
||||||
Thereafter
|
37,767
|
|
|
18
|
|
|
5,457
|
|
|
421
|
|
|
(425
|
)
|
|
(5,391
|
)
|
||||||
Total
|
$
|
133,143
|
|
|
$
|
4,250
|
|
|
$
|
38,829
|
|
|
$
|
461
|
|
|
$
|
(26,428
|
)
|
|
$
|
(5,896
|
)
|
(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.
|
6.
|
Receivables
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Current receivables
(1)
|
$
|
13,233
|
|
|
$
|
9,228
|
|
Allowance for uncollectible tenant receivables
(1)
|
(2,080
|
)
|
|
(1,999
|
)
|
||
Current receivables, net
(1)
|
$
|
11,153
|
|
|
$
|
7,229
|
|
(1)
|
Excludes current receivables, net related to real estate held for sale.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Deferred rent receivables
(1)
|
$
|
191,586
|
|
|
$
|
158,405
|
|
Allowance for deferred rent receivables
|
(1,882
|
)
|
|
(1,989
|
)
|
||
Deferred rent receivables, net
(1)
|
$
|
189,704
|
|
|
$
|
156,416
|
|
(1)
|
Excludes deferred rent receivables, net related to real estate held for sale.
|
|
Annual Stated Interest Rate
(1)
|
|
GAAP
Effective Rate
(1)(2)
|
|
Maturity Date
|
|
December 31,
|
||||||
Type of Debt
|
|
|
|
2015
(3)
|
|
2014
(3)
|
|||||||
|
|
|
|
|
|
|
(in thousands)
|
||||||
Mortgage note payable
(5)
|
4.27%
|
|
4.27%
|
|
February 2018
|
|
$
|
128,315
|
|
|
$
|
130,767
|
|
Mortgage note payable
(5)
|
4.48%
|
|
4.48%
|
|
July 2027
|
|
96,354
|
|
|
97,000
|
|
||
Mortgage note payable
(4)(5)
|
6.05%
|
|
3.50%
|
|
June 2019
|
|
85,890
|
|
|
89,242
|
|
||
Mortgage note payable
|
6.51%
|
|
6.51%
|
|
February 2017
|
|
65,563
|
|
|
66,647
|
|
||
Mortgage note payable
|
7.15%
|
|
7.15%
|
|
May 2017
|
|
3,987
|
|
|
6,568
|
|
||
Mortgage note payable
(5)(6)
|
5.23%
|
|
3.50%
|
|
January 2016
|
|
—
|
|
|
52,793
|
|
||
Mortgage note payable
(5)(6)
|
5.57%
|
|
3.25%
|
|
February 2016
|
|
—
|
|
|
40,258
|
|
||
Mortgage note payable
(5)
|
5.09%
|
|
3.50%
|
|
August 2015
|
|
—
|
|
|
34,311
|
|
||
Mortgage note payable
|
4.94%
|
|
4.00%
|
|
April 2015
|
|
—
|
|
|
26,285
|
|
||
Other
(7)
|
Various
|
|
Various
|
|
Various
|
|
1,809
|
|
|
2,421
|
|
||
Total
|
|
|
|
|
|
|
$
|
381,918
|
|
|
$
|
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
$6.2 million
and
$10.3 million
as of
December 31, 2015
and
2014
, respectively.
|
(4)
|
In January 2013, in connection with the acquisition of two office buildings in Seattle, Washington, we assumed a mortgage loan that is secured by the project. The loan requires monthly principal and interest payments based on a 6.4 year amortization period. As of
December 31, 2015
and
2014
, the mortgage loan had unamortized debt premiums of
$6.2 million
and
$8.0 million
, respectively.
|
(5)
|
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.
|
(6)
|
These mortgage notes payable were repaid during the year ended
December 31, 2015
at par.
|
(7)
|
Excludes
$0.6 million
of secured debt related to real estate assets held for sale as of
December 31, 2015
.
|
|
|
|
|
|
|
|
|
|
Principal Amount
as of December 31,
|
||||||
|
Issuance date
|
|
Maturity date
|
|
Stated
coupon rate
|
|
Effective interest rate
(1)
|
|
2015
|
|
2014
|
||||
|
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
4.375% Unsecured Senior Notes
(2)
|
September 2015
|
|
October 2025
|
|
4.375%
|
|
4.440%
|
|
$
|
400,000
|
|
|
$
|
—
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(2,159
|
)
|
|
$
|
—
|
|
|
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
397,841
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.250% Unsecured Senior Notes
(3)
|
July 2014
|
|
August 2029
|
|
4.250%
|
|
4.350%
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(4,050
|
)
|
|
(4,348
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
395,950
|
|
|
$
|
395,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.800% Unsecured Senior Notes
(4)
|
January 2013
|
|
January 2023
|
|
3.800%
|
|
3.804%
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(70
|
)
|
|
(79
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
299,930
|
|
|
$
|
299,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.800% Unsecured Senior Notes
(4)(5)
|
July 2011
|
|
July 2018
|
|
4.800%
|
|
4.827%
|
|
$
|
325,000
|
|
|
$
|
325,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(191
|
)
|
|
(265
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
324,809
|
|
|
$
|
324,735
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
6.625% Unsecured Senior Notes
(6)
|
May 2010
|
|
June 2020
|
|
6.625%
|
|
6.743%
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
(940
|
)
|
|
(1,154
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
249,060
|
|
|
$
|
248,846
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
5.000% Unsecured Senior Notes
(7)
|
November 2010
|
|
November 2015
|
|
5.000%
|
|
5.014%
|
|
$
|
—
|
|
|
$
|
325,000
|
|
Unamortized discount
|
|
|
|
|
|
|
|
|
—
|
|
|
(33
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
324,967
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Unsecured Senior Notes, Net
|
|
|
|
|
|
|
|
|
$
|
1,667,590
|
|
|
$
|
1,594,121
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 April 1st and October 1st of each year.
|
(3)
|
Interest on these notes is payable semi-annually in arrears on February 15th and August 15th of each year.
|
(4)
|
Interest on these notes is payable semi-annually in arrears on January 15th and July 15th of each year.
|
(5)
|
In October 2015, certain common limited partners in the Operating Partnership that previously contributed their interests in the property at 6255 W. Sunset Blvd., Los Angeles, California to the Operating Partnership entered into an agreement with the Company. Pursuant to this agreement, such common limited partners will reimburse the Company for a portion of any amounts the Company may be required to pay pursuant to its guarantee of the Operating Partnership's 4.800% Senior Notes due 2018 or that the Company may otherwise become required to pay under applicable law with respect to such notes.
|
(6)
|
Interest on these notes is payable semi-annually in arrears on June 1st and December 1st of each year.
|
(7)
|
Interest of these notes is payable semi-annually in arrears on May 3rd and November 3rd of each year.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
—
|
|
|
$
|
140,000
|
|
Remaining borrowing capacity
|
600,000
|
|
|
460,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
—
|
%
|
|
1.41
|
%
|
||
Facility fee-annual rate
(3)
|
0.200%
|
|
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 unsecured term loan facility.
|
(2)
|
Our unsecured revolving credit facility interest rate was calculated based on an annual rate of LIBOR plus
1.050%
and LIBOR plus
1.250%
as of
December 31, 2015
and
December 31, 2014
, respectively.
|
(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
December 31, 2015
,
$4.6 million
of deferred financing costs remains to be amortized through the amended maturity date of our unsecured revolving credit facility.
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Interest rate
(1)
|
1.40
|
%
|
|
1.56
|
%
|
||
Maturity date
|
July 2019
|
|
|
July 2019
|
|
(1)
|
Our unsecured term loan facility interest rate was calculated based on an annual rate of LIBOR plus
1.150%
and LIBOR plus
1.400%
as of
December 31, 2015
and
December 31, 2014
, respectively.
|
Year
|
(in thousands)
|
||
2016
|
$
|
9,734
|
|
2017
|
71,734
|
|
|
2018
|
451,713
|
|
|
2019
|
265,355
|
|
|
2020
|
251,962
|
|
|
Thereafter
|
1,189,198
|
|
|
Total aggregate principal value
|
$
|
2,239,696
|
|
Less net unamortized discounts
|
(1,188
|
)
|
|
Total debt, net of unamortized discounts
|
$
|
2,238,508
|
|
4.25% Exchangeable Notes
|
|
December 31, 2014
|
Issuance date
|
|
November 2009
|
Maturity date
|
|
November 2014
|
Stated coupon rate
(1)
|
|
4.25%
|
Effective interest rate
(2)
|
|
7.13%
|
Exchange rate per $1,000 principal value of the 4.25% Exchangeable Notes, as adjusted
(3)
|
|
27.8307
|
Exchange price as adjusted
(3)
|
|
$35.93
|
Number of shares on which the aggregate consideration to be delivered on conversion
(3)
|
|
4,800,796
|
(1)
|
Interest on the 4.25% Exchangeable Notes was payable semi-annually in arrears on May 15th and November 15th of each year.
|
(2)
|
Represents the rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the 4.25% Exchangeable Notes. This rate represents our conventional debt borrowing rate at the date of issuance.
|
(3)
|
The exchange rate, exchange price, and the number of shares to be delivered upon conversation were subject to adjustment under certain circumstances, including increases in our common dividends as of
December 31, 2014
.
|
|
Period Ended November 15, 2014
(1)
|
|
Year Ended December 31, 2013
|
||||
Per share average trading price of the Company's common stock
|
$
|
60.04
|
|
|
$
|
52.12
|
|
|
Year Ended December 31,
|
||||||
|
2014
|
|
2013
|
||||
|
|
||||||
Contractual interest payments
|
$
|
5,608
|
|
|
$
|
7,331
|
|
Amortization of discount
|
3,769
|
|
|
4,427
|
|
||
Interest expense attributable to the 4.25% Exchangeable Notes
|
$
|
9,377
|
|
|
$
|
11,758
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Gross interest expense
|
$
|
109,647
|
|
|
$
|
114,661
|
|
|
$
|
111,238
|
|
Capitalized interest
|
(51,965
|
)
|
|
(47,090
|
)
|
|
(35,368
|
)
|
|||
Interest expense
|
$
|
57,682
|
|
|
$
|
67,571
|
|
|
$
|
75,870
|
|
9.
|
Deferred Revenue and Acquisition Related Liabilities, net
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Deferred revenue related to tenant-funded tenant improvements
(1)
|
$
|
90,825
|
|
|
$
|
85,757
|
|
Other deferred revenue
|
5,007
|
|
|
3,055
|
|
||
Acquisition-related intangible liabilities, net
(2)
|
32,324
|
|
|
43,427
|
|
||
Total
|
$
|
128,156
|
|
|
$
|
132,239
|
|
(1)
|
Excludes deferred revenue related to tenant-funded tenant improvements related to properties held for sale at
December 31, 2015
.
|
(2)
|
See Note 2 “Basis of Presentation and Significant Accounting Policies” and Note 5 “Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net” for additional information.
|
Year Ending
|
(in thousands)
|
||
2016
|
$
|
12,536
|
|
2017
|
11,924
|
|
|
2018
|
11,285
|
|
|
2019
|
9,761
|
|
|
2020
|
9,230
|
|
|
Thereafter
|
36,089
|
|
|
Total
|
$
|
90,825
|
|
11.
|
Stockholders’ Equity of the Company
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions, except share data)
|
||||||||||
Shares of common stock sold during the period
|
1,866,267
|
|
|
1,599,123
|
|
|
1,040,838
|
|
|||
Aggregate gross proceeds
|
$
|
140.1
|
|
|
$
|
104.7
|
|
|
$
|
55.3
|
|
Aggregate net proceeds after underwriting discounts
|
$
|
138.2
|
|
|
$
|
103.1
|
|
|
$
|
54.4
|
|
|
December 31,
|
||||||
|
2015
|
|
2014
|
||||
|
(in thousands)
|
||||||
Dividends and Distributions payable to:
|
|
|
|
||||
Common stockholders
|
$
|
32,291
|
|
|
$
|
30,191
|
|
Noncontrolling common unitholders of the Operating Partnership
|
618
|
|
|
631
|
|
||
RSU holders
(1)
|
427
|
|
|
421
|
|
||
Total accrued dividends and distribution to common stockholders and noncontrolling unitholders
|
33,336
|
|
|
31,243
|
|
||
Preferred stockholders
|
1,656
|
|
|
1,656
|
|
||
Total accrued dividends and distributions
|
$
|
34,992
|
|
|
$
|
32,899
|
|
(1)
|
The amount includes the value of the dividend equivalents that will be paid with additional RSUs (see Note 13 “Share-Based Compensation” for additional information).
|
|
December 31,
|
||||
|
2015
|
|
2014
|
||
Outstanding Shares and Units:
|
|
||||
Common stock
(1)
|
92,258,690
|
|
|
86,259,684
|
|
Noncontrolling common units
|
1,764,775
|
|
|
1,804,200
|
|
RSUs
(2)
|
1,269,809
|
|
|
1,248,352
|
|
Series G Preferred stock
|
4,000,000
|
|
|
4,000,000
|
|
Series H Preferred stock
|
4,000,000
|
|
|
4,000,000
|
|
(1)
|
The amount includes nonvested shares.
|
(2)
|
The amount includes nonvested RSUs. Does not include the
425,452
and
247,089
market measure-based RSUs because not all the necessary performance conditions have been met as of
December 31, 2015
and
2014
, respectively.
|
12.
|
Preferred and Common Units of the Operating Partnership
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in millions, except share and per share data)
|
||||||||||
Shares of common stock contributed by the Company
|
1,866,267
|
|
|
1,599,123
|
|
|
1,040,838
|
|
|||
Common units exchanged for share of common stock by the Company
|
1,866,267
|
|
|
1,599,123
|
|
|
1,040,838
|
|
|||
Aggregate gross proceeds
|
$
|
140.1
|
|
|
$
|
104.7
|
|
|
$
|
55.3
|
|
Aggregate net proceeds after underwriting discounts
|
$
|
138.2
|
|
|
$
|
103.1
|
|
|
$
|
54.4
|
|
|
December 31, 2015
|
|
December 31, 2014
|
||
Company owned common units in the Operating Partnership
|
92,258,690
|
|
|
86,259,684
|
|
Company owned general partnership interest
|
98.1
|
%
|
|
98.0
|
%
|
Noncontrolling common units of the Operating Partnership
|
1,764,775
|
|
|
1,804,200
|
|
Ownership interest of noncontrolling interest
|
1.9
|
%
|
|
2.0
|
%
|
|
December 31, 2015
|
|
December 31, 2014
|
||||
|
(in thousands)
|
||||||
Distributions payable to:
|
|
|
|
||||
General partner
|
$
|
32,291
|
|
|
$
|
30,191
|
|
Common limited partners
|
618
|
|
|
631
|
|
||
RSU holders
(1)
|
427
|
|
|
421
|
|
||
Total accrued distributions to common unitholders
|
33,336
|
|
|
31,243
|
|
||
Preferred unitholders
|
1,656
|
|
|
1,656
|
|
||
Total accrued distributions
|
$
|
34,992
|
|
|
$
|
32,899
|
|
(1)
|
The amount includes the value of the dividend equivalents that will be paid with additional RSUs (see Note 13 “Share-Based Compensation” for additional information).
|
|
December 31, 2015
|
|
December 31, 2014
|
||
Outstanding Units:
|
|
||||
Common units held by the general partner
|
92,258,690
|
|
|
86,259,684
|
|
Common units held by the limited partners
|
1,764,775
|
|
|
1,804,200
|
|
RSUs
(1)
|
1,269,809
|
|
|
1,248,352
|
|
Series G Preferred units
|
4,000,000
|
|
|
4,000,000
|
|
Series H Preferred units
|
4,000,000
|
|
|
4,000,000
|
|
(1)
|
Does not include the
425,452
and
247,089
market measure-based RSUs because not all the necessary performance conditions have been met as of
December 31, 2015
and
2014
, respectively.
