þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
Kilroy Realty Corporation
|
Maryland
|
95-4598246
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
Kilroy Realty, L.P.
|
Delaware
|
95-4612685
|
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
|
12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064
|
||
(Address of principal executive offices) (Zip Code)
|
||
|
||
(310) 481-8400
|
||
(Registrant's telephone number, including area code)
|
||
|
|
|
N/A
|
||
(Former name, former address and former fiscal year, if changed since last report)
|
Kilroy Realty Corporation
|
|
|
|
Large accelerated filer
þ
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
|||
|
|
|
|
Kilroy Realty, L.P.
|
|
|
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
þ
|
Smaller reporting company
o
|
(Do not check if a smaller reporting company)
|
•
|
Combined reports better reflect how management and the analyst community view the business as a single operating unit;
|
•
|
Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
|
•
|
Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
|
•
|
Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
|
•
|
consolidated financial statements;
|
•
|
the following notes to the consolidated financial statements:
|
◦
|
Note 8, Stockholders’ Equity of the Company;
|
◦
|
Note 9, Partners’ Capital of the Operating Partnership;
|
◦
|
Note 13, Net Income Available to Common Stockholders Per Share of the Company;
|
◦
|
Note 14, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
|
◦
|
Note 15, Supplemental Cash Flow Information of the Company; and
|
◦
|
Note 16, Supplemental Cash Flow Information of the Operating Partnership;
|
•
|
“Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
◦
|
—Liquidity and Capital Resources of the Company;” and
|
◦
|
—Liquidity and Capital Resources of the Operating Partnership.”
|
|
|
|
Page
|
|
|
PART I – FINANCIAL INFORMATION
|
|
Item 1.
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
Item 1.
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
Item 2.
|
|
||
Item 3.
|
|
||
Item 4.
|
|
||
|
|
PART II – OTHER INFORMATION
|
|
Item 1.
|
|
||
Item 1A.
|
|
||
Item 2.
|
|
||
Item 3.
|
|
||
Item 4.
|
|
||
Item 5.
|
|
||
Item 6.
|
|
||
|
March 31, 2016
|
|
December 31, 2015
|
||||
ASSETS
|
(unaudited)
|
|
|
||||
REAL ESTATE ASSETS:
|
|
|
|
||||
Land and improvements
|
$
|
978,643
|
|
|
$
|
875,794
|
|
Buildings and improvements
|
4,501,062
|
|
|
4,091,012
|
|
||
Undeveloped land and construction in progress (Note 2)
|
1,018,738
|
|
|
1,361,340
|
|
||
Total real estate assets held for investment
|
6,498,443
|
|
|
6,328,146
|
|
||
Accumulated depreciation and amortization
|
(1,034,315
|
)
|
|
(994,241
|
)
|
||
Total real estate assets held for investment, net
|
5,464,128
|
|
|
5,333,905
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET
|
—
|
|
|
117,666
|
|
||
CASH AND CASH EQUIVALENTS
|
38,645
|
|
|
56,508
|
|
||
RESTRICTED CASH (Notes 1 and 3)
|
261,600
|
|
|
696
|
|
||
MARKETABLE SECURITIES (Note 12)
|
13,418
|
|
|
12,882
|
|
||
CURRENT RECEIVABLES, NET (Note 5)
|
9,540
|
|
|
11,153
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 5)
|
199,232
|
|
|
189,704
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 4)
|
186,271
|
|
|
176,683
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 1)
|
31,276
|
|
|
27,233
|
|
||
TOTAL ASSETS
|
$
|
6,204,110
|
|
|
$
|
5,926,430
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt, net (Notes 1, 6 and 12)
|
$
|
378,080
|
|
|
$
|
380,835
|
|
Unsecured debt, net (Notes 1, 6 and 12)
|
1,845,313
|
|
|
1,844,634
|
|
||
Unsecured line of credit (Notes 6 and 12)
|
75,000
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities
|
265,863
|
|
|
246,323
|
|
||
Accrued dividends and distributions (Note 17)
|
35,317
|
|
|
34,992
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Note 4)
|
131,296
|
|
|
128,156
|
|
||
Rents received in advance and tenant security deposits
|
48,543
|
|
|
49,361
|
|
||
Liabilities of real estate assets held for sale
|
—
|
|
|
7,543
|
|
||
Total liabilities
|
2,779,412
|
|
|
2,691,844
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 11)
|
|
|
|
||||
EQUITY:
|
|
|
|
||||
Stockholders’ Equity (Note 8):
|
|
|
|
||||
Preferred stock, $.01 par value, 30,000,000 shares authorized:
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred stock, $.01 par value, 4,600,000 shares authorized, 4,000,000 shares issued and outstanding ($100,000 liquidation preference)
|
96,155
|
|
|
96,155
|
|
||
6.375% Series H Cumulative Redeemable Preferred stock, $.01 par value, 4,000,000 shares authorized, issued and outstanding ($100,000 liquidation preference)
|
96,256
|
|
|
96,256
|
|
||
Common stock, $.01 par value, 150,000,000 shares authorized, 92,229,464 and 92,258,690 shares issued and outstanding, respectively
|
922
|
|
|
923
|
|
||
Additional paid-in capital
|
3,066,994
|
|
|
3,047,894
|
|
||
Retained earnings/(distributions in excess of earnings)
|
67,981
|
|
|
(70,262
|
)
|
||
Total stockholders’ equity
|
3,328,308
|
|
|
3,170,966
|
|
||
Noncontrolling Interests:
|
|
|
|
||||
Common units of the Operating Partnership (Note 7)
|
89,675
|
|
|
57,100
|
|
||
Noncontrolling interest in consolidated subsidiary (Note 1)
|
6,715
|
|
|
6,520
|
|
||
Total noncontrolling interests
|
96,390
|
|
|
63,620
|
|
||
Total equity
|
3,424,698
|
|
|
3,234,586
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
6,204,110
|
|
|
$
|
5,926,430
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
REVENUES
|
|
|
|
||||
Rental income
|
$
|
133,755
|
|
|
$
|
130,932
|
|
Tenant reimbursements
|
11,404
|
|
|
14,425
|
|
||
Other property income
|
287
|
|
|
725
|
|
||
Total revenues
|
145,446
|
|
|
146,082
|
|
||
EXPENSES
|
|
|
|
||||
Property expenses
|
25,965
|
|
|
24,714
|
|
||
Real estate taxes
|
11,032
|
|
|
12,715
|
|
||
Provision for bad debts
|
—
|
|
|
242
|
|
||
Ground leases
|
829
|
|
|
776
|
|
||
General and administrative expenses
|
13,437
|
|
|
12,768
|
|
||
Acquisition-related expenses
|
62
|
|
|
128
|
|
||
Depreciation and amortization
|
50,440
|
|
|
51,487
|
|
||
Total expenses
|
101,765
|
|
|
102,830
|
|
||
OTHER (EXPENSES) INCOME
|
|
|
|
||||
Interest income and other net investment gains (Note 12)
|
271
|
|
|
360
|
|
||
Interest expense (Note 6)
|
(11,829
|
)
|
|
(16,878
|
)
|
||
Total other (expenses) income
|
(11,558
|
)
|
|
(16,518
|
)
|
||
INCOME FROM OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
32,123
|
|
|
26,734
|
|
||
Gains on sale of land
|
—
|
|
|
17,268
|
|
||
Gains on sale of depreciable operating properties (Note 3)
|
145,990
|
|
|
—
|
|
||
NET INCOME
|
178,113
|
|
|
44,002
|
|
||
Net income attributable to noncontrolling common units of the Operating Partnership
|
(3,610
|
)
|
|
(815
|
)
|
||
Net income attributable to noncontrolling interest in consolidated subsidiary
|
(195
|
)
|
|
—
|
|
||
Total income attributable to noncontrolling interest
|
(3,805
|
)
|
|
(815
|
)
|
||
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
|
174,308
|
|
|
43,187
|
|
||
PREFERRED DIVIDENDS
|
(3,313
|
)
|
|
(3,313
|
)
|
||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
170,995
|
|
|
$
|
39,874
|
|
Net income available to common stockholders per share – basic (Note 13)
|
$
|
1.85
|
|
|
$
|
0.45
|
|
Net income available to common stockholders per share – diluted (Note 13)
|
$
|
1.84
|
|
|
$
|
0.45
|
|
Weighted average common shares outstanding – basic (Note 13)
|
92,224,522
|
|
|
86,896,776
|
|
||
Weighted average common shares outstanding – diluted (Note 13)
|
92,734,543
|
|
|
87,434,366
|
|
||
Dividends declared per common share
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
|
|
Common Stock
|
|
Total
Stock-
holders’
Equity
|
|
Noncontrolling Interests
|
|
Total
Equity
|
|||||||||||||||||||||
|
Preferred
Stock
|
|
Number of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Distributions
in Excess of
Earnings
|
|
||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2014
|
$
|
192,411
|
|
|
86,259,684
|
|
|
$
|
863
|
|
|
$
|
2,635,900
|
|
|
$
|
(162,964
|
)
|
|
$
|
2,666,210
|
|
|
$
|
57,726
|
|
|
$
|
2,723,936
|
|
Net income
|
|
|
|
|
|
|
|
|
43,187
|
|
|
43,187
|
|
|
815
|
|
|
44,002
|
|
|||||||||||
Issuance of common stock
|
|
|
1,507,393
|
|
|
15
|
|
|
113,082
|
|
|
|
|
113,097
|
|
|
|
|
113,097
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
413
|
|
|
|
|
413
|
|
|
|
|
413
|
|
||||||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
|
|
4,302
|
|
|
|
|
4,302
|
|
|
|
|
4,302
|
|
||||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(20,429
|
)
|
|
|
|
(1,821
|
)
|
|
|
|
(1,821
|
)
|
|
|
|
(1,821
|
)
|
|||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
36,699
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|||||||||||
Exercise of stock options
|
|
|
237,000
|
|
|
2
|
|
|
10,480
|
|
|
|
|
10,482
|
|
|
|
|
10,482
|
|
||||||||||
Exchange of common units of the Operating Partnership
|
|
|
11,030
|
|
|
|
|
316
|
|
|
|
|
316
|
|
|
(316
|
)
|
|
—
|
|
||||||||||
Adjustment for noncontrolling interest
|
|
|
|
|
|
|
(1,496
|
)
|
|
|
|
(1,496
|
)
|
|
1,496
|
|
|
—
|
|
|||||||||||
Preferred dividends
|
|
|
|
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||||||
Dividends declared per common share and common unit ($0.35 per share/unit)
|
|
|
|
|
|
|
|
|
(31,265
|
)
|
|
(31,265
|
)
|
|
(627
|
)
|
|
(31,892
|
)
|
|||||||||||
BALANCE AS OF MARCH 31, 2015
|
$
|
192,411
|
|
|
88,031,377
|
|
|
$
|
880
|
|
|
$
|
2,761,176
|
|
|
$
|
(154,355
|
)
|
|
$
|
2,800,112
|
|
|
$
|
59,094
|
|
|
$
|
2,859,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Total
Stock-
holders’
Equity
|
|
Noncontrolling Interests
|
|
Total
Equity
|
||||||||||||||||||||||
|
Preferred
Stock
|
|
Number of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Retained Earnings /(Distributions
in Excess of
Earnings)
|
|
||||||||||||||||||||
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
|
|
Net income
|
|
|
|
|
|
|
|
|
174,308
|
|
|
174,308
|
|
|
3,805
|
|
|
178,113
|
|
|||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
404
|
|
|
|
|
404
|
|
|
|
|
404
|
|
||||||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
|
|
5,911
|
|
|
|
|
5,911
|
|
|
|
|
5,911
|
|
||||||||||||
Exercise of stock options
|
|
|
6,000
|
|
|
—
|
|
|
256
|
|
|
|
|
256
|
|
|
|
|
256
|
|
||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(92,089
|
)
|
|
(1
|
)
|
|
(5,618
|
)
|
|
|
|
(5,619
|
)
|
|
|
|
(5,619
|
)
|
||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
55,663
|
|
|
—
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|
|
|
(1
|
)
|
||||||||||
Issuance of common units in connection with acquisition (Note 2)
|
|
|
|
|
|
|
|
|
|
|
|
|
48,033
|
|
|
48,033
|
|
|||||||||||||
Exchange of common units of the Operating Partnership
|
|
|
1,200
|
|
|
—
|
|
|
39
|
|
|
|
|
39
|
|
|
(39
|
)
|
|
—
|
|
|||||||||
Adjustment for noncontrolling interest
|
|
|
|
|
|
|
18,109
|
|
|
|
|
18,109
|
|
|
(18,109
|
)
|
|
—
|
|
|||||||||||
Preferred dividends
|
|
|
|
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||||||
Dividends declared per common share and common unit ($0.35 per share/unit)
|
|
|
|
|
|
|
|
|
(32,752
|
)
|
|
(32,752
|
)
|
|
(920
|
)
|
|
(33,672
|
)
|
|||||||||||
BALANCE AS OF MARCH 31, 2016
|
$
|
192,411
|
|
|
92,229,464
|
|
|
$
|
922
|
|
|
$
|
3,066,994
|
|
|
$
|
67,981
|
|
|
$
|
3,328,308
|
|
|
$
|
96,390
|
|
|
$
|
3,424,698
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
178,113
|
|
|
$
|
44,002
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of building and improvements and leasing costs
|
49,664
|
|
|
50,843
|
|
||
Depreciation of furniture, fixtures and equipment
|
776
|
|
|
644
|
|
||
Increase in provision for bad debts
|
—
|
|
|
242
|
|
||
Noncash amortization of share-based compensation awards
|
4,703
|
|
|
3,571
|
|
||
Noncash amortization of deferred financing costs and debt discounts and premiums
|
609
|
|
|
454
|
|
||
Noncash amortization of net below market rents (Note 4)
|
(1,603
|
)
|
|
(1,928
|
)
|
||
Gains on sale of depreciable operating properties (Note 3)
|
(145,990
|
)
|
|
—
|
|
||
Gains on sale of land
|
—
|
|
|
(17,268
|
)
|
||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements
|
(2,888
|
)
|
|
(3,013
|
)
|
||
Straight-line rents
|
(9,451
|
)
|
|
(19,692
|
)
|
||
Net change in other operating assets
|
1,561
|
|
|
(8,421
|
)
|
||
Net change in other operating liabilities
|
2,710
|
|
|
5,545
|
|
||
Net cash provided by operating activities
|
78,204
|
|
|
54,979
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for development properties and undeveloped land
|
(63,702
|
)
|
|
(89,810
|
)
|
||
Expenditures for acquisition of undeveloped land (Note 2)
|
(33,513
|
)
|
|
(50,435
|
)
|
||
Expenditures for operating properties
|
(25,938
|
)
|
|
(24,345
|
)
|
||
Net proceeds received from dispositions (Note 3)
|
262,409
|
|
|
25,563
|
|
||
(Increase) decrease in restricted cash (Note 3)
|
(260,904
|
)
|
|
58,619
|
|
||
(Increase) decrease in acquisition-related deposits
|
(4,085
|
)
|
|
3,099
|
|
||
Increase in note receivable
|
(1,000
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(126,733
|
)
|
|
(77,309
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from issuance of common stock
|
—
|
|
|
113,097
|
|
||
Borrowings on unsecured revolving credit facility
|
80,000
|
|
|
150,000
|
|
||
Repayments on unsecured revolving credit facility
|
(5,000
|
)
|
|
(160,000
|
)
|
||
Principal payments on secured debt (Note 6)
|
(2,377
|
)
|
|
(28,472
|
)
|
||
Financing costs
|
(337
|
)
|
|
(397
|
)
|
||
Repurchase of common stock and restricted stock units
|
(5,619
|
)
|
|
(1,821
|
)
|
||
Proceeds from exercise of stock options
|
256
|
|
|
10,482
|
|
||
Dividends and distributions paid to common stockholders and common unitholders
|
(32,944
|
)
|
|
(30,846
|
)
|
||
Dividends and distributions paid to preferred stockholders and preferred unitholders
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Net cash provided by financing activities
|
30,666
|
|
|
48,730
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(17,863
|
)
|
|
26,400
|
|
||
Cash and cash equivalents, beginning of period
|
56,508
|
|
|
23,781
|
|
||
Cash and cash equivalents, end of period
|
$
|
38,645
|
|
|
$
|
50,181
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
ASSETS
|
(unaudited)
|
|
|
||||
REAL ESTATE ASSETS:
|
|
|
|
||||
Land and improvements
|
$
|
978,643
|
|
|
$
|
875,794
|
|
Buildings and improvements
|
4,501,062
|
|
|
4,091,012
|
|
||
Undeveloped land and construction in progress (Note 2)
|
1,018,738
|
|
|
1,361,340
|
|
||
Total real estate assets held for investment
|
6,498,443
|
|
|
6,328,146
|
|
||
Accumulated depreciation and amortization
|
(1,034,315
|
)
|
|
(994,241
|
)
|
||
Total real estate assets held for investment, net
|
5,464,128
|
|
|
5,333,905
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET
|
—
|
|
|
117,666
|
|
||
CASH AND CASH EQUIVALENTS
|
38,645
|
|
|
56,508
|
|
||
RESTRICTED CASH (Notes 1 and 3)
|
261,600
|
|
|
696
|
|
||
MARKETABLE SECURITIES (Note 12)
|
13,418
|
|
|
12,882
|
|
||
CURRENT RECEIVABLES, NET (Note 5)
|
9,540
|
|
|
11,153
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 5)
|
199,232
|
|
|
189,704
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Note 4)
|
186,271
|
|
|
176,683
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 1)
|
31,276
|
|
|
27,233
|
|
||
TOTAL ASSETS
|
$
|
6,204,110
|
|
|
$
|
5,926,430
|
|
LIABILITIES AND CAPITAL
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt, net (Notes 1, 6 and 12)
|
$
|
378,080
|
|
|
$
|
380,835
|
|
Unsecured debt, net (Notes 1, 6 and 12)
|
1,845,313
|
|
|
1,844,634
|
|
||
Unsecured line of credit (Notes 6 and 12)
|
75,000
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities
|
265,863
|
|
|
246,323
|
|
||
Accrued distributions (Note 17)
|
35,317
|
|
|
34,992
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Note 4)
|
131,296
|
|
|
128,156
|
|
||
Rents received in advance and tenant security deposits
|
48,543
|
|
|
49,361
|
|
||
Liabilities of real estate assets held for sale
|
—
|
|
|
7,543
|
|
||
Total liabilities
|
2,779,412
|
|
|
2,691,844
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 11)
|
|
|
|
||||
CAPITAL:
|
|
|
|
||||
Partners’ Capital (Note 9):
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred units, 4,000,000 units issued and
outstanding ($100,000 liquidation preference) |
96,155
|
|
|
96,155
|
|
||
6.375% Series H Cumulative Redeemable Preferred units, 4,000,000 units issued and
outstanding ($100,000 liquidation preference) |
96,256
|
|
|
96,256
|
|
||
Common units, 92,229,464
and
92,258,690 held by the general partner and 2,631,276 and 1,764,775
held by common limited partners issued and outstanding, respectively |
3,221,441
|
|
|
3,031,609
|
|
||
Total partners’ capital
|
3,413,852
|
|
|
3,224,020
|
|
||
Noncontrolling interests in consolidated subsidiaries (Note 1)
|
10,846
|
|
|
10,566
|
|
||
Total capital
|
3,424,698
|
|
|
3,234,586
|
|
||
TOTAL LIABILITIES AND CAPITAL
|
$
|
6,204,110
|
|
|
$
|
5,926,430
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
REVENUES
|
|
|
|
||||
Rental income
|
$
|
133,755
|
|
|
$
|
130,932
|
|
Tenant reimbursements
|
11,404
|
|
|
14,425
|
|
||
Other property income
|
287
|
|
|
725
|
|
||
Total revenues
|
145,446
|
|
|
146,082
|
|
||
EXPENSES
|
|
|
|
||||
Property expenses
|
25,965
|
|
|
24,714
|
|
||
Real estate taxes
|
11,032
|
|
|
12,715
|
|
||
Provision for bad debts
|
—
|
|
|
242
|
|
||
Ground leases
|
829
|
|
|
776
|
|
||
General and administrative expenses
|
13,437
|
|
|
12,768
|
|
||
Acquisition-related expenses
|
62
|
|
|
128
|
|
||
Depreciation and amortization
|
50,440
|
|
|
51,487
|
|
||
Total expenses
|
101,765
|
|
|
102,830
|
|
||
OTHER (EXPENSES) INCOME
|
|
|
|
||||
Interest income and other net investment gains (Note 12)
|
271
|
|
|
360
|
|
||
Interest expense (Note 6)
|
(11,829
|
)
|
|
(16,878
|
)
|
||
Total other (expenses) income
|
(11,558
|
)
|
|
(16,518
|
)
|
||
INCOME FROM OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
32,123
|
|
|
26,734
|
|
||
Gains on sale of land
|
—
|
|
|
17,268
|
|
||
Gains on sale of depreciable operating properties (Note 3)
|
145,990
|
|
|
—
|
|
||
NET INCOME
|
178,113
|
|
|
44,002
|
|
||
Net income attributable to noncontrolling interests in consolidated subsidiaries
|
(280
|
)
|
|
(75
|
)
|
||
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.