|
|
2015 Performance-Based RSU Grant
|
|
2014 Performance-Based RSU Grant
|
||
Service vesting period
|
December 31, 2017
|
|
|
December 31, 2016
|
|
Target RSUs granted
|
127,657
|
|
|
119,098
|
|
Estimated RSUs earned based on FFO per share performance condition
|
185,510
|
|
|
178,650
|
|
Date of fair valuation
|
January 27, 2015
|
|
|
May 22, 2014
|
|
|
2015 Award Fair Value Assumptions
|
2014 Award Fair Value Assumptions
|
Valuation date
|
January 27, 2015
|
May 22, 2014
|
Fair value per share on valuation date
|
$78.55
|
$65.03
|
Expected share price volatility
|
20.00%
|
24.00%
|
Risk-free interest rate
|
0.92%
|
0.61%
|
Remaining expected life
|
2.9 years
|
2.6 years
|
|
2015 Time-Based RSU Grant
|
|
2014 Time-Based RSU Grant
|
||||
Service vesting period
|
January 5, 2016 - January 5, 2018
|
|
|
January 5, 2015 - January 5, 2018
|
|
||
Fair value on valuation date (in millions)
|
$
|
6.4
|
|
|
$
|
7.1
|
|
Fair value per share
|
$
|
75.34
|
|
|
$
|
60.16
|
|
Date of fair valuation
|
January 27, 2015
|
|
|
May 22, 2014
|
|
|
Nonvested RSUs
|
|
Vested RSUs
|
|
Total RSUs
|
|||||||
|
Amount
|
|
Weighted-Average
Fair Value Per Share (1) |
|
||||||||
Outstanding at January 1, 2015
|
247,089
|
|
|
$
|
58.77
|
|
|
—
|
|
|
247,089
|
|
Granted
|
191,483
|
|
|
79.25
|
|
|
—
|
|
|
191,483
|
|
|
Issuance of dividend equivalents
(2)
|
6,347
|
|
|
70.47
|
|
|
—
|
|
|
6,347
|
|
|
Forfeited
|
(19,467
|
)
|
|
69.20
|
|
|
—
|
|
|
(19,467
|
)
|
|
Outstanding as of December 31, 2015
(3)
|
425,452
|
|
|
$
|
67.68
|
|
|
—
|
|
|
425,452
|
|
(1)
|
Represents the grant-date fair value for all awards, excluding the 2014 Performance-Based RSU Grant. As discussed above, the 2014 Performance-Based RSU Grant was re-measured upon stockholder approval of the amended 2006 Plan on May 22, 2014.
|
(2)
|
Represents the issuance of dividend equivalents earned on the underlying RSUs. The dividend equivalents vest based on terms specified under the related RSU award agreement.
|
(3)
|
Outstanding RSUs as of December 31, 2015 represent the achievement of the maximum performance conditions and assumed target levels for the market conditions. The number of restricted stock units ultimately earned is subject to change based upon actual performance over the three-year vesting period. Dividend equivalents earned will vest along with the underlying award and are also subject to changes based on the number of RSUs ultimately earned for each underlying award.
|
|
RSUs Granted
|
|
RSUs Vested
|
||||||||||
Years ended December 31,
|
Non-Vested
RSUs Granted
|
|
Weighted-Average
Fair Value
Per Share
(1)
|
|
Vested RSUs
|
|
Total Vest-Date Fair Value
(in thousands)
|
||||||
2015
|
191,483
|
|
|
$
|
79.25
|
|
|
—
|
|
|
$
|
—
|
|
2014
|
183,365
|
|
|
64.86
|
|
|
(16,338
|
)
|
|
1,092
|
|
||
2013
|
9,542
|
|
|
44.55
|
|
|
(16,338
|
)
|
|
811
|
|
(1)
|
Represents the grant-date fair value for all awards, excluding the 2014 Performance-Based RSU Grant. As discussed above, the 2014 Performance-Based RSU Grant was re-measured upon stockholder approval of the amended 2006 Plan on May 22, 2014.
|
|
Nonvested RSUs
|
|
Vested RSUs
|
|
Total RSUs
|
|||||||
|
Amount
|
|
Weighted Average Fair Value
Per Share (1) |
|
||||||||
Outstanding at January 1, 2015
|
340,997
|
|
|
$
|
51.04
|
|
|
907,355
|
|
|
1,248,352
|
|
Granted
|
98,802
|
|
|
74.49
|
|
|
—
|
|
|
98,802
|
|
|
Vested
|
(107,541
|
)
|
|
49.52
|
|
|
107,541
|
|
|
—
|
|
|
Settled
(2)
|
|
|
|
|
(78,887
|
)
|
|
(78,887
|
)
|
|||
Issuance of dividend equivalents
(3)
|
3,255
|
|
|
70.47
|
|
|
20,705
|
|
|
23,960
|
|
|
Forfeited
|
(17,064
|
)
|
|
53.50
|
|
|
—
|
|
|
(17,064
|
)
|
|
Canceled
(4)
|
|
|
|
|
(5,354
|
)
|
|
(5,354
|
)
|
|||
Outstanding as of December 31, 2015
|
318,449
|
|
|
$
|
58.91
|
|
|
951,360
|
|
|
1,269,809
|
|
(1)
|
Represents the grant-date fair value for all awards excluding the 2014 Time-Based RSU Grant. As discussed above, the 2014 Time-Based RSU Grant was re-measured upon stockholder approval of the amended 2006 Plan on May 22, 2014.
|
(2)
|
Represents vested RSUs that were settled in shares of the Company’s common stock. Total shares settled include
20,042
shares that were tendered in accordance with the terms of the 2006 Plan to satisfy minimum statutory tax withholding requirements related to the RSUs settled. We accept the return of RSUs at the current quoted closing share price of the Company’s common stock to satisfy tax obligations.
|
(3)
|
Represents the issuance of dividend equivalents earned on the underlying RSUs. The dividend equivalents vest based on terms specified under the related RSU award agreement.
|
(4)
|
For shares vested but not yet settled, we accept the return of RSUs at the current quoted closing share price of the Company’s common stock to satisfy minimum statutory tax-withholding requirements related to either the settlement or vesting of RSUs in accordance with the terms of the 2006 Plan.
|
|
RSUs Granted
|
|
RSUs Vested
|
||||||||||
Year ended December 31,
|
Non-Vested
RSUs Issued
|
|
Weighted-Average Grant Date
Fair Value
Per Share
|
|
Vested RSUs
|
|
Total Vest-Date Fair Value
(1)
(in thousands)
|
||||||
2015
|
98,802
|
|
|
$
|
74.49
|
|
|
(107,541
|
)
|
|
$
|
7,528
|
|
2014
|
155,016
|
|
|
59.89
|
|
|
(116,447
|
)
|
|
6,675
|
|
||
2013
|
173,758
|
|
|
49.45
|
|
|
(89,873
|
)
|
|
4,495
|
|
(1)
|
Total fair value of RSUs vested was calculated based on the quoted closing share price of the Company’s common stock on the NYSE on the day of vesting. Excludes the issuance of dividend equivalents earned on the underlying RSUs. The dividend equivalents vest based on terms specified under the related RSU award agreement.
|
|
Nonvested
Restricted Stock |
|
Weighted-Average
Grant Date Fair Value Per Share |
|||
Outstanding at January 1, 2015
|
85,061
|
|
|
$
|
47.05
|
|
Vested
(1)
|
(24,264
|
)
|
|
46.39
|
|
|
Outstanding as of December 31, 2015
|
60,797
|
|
|
$
|
47.32
|
|
(1)
|
The total shares vested includes
10,699
shares that were tendered in accordance with the terms of the 2006 Plan to satisfy minimum statutory tax withholding requirements related to the restricted shares that have vested. We accept the return of shares at the current quoted closing share price of the Company’s common stock to satisfy tax withholding obligations.
|
|
Shares Granted
|
|
Shares Vested
|
||||||||||
Years ended December 31,
|
Nonvested
Shares Issued
|
|
Weighted-Average Grant Date
Fair Value
Per Share
|
|
Vested Shares
|
|
Total Fair Value at Vest Date
(1)
(in thousands)
|
||||||
2015
|
—
|
|
|
$
|
—
|
|
|
(24,264
|
)
|
|
$
|
1,725
|
|
2014
|
213
|
|
|
51.35
|
|
|
(25,899
|
)
|
|
1,323
|
|
||
2013
|
—
|
|
|
—
|
|
|
(47,291
|
)
|
|
2,290
|
|
(1)
|
Total fair value of shares vested was calculated based on the quoted closing share price of the Company’s common stock on the NYSE on the date of vesting.
|
|
February 2012 Option Grant
|
Fair value of options granted per share
|
$9.20
|
Expected stock price volatility
|
33.00%
|
Risk-free interest rate
|
1.35%
|
Dividend yield
|
3.80%
|
Expected life of option
|
6.5 years
|
|
Number of Options
|
|
Exercise Price
|
|
Intrinsic Value
(in millions)
(1)
|
|||||
Outstanding at December 31, 2014
|
1,008,000
|
|
|
$
|
42.61
|
|
|
$
|
26.7
|
|
Exercised
|
(342,000
|
)
|
|
42.61
|
|
|
10.3
|
|
||
Forfeited
|
(56,000
|
)
|
|
42.61
|
|
|
1.3
|
|
||
Outstanding at December 31, 2015
(2)
|
610,000
|
|
|
$
|
42.61
|
|
|
$
|
12.6
|
|
|
|
|
|
|
|
|||||
Options exercisable at December 31, 2015
(3)
|
70,000
|
|
|
$
|
42.61
|
|
|
$
|
1.4
|
|
(1)
|
The intrinsic value of a stock option is the amount by which the fair value of the underlying stock exceeds the exercise price of an option. The fair value of the underlying stock was determined by using the closing share price on the NYSE on the date of exercise, forfeiture or respective period end.
|
(2)
|
As of
December 31, 2015
, the average remaining life of stock options outstanding was
6.2
years
|
(3)
|
As of
December 31, 2015
, the average remaining life of stock options exercisable was approximately
6.2
years.
|
14.
|
Employee Benefit Plans
|
15.
|
Future Minimum Rent
|
Year Ending
|
(in thousands)
|
||
2016
|
$
|
495,765
|
|
2017
|
482,650
|
|
|
2018
|
440,367
|
|
|
2019
|
379,939
|
|
|
2020
|
311,225
|
|
|
Thereafter
|
1,458,333
|
|
|
Total
|
$
|
3,568,279
|
|
16.
|
Commitments and Contingencies
|
Property
|
Contractual Expiration Date
(1)
|
601 108th Ave NE, Bellevue, WA
|
November 2093
|
701, 801 and 837 N. 34th Street, Seattle, WA
(2)
|
December 2041
|
Kilroy Airport Center Phases I, II, and III, Long Beach, CA
|
July 2084
|
(1)
|
Reflects the contractual expiration date prior to the impact of any extension or purchase options held by the Company.
|
(2)
|
The Company has
three
10
year and
one
45
year extension options for this ground lease, which if exercised would extend the expiration date to December 2116.
|
Year Ending
|
(in thousands)
|
||
2016
|
$
|
3,144
|
|
2017
|
3,144
|
|
|
2018
|
3,144
|
|
|
2019
|
3,144
|
|
|
2020
|
3,144
|
|
|
Thereafter
|
151,738
|
|
|
Total
(1)(2)(3)(4)
|
$
|
167,458
|
|
(1)
|
Reflects the minimum ground lease obligations before the impact of ground lease extension options.
|
(2)
|
One of our ground lease obligations is subject to a fair market value adjustment every
five years
; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to
$1.0 million
. The contractual obligations for that ground lease included above assumes the lesser of
$1.0 million
or annual lease rental obligation in effect as of
December 31, 2015
.
|
(3)
|
One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every
five years
based on
50%
of the average annual percentage rent for the previous five years. Currently, gross income does not exceed the threshold requiring us to pay percentage rent. The contractual obligations for that ground lease included above assume the annual lease rental obligation in effect as of
December 31, 2015
.
|
(4)
|
One of our ground lease obligations is subject to a fair market value adjustment every five years based on a combination of CPI adjustments and third-party appraisals limited to maximum increases annually. The contractual obligations included above assume the annual lease rental obligation in effect as of
December 31, 2015
.
|
|
Fair Value (Level 1)
(1)
|
||||||
|
2015
|
|
2014
|
||||
Description
|
(in thousands)
|
||||||
Marketable securities
(2)
|
$
|
12,882
|
|
|
$
|
11,971
|
|
(1)
|
Fair value calculated using Level 1 inputs based on quoted prices in active markets for identical securities.
|
(2)
|
The marketable securities are held in a limited rabbi trust
.
|
|
December 31,
|
||||||||||||||
|
2015
|
|
2014
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
|
(in thousands)
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Secured debt
(1)
|
$
|
381,918
|
|
|
$
|
391,611
|
|
|
$
|
546,292
|
|
|
$
|
559,483
|
|
Unsecured debt, net
(2)
|
1,856,590
|
|
|
1,898,863
|
|
|
1,783,121
|
|
|
1,858,492
|
|
||||
Unsecured line of credit
(1)
|
—
|
|
|
—
|
|
|
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 II inputs as of
December 31, 2015
, which are based on model-derived valuations in which significant inputs and significant value drivers are observable in active markets. Fair value calculated using primarily Level I inputs as of
December 31, 2014
, which are based on quoted prices for identical instruments in active markets. The carrying value and fair value of the instruments valued using Level I inputs was
$1,269.4 million
and
$1,322.2 million
, respectively, as of
December 31, 2014
. The carrying value and fair value of the instruments valued using Level II inputs was
$513.7 million
and
$536.3 million
, respectively, as of
December 31, 2014
.
|
19.
|
Discontinued Operations
|
|
|
||||||
|
2014
|
|
2013
|
||||
|
(in thousands)
|
||||||
Revenues:
|
|
|
|
||||
Rental income
|
$
|
7,206
|
|
|
$
|
31,984
|
|
Tenant reimbursements
|
278
|
|
|
3,546
|
|
||
Other property income
|
13
|
|
|
5,178
|
|
||
Total revenues
|
7,497
|
|
|
40,708
|
|
||
Expenses:
|
|
|
|
||||
Property expenses
|
2,171
|
|
|
7,207
|
|
||
Real estate taxes
|
692
|
|
|
3,523
|
|
||
Depreciation and amortization
|
2,061
|
|
|
12,600
|
|
||
Total expenses
|
4,924
|
|
|
23,330
|
|
||
Income from discontinued operations before net gain on dispositions of discontinued operations
|
2,573
|
|
|
17,378
|
|
||
Net gain on dispositions of discontinued operations
|
121,922
|
|
|
12,252
|
|
||
Total income from discontinued operations
|
$
|
124,495
|
|
|
$
|
29,630
|
|
20.
|
Net Income Available to Common Stockholders Per Share of the Company
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except unit and per unit amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
238,604
|
|
|
$
|
59,313
|
|
|
$
|
14,935
|
|
Income from continuing operations attributable to noncontrolling interests
|
(4,523
|
)
|
|
(966
|
)
|
|
(36
|
)
|
|||
Preferred dividends and distributions
|
(13,250
|
)
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|||
Allocation to participating securities
(1)
|
(1,634
|
)
|
|
(1,699
|
)
|
|
(1,689
|
)
|
|||
Numerator for basic and diluted income (loss) from continuing operations available to common stockholders
|
219,197
|
|
|
43,398
|
|
|
(40
|
)
|
|||
Income from discontinued operations
(2)
|
—
|
|
|
124,495
|
|
|
29,630
|
|
|||
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership
(2)
|
—
|
|
|
(2,623
|
)
|
|
(649
|
)
|
|||
Numerator for basic and diluted net income available to common stockholders
|
$
|
219,197
|
|
|
$
|
165,270
|
|
|
$
|
28,941
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average vested shares outstanding
|
89,854,096
|
|
|
83,090,235
|
|
|
77,343,853
|
|
|||
Effect of dilutive securities – contingently issuable shares and stock options
|
541,679
|
|
|
1,877,485
|
|
|
—
|
|
|||
Diluted weighted average vested shares and common stock equivalents outstanding
|
90,395,775
|
|
|
84,967,720
|
|
|
77,343,853
|
|
|||
Basic earnings per share:
|
|
|
|
|
|
||||||
Income from continuing operations available to common stockholders per share
|
$
|
2.44
|
|
|
$
|
0.52
|
|
|
$
|
0.00
|
|
Income from discontinued operations per share of common stock
(2)
|
—
|
|
|
1.47
|
|
|
0.37
|
|
|||
Net income available to common stockholders per share
|
$
|
2.44
|
|
|
$
|
1.99
|
|
|
$
|
0.37
|
|
Diluted earnings per share:
|
|
|
|
|
|
||||||
Income from continuing operations available to common stockholders per share
|
$
|
2.42
|
|
|
$
|
0.51
|
|
|
$
|
0.00
|
|
Income from discontinued operations per share of common stock
(2)
|
—
|
|
|
1.44
|
|
|
0.37
|
|
|||
Net income available to common stockholders per share
|
$
|
2.42
|
|
|
$
|
1.95
|
|
|
$
|
0.37
|
|
(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 2 “Basis of Presentation and Significant Accounting Policies” for additional information). 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.
|
21.