|
177,833
|
|
|
43,927
|
|
||
PREFERRED DISTRIBUTIONS
|
(3,313
|
)
|
|
(3,313
|
)
|
||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS
|
$
|
174,520
|
|
|
$
|
40,614
|
|
Net income available to common unitholders per unit – basic (Note 14)
|
$
|
1.85
|
|
|
$
|
0.45
|
|
Net income available to common unitholders per unit – diluted (Note 14)
|
$
|
1.84
|
|
|
$
|
0.45
|
|
Weighted average common units outstanding – basic (Note 14)
|
94,188,520
|
|
|
88,693,306
|
|
||
Weighted average common units outstanding – diluted (Note 14)
|
94,698,541
|
|
|
89,230,896
|
|
||
Dividends declared per common unit
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
Partners’ Capital
|
|
Total
Partners’
Capital
|
|
Noncontrolling Interests in Consolidated Subsidiaries
|
|
|
|||||||||||||||
|
Preferred
Units
|
|
Number of
Common
Units
|
|
Common
Units
|
|
|
|
Total
Capital
|
|||||||||||||
BALANCE AS OF DECEMBER 31, 2014
|
$
|
192,411
|
|
|
88,063,884
|
|
|
$
|
2,521,900
|
|
|
$
|
2,714,311
|
|
|
$
|
9,625
|
|
|
$
|
2,723,936
|
|
Net income
|
|
|
|
|
43,927
|
|
|
43,927
|
|
|
75
|
|
|
44,002
|
|
|||||||
Issuance of common units
|
|
|
1,507,393
|
|
|
113,097
|
|
|
113,097
|
|
|
|
|
113,097
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
413
|
|
|
413
|
|
|
|
|
413
|
|
||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
4,302
|
|
|
4,302
|
|
|
|
|
4,302
|
|
||||||||
Repurchase of common units, stock options and restricted stock units
|
|
|
(20,429
|
)
|
|
(1,821
|
)
|
|
(1,821
|
)
|
|
|
|
(1,821
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
36,699
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Exercise of stock options
|
|
|
237,000
|
|
|
10,482
|
|
|
10,482
|
|
|
|
|
10,482
|
|
|||||||
Preferred distributions
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||
Distributions declared per common unit ($0.35 per unit)
|
|
|
|
|
(31,892
|
)
|
|
(31,892
|
)
|
|
|
|
(31,892
|
)
|
||||||||
BALANCE AS OF MARCH 31, 2015
|
$
|
192,411
|
|
|
89,824,547
|
|
|
$
|
2,657,095
|
|
|
$
|
2,849,506
|
|
|
$
|
9,700
|
|
|
$
|
2,859,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2015
|
$
|
192,411
|
|
|
94,023,465
|
|
|
$
|
3,031,609
|
|
|
$
|
3,224,020
|
|
|
$
|
10,566
|
|
|
$
|
3,234,586
|
|
Net income
|
|
|
|
|
177,833
|
|
|
177,833
|
|
|
280
|
|
|
178,113
|
|
|||||||
Issuance of common units in connection with acquisition (Note 2)
|
|
|
867,701
|
|
|
48,033
|
|
|
48,033
|
|
|
|
|
48,033
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
404
|
|
|
404
|
|
|
|
|
404
|
|
||||||||
Noncash amortization of share-based compensation
|
|
|
|
|
5,911
|
|
|
5,911
|
|
|
|
|
5,911
|
|
||||||||
Exercise of stock options
|
|
|
6,000
|
|
|
256
|
|
|
256
|
|
|
|
|
256
|
|
|||||||
Repurchase of common units, stock options and restricted stock units
|
|
|
(92,089
|
)
|
|
(5,619
|
)
|
|
(5,619
|
)
|
|
|
|
(5,619
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
55,663
|
|
|
(1
|
)
|
|
(1
|
)
|
|
|
|
(1
|
)
|
|||||||
Preferred distributions
|
|
|
|
|
(3,313
|
)
|
|
(3,313
|
)
|
|
|
|
(3,313
|
)
|
||||||||
Distributions declared per common unit ($0.35 per unit)
|
|
|
|
|
(33,672
|
)
|
|
(33,672
|
)
|
|
|
|
(33,672
|
)
|
||||||||
BALANCE AS OF MARCH 31, 2016
|
$
|
192,411
|
|
|
94,860,740
|
|
|
$
|
3,221,441
|
|
|
$
|
3,413,852
|
|
|
$
|
10,846
|
|
|
$
|
3,424,698
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
178,113
|
|
|
$
|
44,002
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of building and improvements and leasing costs
|
49,664
|
|
|
50,843
|
|
||
Depreciation of furniture, fixtures and equipment
|
776
|
|
|
644
|
|
||
Increase in provision for bad debts
|
—
|
|
|
242
|
|
||
Noncash amortization of share-based compensation awards
|
4,703
|
|
|
3,571
|
|
||
Noncash amortization of deferred financing costs and debt discounts and premiums
|
609
|
|
|
454
|
|
||
Noncash amortization of net below market rents (Note 4)
|
(1,603
|
)
|
|
(1,928
|
)
|
||
Gains on sales of depreciable operating properties (Note 3)
|
(145,990
|
)
|
|
—
|
|
||
Gains on sale of land
|
—
|
|
|
(17,268
|
)
|
||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements
|
(2,888
|
)
|
|
(3,013
|
)
|
||
Straight-line rents
|
(9,451
|
)
|
|
(19,692
|
)
|
||
Net change in other operating assets
|
1,561
|
|
|
(8,421
|
)
|
||
Net change in other operating liabilities
|
2,710
|
|
|
5,545
|
|
||
Net cash provided by operating activities
|
78,204
|
|
|
54,979
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for development properties and undeveloped land
|
(63,702
|
)
|
|
(89,810
|
)
|
||
Expenditures for acquisition of undeveloped land (Note 2)
|
(33,513
|
)
|
|
(50,435
|
)
|
||
Expenditures for operating properties
|
(25,938
|
)
|
|
(24,345
|
)
|
||
Net proceeds received from dispositions (Note 3)
|
262,409
|
|
|
25,563
|
|
||
(Increase) decrease in restricted cash (Note 3)
|
(260,904
|
)
|
|
58,619
|
|
||
(Increase) decrease in acquisition-related deposits
|
(4,085
|
)
|
|
3,099
|
|
||
Increase in note receivable
|
(1,000
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(126,733
|
)
|
|
(77,309
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from issuance of common stock
|
—
|
|
|
113,097
|
|
||
Borrowings on unsecured revolving credit facility
|
80,000
|
|
|
150,000
|
|
||
Repayments on unsecured revolving credit facility
|
(5,000
|
)
|
|
(160,000
|
)
|
||
Principal payments on secured debt (Note 6)
|
(2,377
|
)
|
|
(28,472
|
)
|
||
Financing costs
|
(337
|
)
|
|
(397
|
)
|
||
Repurchase of common stock and restricted stock units
|
(5,619
|
)
|
|
(1,821
|
)
|
||
Proceeds from exercise of stock options
|
256
|
|
|
10,482
|
|
||
Dividends and distributions paid to common unitholders
|
(32,944
|
)
|
|
(30,846
|
)
|
||
Dividends and distributions paid to preferred unitholders
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Net cash provided by financing activities
|
30,666
|
|
|
48,730
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(17,863
|
)
|
|
26,400
|
|
||
Cash and cash equivalents, beginning of period
|
56,508
|
|
|
23,781
|
|
||
Cash and cash equivalents, end of period
|
$
|
38,645
|
|
|
$
|
50,181
|
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
|
Number of
Tenants
|
|
Percentage
Occupied
|
||||
Stabilized Office Properties
|
103
|
|
|
13,671,730
|
|
|
523
|
|
|
94.9
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
|
|
Development projects in
“
lease-up
”
|
2
|
|
443,000
|
|
Development projects under construction
(1)
|
2
|
|
905,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
Location
|
|
Property Type
|
|
Month of Disposition
|
|
Number of Buildings
|
|
Rentable Square Feet
|
|
Sales Price
(1)
(in millions)
|
|||
Torrey Santa Fe Properties
(2)
|
|
Office
|
|
January
|
|
4
|
|
465,812
|
|
|
$
|
262.3
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents gross sales price before the impact of broker commissions and closing costs.