|
Net Income Available to Common Unitholders Per Unit of the Operating Partnership
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands, except unit and per unit amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Income from continuing operations
|
$
|
238,604
|
|
|
$
|
59,313
|
|
|
$
|
14,935
|
|
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries
|
(467
|
)
|
|
(247
|
)
|
|
(225
|
)
|
|||
Preferred distributions
|
(13,250
|
)
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|||
Allocation to participating securities
(1)
|
(1,634
|
)
|
|
(1,699
|
)
|
|
(1,689
|
)
|
|||
Numerator for basic and diluted income (loss) from continuing operations available to common unitholders
|
223,253
|
|
|
44,117
|
|
|
(229
|
)
|
|||
Income from discontinued operations
(2)
|
—
|
|
|
124,495
|
|
|
29,630
|
|
|||
(Income) loss from discontinued operations attributable to noncontrolling interests in consolidated subsidiaries
(2)
|
—
|
|
|
(13
|
)
|
|
1
|
|
|||
Numerator for basic and diluted net income available to common unitholders
|
$
|
223,253
|
|
|
$
|
168,599
|
|
|
$
|
29,402
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average vested units outstanding
|
91,645,578
|
|
|
84,894,498
|
|
|
79,166,260
|
|
|||
Effect of dilutive securities - contingently issuable shares and stock options
|
541,679
|
|
|
1,877,485
|
|
|
—
|
|
|||
Diluted weighted average vested units and common unit equivalents outstanding
|
92,187,257
|
|
|
86,771,983
|
|
|
79,166,260
|
|
|||
Basic earnings per unit:
|
|
|
|
|
|
||||||
Income from continuing operations available to common unitholders per unit
|
$
|
2.44
|
|
|
$
|
0.52
|
|
|
$
|
0.00
|
|
Income from discontinued operations per common unit
(2)
|
—
|
|
|
1.47
|
|
|
0.37
|
|
|||
Net income available to common unitholders per unit
|
$
|
2.44
|
|
|
$
|
1.99
|
|
|
$
|
0.37
|
|
Diluted earnings per unit:
|
|
|
|
|
|
||||||
Income from continuing operations available to common unitholders per unit
|
$
|
2.42
|
|
|
$
|
0.51
|
|
|
$
|
0.00
|
|
Income from discontinued operations per common unit
(2)
|
—
|
|
|
1.43
|
|
|
0.37
|
|
|||
Net income available to common unitholders per unit
|
$
|
2.42
|
|
|
$
|
1.94
|
|
|
$
|
0.37
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
(2)
|
The Operating Partnership adopted ASU 2014-08 effective January 1, 2015 (see Note 2 “Basis of Presentation and Significant Accounting Policies” for additional information). 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.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for interest, net of capitalized interest of $50,923, $44,385, and $32,742 as of
December 31, 2015, 2014 and 2013, respectively
|
$
|
54,747
|
|
|
$
|
58,944
|
|
|
$
|
65,157
|
|
NONCASH INVESTING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual for expenditures for operating properties and development and redevelopment
properties
|
$
|
109,715
|
|
|
$
|
77,091
|
|
|
$
|
73,482
|
|
Tenant improvements funded directly by tenants
|
$
|
13,837
|
|
|
$
|
42,906
|
|
|
$
|
7,633
|
|
Assumption of secured debt in connection with property acquisitions (Note 8)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95,496
|
|
Assumption of other assets and liabilities in connection with operating and development
property acquisitions, net (Note 3)
|
$
|
6,254
|
|
|
$
|
14,917
|
|
|
$
|
1,811
|
|
Release of holdback funds to third party
|
$
|
9,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contribution of land, net of related liabilities, by noncontrolling interest to consolidated
subsidiary
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,885
|
|
NONCASH FINANCING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual of dividends and distributions payable to common stockholders and common
unitholders (Note 11)
|
$
|
33,336
|
|
|
$
|
31,243
|
|
|
$
|
29,378
|
|
Accrual of dividends and distributions payable to preferred stockholders and preferred
unitholders (Note 11)
|
$
|
1,656
|
|
|
$
|
1,656
|
|
|
$
|
1,694
|
|
Issuance of common shares in connection with a development property
acquisition (Notes 3 and 11)
|
$
|
—
|
|
|
$
|
21,631
|
|
|
$
|
—
|
|
Exchange of common units of the Operating Partnership into shares of the Company’s
common stock (Note 11)
|
$
|
1,223
|
|
|
$
|
28
|
|
|
$
|
450
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for interest, net of capitalized interest of $50,923, $44,385, and $32,742 as of
December 31, 2015, 2014 and 2013, respectively
|
$
|
54,747
|
|
|
$
|
58,944
|
|
|
$
|
65,157
|
|
NONCASH INVESTING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual for expenditures for operating properties and development and redevelopment properties
|
$
|
109,715
|
|
|
$
|
77,091
|
|
|
$
|
73,482
|
|
Tenant improvements funded directly by tenants
|
$
|
13,837
|
|
|
$
|
42,906
|
|
|
$
|
7,633
|
|
Assumption of secured debt in connection with property acquisition (Note 8)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
95,496
|
|
Assumption of other assets and liabilities in connection with operating and development property acquisitions, net (Note 3)
|
$
|
6,254
|
|
|
$
|
14,917
|
|
|
$
|
1,811
|
|
Release of holdback funds to third party
|
$
|
9,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Contribution of land, net of related liabilities, by noncontrolling interest to consolidated subsidiary
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,885
|
|
NONCASH FINANCING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual of distributions payable to common unitholders (Note 12)
|
$
|
33,353
|
|
|
$
|
31,243
|
|
|
$
|
29,378
|
|
Accrual of distributions payable to preferred unitholders (Note 12)
|
$
|
1,656
|
|
|
$
|
1,656
|
|
|
$
|
1,694
|
|
Issuance of common units in connection with a development property acquisition (Notes 3 and 12)
|
$
|
—
|
|
|
$
|
21,631
|
|
|
$
|
—
|
|
|
Year Ended December 31,
|
|||||||
Dividends
|
2015
|
|
2014
|
|
2013
|
|||
Dividends declared per share of common stock
|
1.400
|
|
|
1.400
|
|
|
1.400
|
|
Less: Dividends declared in the current year and paid in the following year
|
(0.350
|
)
|
|
(0.350
|
)
|
|
(0.350
|
)
|
Add: Dividends declared in the prior year and paid in the current year
|
0.350
|
|
|
0.350
|
|
|
0.350
|
|
Dividends paid per share of common stock
|
1.400
|
|
|
1.400
|
|
|
1.400
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
Shares of Common Stock
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Ordinary income
|
$
|
0.992
|
|
|
70.86
|
%
|
|
$
|
0.998
|
|
|
71.29
|
%
|
|
$
|
0.756
|
|
|
54.00
|
%
|
Qualified dividend
|
0.002
|
|
|
0.13
|
|
|
0.002
|
|
|
0.14
|
|
|
0.003
|
|
|
0.21
|
|
|||
Return of capital
|
—
|
|
|
—
|
|
|
0.398
|
|
|
28.43
|
|
|
0.620
|
|
|
44.29
|
|
|||
Capital gains
(1)
|
0.051
|
|
|
3.65
|
|
|
0.002
|
|
|
0.14
|
|
|
—
|
|
|
—
|
|
|||
Unrecaptured section 1250 gains
|
0.355
|
|
|
25.36
|
|
|
—
|
|
|
—
|
|
|
0.021
|
|
|
1.5
|
|
|||
|
$
|
1.400
|
|
|
100.00
|
%
|
|
$
|
1.400
|
|
|
100.00
|
%
|
|
$
|
1.400
|
|
|
100.00
|
%
|
(1)
|
Capital gains are comprised entirely of
20%
rate gains.
|
|
Year Ended December 31,
|
|
||||||||||||||||||
Preferred Shares
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Ordinary income
|
$
|
1.218
|
|
|
70.86
|
%
|
|
$
|
1.711
|
|
|
99.54
|
%
|
|
$
|
1.668
|
|
|
97.03
|
%
|
Qualified dividend
|
0.002
|
|
|
0.13
|
|
|
0.003
|
|
|
0.17
|
|
|
0.006
|
|
|
0.35
|
|
|||
Capital gains
(1)
|
0.063
|
|
|
3.65
|
|
|
0.005
|
|
|
0.29
|
|
|
—
|
|
|
—
|
|
|||
Unrecaptured section 1250 gains
|
0.436
|
|
|
25.36
|
|
|
—
|
|
|
—
|
|
|
0.045
|
|
|
2.62
|
|
|||
|
$
|
1.719
|
|
|
100.00
|
%
|
|
$
|
1.719
|
|
|
100.00
|
%
|
|
$
|
1.719
|
|
|
100.00
|
%
|
(1)
|
Capital gains are comprised entirely of
20%
rate gains.
|
|
Year Ended December 31,
|
|||||||||||||||||||
Preferred Shares
|
2015
|
|
2014
|
|
2013
|
|||||||||||||||
Ordinary income
|
$
|
1.129
|
|
|
70.86
|
%
|
|
$
|
1.587
|
|
|
99.56
|
%
|
|
$
|
1.546
|
|
|
96.99
|
%
|
Qualified dividend
|
0.002
|
|
|
0.13
|
|
|
0.003
|
|
|
0.19
|
|
|
0.006
|
|
|
0.38
|
|
|||
Capital gains
(1)
|
0.059
|
|
|
3.65
|
|
|
0.004
|
|
|
0.25
|
|
|
—
|
|
|
—
|
|
|||
Unrecaptured section 1250 gains
|
0.404
|
|
|
25.36
|
|
|
—
|
|
|
—
|
|
|
0.042
|
|
|
2.63
|
|
|||
|
$
|
1.594
|
|
|
100.00
|
%
|
|
$
|
1.594
|
|
|
100.00
|
%
|
|
$
|
1.594
|
|
|
100.00
|
%
|
(1)
|
Capital gains are comprised entirely of
20%
rate gains.
|
25.
|
Quarterly Financial Information of the Company (Unaudited)
|
|
2015 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues from continuing operations
|
$
|
146,082
|
|
|
$
|
146,227
|
|
|
$
|
141,553
|
|
|
$
|
147,413
|
|
Income from continuing operations
|
44,002
|
|
|
58,590
|
|
|
106,704
|
|
|
29,308
|
|
||||
Net income
|
44,002
|
|
|
58,590
|
|
|
106,704
|
|
|
29,308
|
|
||||
Net income attributable to Kilroy Realty Corporation
|
43,187
|
|
|
57,500
|
|
|
104,759
|
|
|
28,635
|
|
||||
Preferred dividends and distributions
|
(3,313
|
)
|
|
(3,312
|
)
|
|
(3,313
|
)
|
|
(3,312
|
)
|
||||
Net income available to common stockholders
|
39,874
|
|
|
54,188
|
|
|
101,446
|
|
|
25,323
|
|
||||
Net income available to common stockholders per share – basic
|
0.45
|
|
|
0.61
|
|
|
1.10
|
|
|
0.27
|
|
||||
Net income available to common stockholders per share – diluted
|
0.45
|
|
|
0.61
|
|
|
1.09
|
|
|
0.27
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
2014 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues from continuing operations
|
$
|
123,758
|
|
|
$
|
127,178
|
|
|
$
|
129,024
|
|
|
$
|
141,765
|
|
Income from continuing operations
|
10,874
|
|
|
15,854
|
|
|
13,168
|
|
|
19,417
|
|
||||
Income from discontinued operations
|
91,058
|
|
|
15,289
|
|
|
6,135
|
|
|
12,013
|
|
||||
Net income
|
101,932
|
|
|
31,143
|
|
|
19,303
|
|
|
31,430
|
|
||||
Net income attributable to Kilroy Realty Corporation
|
99,845
|
|
|
30,540
|
|
|
18,982
|
|
|
30,852
|
|
||||
Preferred dividends and distributions
|
(3,313
|
)
|
|
(3,312
|
)
|
|
(3,313
|
)
|
|
(3,312
|
)
|
||||
Net income available to common stockholders
|
96,532
|
|
|
27,228
|
|
|
15,669
|
|
|
27,540
|
|
||||
Net income available to common stockholders per share – basic
|
1.17
|
|
|
0.33
|
|
|
0.18
|
|
|
0.32
|
|
||||
Net income available to common stockholders per share – diluted
|
1.14
|
|
|
0.32
|
|
|
0.18
|
|
|
0.32
|
|
(1)
|
The summation of the quarterly financial data may not equal the annual number reported on the consolidated statements of operations due to rounding. The summation of the quarterly net income (loss) available to common stockholders per share does not equal the annual number reported on the consolidated statements of operations due to the Company's public offerings of common stock and its at-the-market stock offering programs that occurred during the years ended
December 31, 2015
and
2014
.
|
26.
|
Quarterly Financial Information of the Operating Partnership (Unaudited)
|
|
2015 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Revenues from continuing operations
|
$
|
146,082
|
|
|
$
|
146,227
|
|
|
$
|
141,553
|
|
|
$
|
147,413
|
|
Income from continuing operations
|
44,002
|
|
|
58,590
|
|
|
106,704
|
|
|
29,308
|
|
||||
Net income
|
44,002
|
|
|
58,590
|
|
|
106,704
|
|
|
29,308
|
|
||||
Net income attributable to the Operating Partnership
|
43,927
|
|
|
58,518
|
|
|
106,640
|
|
|
29,052
|
|
||||
Preferred distributions
|
(3,313
|
)
|
|
(3,312
|
)
|
|
(3,313
|
)
|
|
(3,312
|
)
|
||||
Net income available to common unitholders
|
40,614
|
|
|
55,206
|
|
|
103,327
|
|
|
25,740
|
|
||||
Net income available to common unitholders per unit – basic
|
0.45
|
|
|
0.61
|
|
|
1.10
|
|
|
0.27
|
|
||||
Net income available to common unitholders per unit – diluted
|
0.45
|
|
|
0.61
|
|
|
1.09
|
|
|
0.27
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
2014 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Revenues from continuing operations
|
$
|
123,758
|
|
|
$
|
127,178
|
|
|
$
|
129,024
|
|
|
$
|
141,765
|
|
Income from continuing operations
|
10,874
|
|
|
15,854
|
|
|
13,168
|
|
|
19,417
|
|
||||
Income from discontinued operations
|
91,058
|
|
|
15,289
|
|
|
6,135
|
|
|
12,013
|
|
||||
Net income
|
101,932
|
|
|
31,143
|
|
|
19,303
|
|
|
31,430
|
|
||||
Net income attributable to the Operating Partnership
|
101,867
|
|
|
31,066
|
|
|
19,244
|
|
|
31,371
|
|
||||
Preferred distributions
|
(3,313
|
)
|
|
(3,312
|
)
|
|
(3,313
|
)
|
|
(3,312
|
)
|
||||
Net income available to common unitholders
|
98,554
|
|
|
27,754
|
|
|
15,931
|
|
|
28,059
|
|
||||
Net income available to common unitholders per unit – basic
|
1.17
|
|
|
0.33
|
|
|
0.18
|
|
|
0.32
|
|
||||
Net income available to common unitholders per unit – diluted
|
1.14
|
|
|
0.32
|
|
|
0.18
|
|
|
0.31
|
|
(1)
|
The summation of the quarterly financial data may not equal the annual number reported on the consolidated statements of operations due to rounding. The summation of the quarterly net income (loss) available to common unitholders per unit does not equal the annual number reported on the consolidated statements of operations due to the impact of the Company's public offerings of common stock and its at-the-market stock offering programs that occurred during the years ended
December 31, 2015
and
2014
.
|
27.
|
Subsequent Events
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Recoveries
(Deductions)
|
|
Balance
at End
of Period
(1)
|
||||||||
Allowance for Uncollectible Tenant Receivables for the year ended
December 31,
|
|
|
|
|
|
|
|
||||||||
2015 – Allowance for uncollectible tenant receivables
|
$
|
1,999
|
|
|
$
|
303
|
|
|
$
|
(222
|
)
|
|
$
|
2,080
|
|
2014 – Allowance for uncollectible tenant receivables
|
2,134
|
|
|
58
|
|
|
(193
|
)
|
|
1,999
|
|
||||
2013 – Allowance for uncollectible tenant receivables
|
2,581
|
|
|
396
|
|
|
(843
|
)
|
|
2,134
|
|
||||
Allowance for Unbilled Deferred Rent for the year ended
December 31,
|
|
|
|
|
|
|
|
||||||||
2015 – Allowance for deferred rent
|
$
|
1,989
|
|
|
$
|
242
|
|
|
$
|
(349
|
)
|
|
$
|
1,882
|
|
2014 – Allowance for deferred rent
|
2,075
|
|
|
—
|
|
|
(86
|
)
|
|
1,989
|
|
||||
2013 – Allowance for deferred rent
|
2,607
|
|
|
—
|
|
|
(532
|
)
|
|
2,075
|
|
|
|
Initial Cost
|
|
|
|
Gross Amounts at Which
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Property Location
|
|
Encumb-
rances
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Costs
Capitalized
Subsequent to
Acquisition/
Improvement
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Total
|
|
Accumulated
Depreciation
|
|
Deprecia-
tion
Life
(1)
|
|
Date of
Acquisition
(A)/
Construction
(C)
(2)
|
|
Rentable
Square
Feet
(3)
(unaudited)
|
|||||||||||||||||
|
|
(in thousands)
|
|||||||||||||||||||||||||||||||||||||
Office Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
23925 Park Sorrento, Calabasas, CA
|
|
$
|
3,987
|
|
(4)
|
$
|
50
|
|
|
$
|
2,346
|
|
|
$
|
493
|
|
|
$
|
50
|
|
|
$
|
2,839
|
|
|
$
|
2,889
|
|
|
$
|
1,587
|
|
|
35
|
|
2001
|
(C)
|
11,789
|
|
23975 Park Sorrento, Calabasas, CA
|
|
|
|
(4)
|
765
|
|
|
17,720
|
|
|
6,416
|
|
|
765
|
|
|
24,136
|
|
|
24,901
|
|
|
13,702
|
|
|
35
|
|
2002
|
(C)
|
104,797
|
|
||||||||
24025 Park Sorrento, Calabasas, CA
|
|
|
|
(4)
|
845
|
|
|
15,896
|
|
|
6,121
|
|
|
845
|
|
|
22,017
|
|
|
22,862
|
|
|
12,503
|
|
|
35
|
|
2000
|
(C)
|
108,671
|
|
||||||||
2829 Townsgate Rd., Thousand Oaks, CA
|
|
|
|
5,248
|
|
|
8,001
|
|
|
7,417
|
|
|
5,247
|
|
|
15,419
|
|
|
20,666
|
|
|
9,764
|
|
|
35
|
|
1997
|
(A)
|
81,067
|
|
|||||||||
2240 E. Imperial Highway, El Segundo, CA
|
|
|
|
1,044
|
|
|
11,763
|
|
|
29,448
|
|
|
1,048
|
|
|
41,207
|
|
|
42,255
|
|
|
21,837
|
|
|
35
|
|
1983
|
(C)
|
122,870
|
|
|||||||||
2250 E. Imperial Highway, El Segundo, CA
|
|
|
|
2,579
|
|
|
29,062
|
|
|
34,953
|
|
|
2,547
|
|
|
64,047
|
|
|
66,594
|
|
|
46,814
|
|
|
35
|
|
1983
|
(C)
|
298,728
|
|
|||||||||
2260 E. Imperial Highway, El Segundo, CA
|
|
|
|
2,518
|
|
|
28,370
|
|
|
36,771
|
|
|
2,547
|
|
|
65,112
|
|
|
67,659
|
|
|
7,312
|
|
|
35
|
|
1983
|
(C)
|
298,728
|
|
|||||||||
909 N. Sepulveda Blvd., El Segundo, CA
|
|
65,563
|
|
(5)
|
3,577
|
|
|
34,042
|
|
|
42,869
|
|
|
3,577
|
|
|
76,911
|
|
|
80,488
|
|
|
29,058
|
|
|
35
|
|
2005
|
(C)
|
241,607
|
|
||||||||
999 N. Sepulveda Blvd., El Segundo, CA
|
|
|
|
(5)
|
1,407
|
|
|
34,326
|
|
|
12,238
|
|
|
1,407
|
|
|
46,564
|
|
|
47,971
|
|
|
18,201
|
|
|
35
|
|
2003
|
(C)
|
128,592
|
|
||||||||
6115 W. Sunset Blvd., Los Angeles, CA
(6)
|
|
|
|
|
1,313
|
|
|
3
|
|
|
25,503
|
|
|
2,455
|
|
|
24,364
|
|
|
26,819
|
|
|
308
|
|
|
35
|
|
2015
|
(C)
|
26,075
|
|
||||||||
6121 W. Sunset Blvd., Los Angeles, CA
(6)
|
|
|
|
|
11,120
|
|
|
4,256
|
|
|
73,250
|
|
|
8,703
|
|
|
79,923
|
|
|
88,626
|
|
|
1,040
|
|
|
35
|
|
2015
|
(C)
|
82,442
|
|
||||||||
6255 W. Sunset Blvd., Los Angeles, CA
|
|
|
|
|
18,111
|
|
|
60,320
|
|
|
32,840
|
|
|
18,111
|
|
|
93,160
|
|
|
111,271
|
|
|
12,693
|
|
|
35
|
|
2012
|
(A)
|
324,617
|
|
||||||||
3750 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
1,941
|
|
|
10,463
|
|
|
—
|
|
|
12,404
|
|
|
12,404
|
|
|
9,280
|
|
|
35
|
|
1989
|
(C)
|
10,457
|
|
|||||||||
3760 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
17,467
|
|
|
10,734
|
|
|
—
|
|
|
28,201
|
|
|
28,201
|
|
|
21,954
|
|
|
35
|
|
1989
|
(C)
|
165,278
|
|
|||||||||
3780 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
22,319
|
|
|
17,939
|
|
|
—
|
|
|
40,258
|
|
|
40,258
|
|
|
32,824
|
|
|
35
|
|
1989
|
(C)
|
219,745
|
|
|||||||||
3800 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
19,408
|
|
|
17,263
|
|
|
—
|
|
|
36,671
|
|
|
36,671
|
|
|
20,556
|
|
|
35
|
|
2000
|
(C)
|
192,476
|
|
|||||||||
3840 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
13,586
|
|
|
9,337
|
|
|
—
|
|
|
22,923
|
|
|
22,923
|
|
|
13,222
|
|
|
35
|
|
1999
|
(C)
|
136,026
|
|
|||||||||
3880 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
9,704
|
|
|
11,086
|
|
|
—
|
|
|
20,790
|
|
|
20,790
|
|
|
1,722
|
|
|
35
|
|
1997
|
(A)
|
96,035
|
|
|||||||||
3900 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
12,615
|
|
|
9,949
|
|
|
—
|
|
|
22,564
|
|
|
22,564
|
|
|
13,958
|
|
|
35
|
|
1997
|
(A)
|
126,840
|
|
|||||||||
Kilroy Airport Center, Phase IV, Long Beach, CA
(7)
|
|
|
|
—
|
|
|
—
|
|
|
4,997
|
|
|
—
|
|
|
4,997
|
|
|
4,997
|
|
|
4,984
|
|
|
35
|
|
|
|
|
||||||||||
12100 W. Olympic Blvd., Los Angeles, CA
|
|
|
|
352
|
|
|
45,611
|
|
|
16,258
|
|
|
9,633
|
|
|
52,588
|
|
|
62,221
|
|
|
21,521
|
|
|
35
|
|
2003
|
(C)
|
150,167
|
|
|||||||||
12200 W. Olympic Blvd., Los Angeles, CA
|
|
|
|
4,329
|
|
|
35,488
|
|
|
17,561
|
|
|
3,977
|
|
|
53,401
|
|
|
57,378
|
|
|
31,401
|
|
|
35
|
|
2000
|
(C)
|
150,117
|
|
|||||||||
12233 W. Olympic Blvd., Los Angeles, CA
|
|
|
|
22,100
|
|
|
53,170
|
|
|
1,695
|
|
|
22,100
|
|
|
54,865
|
|
|
76,965
|
|
|
5,616
|
|
|
35
|
|
2012
|
(A)
|
151,029
|
|
|||||||||
12312 W. Olympic Blvd., Los Angeles, CA
|
|
|
|
3,325
|
|
|
12,202
|
|
|
11,307
|
|
|
3,399
|
|
|
23,435
|
|
|
26,834
|
|
|
7,687
|
|
|
35
|
|
1997
|
(A)
|
76,644
|
|
|||||||||
1633 26th St., Santa Monica, CA
|
|
|
|
2,080
|
|
|
6,672
|
|
|
2,955
|
|
|
2,040
|
|
|
9,667
|
|
|
11,707
|
|
|
5,996
|
|
|
35
|
|
1997
|
(A)
|
44,915
|
|
|||||||||
2100/2110 Colorado Ave., Santa Monica, CA
|
|
96,354
|
|
(8)
|
5,474
|
|
|
26,087
|
|
|
13,998
|
|
|
5,476
|
|
|
40,083
|
|
|
45,559
|
|
|
18,941
|
|
|
35
|
|
1997
|
(A)
|
102,864
|
|
||||||||
3130 Wilshire Blvd., Santa Monica, CA
|
|
|
|
8,921
|
|
|
6,579
|
|
|
11,929
|
|
|
9,188
|
|
|
18,241
|
|
|
27,429
|
|
|
12,144
|
|
|
35
|
|
1997
|
(A)
|
88,340
|
|
|||||||||
501 Santa Monica Blvd., Santa Monica, CA
|
|
|
|
|
4,547
|
|
|
12,044
|
|
|
8,861
|
|
|
4,551
|
|
|
20,901
|
|
|
25,452
|
|
|
11,794
|
|
|
35
|
|
1998
|
(A)
|
73,115
|
|
||||||||
2211 Michelson, Irvine, CA
|
|
|
(8)
|
9,319
|
|
|
82,836
|
|
|
4,163
|
|
|
9,319
|
|
|
86,999
|
|
|
96,318
|
|
|
17,512
|
|
|
35
|
|
2010
|
(A)
|
271,556
|
|
|||||||||
12225 El Camino Real, Del Mar, CA
|
|
|
|
1,700
|
|
|
9,633
|
|
|
2,969
|
|
|
1,660
|
|
|
12,642
|
|
|
14,302
|
|
|
7,013
|
|
|
35
|
|
1998
|
(A)
|
58,401
|
|
|||||||||
12235 El Camino Real, Del Mar, CA
|
|
|
|
1,507
|
|
|
8,543
|
|
|
4,943
|
|
|
1,554
|
|
|
13,439
|
|
|
14,993
|
|
|
8,102
|
|
|
35
|
|
1998
|
(A)
|
54,673
|
|
|||||||||
12340 El Camino Real, Del Mar, CA
|
|
|
(5)
|
4,201
|
|
|
13,896
|
|
|
7,981
|
|
|
4,201
|
|
|
21,877
|
|
|
26,078
|
|
|
8,875
|
|
|
35
|
|
2002
|
(C)
|
87,774
|
|
|||||||||
12390 El Camino Real, Del Mar, CA
|
|
|
(5)
|
3,453
|
|
|
11,981
|
|
|
1,344
|
|
|
3,453
|
|
|
13,325
|
|
|
16,778
|
|
|
7,920
|
|
|
35
|
|
2000
|
(C)
|
72,332
|
|
|||||||||
12348 High Bluff Dr., Del Mar, CA
|
|
|
|
1,629
|
|
|
3,096
|
|
|
4,686
|
|
|
1,629
|
|
|
7,782
|
|
|
9,411
|
|
|
5,164
|
|
|
35
|
|
1999
|
(C)
|
38,806
|
|
|||||||||
12400 High Bluff Dr., Del Mar, CA
|
|
|
|
15,167
|
|
|
40,497
|
|
|
12,551
|
|
|
15,167
|
|
|
53,048
|
|
|
68,215
|
|
|
21,723
|
|
|
35
|
|
2004
|
(C)
|
209,220
|
|
|
|
Initial Cost
|
|
|
|
Gross Amounts at Which
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Property Location
|
|
Encumb-
rances
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Costs
Capitalized
Subsequent to
Acquisition/
Improvement
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Total
|
|
Accumulated
Depreciation
|
|
Deprecia-
tion
Life
(1)
|
|
Date of
Acquisition
(A)/
Construction
(C)
(2)
|
|
Rentable
Square
Feet
(3)
(unaudited)
|
|||||||||||||||
|
|
(in thousands)
|
|||||||||||||||||||||||||||||||||||
3579 Valley Centre Dr., Del Mar, CA
|
|
|
|
$
|
2,167
|
|
|
$
|
6,897
|
|
|
$
|
7,400
|
|
|
$
|
2,858
|
|
|
$
|
13,606
|
|
|
$
|
16,464
|
|
|
$
|
7,788
|
|
|
35
|
|
1999
|
(C)
|
50,677
|
|
3611 Valley Centre Dr., Del Mar, CA
|
|
|
|
4,184
|
|
|
19,352
|
|
|
18,405
|
|
|
5,259
|
|
|
36,682
|
|
|
41,941
|
|
|
19,372
|
|
|
35
|
|
2000
|
(C)
|
130,047
|
|
|||||||
3661 Valley Centre Dr., Del Mar, CA
|
|
|
|
4,038
|
|
|
21,144
|
|
|
12,448
|
|
|
4,725
|
|
|
32,905
|
|
|
37,630
|
|
|
16,408
|
|
|
35
|
|
2001
|
(C)
|
129,051
|
|
|||||||
3721 Valley Centre Dr., Del Mar, CA
|
|
|
|
4,297
|
|
|
18,967
|
|
|
12,819
|
|
|
4,254
|
|
|
31,829
|
|
|
36,083
|
|
|
11,283
|
|
|
35
|
|
2003
|
(C)
|
114,780
|
|
|||||||
3811 Valley Centre Dr., Del Mar, CA
|
|
|
|
3,452
|
|
|
16,152
|
|
|
20,092
|
|
|
4,457
|
|
|
35,239
|
|
|
39,696
|
|
|
17,641
|
|
|
35
|
|
2000
|
(C)
|
112,067
|
|
|||||||
12770 El Camino Real, Del Mar, CA
|
|
|
|
9,360
|
|
|
—
|
|
|
22,492
|
|
|
9,360
|
|
|
22,492
|
|
|
31,852
|
|
|
—
|
|
|
35
|
|
2015
|
(C)
|
(9
|
)
|
|||||||
12780 El Camino Real, Del Mar, CA
|
|
|
|
18,398
|
|
|
54,954
|
|
|
1,623
|
|
|
18,398
|
|
|
56,577
|
|
|
74,975
|
|
|
4,942
|
|
|
35
|
|
2013
|
(A)
|
140,591
|
|
|||||||
12790 El Camino Real, Del Mar, CA
|
|
|
|
10,252
|
|
|
21,236
|
|
|
1,202
|
|
|
10,252
|
|
|
22,438
|
|
|
32,690
|
|
|
1,905
|
|
|
35
|
|
2013
|
(A)
|
78,349
|
|
|||||||
13280 Evening Creek Dr. South, I-15 Corridor, CA
|
|
|
|
3,701
|
|
|
8,398
|
|
|
4,590
|
|
|
3,701
|
|
|
12,988
|
|
|
16,689
|
|
|
3,349
|
|
|
35
|
|
2008
|
(C)
|
41,196
|
|
|||||||
13290 Evening Creek Dr. South, I-15 Corridor, CA
|
|
|
|
5,229
|
|
|
11,871
|
|
|
5,898
|
|
|
5,229
|
|
|
17,769
|
|
|
22,998
|
|
|
3,418
|
|
|
35
|
|
2008
|
(C)
|
61,180
|
|
|||||||
13480 Evening Creek Dr. North, I-15 Corridor, CA
|
|
|
|
7,997
|
|
|
—
|
|
|
48,103
|
|
|
7,997
|
|
|
48,103
|
|
|
56,100
|
|
|
13,230
|
|
|
35
|
|
2008
|
(C)
|
149,817
|
|
|||||||
13500 Evening Creek Dr. North, I-15 Corridor, CA
|
|
|
|
7,581
|
|
|
35,903
|
|
|
8,540
|
|
|
7,580
|
|
|
44,444
|
|
|
52,024
|
|
|
15,768
|
|
|
35
|
|
2004
|
(A)
|
147,533
|
|
|||||||
13520 Evening Creek Dr. North, I-15 Corridor, CA
|
|
|
|
7,581
|
|
|
35,903
|
|
|
10,094
|
|
|
7,580
|
|
|
45,998
|
|
|
53,578
|
|
|
17,422
|
|
|
35
|
|
2004
|
(A)
|
141,128
|
|
|||||||
2355 Northside Dr., Mission Valley, CA
|
|
|
|
4,066
|
|
|
8,332
|
|
|
2,085
|
|
|
3,344
|
|
|
11,139
|
|
|
14,483
|
|
|
2,770
|
|
|
35
|
|
2010
|
(A)
|
53,610
|
|
|||||||
2365 Northside Dr., Mission Valley, CA
|
|
|
|
7,359
|
|
|
15,257
|
|
|
6,324
|
|
|
6,015
|
|
|
22,925
|
|
|
28,940
|
|
|
4,766
|
|
|
35
|
|
2010
|
(A)
|
96,437
|
|
|||||||
2375 Northside Dr., Mission Valley, CA
|
|
|
|
3,947
|
|
|
8,146
|
|
|
2,386
|
|
|
3,213
|
|
|
11,266
|
|
|
14,479
|
|
|
2,688
|
|
|
35
|
|
2010
|
(A)
|
51,516
|
|
|||||||
2385 Northside Dr., Mission Valley, CA
|
|
|
|
2,752
|
|
|
14,513
|
|
|
5,240
|
|
|
5,552
|
|
|
16,953
|
|
|
22,505
|
|
|
4,410
|
|
|
35
|
|
2010
|
(A)
|
89,023
|
|
|||||||
2305 Historic Decatur Rd., Point Loma, CA
|
|
|
|
5,240
|
|
|
22,220
|
|
|
3,278
|
|
|
5,240
|
|
|
25,498
|
|
|
30,738
|
|
|
4,938
|
|
|
35
|
|
2010
|
(A)
|
103,900
|
|
|||||||
4939 Directors Place, Sorrento Mesa, CA
|
|
|
|
2,225
|
|
|
12,698