|
(2)
|
The Torrey Santa Fe Properties include the following: 7525 Torrey Santa Fe, 7535 Torrey Santa Fe, 7545 Torrey Santa Fe, and 7555 Torrey Santa Fe.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Deferred Leasing Costs and Acquisition-Related Intangible Assets, net:
|
|
|
|
||||
Deferred leasing costs
|
$
|
223,224
|
|
|
$
|
205,888
|
|
Accumulated amortization
|
(77,211
|
)
|
|
(72,745
|
)
|
||
Deferred leasing costs, net
|
146,013
|
|
|
133,143
|
|
||
Above-market operating leases
|
10,688
|
|
|
10,989
|
|
||
Accumulated amortization
|
(6,830
|
)
|
|
(6,739
|
)
|
||
Above-market operating leases, net
|
3,858
|
|
|
4,250
|
|
||
In-place leases
|
70,644
|
|
|
72,639
|
|
||
Accumulated amortization
|
(34,703
|
)
|
|
(33,810
|
)
|
||
In-place leases, net
|
35,941
|
|
|
38,829
|
|
||
Below-market ground lease obligation
|
490
|
|
|
490
|
|
||
Accumulated amortization
|
(31
|
)
|
|
(29
|
)
|
||
Below-market ground lease obligation, net
|
459
|
|
|
461
|
|
||
Total deferred leasing costs and acquisition-related intangible assets, net
|
$
|
186,271
|
|
|
$
|
176,683
|
|
Acquisition-Related Intangible Liabilities, net:
(1)
|
|
|
|
||||
Below-market operating leases
|
$
|
52,733
|
|
|
$
|
53,502
|
|
Accumulated amortization
|
(28,300
|
)
|
|
(27,074
|
)
|
||
Below-market operating leases, net
|
24,433
|
|
|
26,428
|
|
||
Above-market ground lease obligation
|
6,320
|
|
|
6,320
|
|
||
Accumulated amortization
|
(450
|
)
|
|
(424
|
)
|
||
Above-market ground lease obligation, net
|
5,870
|
|
|
5,896
|
|
||
Total acquisition-related intangible liabilities, net
|
$
|
30,303
|
|
|
$
|
32,324
|
|
(1)
|
Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Deferred leasing costs
(1)
|
$
|
6,783
|
|
|
$
|
6,822
|
|
Above-market operating leases
(2)
|
392
|
|
|
911
|
|
||
In-place leases
(1)
|
2,888
|
|
|
4,221
|
|
||
Below-market ground lease obligation
(3)
|
2
|
|
|
2
|
|
||
Below-market operating leases
(4)
|
(1,995
|
)
|
|
(2,839
|
)
|
||
Above-market ground lease obligation
(5)
|
(25
|
)
|
|
(25
|
)
|
||
Total
|
$
|
8,045
|
|
|
$
|
9,092
|
|
(1)
|
The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented.
|
(2)
|
The amortization of above-market operating leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.
|
(3)
|
The amortization of the below-market ground lease obligation is recorded as an increase to ground lease expense in the consolidated statements of operations for the periods presented.
|
(4)
|
The amortization of below-market operating leases is recorded as an increase to rental income in the consolidated statements of operations for the periods presented.
|
(5)
|
The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.
|
Year
|
Deferred Leasing Costs
|
|
Above-Market Operating Leases
(1)
|
|
In-Place Leases
|
|
Below-Market Ground Lease Obligation
(2)
|
|
Below-Market Operating Leases
(3)
|
|
Above-Market Ground Lease Obligation
(4)
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Remaining 2016
|
$
|
20,497
|
|
|
$
|
1,109
|
|
|
$
|
7,725
|
|
|
$
|
6
|
|
|
$
|
(5,689
|
)
|
|
$
|
(75
|
)
|
2017
|
24,704
|
|
|
1,241
|
|
|
9,036
|
|
|
8
|
|
|
(6,997
|
)
|
|
(101
|
)
|
||||||
2018
|
21,490
|
|
|
831
|
|
|
6,296
|
|
|
8
|
|
|
(5,713
|
)
|
|
(101
|
)
|
||||||
2019
|
17,492
|
|
|
643
|
|
|
4,637
|
|
|
8
|
|
|
(3,574
|
)
|
|
(101
|
)
|
||||||
2020
|
13,515
|
|
|
16
|
|
|
2,789
|
|
|
8
|
|
|
(2,035
|
)
|
|
(101
|
)
|
||||||
Thereafter
|
48,315
|
|
|
18
|
|
|
5,458
|
|
|
421
|
|
|
(425
|
)
|
|
(5,391
|
)
|
||||||
Total
|
$
|
146,013
|
|
|
$
|
3,858
|
|
|
$
|
35,941
|
|
|
$
|
459
|
|
|
$
|
(24,433
|
)
|
|
$
|
(5,870
|
)
|
(1)
|
Represents estimated annual amortization related to above-market operating leases. Amounts will be recorded as a decrease to rental income in the consolidated statements of operations.
|
(2)
|
Represents estimated annual amortization related to below-market ground lease obligations. Amounts will be recorded as an increase to ground lease expense in the consolidated statements of operations.
|
(3)
|
Represents estimated annual amortization related to below-market operating leases. Amounts will be recorded as an increase to rental income in the consolidated statements of operations.
|
(4)
|
Represents estimated annual amortization related to above-market ground lease obligations. Amounts will be recorded as a decrease to ground lease expense in the consolidated statements of operations.
|
|
March 31, 2016
|
|
December 31, 2015
(1)
|
||||
|
(in thousands)
|
||||||
Current receivables
|
$
|
11,620
|
|
|
$
|
13,233
|
|
Allowance for uncollectible tenant receivables
|
(2,080
|
)
|
|
(2,080
|
)
|
||
Current receivables, net
|
$
|
9,540
|
|
|
$
|
11,153
|
|
(1)
|
Excludes current receivables, net related to real estate held for sale at
December 31, 2015
.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Deferred rent receivables
(1)
|
$
|
200,772
|
|
|
$
|
191,586
|
|
Allowance for deferred rent receivables
|
(1,540
|
)
|
|
(1,882
|
)
|
||
Deferred rent receivables, net
(1)
|
$
|
199,232
|
|
|
$
|
189,704
|
|
(1)
|
Excludes deferred rent receivables, net related to real estate held for sale at
December 31, 2015
.
|
Type of Debt
|
Annual Stated Interest Rate
(1)
|
|
Effective Interest Rate
(1)(2)
|
|
Maturity Date
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
|
|
|
|
|
|
(in thousands)
|
||||||
Mortgage note payable
(4)
|
4.27%
|
|
4.27%
|
|
February 2018
|
|
$
|
127,684
|
|
|
$
|
128,315
|
|
Mortgage note payable
(4)
|
4.48%
|
|
4.48%
|
|
July 2027
|
|
95,961
|
|
|
96,354
|
|
||
Mortgage note payable
(3)
(4)
|
6.05%
|
|
3.50%
|
|
June 2019
|
|
85,037
|
|
|
85,890
|
|
||
Mortgage note payable
|
6.51%
|
|
6.51%
|
|
February 2017
|
|
65,281
|
|
|
65,563
|
|
||
Mortgage note payable
|
7.15%
|
|
7.15%
|
|
May 2017
|
|
3,314
|
|
|
3,987
|
|
||
Other
|
Various
|
|
Various
|
|
Various
|
|
1,809
|
|
|
1,809
|
|
||
Total secured debt
|
|
|
|
|
|
|
$
|
379,086
|
|
|
$
|
381,918
|
|
Unamortized deferred financing costs
|
|
|
|
|
|
|
(1,006
|
)
|
|
(1,083
|
)
|
||
Total secured debt, net
|
|
|
|
|
|
|
$
|
378,080
|
|
|
$
|
380,835
|
|
(1)
|
All interest rates presented are fixed-rate interest rates.
|
(2)
|
Represents the effective interest rate including the amortization of initial issuance discounts/premiums excluding the amortization of deferred financing costs.
|
(3)
|
Amounts reported include the amounts of unamortized debt premiums of
$5.8 million
and
$6.2 million
as of
March 31, 2016
and
December 31, 2015
, respectively.
|
(4)
|
The secured debt and the related properties that secure the debt are held in a special purpose entity and the properties are not available to satisfy the debts and other obligations of the Company or the Operating Partnership.