|
|
|
4,359
|
|
|
2,198
|
|
|
17,084
|
|
|
19,282
|
|
|
8,975
|
|
|
35
|
|
2002
|
(C)
|
60,662
|
|
|||||||
4955 Directors Place, Sorrento Mesa, CA
|
|
|
|
2,521
|
|
|
14,122
|
|
|
3,697
|
|
|
3,179
|
|
|
17,161
|
|
|
20,340
|
|
|
12,998
|
|
|
35
|
|
2000
|
(C)
|
76,246
|
|
|||||||
10390 Pacific Center Ct., Sorrento Mesa, CA
|
|
|
|
3,267
|
|
|
5,779
|
|
|
7,501
|
|
|
3,267
|
|
|
13,280
|
|
|
16,547
|
|
|
5,787
|
|
|
35
|
|
2002
|
(C)
|
68,400
|
|
|||||||
10394 Pacific Center Ct., Sorrento Mesa, CA
|
|
|
|
2,696
|
|
|
7,134
|
|
|
(781
|
)
|
|
1,671
|
|
|
7,378
|
|
|
9,049
|
|
|
4,033
|
|
|
35
|
|
1998
|
(A)
|
59,630
|
|
|||||||
10398 Pacific Center Ct., Sorrento Mesa, CA
|
|
|
|
1,947
|
|
|
5,152
|
|
|
1,316
|
|
|
1,222
|
|
|
7,193
|
|
|
8,415
|
|
|
3,874
|
|
|
35
|
|
1998
|
(A)
|
43,645
|
|
|||||||
10421 Pacific Center Ct., Sorrento Mesa, CA
|
|
|
|
2,926
|
|
|
7,979
|
|
|
21,885
|
|
|
2,926
|
|
|
29,864
|
|
|
32,790
|
|
|
16,673
|
|
|
35
|
|
1998
|
(A)
|
75,899
|
|
|||||||
10445 Pacific Center Ct., Sorrento Mesa, CA
|
|
|
|
2,247
|
|
|
5,945
|
|
|
1,832
|
|
|
1,809
|
|
|
8,215
|
|
|
10,024
|
|
|
4,346
|
|
|
35
|
|
1998
|
(A)
|
48,709
|
|
|||||||
10455 Pacific Center Ct., Sorrento Mesa, CA
|
|
|
|
4,044
|
|
|
10,701
|
|
|
(2,250
|
)
|
|
3,780
|
|
|
8,715
|
|
|
12,495
|
|
|
4,532
|
|
|
35
|
|
1998
|
(A)
|
90,000
|
|
|||||||
5717 Pacific Center Blvd., Sorrento Mesa, CA
|
|
|
|
2,693
|
|
|
6,280
|
|
|
4,220
|
|
|
2,693
|
|
|
10,500
|
|
|
13,193
|
|
|
3,615
|
|
|
35
|
|
2001
|
(C)
|
67,995
|
|
|||||||
4690 Executive Dr., University Towne Centre, CA
|
|
|
(5)
|
1,623
|
|
|
7,926
|
|
|
2,639
|
|
|
1,623
|
|
|
10,565
|
|
|
12,188
|
|
|
5,992
|
|
|
35
|
|
1999
|
(A)
|
47,846
|
|
|||||||
4100 Bohannon Dr., Menlo Park, CA
|
|
|
|
4,835
|
|
|
15,526
|
|
|
468
|
|
|
4,835
|
|
|
15,994
|
|
|
20,829
|
|
|
2,156
|
|
|
35
|
|
2012
|
(A)
|
47,379
|
|
|||||||
4200 Bohannon Dr., Menlo Park, CA
|
|
|
|
4,798
|
|
|
15,406
|
|
|
2,125
|
|
|
4,798
|
|
|
17,531
|
|
|
22,329
|
|
|
2,406
|
|
|
35
|
|
2012
|
(A)
|
45,451
|
|
|||||||
4300 Bohannon Dr., Menlo Park, CA
|
|
|
|
6,527
|
|
|
20,958
|
|
|
2,803
|
|
|
6,527
|
|
|
23,761
|
|
|
30,288
|
|
|
3,828
|
|
|
35
|
|
2012
|
(A)
|
63,079
|
|
|||||||
4400 Bohannon Dr., Menlo Park, CA
|
|
|
|
4,798
|
|
|
15,406
|
|
|
2,125
|
|
|
4,798
|
|
|
17,531
|
|
|
22,329
|
|
|
2,637
|
|
|
35
|
|
2012
|
(A)
|
48,146
|
|
|||||||
4500 Bohannon Dr., Menlo Park, CA
|
|
|
|
6,527
|
|
|
20,957
|
|
|
1,692
|
|
|
6,527
|
|
|
22,649
|
|
|
29,176
|
|
|
3,090
|
|
|
35
|
|
2012
|
(A)
|
63,078
|
|
|||||||
4600 Bohannon Dr., Menlo Park, CA
|
|
|
|
4,798
|
|
|
15,406
|
|
|
2,180
|
|
|
4,798
|
|
|
17,586
|
|
|
22,384
|
|
|
2,426
|
|
|
35
|
|
2012
|
(A)
|
48,147
|
|
|||||||
4700 Bohannon Dr., Menlo Park, CA
|
|
|
|
6,527
|
|
|
20,958
|
|
|
1,468
|
|
|
6,527
|
|
|
22,426
|
|
|
28,953
|
|
|
3,000
|
|
|
35
|
|
2012
|
(A)
|
63,078
|
|
|||||||
331 Fairchild Dr., CA
|
|
|
|
18,396
|
|
|
17,712
|
|
|
7,887
|
|
|
18,396
|
|
|
25,599
|
|
|
43,995
|
|
|
1,972
|
|
|
35
|
|
2013
|
(C)
|
87,147
|
|
|
|
Initial Cost
|
|
|
|
Gross Amounts at Which
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Property Location
|
|
Encumb-
rances
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Costs
Capitalized
Subsequent to
Acquisition/
Improvement
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Total
|
|
Accumulated
Depreciation
|
|
Deprecia-
tion
Life
(1)
|
|
Date of
Acquisition
(A)/
Construction
(C)
(2)
|
|
Rentable
Square
Feet
(3)
(unaudited)
|
|||||||||||||||||
|
|
(in thousands)
|
|||||||||||||||||||||||||||||||||||||
680 E. Middlefield Rd., Mountain View, CA
|
|
|
|
$
|
34,605
|
|
|
$
|
—
|
|
|
$
|
56,464
|
|
|
$
|
34,605
|
|
|
$
|
56,464
|
|
|
$
|
91,069
|
|
|
$
|
2,194
|
|
|
35
|
|
2014
|
(C)
|
170,090
|
|
||
690 E. Middlefield Rd., Mountain View, CA
|
|
|
|
34,755
|
|
|
—
|
|
|
56,707
|
|
|
34,755
|
|
|
56,707
|
|
|
91,462
|
|
|
2,203
|
|
|
35
|
|
2014
|
(C)
|
170,823
|
|
|||||||||
900 Jefferson Ave., Redwood City, CA
(10)
|
|
|
|
16,668
|
|
|
—
|
|
|
109,303
|
|
|
18,063
|
|
|
107,908
|
|
|
125,971
|
|
|
858
|
|
|
35
|
|
2015
|
(C)
|
226,197
|
|
|||||||||
900 Middlefield Rd., Redwood City, CA
(10)
|
|
|
|
7,959
|
|
|
—
|
|
|
46,065
|
|
|
8,626
|
|
|
45,398
|
|
|
54,024
|
|
|
277
|
|
|
35
|
|
2015
|
(C)
|
113,790
|
|
|||||||||
303 Second St., San Francisco, CA
|
|
128,315
|
|
(11)
|
63,550
|
|
|
154,153
|
|
|
42,562
|
|
|
63,550
|
|
|
196,715
|
|
|
260,265
|
|
|
41,552
|
|
|
35
|
|
2010
|
(A)
|
740,047
|
|
||||||||
100 First St., San Francisco, CA
|
|
|
|
49,150
|
|
|
131,238
|
|
|
25,717
|
|
|
49,150
|
|
|
156,955
|
|
|
206,105
|
|
|
32,069
|
|
|
35
|
|
2010
|
(A)
|
467,095
|
|
|||||||||
250 Brannan St., San Francisco, CA
|
|
|
|
7,630
|
|
|
22,770
|
|
|
4,324
|
|
|
7,630
|
|
|
27,094
|
|
|
34,724
|
|
|
6,001
|
|
|
35
|
|
2011
|
(A)
|
95,008
|
|
|||||||||
201 Third St., San Francisco, CA
|
|
|
|
19,260
|
|
|
84,018
|
|
|
32,926
|
|
|
19,260
|
|
|
116,944
|
|
|
136,204
|
|
|
23,292
|
|
|
35
|
|
2011
|
(A)
|
346,538
|
|
|||||||||
301 Brannan St., San Francisco, CA
|
|
|
|
5,910
|
|
|
22,450
|
|
|
1,843
|
|
|
5,910
|
|
|
24,293
|
|
|
30,203
|
|
|
4,066
|
|
|
35
|
|
2011
|
(A)
|
74,430
|
|
|||||||||
360 Third St., San Francisco, CA
|
|
|
|
—
|
|
|
88,235
|
|
|
111,085
|
|
|
28,504
|
|
|
170,816
|
|
|
199,320
|
|
|
17,936
|
|
|
35
|
|
2011
|
(A)
|
429,796
|
|
|||||||||
1310 Chesapeake Terrace, Sunnyvale, CA
|
|
|
|
16,700
|
|
|
11,020
|
|
|
87
|
|
|
16,700
|
|
|
11,107
|
|
|
27,807
|
|
|
572
|
|
|
35
|
|
2014
|
(A)
|
76,244
|
|
|||||||||
1315 Chesapeake Terrace, Sunnyvale, CA
|
|
|
|
12,260
|
|
|
7,930
|
|
|
235
|
|
|
12,260
|
|
|
8,165
|
|
|
20,425
|
|
|
534
|
|
|
35
|
|
2014
|
(A)
|
55,635
|
|
|||||||||
1320-1324 Chesapeake Terrace, Sunnyvale, CA
|
|
|
|
17,360
|
|
|
10,720
|
|
|
91
|
|
|
17,360
|
|
|
10,811
|
|
|
28,171
|
|
|
723
|
|
|
35
|
|
2014
|
(A)
|
79,720
|
|
|||||||||
1325-1327 Chesapeake Terrace, Sunnyvale, CA
|
|
|
|
12,610
|
|
|
8,160
|
|
|
63
|
|
|
12,610
|
|
|
8,223
|
|
|
20,833
|
|
|
551
|
|
|
35
|
|
2014
|
(A)
|
55,383
|
|
|||||||||
505 Mathilda Ave., Sunnyvale, CA
|
|
|
|
37,843
|
|
|
1,163
|
|
|
50,847
|
|
|
37,943
|
|
|
51,910
|
|
|
89,853
|
|
|
1,966
|
|
|
35
|
|
2014
|
(C)
|
212,322
|
|
|||||||||
555 Mathilda Ave., Sunnyvale, CA
|
|
|
|
37,843
|
|
|
1,163
|
|
|
50,560
|
|
|
37,943
|
|
|
51,623
|
|
|
89,566
|
|
|
1,966
|
|
|
35
|
|
2014
|
(C)
|
212,322
|
|
|||||||||
605 Mathilda Ave., Sunnyvale, CA
|
|
|
|
29,014
|
|
|
891
|
|
|
76,844
|
|
|
29,090
|
|
|
77,659
|
|
|
106,749
|
|
|
4,354
|
|
|
35
|
|
2014
|
(C)
|
162,785
|
|
|||||||||
599 N. Mathilda Ave., Sunnyvale, CA
|
|
|
|
13,538
|
|
|
12,559
|
|
|
58
|
|
|
13,538
|
|
|
12,617
|
|
|
26,155
|
|
|
1,778
|
|
|
35
|
|
2012
|
(A)
|
75,810
|
|
|||||||||
601 108th Ave., Bellevue, WA
|
|
|
|
—
|
|
|
214,095
|
|
|
30,538
|
|
|
—
|
|
|
244,633
|
|
|
244,633
|
|
|
42,168
|
|
|
35
|
|
2011
|
(A)
|
488,470
|
|
|||||||||
10900 NE 4th St., Bellevue, WA
|
|
|
|
25,080
|
|
|
150,877
|
|
|
20,089
|
|
|
25,080
|
|
|
170,966
|
|
|
196,046
|
|
|
23,731
|
|
|
35
|
|
2012
|
(A)
|
416,755
|
|
|||||||||
10210 NE Points Dr., Kirkland, WA
|
|
|
|
4,336
|
|
|
24,187
|
|
|
2,659
|
|
|
4,336
|
|
|
26,846
|
|
|
31,182
|
|
|
5,022
|
|
|
35
|
|
2011
|
(A)
|
84,641
|
|
|||||||||
10220 NE Points Dr., Kirkland, WA
|
|
|
|
2,554
|
|
|
12,080
|
|
|
1,040
|
|
|
2,554
|
|
|
13,120
|
|
|
15,674
|
|
|
2,414
|
|
|
35
|
|
2011
|
(A)
|
49,851
|
|
|||||||||
10230 NE Points Dr., Kirkland, WA
|
|
|
|
5,071
|
|
|
24,694
|
|
|
3,671
|
|
|
5,070
|
|
|
28,366
|
|
|
33,436
|
|
|
5,189
|
|
|
35
|
|
2011
|
(A)
|
98,982
|
|
|||||||||
3933 Lake WA Blvd. NE, Kirkland, WA
|
|
|
|
2,380
|
|
|
15,114
|
|
|
3,428
|
|
|
2,380
|
|
|
18,542
|
|
|
20,922
|
|
|
3,450
|
|
|
35
|
|
2011
|
(A)
|
46,450
|
|
|||||||||
837 N. 34th St., Lake Union, WA
|
|
|
|
—
|
|
|
37,404
|
|
|
2,541
|
|
|
—
|
|
|
39,945
|
|
|
39,945
|
|
|
5,397
|
|
|
35
|
|
2012
|
(A)
|
111,580
|
|
|||||||||
701 N. 34th St., Lake Union, WA
|
|
|
|
—
|
|
|
48,027
|
|
|
1,393
|
|
|
—
|
|
|
49,420
|
|
|
49,420
|
|
|
7,717
|
|
|
35
|
|
2012
|
(A)
|
138,995
|
|
|||||||||
801 N. 34th St., Lake Union, WA
|
|
|
|
—
|
|
|
58,537
|
|
|
164
|
|
|
—
|
|
|
58,701
|
|
|
58,701
|
|
|
7,676
|
|
|
35
|
|
2012
|
(A)
|
169,412
|
|
|||||||||
320 Westlake Avenue North, WA
|
|
79,667
|
|
(12)
|
14,710
|
|
|
82,018
|
|
|
1,087
|
|
|
14,710
|
|
|
83,105
|
|
|
97,815
|
|
|
8,236
|
|
|
35
|
|
2013
|
(A)
|
184,643
|
|
||||||||
321 Terry Avenue North, Lake Union, WA
|
|
|
(12)
|
10,430
|
|
|
60,003
|
|
|
227
|
|
|
10,430
|
|
|
60,230
|
|
|
70,660
|
|
|
6,294
|
|
|
35
|
|
2013
|
(A)
|
135,755
|
|
|||||||||
401 Terry Avenue North, Lake Union, WA
|
|
|
|
22,500
|
|
|
77,046
|
|
|
—
|
|
|
22,500
|
|
|
77,046
|
|
|
99,546
|
|
|
4,889
|
|
|
35
|
|
2014
|
(A)
|
140,605
|
|
|||||||||
TOTAL OPERATING PROPERTIES
|
|
373,886
|
|
|
835,393
|
|
|
2,617,322
|
|
|
1,514,091
|
|
|
875,794
|
|
|
4,091,012
|
|
|
4,966,806
|
|
|
994,241
|
|
|
|
|
|
|
13,032,406
|
|
||||||||
Undeveloped land and construction in progress
|
|
1,810
|
|
(13)
|
730,351
|
|
|
111
|
|
|
630,878
|
|
|
730,351
|
|
|
630,989
|
|
|
1,361,340
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||
TOTAL ALL PROPERTIES
|
|
$
|
375,696
|
|
(14)
|
$
|
1,565,744
|
|
|
$
|
2,617,433
|
|
|
$
|
2,144,969
|
|
|
$
|
1,606,145
|
|
|
$
|
4,722,001
|
|
|
$
|
6,328,146
|
|
|
$
|
994,241
|
|
|
|
|
|
|
13,032,406
|
|
(1)
|
The initial costs of buildings and improvements are depreciated over
35 years
using a straight-line method of accounting; improvements capitalized subsequent to acquisition are depreciated over the shorter of the lease term or useful life, generally ranging from
one
to
20
years.
|
(2)
|
Represents our date of construction or acquisition, or our predecessor, the Kilroy Group.
|
(3)
|
Includes square footage from our stabilized portfolio.
|
(4)
|
These properties secure a
$4.0 million
mortgage note.
|
(5)
|
These properties secure a
$65.6 million
mortgage note.
|
(6)
|
These properties include the costs of a shared parking structure for a complex that will be comprised of five office buildings upon completion. Once completed, the costs of the parking structure will be reallocated amongst the five buildings.
|
(7)
|
These costs represent infrastructure costs incurred in 1989. During the third quarter of 2009, we exercised our option to terminate the ground lease at Kilroy Airport Center, Phase IV in Long Beach, California. We had previously leased this land, which is adjacent to our Office Properties at Kilroy Airport Center, Long Beach, for potential future development opportunities.
|
(8)
|
These properties secure a
$96.4 million
mortgage note.
|
(9)
|
This property, comprised of
73,000
rentable square feet, is excluded from our stabilized portfolio as of
December 31, 2015
, as it is in the “lease-up” phase.
|
(10)
|
These properties are owned by Redwood City Partners LLC, a consolidated subsidiary.
|
(11)
|
This property secures a
$128.3 million
mortgage note.
|
(12)
|
These properties secure a
$79.7 million
mortgage note.
|
(13)
|
Represents the principal balance of the public facility bonds (the “Bonds”), the proceeds from which were used to finance infrastructure improvements on one of our undeveloped land parcels. The Bonds are secured by property tax payments.
|
(14)
|
Represents gross aggregate principal amount before the effect of the unamortized premium of approximately
$6.2 million
as of
December 31, 2015
.
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Total real estate held for investment, beginning of year
|
$
|
6,057,932
|
|
|
$
|
5,264,947
|
|
|
$
|
4,757,394
|
|
Additions during period:
|
|
|
|
|
|
||||||
Acquisitions
|
139,123
|
|
|
340,296
|
|
|
384,650
|
|
|||
Improvements, etc.
|
536,411
|
|
|
588,166
|
|
|
452,331
|
|
|||
Total additions during period
|
675,534
|
|
|
928,462
|
|
|
836,981
|
|
|||
Deductions during period:
|
|
|
|
|
|
||||||
Cost of real estate sold
|
(231,984
|
)
|
|
(113,416
|
)
|
|
(56,993
|
)
|
|||
Properties held for sale
|
(160,074
|
)
|
|
(14,700
|
)
|
|
(259,251
|
)
|
|||
Other
|
(13,262
|
)
|
|
(7,361
|
)
|
|
(13,184
|
)
|
|||
Total deductions during period
|
(405,320
|
)
|
|
(135,477
|
)
|
|
(329,428
|
)
|
|||
Total real estate held for investment, end of year
|
$
|
6,328,146
|
|
|
$
|
6,057,932
|
|
|
$
|
5,264,947
|
|
|
Year Ended December 31,
|
||||||||||
|
2015
|
|
2014
|
|
2013
|
||||||
|
(in thousands)
|
||||||||||
Accumulated depreciation, beginning of year
|
$
|
947,664
|
|
|
$
|
818,957
|
|
|
$
|
756,515
|
|
Additions during period:
|
|
|
|
|
|
||||||
Depreciation of real estate
|
159,524
|
|
|
153,841
|
|
|
145,325
|
|
|||
Total additions during period
|
159,524
|
|
|
153,841
|
|
|
145,325
|
|
|||
Deductions during period:
|
|
|
|
|
|
||||||
Write-offs due to sale
|
(66,603
|
)
|
|
(18,111
|
)
|
|
(17,144
|
)
|
|||
Properties held for sale
|
(46,191
|
)
|
|
(7,007
|
)
|
|
(63,110
|
)
|
|||
Other
|
(153
|
)
|
|
(16
|
)
|
|
(2,629
|
)
|
|||
Total deductions during period
|
(112,947
|
)
|
|
(25,134
|
)
|
|
(82,883
|
)
|
|||
Accumulated depreciation, end of year
|
$
|
994,241
|
|
|
$
|
947,664
|
|
|
$
|
818,957
|
|
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 August 15, 2012, as amended (previously filed by Kilroy Realty Corporation on Form 10-Q for the quarter ended June 30, 2014)
|
4.1
|
|
Kilroy Realty Corporation Form of Certificate for Common Stock (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
4.2
|
|
Specimen Certificate for Kilroy Realty Corporation’s 6.875% Series G Cumulative Redeemable Preferred Stock (previously filed by Kilroy Realty Corporation on Form 8-A as filed with the Securities and Exchange Commission on March 22, 2012)
|
4.3
|
|
Specimen Certificate for 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)
|
4.4
|
|
Registration Rights Agreement, dated January 31, 1997 (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
4.5
|
|
Registration Rights Agreement, dated October 31, 1997 (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K/A as filed with the Securities and Exchange Commission on December 19, 1997)
|
4.6
|
|
Registration Rights Agreement, dated October 6, 2000 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2000)
|
4.7
|
|
Form of Certificate for Partnership Units 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)
|
4.8
|
|
Indenture, dated May 24, 2010, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, including the form of 6.625% Senior Notes due 2020 and the form of the related guarantee (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 25, 2010)
|
4.9
|
|
Registration Rights Agreement, dated May 24, 2010, among Kilroy Realty, L.P., Kilroy Realty Corporation, J.P. Morgan Securities Inc., Banc of America Securities LLC and Barclays Capital Inc. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8−K as filed with the Securities and Exchange Commission on May 25, 2010)
|
4.10
|
|
Officers’ Certificate pursuant to Sections 101, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.800% Notes due 2018,” including the form of 4.800% Notes due 2018 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on July 6, 2011)
|
Exhibit
Number
|
|
Description
|
4.11
|
|
Registration Rights Agreement, dated July 31, 2012 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2012)
|
4.12
|
|
Officers’ Certificate pursuant to Sections 101, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “3.800% Notes due 2023,” including the form of 3.800% Notes due 2023 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 14, 2013)
|
4.13
|
|
Indenture, dated March 1, 2011, by and among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit to the Registration Statement on Form S-3 as filed with the Securities and Exchange Commission on October 2, 2013)
|
4.14
|
|
Supplemental Indenture, dated July 5, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit to the Registration Statement on Form S-3 as filed with the Securities and Exchange Commission on October 2, 2013)
|
4.15
|
|
Officers’ Certificate pursuant to Sections 102, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.25% Senior Notes due 2029,” including the form of 4.25% Senior Notes due 2029 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on August 6, 2014)
|
4.16
|
|
Officers’ Certificate, dated September 16, 2015, pursuant to Sections 102, 201, 301 and 303 of the Indenture dated March 1, 2011, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.375% Senior Notes due 2025,” including the form of 4.375% Senior Notes due 2025 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on September 16, 2015)
|
4.17
|
|
The Company is party to agreements in connection with long-term debt obligations, none of which individually exceeds ten percent of the total assets of the Company on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Company agrees to furnish copies of these agreements to the Commission upon request
|
10.1
|
|
Pledge Agreement by and among Kilroy Realty, L.P., John B. Kilroy, Sr., John B. Kilroy, Jr. and Kilroy Industries (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
10.2†
|
|
1997 Stock Option and Incentive Plan of the Registrant and Kilroy Realty, L.P. (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 3 to Form S-11 (No. 333-15553))
|
10.3
|
|
Lease Agreement, dated January 24, 1989, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 2 to Form S-11 (No. 333-15553))
|
10.4
|
|
First Amendment to Lease Agreement, dated December 28, 1990, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 2 to Form S-11 (No. 333-15553))
|
10.5
|
|
Second Amendment to Lease Agreement, dated April 28, 1997, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I
|
10.6
|
|
Third Amendment to Lease Agreement, dated June 20, 2002, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase I
|
10.7
|
|
Lease Agreement, dated December 30, 1988, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase II (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.8
|
|
First Amendment to Lease Agreement, dated December 28, 1990, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase II (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
Exhibit
Number
|
|
Description
|
10.9
|
|
Second Amendment to Lease Agreement, dated April 28, 1997, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase II
|
10.10
|
|
Lease Agreement, dated July 17, 1985, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.11
|
|
First Amendment to Lease, dated January 24, 1989, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.12
|
|
Second Amendment to Lease Agreement, dated December 28, 1990, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.13
|
|
Third Amendment to Lease Agreement, dated October 10, 1994, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.14
|
|
Fourth Amendment to Lease Agreement, dated June 20, 2002, by and between Kilroy Long Beach Associates and the City of Long Beach for Kilroy Long Beach Phase III
|
10.15
|
|
Development Agreement by and between Kilroy Long Beach Associates and the City of Long Beach (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.16
|
|
Amendment No. 1 to Development Agreement by and between Kilroy Long Beach Associates and the City of Long Beach (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Form S-11 (No. 333-15553))
|
10.17
|
|
License Agreement by and among the Registrant and the other persons named therein (previously filed by Kilroy Realty Corporation as an exhibit to the Registration Statement on Amendment No. 4 to Form S-11 (No. 333-15553))
|
10.18
|
|
Contribution Agreement, dated October 21, 1997, by and between Kilroy Realty, L.P., Kilroy Realty Corporation, The Allen Group and the Allens (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on November 21, 1997)
|
10.19
|
|
Amendment to the Contribution Agreement, dated October 14, 1998, by and between Kilroy Realty, L.P., Kilroy Realty Corporation, The Allen Group and the Allens dated October 21, 1997 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended September 30, 1998)
|
10.20†
|
|
Form of Restricted Stock Award Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on February 8, 2007)
|
10.21†
|
|
Kilroy Realty Corporation 2007 Deferred Compensation Plan (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2007)
|
10.22†
|
|
Employment Agreement by and among Kilroy Realty Corporation, Kilroy Realty, L.P. and Tyler H. Rose effective as of January 1, 2007 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2007)
|
10.23†
|
|
Amendment No. 1 to Employment Agreement by and among Kilroy Realty Corporation, Kilroy Realty, L.P. and Tyler H. Rose effective as of December 31, 2009 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2008)
|
10.24†
|
|
Kilroy Realty Corporation Stock Award Deferral Program (previously filed by Kilroy Realty Corporation as an exhibit to Form 8-K as filed with the Securities and Exchange Commission on January 2, 2008)
|
10.25†
|
|
Form of Indemnification Agreement of Kilroy Realty Corporation with certain officers and directors (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009)
|
10.26†
|
|
Separation Agreement and Release, dated December 16, 2009, by and between Richard E. Moran Jr., Kilroy Realty, L.P. and Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009)
|
Exhibit
Number
|
|
Description
|
10.27
|
|
Deed of Trust and Security Agreement, dated January 26, 2010, between Kilroy Realty, L.P. and The Northwestern Mutual Life Insurance Company; related Promissory Note, dated January 26, 2010 for $71 million payable to The Northwestern Mutual Life Insurance Company; and related Guarantee of Recourse Obligations, dated January 26, 2010 by Kilroy Realty Corporation (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009)
|
10.28
|
|
Promissory Note, dated January 12, 2011, executed by Kilroy Realty 303, LLC (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.29
|
|
Deed of Trust, Security Agreement and Fixture Filing, dated January 12, 2011, executed by Kilroy Realty 303, LLC (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.30
|
|
Guaranty, dated January 12, 2011, executed by Kilroy Realty, L.P. (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.31
|
|
Unsecured Indemnity Agreement, dated January 12, 2011, executed by Kilroy Realty 303, LLC (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P. as an exhibit on Form 8−K as filed with the Securities and Exchange Commission on January 13, 2011)
|
10.32†
|
|
Kilroy Realty Corporation Form of Stock Option Grant Notice and Stock Option Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on February 24, 2012)
|
10.33†
|
|
Amended and Restated Employment Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr. (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 4, 2012)
|
10.34†
|
|
Noncompetition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr. (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 4, 2012)
|
10.35
|
|
Term Loan Agreement, dated March 29, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 2, 2012)
|
10.36
|
|
First Amendment to Term Loan Agreement, dated November 28, 2012 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2012)
|
10.37
|
|
Guaranty of Payment of Kilroy Realty Corporation, dated March 29, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 2, 2012)
|
10.38
|
|
Promissory Note, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.39
|
|
Loan Agreement, dated June 28, 2012, by and between KR MML 12701, LLC and Massachusetts Mutual Life Insurance Company (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.40
|
|
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Irvine) for 2211 Michelson Drive, Irvine, California, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.41
|
|
Deed of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing (Santa Monica) for 2100-2110 Colorado Avenue, Santa Monica, California, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.42
|
|
Recourse Guaranty Agreement, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
10.43
|
|
Environmental Indemnification Agreement, dated June 28, 2012 (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on July 5, 2012)
|
Exhibit
Number
|
|
Description
|
10.44†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and Jeffrey C. Hawken, dated April 4, 2013 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.45†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and John Kilroy, Jr., dated March 30, 2012 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.46†
|
|
Form of Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.47†
|
|
Form of Stock Award Deferral Program Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2013)
|
10.48†
|
|
Form of Performance-Vest Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2014)
|
10.49†
|
|
Form of Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2014)
|
10.50†
|
|
Form of Restricted Stock Unit Agreement for Non-Employee Members of the Board of Directors (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2014)
|
10.51†
|
|
Kilroy Realty 2006 Incentive Award Plan (previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on May 21, 2015)
|
10.52
|
|
Amended and Restated Revolving Credit Agreement, dated June 23, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2014)
|
10.53
|
|
Amended and Restated Guaranty, dated June 23, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2014)
|
10.54
|
|
Term Loan Agreement, dated July 31, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended September 30, 2014)
|
10.55
|
|
Guaranty, dated July 31, 2014 (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended September 30, 2014)
|
10.56
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and RBC Capital Markets, LLC (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.57
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and Jefferies LLC (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.58
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and KeyBanc Capital Markets Inc. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.59
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and BNP Paribas Securities Corp. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.60
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and J.P. Morgan Securities LLC (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.61
|
|
Sales Agreement, dated December 12, 2014, between Kilroy Realty Corporation, Kilroy Realty, L.P. and Barclays Capital Inc. (previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2014)
|
10.62†
|
|
Form of Performance-Vest Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2015)
|
10.63†
|
|
Form of Restricted Stock Unit Agreement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2015)
|
10.64†
|
|
Form of Restricted Stock Unit Agreement for Non-Employee Members of the Board of Directors (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended March 31, 2015)
|
Exhibit
Number
|
|
Description
|
10.65†*
|
|
Amended and Restated Employment Agreement and Non-Competition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and Jeffrey C. Hawken effective as of December 31, 2015
|
10.66†*
|
|
Kilroy Realty Corporation Director Compensation Policy effective as of January 1, 2016
|
12.1*
|
|
Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges and Consolidated Ratio of Earnings to Combined Fixed Charges and Preferred Dividends of Kilroy Realty Corporation
|
12.2*
|
|
Statement of Computation of Consolidated Ratio of Earnings to Fixed Charges of Kilroy Realty, L.P.
|
21.1*
|
|
List of Subsidiaries of Kilroy Realty Corporation
|
21.2*
|
|
List of Subsidiaries of Kilroy Realty, L.P.
|
23.1*
|
|
Consent of Deloitte & Touche LLP for Kilroy Realty Corporation
|
23.2*
|
|
Consent of Deloitte & Touche LLP for Kilroy Realty, L.P.
|
24.1*
|
|
Power of Attorney (included on the signature page of this Form 10-K)
|
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 year ended December 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Capital, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.
(1)
|
*
|
Filed herewith
|
†
|
Management contract or compensatory plan or arrangement.