|
|
|
|
|
|
|
|
|
|
Principal Amount as of
|
||||||
|
Issuance date
|
|
Maturity date
|
|
Stated
coupon rate
|
|
Effective interest rate
(1)
|
|
March 31,
2016
|
|
December 31,
2015 |
||||
|
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
4.375% Unsecured Senior Notes
(2)
|
September 2015
|
|
October 2025
|
|
4.375%
|
|
4.440%
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(5,261
|
)
|
|
(5,400
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
394,739
|
|
|
$
|
394,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.250% Unsecured Senior Notes
(3)
|
July 2014
|
|
August 2029
|
|
4.250%
|
|
4.350%
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(7,095
|
)
|
|
(7,228
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
392,905
|
|
|
$
|
392,772
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.800% Unsecured Senior Notes
(4)
|
January 2013
|
|
January 2023
|
|
3.800%
|
|
3.804%
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(1,862
|
)
|
|
(1,931
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
298,138
|
|
|
$
|
298,069
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.800% Unsecured Senior Notes
(4) (5)
|
July 2011
|
|
July 2018
|
|
4.800%
|
|
4.827%
|
|
$
|
325,000
|
|
|
$
|
325,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(1,129
|
)
|
|
(1,251
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
323,871
|
|
|
$
|
323,749
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
6.625% Unsecured Senior Notes
(6)
|
May 2010
|
|
June 2020
|
|
6.625%
|
|
6.743%
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(2,279
|
)
|
|
(2,414
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
247,721
|
|
|
$
|
247,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Unsecured Senior Notes, Net
|
|
|
|
|
|
|
|
|
$
|
1,657,374
|
|
|
$
|
1,656,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the effective interest rate including the amortization of initial issuance discounts/premiums excluding the amortization of deferred financing 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.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
(1)
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Interest rate
(2)
|
1.59
|
%
|
|
1.40
|
%
|
||
Maturity date
|
July 2019
|
(1)
|
As of
March 31, 2016
and
December 31, 2015
,
$0.9 million
of unamortized deferred financing costs remained to be amortized through the maturity date of our unsecured term loan facility.
|
(2)
|
Our unsecured term loan facility interest rate was calculated based on an annual rate of LIBOR plus
1.150%
as of
March 31, 2016
and
December 31, 2015
.
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
75,000
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
525,000
|
|
|
600,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
1.49
|
%
|
|
—
|
%
|
||
Facility fee-annual rate
(3)
|
0.200%
|
||||||
Maturity date
|
July 2019
|
(1)
|
We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional
$311.0 million
under an accordion feature under the terms of the unsecured revolving credit facility and term loan facility.
|
(2)
|
Our unsecured revolving credit facility interest rate was calculated based on an annual rate of LIBOR plus
1.050%
as of
March 31, 2016
and
December 31, 2015
.
|
(3)
|
Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of
March 31, 2016
and
December 31, 2015
,
$4.3 million
and
$4.6 million
, of unamortized deferred financing costs, respectively, remained to be amortized through the maturity date of our unsecured revolving credit facility, which are included in prepaid expenses and other assets, net on our consolidated balance sheets.
|
Year
|
(in thousands)
|
||
Remaining 2016
|
$
|
7,356
|
|
2017
|
71,734
|
|
|
2018
|
451,713
|
|
|
2019
|
340,355
|
|
|
2020
|
251,962
|
|
|
Thereafter
|
1,189,198
|
|
|
Total
(1)
|
$
|
2,312,318
|
|
(1)
|
Includes gross principal balance of outstanding debt before the effect of the following at
March 31, 2016
:
$12.5 million
of unamortized deferred financing costs,
$7.2 million
of unamortized discounts for the unsecured senior notes and
$5.8 million
of unamortized premiums for the secured debt.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Gross interest expense
|
$
|
26,175
|
|
|
$
|
27,749
|
|
Capitalized interest and deferred financing costs
|
(14,346
|
)
|
|
(10,871
|
)
|
||
Interest expense
|
$
|
11,829
|
|
|
$
|
16,878
|
|
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2015
|
|||
Company owned common units in the Operating Partnership
|
92,229,464
|
|
|
92,258,690
|
|
|
88,031,377
|
|
Company owned general partnership interest
|
97.2
|
%
|
|
98.1
|
%
|
|
98.0
|
%
|
Noncontrolling common units of the Operating Partnership
|
2,631,276
|
|
|
1,764,775
|
|
|
1,793,170
|
|
Ownership interest of noncontrolling interest
|
2.8
|
%
|
|
1.9
|
%
|
|
2.0
|
%
|
|
Fair Value Assumptions
|
Fair value per share at January 28, 2016
|
$57.08
|
Expected share price volatility
|
26.00%
|
Risk-free interest rate
|
1.13%
|
Remaining expected life
|
2.9 years
|
|
Fair Value (Level 1)
(1)
|
||||||
|
March 31, 2016
|
|
December 31, 2015
|
||||
Description
|
(in thousands)
|
||||||
Marketable securities
(2)
|
$
|
13,418
|
|
|
$
|
12,882
|
|
(1)
|
Based on quoted prices in active markets for identical securities.
|
(2)
|
The marketable securities are held in a limited rabbi trust.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
Description
|
(in thousands)
|
||||||
Net gain on marketable securities
|
$
|
137
|
|
|
$
|
388
|
|
|
March 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
Value |
|
Fair
Value (1) |
|
Carrying
Value |
|
Fair
Value (1) |
||||||||
|
(in thousands)
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Secured debt, net
|
$
|
378,080
|
|
|
$
|
388,113
|
|
|
$
|
380,835
|
|
|
$
|
391,611
|
|
Unsecured debt, net
|
1,845,313
|
|
|
1,948,299
|
|
|
1,844,634
|
|
|
1,898,863
|
|
||||
Unsecured line of credit
|
75,000
|
|
|
75,018
|
|
|
—
|
|
|
—
|
|
(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.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands, except share and per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to Kilroy Realty Corporation
|
$
|
174,308
|
|
|
$
|
43,187
|
|
Preferred dividends
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Allocation to participating securities
(1)
|
(395
|
)
|
|
(415
|
)
|
||
Numerator for basic and diluted net income available to common stockholders
|
$
|
170,600
|
|
|
$
|
39,459
|
|
Denominator:
|
|
|
|
||||
Basic weighted average vested shares outstanding
|
92,224,522
|
|
|
86,896,776
|
|
||
Effect of dilutive securities
|
510,021
|
|
|
537,590
|
|
||
Diluted weighted average vested shares and common share equivalents outstanding
|
92,734,543
|
|
|
87,434,366
|
|
||
Basic earnings per share:
|
|
|
|
||||
Net income available to common stockholders per share
|
$
|
1.85
|
|
|
$
|
0.45
|
|
Diluted earnings per share:
|
|
|
|
||||
Net income available to common stockholders per share
|
$
|
1.84
|
|
|
$
|
0.45
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands, except unit and per unit amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to Kilroy Realty, L.P.
|
$
|
177,833
|
|
|
$
|
43,927
|
|
Preferred distributions
|
(3,313
|
)
|
|
(3,313
|
)
|
||
Allocation to participating securities
(1)
|
(395
|
)
|
|
(415
|
)
|
||
Numerator for basic and diluted net income available to common unitholders
|
$
|
174,125
|
|
|
$
|
40,199
|
|
Denominator:
|
|
|
|
||||
Basic weighted average vested units outstanding
|
94,188,520
|
|
|
88,693,306
|
|
||
Effect of dilutive securities
|
510,021
|
|
|
537,590
|
|
||
Diluted weighted average vested units and common unit equivalents outstanding
|
94,698,541
|
|
|
89,230,896
|
|
||
Basic earnings per unit:
|
|
|
|
||||
Net income available to common unitholders per unit
|
$
|
1.85
|
|
|
$
|
0.45
|
|
Diluted earnings per unit:
|
|
|
|
||||
Net income available to common unitholders per unit
|
$
|
1.84
|
|
|
$
|
0.45
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest of $13,815 and $10,669 as of March 31, 2016 and 2015, respectively
|
$
|
13,797
|
|
|
$
|
19,814
|
|
NONCASH INVESTING TRANSACTIONS:
|
|
|
|
||||
Accrual for expenditures for operating properties and development properties
|
$
|
59,218
|
|
|
$
|
85,656
|
|
Tenant improvements funded directly by tenants
|
$
|
10,664
|
|
|
$
|
231
|
|
Assumption of accrued liabilities in connection with development acquisitions (Note 2)
|
$
|
4,741
|
|
|
$
|
1,478
|
|
Release of holdback funds to third party
|
$
|
—
|
|
|
$
|
8,279
|
|
NONCASH FINANCING TRANSACTIONS:
|
|
|
|
||||
Issuance of common units of the Operating Partnership in connection with an acquisition (Note 2)
|
$
|
48,033
|
|
|
$
|
—
|
|
Accrual of dividends and distributions payable to common stockholders and common unitholders
|
$
|
33,677
|
|
|
$
|
31,892
|
|
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders
|
$
|
1,656
|
|
|
$
|
1,656
|
|
Exchange of common units of the Operating Partnership into shares of the Company’s common stock
|
$
|
39
|
|
|
$
|
316
|
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest of $13,815 and $10,669 as of March 31, 2016 and 2015, respectively
|
$
|
13,797
|
|
|
$
|
19,814
|
|
NONCASH INVESTING TRANSACTIONS:
|
|
|
|
||||
Accrual for expenditures for operating properties and development properties
|
$
|
59,218
|
|
|
$
|
85,656
|
|
Tenant improvements funded directly by tenants
|
$
|
10,664
|
|
|
$
|
231
|
|
Assumption of accrued liabilities in connection with development acquisitions (Note 2)
|
$
|
4,741
|
|
|
$
|
1,478
|
|
Release of holdback funds to third party
|
$
|
—
|
|
|
$
|
8,279
|
|
NONCASH FINANCING TRANSACTIONS:
|
|
|
|
||||
Issuance of common units in connection with an acquisition (Note 2)
|
$
|
48,033
|
|
|
$
|
—
|
|
Accrual of dividends and distributions payable to common unitholders
|
$
|
33,677
|
|
|
$
|
31,892
|
|
Accrual of dividends and distributions payable to preferred unitholders
|
$
|
1,656
|
|
|
$
|
1,656
|
|
•
|
350 Mission Street, SOMA, San Francisco, California, which we acquired in October 2012 and was stabilized in March 2016. This development project has a total estimated investment of approximately
$279.6 million
and encompasses approximately
455,340
rentable square feet. The office component of this project is
100%
leased to salesforce.com, inc.