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
|
|
||
|
|
Page
|
1.
|
Employment
|
1
|
2.
|
Term
|
1
|
3.
|
Offices and Duties
|
2
|
|
(a) Generally
|
2
|
|
(b) Devotion of Time and Effort
|
2
|
|
(c) Place of Employment
|
2
|
4.
|
Salary and Annual Incentive Compensation
|
2
|
|
(a) Base Salary
|
2
|
|
(b) Annual Incentive Compensation
|
3
|
|
(c) Other Long-Term Incentive Programs
|
3
|
5.
|
Compensation Plans, Benefits, Deferred Compensation, and Expense
|
|
|
Reimbursement
|
4
|
|
(a) Executive Compensation Plans
|
4
|
|
(b) Employee and Executive Benefit Plans
|
4
|
|
(c) Deferral of Compensation
|
5
|
|
(d) Reimbursement of Expenses
|
5
|
|
(e) Office, Staff and Equipment
|
5
|
|
(f) Indemnification Agreement
|
5
|
|
(g) Limitations Under code Section 409A
|
5
|
6.
|
Termination Due to Retirement, Death, or Disability
|
8
|
|
(a) Retirement
|
8
|
|
(b) Death
|
9
|
|
(c) Disability
|
10
|
|
(d) Other Terms of Payment Following Retirement, Death, or Disability
|
12
|
|
|
Page
|
7.
|
Termination of Employment for Reasons Other Than Retirement, Death, or
|
12
|
|
Disability
|
|
|
(a) Termination by the Company for Cause
|
12
|
|
(b) Termination by Executive Other Than For Good Reason
|
12
|
|
(c) Termination by the Company Without Cause
|
13
|
|
(d) Termination by Executive for Good Reason
|
14
|
|
(e) Other Terms Relating to Certain Termination of Employment
|
15
|
8.
|
Definitions Relating to Termination Events
|
15
|
|
(a) "Annual Incentives"
|
15
|
|
(b) "Cause"
|
16
|
|
(c) "Change in Control"
|
17
|
|
(d) "Compensation Accrued at Termination"
|
18
|
|
(e) "Disability"
|
18
|
|
(f) "Good Reason"
|
19
|
|
(g) "Partial Year Bonus"
|
20
|
|
(h) Intentionally omitted
|
20
|
|
(i) "Reasonably Anticipated Performance"
|
20
|
9.
|
Payment of Financial Obligations
|
20
|
10.
|
Rabbi Trust Obligations; Excise Tax-Related Provisions
|
21
|
|
(a) Rabbi Trust Funding
|
21
|
|
(b) Parachute Payments-Best After-Tax Result
|
21
|
11.
|
Restrictive Covenants; Release of Claims
|
22
|
|
(a) Restrictive Covenants
|
22
|
|
(b) Release of Employment Claims
|
22
|
|
(c) Forfeiture of Outstanding Options and Other Equity Awards
|
22
|
|
(d) Survival
|
22
|
12.
|
Governing Law; Disputes; Arbitration
|
23
|
|
(a) Governing Law
|
23
|
|
(b) Reimbursement of Expenses in Enforcing Rights
|
23
|
|
(c) Arbitration
|
23
|
|
(d) Interest on Unpaid Amounts
|
24
|
|
(e) LIMITATION ON LIABILITIES
|
24
|
|
(f) WAIVER OF JURY TRIAL
|
24
|
13.
|
Miscellaneous
|
24
|
|
(a) Integration
|
24
|
|
(b) Successors; Transferability
|
25
|
|
(c) Beneficiaries
|
25
|
|
|
Page
|
|
(d) Notices
|
25
|
|
(e) Reformation
|
26
|
|
(f) Headings
|
26
|
|
(g) No General Waivers
|
26
|
|
(h) No Obligation to Mitigate
|
26
|
|
(i) Offsets; Withholding
|
26
|
|
(j) Successors and Assigns
|
26
|
|
(k) Counterparts
|
26
|
|
(l) Due Authority and Execution
|
26
|
|
(m) Representations of Executive
|
27
|
14.
|
D&O Insurance
|
27
|
1.
|
Employment.
|
2.
|
Term.
|
3.
|
Offices and Duties.
|
4.
|
Salary and Annual Incentive Compensation.
|
5.
|
Compensation Plans, Benefits, Deferred Compensation, and Expense Reimbursement.
|
(i)
|
Executive will participate as Executive Vice President and Chief Operating Officer in all executive and employee vacation and time-off programs; provided that Executive shall be entitled to a minimum of five (5) weeks of vacation annually; and
|
(ii)
|
The Company shall pay or reimburse Executive for tax and financial planning services subject to an annual maximum of $25,000 provided that such payment or reimbursement by the Company shall be made no later than the fifteenth day of the third month following the end of the calendar year in which Executive incurred such expense; provided, further, that Executive shall have provided a reimbursement request to the Company no later than 30 days prior to the date the reimbursement is due; and
|
(iii)
|
The Company shall reimburse the executive for the cost of an annual physical examination which is not paid for or reimbursed under the Company’s medical insurance, and Executive shall be required under this
|
(iv)
|
The Company shall provide Executive with a reasonable automobile allowance during the Term, subject to and on a basis consistent with Company policy applicable to Executive on the Effective Date.
|
(i)
|
Anything in this Agreement to the contrary notwithstanding, if (A) on the date of termination of Executive’s employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”)), (B) Executive is determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations section
|
(ii)
|
To the extent that any benefits to be provided during the Delay Period are considered deferred compensation under Section 409A of the Code provided on account of a “separation from service,” and such benefits are not otherwise exempt from Section 409A of the Code, Executive shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse Executive, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to Executive, the Company’s share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein.
|
(iii)
|
In addition, other provisions of this Agreement or any other such plan notwithstanding, the Company shall have no right to accelerate any such payment or to make any such payment as the result of any specific event except to the extent permitted under Section 409A of the Code.
|
(iv)
|
For purposes of Section 409A of the Code, each payment made after termination of employment, including his premiums charged to continue medical coverage pursuant to the Federal and California State Consolidated Omnibus Budget Reconciliation Act (for the purposes of this Agreement, “COBRA”), will be considered one of a series of separate payments.
|
(v)
|
A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment
|
(vi)
|
Any amount that Executive is entitled to be reimbursed under this Agreement that may be treated as taxable compensation will be reimbursed to Executive as promptly as practical and in any event not later than sixty (60) days after the end of the calendar year in which the expenses are incurred; provided that Executive shall have provided a reimbursement request to the Company no later than thirty (30) days prior to the date the reimbursement is due. The amount of the expenses eligible for reimbursement during any calendar year will not affect the amount of expenses for reimbursement in any other calendar year, except as may be required pursuant to an arrangement providing for the reimbursement of expenses referred to in Section 105(b) of the Code.
|
(vii)
|
The Company shall not be obligated to reimburse Executive for any tax penalty or interest or provide a gross-up in connection with any tax liability of Executive under Section 409A of the Code.
|
(viii)
|
Any annual bonus that is earned pursuant to Section 4(b) shall be paid, whether in cash or equity as provided above, between January 1 and March 15 of the year following the year for which such annual bonus was earned; provided, however, that if the Board shall determine that it is administratively impracticable, which may include inability of the Company to gain certification of its financial statements, to make such annual bonus payment by March 15, any such payment shall be made as soon as reasonably practicable after such period and in no event later than December 31 of the year following the year for which such annual bonus was earned.
|
(ix)
|
Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), except as specifically provided herein, the actual date of payment within the specified period shall be within the sole discretion of the Company.
|
(x)
|
Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of base salary or other compensation is to be paid for a specified continuing period of time beyond the date of termination of Executive’s employment, the payments of such base salary or other compensation shall be made in accordance with the Company’s payroll practices (or other similar term) or, if not payable in accordance with the Company’s payroll practices, on a monthly basis.
|
6.
|
Termination Due to Retirement, Death, or Disability.
|
(i)
|
Executive’s Compensation Accrued at Termination (as defined in Section 8(d));
|
(ii)
|
In lieu of any annual incentive compensation under Section 4(b) for the year in which Executive’s employment terminated, a Partial Year Bonus (as defined in Section 8(g));
|
(iii)
|
A single severance payment in an amount equal to the sum of: (i) Executive’s Base Salary plus (ii) the average of the Annual Incentives (as defined in Section 8(a)) for the prior five (5) calendar years;
|
(iv)
|
All equity awards (or portions thereof) held by Executive at termination that vest based on time (not based on performance) shall be fully vested and, except as otherwise provided herein, all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to the terms of this Agreement including Section 11(c) hereof);
|
(v)
|
All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
|
(vi)
|
The Company will pay or reimburse Executive for his premiums charged to continue medical coverage pursuant to COBRA, at the same or reasonably equivalent medical coverage for Executive (and, if applicable, his eligible dependents, including spouse, child(ren), to the extent eligible, including disabled child, herein referred to as “Eligible Dependents”) as in effect immediately prior to the date his employment terminates, to the extent that Executive elects such continued coverage; provided that the Company’s obligation to make any payment or reimbursement pursuant to this section shall, subject to Section 5(g) of this Agreement, commence with continuation coverage for the month following the month in which Executive’s “separation from service” (as defined in Section 5(g)(v) of this Agreement) occurs and shall cease with continuation coverage for the thirty-sixth (36
th
) month following the month in which Executive’s separation from service occurs (or, if earlier, shall cease upon the first to occur of the date Executive becomes eligible for coverage under the health
|
(i)
|
Executive’s Compensation Accrued at Termination;
|
(ii)
|
In lieu of any annual incentive compensation under Section 4(b) for the year in which Executive dies, a Partial Year Bonus (as defined in Section 8(g));
|
(iii)
|
A single severance payment in an amount equal to the sum of: (i) Executive's Base Salary plus (ii) the average of the Annual Incentives (as defined in Section 8(a)) for the prior five (5) calendar years. Such payment shall be in addition to any life insurance payments to which Executive is otherwise entitled and any other compensation earned by Executive hereunder;
|
(iv)
|
All equity awards held by Executive at termination that vest based on time shall be fully vested and, except as otherwise provided herein, all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to Section 11(c) hereof);
|
(v)
|
Unless otherwise expressly provided for in an applicable award agreement, any performance objectives upon which the earning of performance-based restricted stock, RSUs, and other equity awards and other long-term incentive awards (including cash awards and any Outperformance Incentive Award, but excluding for purposes of this clause (v) any annual incentive compensation payable pursuant to Section 4(b)) is conditioned shall be deemed to have been met at the greater of (A) target level at the date of termination, or (B) actual performance and Reasonably Anticipated Performance at the date of termination, and such amounts shall become fully vested and non-forfeitable as a result of termination of employment at the date of such termination, subject to the discretion of the Committee to deem a higher level of performance to have been achieved, and, except as otherwise provided herein, in other respects, such awards shall be governed by the plans and programs and the
|
(vi)
|
All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
|
(vii)
|
The Company will pay or reimburse Executive’s Eligible Dependents (if applicable) for the premiums charged to continue medical coverage pursuant to COBRA, at the same or reasonably equivalent medical coverage for Executive (and, if applicable, his Eligible Dependents) as in effect immediately prior to the date his employment terminates, to the extent that Executive’s Eligible Dependents elect such continued coverage; provided that the Company’s obligation to make any payment or reimbursement pursuant to this section shall, subject to Section 5(g) of this Agreement, commence with continuation coverage for the month following the month in which Executive’s “separation from service” (as defined in Section 5(g)(v) of this Agreement) occurs and shall cease with continuation coverage for the thirty-sixth (36
th
) month following the month in which Executive’s separation from service occurs (or, if earlier, shall cease upon the first to occur of the date such Eligible Dependents become eligible for coverage under the health plan of a future employer or the date the Company ceases to offer group medical coverage to its active executive employees). To the extent Executive’s Eligible Dependents elect COBRA coverage, such Eligible Dependents shall notify the Company in writing of such election prior to such coverage taking effect and complete any other continuation coverage enrollment procedures the Company may then have in place.
|
(i)
|
Executive’s Compensation Accrued at Termination;
|
(ii)
|
In lieu of any annual incentive compensation under Section 4(b) for the year in which Executive becomes disabled, a Partial Year Bonus (as defined in Section 8(g));
|
(iii)
|
A single severance payment in an amount equal to the sum of two times: (i) Executive’s Base Salary plus (ii) the average of the Annual Incentives (as defined in Section 8(a)) for the prior five (5) calendar years. Such payment shall be in addition to any disability insurance payments to which Executive is otherwise entitled and any other compensation earned by Executive hereunder;
|
(iv)
|
All equity awards held by Executive at termination that vest based on time shall be fully vested and, except as otherwise provided herein, all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to Section 11(c) hereof);
|
(v)
|
Unless otherwise expressly provided for in an applicable award agreement, any performance objectives upon which the earning of performance-based restricted stock, RSUs, and other equity awards and other long-term incentive awards (including cash awards and any Outperformance Incentive Award, but excluding for purposes of this clause (v) any annual incentive compensation payable pursuant to Section 4(b) that is subject to subsection (ii) above) is conditioned shall be deemed to have been met at the greater of (A) target level at the date of termination, or (B) actual performance and Reasonably Anticipated Performance at the date of termination, and such amounts shall become fully vested and non-forfeitable as a result of termination of employment at the date of such termination, subject to the discretion of the Committee to deem a higher level of performance to have been achieved, and, except as otherwise provided herein, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;
|
(vi)
|
Disability benefits shall be payable in accordance with the Company’s plans, programs and policies;
|
(vii)
|
All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
|
(viii)
|
The Company will pay or reimburse Executive for his premiums charged to continue medical coverage pursuant to COBRA, at the same or reasonably equivalent medical coverage for Executive (and, if applicable, his Eligible Dependents) as in effect immediately prior to the date his employment terminates, to the extent that Executive elects such continued coverage; provided that the Company’s obligation to make any payment or reimbursement pursuant to this section shall, subject to Section 5(g) of this Agreement, commence with continuation coverage for the month following the month in which Executive’s “separation from service” (as defined in Section 5(g)(v) of this Agreement) occurs and shall cease with continuation coverage for the thirty-sixth (36
th
) month following the month in which Executive’s separation from service occurs (or, if earlier, shall cease upon the first to occur of the date Executive becomes eligible for coverage under the health plan of a future employer or the date the Company ceases to offer group medical coverage to its active executive employees). To the extent Executive elects COBRA coverage, Executive shall notify the Company in writing of such election prior to such
|
7.
|
Termination of Employment For Reasons Other Than Retirement, Death, or Disability.
|
(i)
|
Executive’s Compensation Accrued at Termination;
|
(ii)
|
The vesting and exercisability of stock options, restricted stock, RSUs and other equity awards held by Executive at termination and all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such options, RSUs and other equity awards were granted (subject to Section 11(c) hereof); and
|
(iii)
|
All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan. In addition, at Executive’s expense, Executive and his spouse and dependent children shall be entitled to continuation of health insurance coverage under any applicable law.
|
(i)
|
Executive’s Compensation Accrued at Termination;
|
(ii)
|
A single severance payment in cash in an aggregate amount equal to the sum of: (i) three times Executive’s Base Salary plus (ii) three times the average of the Annual Incentives (as defined in Section 8(a)) for the prior five (5) calendar years;
|
(iii)
|
In lieu of any annual incentive compensation under Section 4(b) for the year in which Executive’s employment terminates, a Partial Year Bonus (as defined in Section 8(g));
|
(iv)
|
All equity awards held by Executive at termination which vest based on time shall become vested and, except as otherwise provided herein, all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to Section 11(c) hereof);
|
(v)
|
Unless otherwise expressly provided for in an applicable award agreement, any performance objectives upon which the earning of performance-based restricted stock, RSUs, and other equity awards and other long-term incentive awards (including cash awards and any Outperformance Incentive Award, but excluding for purposes of this clause (v) any annual incentive compensation payable pursuant to Section 4(b)) is conditioned shall be deemed to have been met at the greater of (A) target level at the date of termination, or (B) actual performance and Reasonably Anticipated Performance at the date of termination, and such amounts shall become fully vested and non-forfeitable as a result of termination of employment at the date of such termination, subject to the
|
(vi)
|
All deferral arrangements under Section 5(c) will be settled in accordance with the plans and programs governing the deferral;
|
(vii)
|
All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
|
(viii)
|
The Company will pay or reimburse Executive for his premiums charged to continue medical coverage pursuant to COBRA, at the same or reasonably equivalent medical coverage for Executive (and, if applicable, his Eligible Dependents) as in effect immediately prior to the date his employment terminates, to the extent that Executive elects such continued coverage; provided that the Company’s obligation to make any payment or reimbursement pursuant to this section shall, subject to Section 5(g) of this Agreement, commence with continuation coverage for the month following the month in which Executive’s “separation from service” (as defined in Section 5(g)(v) of this Agreement) occurs and shall cease with continuation coverage for the thirty-sixth (36
th
) month following the month in which Executive’s separation from service occurs (or, if earlier, shall cease upon the first to occur of the date Executive becomes eligible for coverage under the health plan of a future employer or the date the Company ceases to offer group medical coverage to its active executive employees). To the extent Executive elects COBRA coverage, Executive shall notify the Company in writing of such election prior to such coverage taking effect and complete any other continuation coverage enrollment procedures the Company may then have in place.
|
8.
|
Definitions Relating to Termination Events.