|
•
|
333 Brannan Street, SOMA, San Francisco, California, which we acquired in July 2012 and was stabilized in March 2016. This development project has a total estimated investment of approximately
$101.5 million
and encompasses approximately
185,602
rentable square feet. The office component of the project is
100%
leased to Dropbox, Inc.
|
•
|
Columbia Square Office Phase 2, Hollywood, California, located in the heart of Hollywood, California, two blocks from the corner of Sunset Boulevard and Vine Street. This project is comprised of three buildings totaling approximately
370,000
rentable square feet with a total estimated investment of
$220 million
. The building core and shell of the project, which is currently
80%
committed, was completed in the first quarter of 2016, and is expected to be stabilized in the first quarter of 2017.
|
•
|
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
. The building core and shell of the project was completed in the fourth quarter of 2015 and is currently
44%
committed.
|
•
|
The Exchange on 16th, Mission Bay, San Francisco, California, was acquired in May 2014 and we commenced construction in June 2015. This project encompasses approximately
700,000
gross rentable square feet in four buildings and represents a total estimated investment of approximately
$485 million
. Construction is currently in process and the building core and shell is currently estimated to be completed in the second half of 2017.
|
•
|
Columbia Square - Residential, Hollywood, California, the residential component of the Columbia Square project, which encompasses approximately
205,000
square feet, will be a mix of high-end long-term rentals and extended stay apartment homes and has an estimated investment of approximately
$160 million
. Construction of this project is currently expected to be completed in the second quarter of 2016, and the project is expected to be leased-up through the second quarter of 2017.
|
Near-Term Development Pipeline
(1)
|
|
Location
|
|
Potential Start Date
(2)
|
|
Approx. Developable Square Feet
|
|
Total Estimated Investment
|
|
Total Costs as of 3/31/2016
(3)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
100 Hooper
|
|
San Francisco
|
|
2016
|
|
400,000
|
|
$
|
255
|
|
|
$
|
91.2
|
|
Academy Project
|
|
Hollywood
|
|
2016
|
|
545,000
|
|
385
|
|
|
63.6
|
|
||
333 Dexter
(4)
|
|
South Lake Union
|
|
2016
|
|
700,000
|
|
385
|
|
|
61.1
|
|
||
One Paseo
|
|
Del Mar
|
|
2016
|
|
TBD
|
|
TBD
|
|
|
186.3
|
|
||
Total Near-Term Development Pipeline
|
|
|
|
|
|
|
|
|
|
$
|
402.2
|
|
(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
March 31, 2016
.
|
(4)
|
Consists of four adjacent parcels in the South Lake Union submarket of Seattle.
|
|
1st & 2nd Generation
(1)
|
|
2nd Generation
(1)
|
||||||||||||||||||||||||
|
Number of Leases
(2)
|
|
Rentable Square Feet
(2)
|
|
TI/LC per
Sq. Ft.
(3)
|
|
Changes in
Rents
(4)(5)
|
|
Changes in
Cash Rents
(6)
|
|
Retention Rates
(7)
|
|
Weighted Average Lease Term (in months)
|
||||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|||||||||||||||||||
Three Months Ended
March 31, 2016
|
21
|
|
|
18
|
|
|
140,526
|
|
|
96,952
|
|
|
$
|
35.11
|
|
|
40.1
|
%
|
|
29.6
|
%
|
|
40.0
|
%
|
|
71
|
|
|
1st & 2nd Generation
(1)
|
|
2nd Generation
(1)
|
|||||||||||||||||||||
|
Number of Leases
(2)
|
|
Rentable Square Feet
(2)
|
|
TI/LC per Sq. Ft.
(3)
|
|
Changes in
Rents
(4)(5)
|
|
Changes in
Cash Rents
(6)
|
|
Weighted Average Lease Term
(in months)
|
|||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|
|
||||||||||||||
Three Months Ended
March 31, 2016 |
27
|
|
|
18
|
|
|
142,362
|
|
|
96,952
|
|
|
$
|
32.85
|
|
|
21.2
|
%
|
|
11.3
|
%
|
|
76
|
|
(1)
|
First generation leasing includes space where we have made capital expenditures that result in additional revenue generated when the space is re-leased. Second generation leasing includes space where we have made capital expenditures to maintain the current market revenue stream.
|
(2)
|
Represents leasing activity for leases that commenced or signed during the period, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction.
|
(3)
|
Tenant improvements and leasing commissions per square foot exclude tenant-funded tenant improvements.
|
(4)
|
Calculated as the change between GAAP rents for new/renewed leases and the expiring GAAP rents for the same space. Excludes leases for which the space was vacant longer than one year or vacant when the property was acquired.
|
(5)
|
Excludes commenced and executed leases of approximately 72,031 and 31,711 square feet, respectively, for the
three
months ended
March 31, 2016
, for which the space was vacant longer than one year or being leased for the first time. Space vacant for more than one year is excluded from our change in rents calculations to provide a meaningful market comparison.
|
(6)
|
Calculated as the change between stated rents for new/renewed leases and the expiring stated rents for the same space. Excludes leases for which the space was vacant longer than one year or vacant when the property was acquired.
|
(7)
|
Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
|
(8)
|
For the
three
months ended
March 31, 2016
,
21
leases totaling
130,978
rentable square feet were signed but not commenced as of
March 31, 2016
.
|
Year of Lease Expiration
|
|
Number of
Expiring
Leases
|
|
Total Square Feet
|
|
% of Total Leased Sq. Ft.
|
|
Annualized Base Rent
(2)
|
|
% of Total Annualized Base Rent
(2)
|
|
Annualized Base Rent per Sq. Ft.
(2)
|
||||||||
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
||||||||
Remainder of 2016
|
|
72
|
|
|
521,435
|
|
|
4.1
|
%
|
|
$
|
16,146
|
|
|
3.1
|
%
|
|
$
|
30.96
|
|
2017
|
|
108
|
|
|
1,264,882
|
|
|
9.9
|
%
|
|
47,484
|
|
|
9.1
|
%
|
|
37.54
|
|
||
2018
|
|
78
|
|
|
1,361,979
|
|
|
10.7
|
%
|
|
54,702
|
|
|
10.5
|
%
|
|
40.16
|
|
||
2019
|
|
92
|
|
|
1,523,280
|
|
|
11.9
|
%
|
|
56,034
|
|
|
10.7
|
%
|
|
36.79
|
|
||
2020
|
|
90
|
|
|
1,908,728
|
|
|
15.0
|
%
|
|
71,430
|
|
|
13.7
|
%
|
|
37.42
|
|
||
2021
|
|
58
|
|
|
927,764
|
|
|
7.3
|
%
|
|
39,372
|
|
|
7.5
|
%
|
|
42.44
|
|
||
Total
|
|
498
|
|
|
7,508,068
|
|
|
58.9
|
%
|
|
$
|
285,168
|
|
|
54.6
|
%
|
|
$
|
37.98
|
|
(1)
|
The information presented for all lease expiration activity reflects leasing activity through
March 31, 2016
for our stabilized portfolio. For leases that have been renewed early or space that has been re-leased to a new tenant, the expiration date and annualized base rent information presented takes into consideration the renewed or re-leased lease terms. Excludes space leased under month-to-month leases, intercompany leases, vacant space and lease renewal options not executed as of
March 31, 2016
.
|
(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
|
|
Development projects in
“
lease-up
”
|
2
|
|
443,000
|
|
Development projects under construction
(1)
|
2
|
|
905,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
||
Total as of March 31, 2015
|
101
|
|
|
13,047,720
|
|
Completed development properties placed in-service
|
6
|
|
|
1,089,446
|
|
Dispositions
|
(4
|
)
|
|
(465,812
|
)
|
Remeasurement
|
—
|
|
|
376
|
|
Total as of March 31, 2016
|
103
|
|
|
13,671,730
|
|
Region
|
|
Number of
Buildings |
|
Rentable Square Feet
|
|
Occupancy at
(1)
|
|||||||||
|
3/31/2016
|
|
12/31/2015
|
|
9/30/2015
|
||||||||||
Los Angeles and Ventura Counties
|
|
29
|
|
|
3,613,336
|
|
|
94.3
|
%
|
|
95.1
|
%
|
|
94.1
|
%
|
Orange County
|
|
1
|
|
|
271,556
|
|
|
97.6
|
%
|
|
94.0
|
%
|
|
95.7
|
%
|
San Diego
|
|
33
|
|
|
2,850,218
|
|
|
88.8
|
%
|
|
89.6
|
%
|
|
96.3
|
%
|
San Francisco Bay Area
|
|
28
|
|
|
4,870,482
|
|
|
98.6
|
%
|
|
98.1
|
%
|
|
96.8
|
%
|
Greater Seattle
|
|
12
|
|
|
2,066,138
|
|
|
95.3
|
%
|
|
95.1
|
%
|
|
94.7
|
%
|
Total Stabilized Portfolio
|
|
103
|
|
|
13,671,730
|
|
|
94.9
|
%
|
|
94.8
|
%
|
|
95.6
|
%
|
|
Average Occupancy
|
||||
|
Three Months Ended March 31,
|
||||
|
2016
|
|
2015
|
||
Stabilized Portfolio
(1)
|
94.7
|
%
|
|
95.4
|
%
|
Same Store Portfolio
(2)
|
94.5
|
%
|
|
95.9
|
%
|
(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,
2015
and still owned and stabilized as of
March 31, 2016
. See discussion under “Results of Operations” for additional information.
|
Tenant Name
|
|
Annualized Base Rental Revenue
($ in thousands)
|
|
Rentable
Square Feet
|
|
Percentage of Total Annualized Base Rental Revenue
|
|
Percentage of
Total Rentable
Square Feet
|
||||||
LinkedIn Corporation
|
|
$
|
28,344
|
|
|
663,239
|
|
|
5.4
|
%
|
|
4.9
|
%
|
|
salesforce.com, inc.
(1)
|
|
24,183
|
|
|
468,445
|
|
|
4.6
|
%
|
|
3.4
|
%
|
||
DIRECTV, LLC
|
|
22,467
|
|
|
667,852
|
|
|
4.3
|
%
|
|
4.9
|
%
|
||
Box, Inc.
(2)
|
|
22,441
|
|
|
364,563
|
|
|
4.3
|
%
|
|
2.7
|
%
|
||
Synopsys, Inc.
|
|
15,492
|
|
|
340,913
|
|
|
3.0
|
%
|
|
2.5
|
%
|
||
Bridgepoint Education, Inc.
|
|
15,066
|
|
|
322,342
|
|
|
2.9
|
%
|
|
2.4
|
%
|
||
Dropbox, Inc.
|
|
14,827
|
|
|
182,054
|
|
|
2.8
|
%
|
|
1.3
|
%
|
||
Delta Dental of California
|
|
10,313
|
|
|
188,143
|
|
|
2.0
|
%
|
|
1.4
|
%
|
||
AMN Healthcare, Inc.
|
|
9,001
|
|
|
176,075
|
|
|
1.7
|
%
|
|
1.3
|
%
|
||
Concur Technologies
|
|
8,225
|
|
|
227,414
|
|
|
1.6
|
%
|
|
1.7
|
%
|
||
Zenefits Insurance Service
|
|
7,314
|
|
|
96,305
|
|
|
1.4
|
%
|
|
0.7
|
%
|
||
Scan Group
(1)
|
|
6,487
|
|
|
201,782
|
|
|
1.2
|
%
|
|
1.5
|
%
|
||
Group Health Cooperative
|
|
6,372
|
|
|
183,422
|
|
|
1.2
|
%
|
|
1.3
|
%
|
||
Neurocrine Biosciences, Inc.
|
|
6,366
|
|
|
140,591
|
|
|
1.2
|
%
|
|
1.0
|
%
|
||
Riot Games, Inc.
|
|
6,223
|
|
|
114,565
|
|
|
1.2
|
%
|
|
0.8
|
%
|
||
Total Top Fifteen Tenants
|
|
$
|
203,121
|
|
|
4,337,705
|
|
|
38.8
|
%
|
|
31.8
|
%
|
(1)
|
The Company has entered into leases with various affiliates of the tenant
.
|
(2)
|
Includes 100% of annualized base rental revenues from Redwood City Partners, LLC, a consolidated subsidiary.
|
•
|
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,
2015
and still owned and included in the stabilized portfolio as of
March 31, 2016
;
|
•
|
Stabilized Development Properties – which includes the results generated by the following:
|
◦
|
Two office development projects that were completed and stabilized in March 2016;
|
◦
|
Two office development projects comprising four office buildings that were completed and stabilized in the fourth quarter of 2015; and
|
•
|
Dispositions and Other – which includes the results of the
four
properties disposed of in 2016, the
ten
properties disposed of in 2015, and expenses for certain of our in-process, near-term and future development projects.
|
Group
|
|
# of Buildings
|
|
Rentable
Square Feet
|
||
Same Store Properties
|
|
97
|
|
|
12,582,284
|
|
Stabilized Development Properties
|
|
6
|
|
|
1,089,446
|
|
Total Stabilized Portfolio
|
|
103
|
|
13,671,730
|
|
|
Three Months Ended March 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2016
|
|
2015
|
|
||||||||||
|
($ in thousands)
|
|||||||||||||
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|||||||
Net Operating Income, as defined
|
$
|
107,620
|
|
|
$
|
107,635
|
|
|
$
|
(15
|
)
|
|
—
|
%
|
Unallocated (expense) income:
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
(13,437
|
)
|
|
(12,768
|
)
|
|
(669
|
)
|
|
5.2
|
|
|||
Acquisition-related expenses
|
(62
|
)
|
|
(128
|
)
|
|
66
|
|
|
(51.6
|
)
|
|||
Depreciation and amortization
|
(50,440
|
)
|
|
(51,487
|
)
|
|
1,047
|
|
|
(2.0
|
)
|
|||
Interest income and other net investment gains
|
271
|
|
|
360
|
|
|
(89
|
)
|
|
(24.7
|
)
|
|||
Interest expense
|
(11,829
|
)
|
|
(16,878
|
)
|
|
5,049
|
|
|
(29.9
|
)
|
|||
Gains on sale of depreciable operating properties
|
145,990
|
|
|
—
|
|
|
145,990
|
|
|
100.0
|
|
|||
Gain on sale of land
|
—
|
|
|
17,268
|
|
|
(17,268
|
)
|
|
(100.0
|
)
|
|||
Net Income
|
$
|
178,113
|
|
|
$
|
44,002
|
|
|
$
|
134,111
|
|
|
304.8
|
%
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||
|
2016
|
|
2015
|
||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized
Development |
|
Dispositions & Other
|
|
Total
|
|
Same Store
|
|
Stabilized
Development |
|
Dispositions & Other
|
|
Total
|
||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Rental income
|
$
|
124,803
|
|
|
$
|
8,366
|
|
|
$
|
586
|
|
|
$
|
133,755
|
|
|
$
|
121,974
|
|
|
$
|
—
|
|
|
$
|
8,958
|
|
|
$
|
130,932
|
|
Tenant reimbursements
|
9,873
|
|
|
1,407
|
|
|
124
|
|
|
11,404
|
|
|
12,726
|
|
|
—
|
|
|
1,699
|
|
|
14,425
|
|
||||||||
Other property income
|
283
|
|
|
3
|
|
|
1
|
|
|
287
|
|
|
725
|
|
|
—
|
|
|
—
|
|
|
725
|
|
||||||||
Total
|
134,959
|
|
|
9,776
|
|
|
711
|
|
|
145,446
|
|
|
135,425
|
|
|
—
|
|
|
10,657
|
|
|
146,082
|
|
||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property expenses
|
24,285
|
|
|
1,248
|
|
|
432
|
|
|
25,965
|
|
|
23,217
|
|
|
—
|
|
|
1,497
|
|
|
24,714
|
|
||||||||
Real estate taxes
|
9,977
|
|
|
838
|
|
|
217
|
|
|
11,032
|
|
|
11,440
|
|
|
—
|
|
|
1,275
|
|
|
12,715
|
|
||||||||
Provision for bad debts
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
219
|
|
|
—
|
|
|
23
|
|
|
242
|
|
||||||||
Ground leases
|
829
|
|
|
—
|
|
|
—
|
|
|
829
|
|
|
776
|
|
|
—
|
|
|
—
|
|
|
776
|
|
||||||||
Total
|
35,091
|
|
|
2,086
|
|
|
649
|
|
|
37,826
|
|
|
35,652
|
|
|
—
|
|
|
2,795
|
|
|
38,447
|
|
||||||||
Net Operating Income,
as defined
|
$
|
99,868
|
|
|
$
|
7,690
|
|
|
$
|
62
|
|
|
$
|
107,620
|
|
|
$
|
99,773
|
|
|
$
|
—
|
|
|
$
|
7,862
|
|
|
$
|
107,635
|
|
|
Three Months Ended March 31, 2016 as compared to the Three Months Ended March 31, 2015
|
||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized Development
|
|
Dispositions & Other
|
|
Total
|
||||||||||||||||||||
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
||||||||||||
|
($ in thousands)
|
||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Rental income
|
$
|
2,829
|
|
|
2.3
|
%
|
|
$
|
8,366
|
|
|
100.0
|
%
|
|
$
|
(8,372
|
)
|
|
(93.5
|
)%
|
|
$
|
2,823
|
|
|
2.2
|
%
|
Tenant reimbursements
|
(2,853
|
)
|
|
(22.4
|
)
|
|
1,407
|
|
|
100.0
|
|
|
(1,575
|
)
|
|
(92.7
|
)
|
|
(3,021
|
)
|
|
(20.9
|
)
|
||||
Other property income
|
(442
|
)
|
|
(61.0
|
)
|
|
3
|
|
|
100.0
|
|
|
1
|
|
|
100.0
|
|
|
(438
|
)
|
|
(60.4
|
)
|
||||
Total
|
(466
|
)
|
|
(0.3
|
)
|
|
9,776
|
|
|
100.0
|
|
|
(9,946
|
)
|
|
(93.3
|
)
|
|
(636
|
)
|
|
(0.4
|
)
|
||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Property expenses
|
1,068
|
|
|
4.6
|
|
|
1,248
|
|
|
100.0
|
|
|
(1,065
|
)
|
|
(71.1
|
)
|
|
1,251
|
|
|
5.1
|
|
||||
Real estate taxes
|
(1,463
|
)
|
|
(12.8
|
)
|
|
838
|
|
|
100.0
|
|
|
(1,058
|
)
|
|
(83.0
|
)
|
|
(1,683
|
)
|
|
(13.2
|
)
|
||||
Provision for bad debts
|
(219
|
)
|
|
(100.0
|
)
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
(100.0
|
)
|
|
(242
|
)
|
|
(100.0
|
)
|
||||
Ground leases
|
53
|
|
|
6.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
53
|
|
|
6.8
|
|
||||
Total
|
(561
|
)
|
|
(1.6
|
)
|
|
2,086
|
|
|
100.0
|
|
|
(2,146
|
)
|
|
(76.8
|
)
|
|
(621
|
)
|
|
(1.6
|
)
|
||||
Net Operating Income,
as defined
|
$
|
95
|
|
|
0.1
|
%
|
|
$
|
7,690
|
|
|
100.0
|
%
|
|
$
|
(7,800
|
)
|
|
(99.2
|
)%
|
|
$
|
(15
|
)
|
|
—
|
%
|
•
|
An increase in Net Operating Income of
$0.1 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase in rental income of
$2.8 million
primarily due to an increase from new leases and renewals at higher rates primarily in the San Francisco Bay Area and Los Angeles regions;
|
•
|
An offsetting decrease in tenant reimbursements of
$2.9 million
primarily due to the following:
|
◦
|
$1.8 million reduction as a result of a change in estimate due to lower supplemental taxes primarily at two properties we developed and stabilized in 2014; and
|
◦
|
$0.7 million decrease from a number of lease renewals with base year resets and adjustments;
|
•
|
An offsetting decrease in other property income of
$0.4 million
due to lease termination fees recognized mainly from one tenant during the three months ended
March 31, 2015
; and
|
•
|
A partially offsetting decrease in property and related expenses of
$0.6 million
primarily due to the following:
|
◦
|
$1.1 million
increase in property expenses due to an increase in security, janitorial, engineering, and various other reimbursable expenses and an increase in non-reimbursable expenses due to an insurance refund received in 2015; partially offset by
|
◦
|
$1.5 million
decrease in real estate taxes primarily due to a reduction in supplemental taxes at two properties we developed and stabilized in 2014;
|
•
|
An increase in Net Operating Income of
$7.7 million
attributable to the Stabilized Development Properties primarily attributable to the properties completed and/or stabilized in the three months ended December 31, 2015 and March 31, 2016;
|
•
|
A decrease in Net Operating Income of
$7.8 million
attributable to Dispositions and Other Properties due to the sale of four buildings during the three months ended
March 31, 2016
and ten buildings during the last nine months of 2015.