|
(i)
|
The Annual Cash Target and the Annual Stock Target;
|
(ii)
|
The value of any equity compensation granted to Executive in such calendar year other than pursuant to Section 4(b) (each a “Discretionary Equity Incentive”). For example, if Executive is granted a Discretionary Equity Incentive in calendar year 2016 that contains time and/or performance based vesting conditions, the Discretionary Equity Incentive will be considered part of the Annual Incentives for calendar year 2016; and
|
(iii)
|
Any cash incentive compensation earned by Executive, other than pursuant to Section 4(b), with respect to a performance period that (x) exceeds one calendar year and (y) ends during such calendar year (each a “Long-Term Cash Incentive”). A Long-Term Cash Incentive shall be included as part of Annual Incentives for the calendar year that includes the last day of the Long-Term Cash Incentive's performance period, even if the amount of the incentive is determined and/or paid in a later calendar year. For example, if Executive earns a Long-Term Cash Incentive that is paid to Executive in calendar year 2016 and is based on a performance period that includes calendar years 2012 through 2015, then such Long-Term Cash Incentive will be considered part of the Annual Incentives for calendar year 2015.
|
(i)
|
conviction for commission of a felony or a crime involving moral turpitude;
|
(ii)
|
willful commission of any act of theft, fraud, embezzlement or misappropriation against the Company or its subsidiaries or affiliates; or
|
(iii)
|
willful and continued failure to substantially perform Executive’s duties hereunder (other than such failure resulting from Executive’s incapacity due to physical or mental illness or from Executive’s unavailability due to circumstances beyond his control), which failure is not remedied within 30 calendar days after written demand for substantial performance is delivered by the Company which specifically identifies the manner in which the Company believes that Executive has not substantially performed Executive’s duties.
|
(i)
|
A transaction or series of transactions (other than an offering of the common stock of the Company, par value $0.01 per share, to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company and immediately after such acquisition possesses more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or
|
(ii)
|
During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new director(s) (other than a director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in Section 8(c)(i) hereof or Section 8(c)(iii) hereof) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
|
(iii)
|
The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
|
(A)
|
Which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “ Successor Entity”)) directly or
|
(B)
|
After which no person or group (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) beneficially owns (within the meaning of Rule 13d-3 under the Exchange Act) voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 8(c)(iii)(B) as beneficially owning 50% or more of combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or
|
(iv)
|
The Company’s stockholders approve a liquidation or dissolution of the Company and all material contingencies to such liquidation or dissolution have been satisfied or waived.
|
(i)
|
The unpaid portion of annual Base Salary at the rate payable, in accordance with Section 4(a) hereof, at the date of Executive’s termination of employment, pro-rated through such date of termination, payable in accordance with the Company’s regular pay schedule;
|
(ii)
|
Except as otherwise provided in this Agreement, all earned and unpaid and/or vested, non-forfeitable amounts owing or accrued at the date of Executive’s termination of employment under any compensation and benefit plans, programs, and arrangements set forth or referred to in Sections 4(b) and 5(a) and 5(b) hereof (including any earned and vested Annual Incentives) in which Executive theretofore participated, payable in accordance with the terms and conditions of the plans, programs, and arrangements (and agreements and documents thereunder) pursuant to which such compensation and benefits were granted or accrued; and
|
(iii)
|
Reasonable business expenses and disbursements incurred by Executive prior to Executive’s termination of employment or contractually obligated prior to Executive’s termination of employment and incurred by Executive thereafter, to be reimbursed to Executive, as authorized under Section 5(d), in accordance the Company’s reimbursement policies as in effect at the date of such termination.
|
(i)
|
the assignment to Executive of duties materially inconsistent with Executive’s position and status hereunder, or an alteration, materially adverse to Executive, in the nature of Executive’s duties, responsibilities, and authorities, Executive’s positions or the conditions of Executive’s employment from those specified in Section 3 or otherwise hereunder (other than inadvertent actions which are promptly remedied); for this purpose, it shall constitute “Good Reason” under this subsection (f)(i) if Executive shall be required to report to and take direction from any person other than the Chief Executive Officer of the Company; except the foregoing shall not constitute Good Reason if occurring in connection with the termination of Executive’s employment for Cause, Disability, Retirement, as a result of Executive’s death, or as a result of action by or with the consent of Executive; for purposes of this Section 8(f)(i), references to the Company (and the Board and stockholders of the Company) refer to the ultimate parent company (and its board and stockholders) succeeding the Company following an acquisition in which the corporate existence of the Company continues, in accordance with Section 13(b);
|
(ii)
|
(A) a reduction by the Company in Executive’s Base Salary, (B) the setting of Executive’s annual target incentive opportunity in amounts less than specified under or otherwise not in conformity with Section 4 hereof (other than a setting of annual target incentives that would pay cash in amounts equal to the value of what would otherwise have been provided in the form of Company common stock), or (C) a material adverse change in benefits not in conformity with Section 5;
|
(iii)
|
the relocation of the principal place of Executive’s employment not in conformity with Section 3(c) hereof; for this purpose, required travel on the Company’s business will not constitute a relocation;
|
(iv)
|
the failure by the Company to pay to Executive (A) any portion of Executive's base salary, (B) any portion of the Annual Cash Award or the Annual Stock Incentive that is payable in cash and has been awarded to Executive pursuant to Section 4(b), or (C) any portion of an installment of
|
(v)
|
the failure by the Company to continue in effect any material compensation or benefit plan in which Executive participated immediately prior to a Change in Control, unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amounts of compensation or benefits provided and the level of Executive’s participation relative to other participants and the tax treatment of such compensation or benefits, as existed at the time of the Change in Control;
|
(vi)
|
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to fully assume the Company’s obligations and to perform under this Agreement, as contemplated in Section 13(b) hereof; or
|
(vii)
|
any other failure by the Company to perform any material obligation under, or breach by the Company of any material provision of, this Agreement.
|
9.
|
Payment of Financial Obligations.
|
10.
|
Rabbi Trust Obligation; Excise Tax-Related Provisions.
|
11.
|
Restrictive Covenants; Release of Claims.
|
12.
|
Governing Law; Disputes; Arbitration.
|
13.
|
Miscellaneous.
|
14.
|
D&O Insurance.
|
|
|
|
|
||
|
|
KILROY REALTY CORPORATION,
|
|
||
|
|
a Maryland corporation
|
|
||
|
|
By:
|
|
/s/ Tyler H. Rose
|
|
|
|
|
|
Name: Tyler H. Rose
|
|
|
|
|
|
Title: Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Joseph E. Magri
|
|
|
|
|
|
Name: Joseph E. Magri
|
|
|
|
|
|
Title: Senior Vice President and Corporate Counsel
|
|
|
|
|
|
|||
|
|
KILROY REALTY, L.P.,
|
|
|||
|
|
a Delaware limited partnership
|
|
|||
|
|
|
|
|
|
|
|
|
By:
|
KILROY REALTY CORPORATION
|
|
||
|
|
|
a Maryland corporation
|
|
||
|
|
|
its general partner
|
|
||
|
|
|
By:
|
|
/s/ Tyler H. Rose
|
|
|
|
|
|
|
Name: Tyler H. Rose
|
|
|
|
|
|
|
Title: Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Joseph E. Magri
|
|
|
|
|
|
|
Name: Joseph E. Magri
|
|
|
|
|
|
|
Title: Senior Vice President and Corporate Counsel
|
|
|
|
|
|
||
|
|
EXECUTIVE
|
|
||
|
|
|
|
||
|
|
/s/ Jeffrey C. Hawken
|
|
||
|
|
Jeffrey C. Hawken
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
KILROY REALTY CORPORATION,
|
|
||
|
|
a Maryland corporation
|
|
||
|
|
By:
|
|
/s/ Tyler H. Rose
|
|
|
|
|
|
Name: Tyler H. Rose
|
|
|
|
|
|
Title: Executive Vice President and Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Joseph E. Magri
|
|
|
|
|
|
Name: Joseph E. Magri
|
|
|
|
|
|
Title: Senior Vice President and Corporate Counsel
|
|
|
|
|
|
|||
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KILROY REALTY, L.P.,
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a Delaware limited partnership
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By:
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KILROY REALTY CORPORATION
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a Maryland corporation
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its general partner
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By:
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/s/ Tyler H. Rose
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Name: Tyler H. Rose
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Title: Executive Vice President and Chief Financial Officer
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By:
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/s/ Joseph E. Magri
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Name: Joseph E. Magri
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Title: Senior Vice President and Corporate Counsel
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EXECUTIVE
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/s/ Jeffrey C. Hawken
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Jeffrey C. Hawken
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Date
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Jeffrey C. Hawken
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Date
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Kilroy Realty Corporation
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Date
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Kilroy Realty Corporation
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Jeffrey C. Hawken
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Cash Compensation
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Annual Retainer
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$
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55,000
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Additional Lead Independent Director Retainer
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$
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50,000
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Additional Committee Member Retainers
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Audit Committee
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$
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10,000
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Executive Compensation Committee
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$
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10,000
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Nominating/Corporate Governance Committee
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$
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5,000
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Additional Committee Chair Retainers
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Audit Committee Chair
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$
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20,000
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Executive Compensation Committee Chair
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$
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20,000
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Nominating/Corporate Governance Committee Chair
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$
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10,000
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Equity Compensation
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Annual Equity Award Value
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$
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100,000
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Year Ended December 31,
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2015
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2014
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2013
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2012
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2011
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Earnings:
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Income (loss) from continuing operations
(1)
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$
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238,604
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$
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59,313
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$
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14,935
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$
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(5,475
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)
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$
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(16,664
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)
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Plus Fixed Charges:
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||||||||||
Interest expense (including amortization of loan costs)
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57,682
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67,571
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75,870
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79,114
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85,785
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Capitalized interest and loan costs
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51,965
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47,090
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35,368
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19,792
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9,130
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Estimate of interest within rental expense
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3,138
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4,270
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4,073
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3,475
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1,481
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Distributions on Cumulative Redeemable Preferred units
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—
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—
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—
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3,541
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5,588
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|||||
Fixed Charges
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112,785
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118,931
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115,311
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105,922
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101,984
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Plus: Amortization of capitalized interest
(2)
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8,412
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7,001
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5,823
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5,318
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4,622
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Less: Capitalized interest and loan costs
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(51,965
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)
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(47,090
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)
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(35,368
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)
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(19,792
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)
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(9,130
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)
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Less: Distributions on Cumulative Redeemable Preferred units
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—
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—
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—
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(3,541
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)
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(5,588
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)
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Earnings
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307,836
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138,155
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100,701
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82,432
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75,224
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|||||
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Combined Fixed Charges and Preferred Dividends:
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||||||||||
Fixed Charges (from above)
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112,785
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118,931
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115,311
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105,922
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101,984
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Preferred Dividends
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13,250
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13,250
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13,250
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10,567
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9,608
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Combined Fixed Charges and Preferred Dividends
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$
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126,035
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$
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132,181
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$
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128,561
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$
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116,489
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$
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111,592
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Consolidated ratio of earnings to fixed charges
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2.73x
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1.16x
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0.87x
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0.78x
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0.74x
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Consolidated ratio of earnings to combined fixed charges and preferred dividends
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2.44x
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1.05x
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0.78x
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0.71x
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0.67x
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||||||||||
(Surplus) Deficiency
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$
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(181,801
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)
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$
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(5,974
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)
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$
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27,860
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$
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34,057
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$
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36,368
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Year Ended December 31,
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2015
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2014
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2013
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2012
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2011
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Earnings:
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||||||||||
Income (loss) from continuing operations
(1)
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$
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238,604
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$
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59,313
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$
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14,935
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$
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(5,475
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)
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$
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(16,664
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)
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Plus Fixed Charges:
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|
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||||||||||
Interest expense (including amortization of loan costs)
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57,682
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67,571
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75,870
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79,114
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85,785
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|||||
Capitalized interest and loan costs
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51,965
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47,090
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35,368
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19,792
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9,130
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|||||
Estimate of interest within rental expense
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3,138
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4,270
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4,073
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3,475
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1,481
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|||||
Fixed Charges
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112,785
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118,931
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115,311
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102,381
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96,396
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Plus: Amortization of capitalized interest
(2)
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8,412
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7,001
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5,823
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5,318
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4,622
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|||||
Less: Capitalized interest and loan costs
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(51,965
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)
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(47,090
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)
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(35,368
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)
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(19,792
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)
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(9,130
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)
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|||||
Earnings
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$
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307,836
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$
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138,155
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$
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100,701
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$
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82,432
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$
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75,224
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||||||||||
Ratio of earnings to fixed charges
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2.73
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x
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1.16
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x
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0.87
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x
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0.81
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x
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0.78
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x
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NAME OF SUBSIDIARY
OR ORGANIZATION
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STATE OF INCORPORATION
OR FORMATION
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Kilroy Realty, L.P.
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Delaware
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Kilroy Realty Finance, Inc.
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Delaware
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Kilroy Realty Finance Partnership, L.P.
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Delaware
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Kilroy Services, LLC
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Delaware
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Kilroy Realty TRS, Inc.
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Delaware
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Kilroy Realty Management, L.P.
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Delaware
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Kilroy Realty 303, LLC
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Delaware
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KR Westlake Terry, LLC
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Delaware
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KR 6255 Sunset, LLC
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Delaware
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KR MML 12701, LLC
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Delaware
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KR 690 Middlefield, LLC
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Delaware
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KR Lakeview, LLC
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Delaware
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KR Tribeca West, LLC
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Delaware
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KR 331 Fairchild, LLC
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Delaware
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KR Hollywood, LLC
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Delaware
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KR 350 Mission, LLC
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Delaware
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Fremont Lake Union Center, LLC
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Delaware
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KR 555 Mathilda, LLC
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Delaware
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KR Redwood City Member, LLC
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Delaware
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Redwood City Partners, LLC
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Delaware
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KR Academy, LLC
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Delaware
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KR 401 Terry, LLC
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Delaware
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KR Mission Bay, LLC
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Delaware
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KR Flower Mart, LLC
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Delaware
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KR SFFGA, LLC
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Delaware
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KR CFM, Inc.
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California
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KR 333 Dexter, LLC
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Delaware
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KR 330 Dexter, LLC
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Delaware
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KR 400 Aurora, LLC
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Delaware
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KR 401 Dexter, LLC
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Delaware
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KR 100 Hooper, LLC
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Delaware
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KR 149 Morris, LLC
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Delaware
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NAME OF SUBSIDIARY
OR ORGANIZATION
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STATE OF INCORPORATION
OR FORMATION
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Kilroy Realty Finance Partnership, L.P.
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Delaware
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Kilroy Services, LLC
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Delaware
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Kilroy Realty TRS, Inc.
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Delaware
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Kilroy Realty Management, L.P.
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Delaware
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Kilroy Realty 303, LLC
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Delaware
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KR Westlake Terry, LLC
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Delaware
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KR 6255 Sunset, LLC
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Delaware
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KR MML 12701, LLC
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Delaware
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KR 690 Middlefield, LLC
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Delaware
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KR Lakeview, LLC
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Delaware
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KR Tribeca West, LLC
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Delaware
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KR 331 Fairchild, LLC
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Delaware
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KR Hollywood, LLC
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Delaware
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KR 350 Mission, LLC
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Delaware
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Fremont Lake Union Center, LLC
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Delaware
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KR 555 Mathilda, LLC
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Delaware
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KR Redwood City Member, LLC
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Delaware
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Redwood City Partners, LLC
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Delaware
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KR Academy, LLC
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Delaware
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KR 401 Terry, LLC
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Delaware
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KR Mission Bay, LLC
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Delaware
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KR Flower Mart, LLC
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Delaware
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KR SFFGA, LLC
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Delaware
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KR 333 Dexter, LLC
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Delaware
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KR 330 Dexter, LLC
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Delaware
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KR 400 Aurora, LLC
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Delaware
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KR 401 Dexter, LLC
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Delaware
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KR 100 Hooper, LLC
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Delaware
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KR 149 Morris, LLC
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Delaware
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1.
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I have reviewed this annual report on Form 10-K of Kilroy Realty Corporation;
|
2.
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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;
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3.
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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;
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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:
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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;
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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
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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.
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/s/ John Kilroy
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John Kilroy
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President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K 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 annual report on Form 10-K 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 annual report on Form 10-K 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
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b.
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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.
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/s/ Tyler H. Rose
|
Tyler H. Rose
|
Executive Vice President and
Chief Financial Officer
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Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
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(i)
|
the accompanying Annual Report on Form 10-K of the Company for the year ended
December 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.
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/s/ John Kilroy
|
|
John Kilroy
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
February 12, 2016
|
(i)
|
the accompanying Annual Report on Form 10-K of the Company for the year ended
December 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:
|
February 12, 2016
|
(i)
|
the accompanying Annual Report on Form 10-K of the Operating Partnership for the year ended
December 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:
|
February 12, 2016
|
(i)
|
the accompanying Annual Report on Form 10-K of the Operating Partnership for the year ended
December 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:
|
February 12, 2016
|