|
•
|
A decrease of $3.8 million attributable to sold properties; partially offset by
|
•
|
An increase of $2.6 million attributable to the Stabilized Development Properties.
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
(in thousands)
|
|
|
|
|
|||||||||
Gross interest expense
|
$
|
26,175
|
|
|
$
|
27,749
|
|
|
$
|
(1,574
|
)
|
|
(5.7
|
)%
|
Capitalized interest and deferred financing costs
|
(14,346
|
)
|
|
(10,871
|
)
|
|
(3,475
|
)
|
|
32.0
|
%
|
|||
Interest expense
|
$
|
11,829
|
|
|
$
|
16,878
|
|
|
$
|
(5,049
|
)
|
|
(29.9
|
)%
|
|
Shares/Units at
March 31, 2016
|
|
Aggregate
Principal
Amount or
$ Value
Equivalent
|
|
% of Total
Market
Capitalization
|
||||
|
($ in thousands)
|
||||||||
Debt:
|
|
|
|
|
|
||||
Unsecured Line of Credit
|
|
|
$
|
75,000
|
|
|
0.9
|
%
|
|
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)
|
|
|
373,318
|
|
|
4.4
|
%
|
||
Total debt
|
|
|
$
|
2,312,318
|
|
|
27.6
|
%
|
|
Equity and Noncontrolling Interests:
|
|
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred stock
(2)
|
4,000,000
|
|
|
$
|
100,000
|
|
|
1.2
|
%
|
6.375% Series H Cumulative Redeemable Preferred stock
(2)
|
4,000,000
|
|
|
100,000
|
|
|
1.2
|
%
|
|
Common limited partnership units outstanding
(3)(4)
|
2,631,276
|
|
|
162,797
|
|
|
1.9
|
%
|
|
Common shares outstanding
(4)
|
92,229,464
|
|
|
5,706,237
|
|
|
68.1
|
%
|
|
Total equity and noncontrolling interests
|
|
|
$
|
6,069,034
|
|
|
72.4
|
%
|
|
Total Market Capitalization
|
|
|
$
|
8,381,352
|
|
|
100.0
|
%
|
(1)
|
Represents gross aggregate principal amount due at maturity before the effect of the following at
March 31, 2016
:
$12.5 million
of unamortized deferred financing costs,
$7.2 million
of unamortized discounts for the unsecured senior notes and
$5.8 million
of unamortized premiums for the secured debt.
|
(2)
|
Value based on $25.00 per share liquidation preference.
|
(3)
|
Represents common units not owned by the Company.
|
(4)
|
Value based on closing price per share of our common stock of
$61.87
as of
March 31, 2016
.
|
•
|
Net cash flow from operations;
|
•
|
Borrowings under the Operating Partnership’s unsecured revolving credit facility and term loan facility;
|
•
|
Proceeds from the disposition of assets through our capital recycling program;
|
•
|
Proceeds from additional secured or unsecured debt financings; and
|
•
|
Proceeds from public or private issuance of debt or equity securities.
|
•
|
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 repurchases.
|
|
March 31,
2016 |
|
December 31,
2015 |
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
75,000
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
525,000
|
|
|
600,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
1.49
|
%
|
|
—
|
%
|
||
Facility fee-annual rate
(3)
|
0.200%
|
||||||
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
March 31, 2016
and
December 31, 2015
.
|
(3)
|
Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of
March 31, 2016
and
December 31, 2015
,
$4.3 million
and
$4.6 million
of unamortized deferred financing costs, respectively, remained to be amortized through the maturity date of our unsecured revolving credit facility, which are included in prepaid expenses and other assets, net on our consolidated balance sheets.
|
|
Aggregate Principal
Amount Outstanding
|
||
|
(in thousands)
|
||
Unsecured Line of Credit
|
$
|
75,000
|
|
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
|
373,318
|
|
|
Total Unsecured and Secured Debt
|
$
|
2,312,318
|
|
Less: Unamortized Net Discounts and Deferred Financing Costs
|
(13,925
|
)
|
|
Total Debt, Net
|
$
|
2,298,393
|
|
|
Percentage of Total Debt
|
|
Weighted Average Interest Rate
|
||||||||
|
March 31, 2016
|
|
December 31, 2015
|
|
March 31, 2016
|
|
December 31, 2015
|
||||
Secured vs. unsecured
(1)
:
|
|
|
|
|
|
|
|
||||
Unsecured
|
83.9
|
%
|
|
83.2
|
%
|
|
4.2
|
%
|
|
4.3
|
%
|
Secured
|
16.1
|
%
|
|
16.8
|
%
|
|
5.1
|
%
|
|
5.1
|
%
|
Variable-rate vs. fixed-rate
(1)
:
|
|
|
|
|
|
|
|
||||
Variable-rate
|
11.4
|
%
|
|
8.4
|
%
|
|
1.6
|
%
|
|
1.4
|
%
|
Fixed-rate
|
88.6
|
%
|
|
91.6
|
%
|
|
4.7
|
%
|
|
4.7
|
%
|
Stated rate
(1)
|
|
|
|
|
4.4
|
%
|
|
4.5
|
%
|
||
GAAP effective rate
(2)
|
|
|
|
|
4.3
|
%
|
|
4.4
|
%
|
||
GAAP effective rate including deferred financing costs
|
|
|
|
|
4.5
|
%
|
|
4.6
|
%
|
(1)
|
Excludes the impact of the amortization of any debt discounts/premiums and deferred financing costs.
|
(2)
|
Includes the impact of the amortization of any debt discounts/premiums, excluding deferred financing costs.
|
|
Payment Due by Period
|
|
|
||||||||||||||||
|
Less than
1 Year (Remainder of 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)
|
$
|
7,356
|
|
|
$
|
198,447
|
|
|
$
|
78,317
|
|
|
$
|
89,198
|
|
|
$
|
373,318
|
|
Principal payments: unsecured debt
(2)
|
—
|
|
|
325,000
|
|
|
514,000
|
|
|
1,100,000
|
|
|
1,939,000
|
|
|||||
Interest payments: fixed-rate debt
(3)
|
72,735
|
|
|
172,863
|
|
|
125,348
|
|
|
277,544
|
|
|
648,490
|
|
|||||
Interest payments: variable-rate debt
(4)
|
2,264
|
|
|
6,010
|
|
|
1,490
|
|
|
—
|
|
|
9,764
|
|
|||||
Interest payments: unsecured revolving credit facility
(5)
|
842
|
|
|
2,235
|
|
|
554
|
|
|
—
|
|
|
3,631
|
|
|||||
Ground lease obligations
(6)
|
2,358
|
|
|
6,288
|
|
|
6,288
|
|
|
151,738
|
|
|
166,672
|
|
|||||
Lease and contractual commitments
(7)
|
80,483
|
|
|
4,578
|
|
|
—
|
|
|
—
|
|
|
85,061
|
|
|||||
Development commitments
(8)
|
257,000
|
|
|
119,000
|
|
|
—
|
|
|
—
|
|
|
376,000
|
|
|||||
Total
|
$
|
423,038
|
|
|
$
|
834,421
|
|
|
$
|
725,997
|
|
|
$
|
1,618,480
|
|
|
$
|
3,601,936
|
|
(1)
|
Represents gross aggregate principal amount before the effect of the unamortized
premium and deferred financing costs
of approximately
$5.8 million
and
$1.0 million
, respectively, as of
March 31, 2016
.
|
(2)
|
Represents gross aggregate principal amount before the effect of the unamortized discount and deferred financing costs
of approximately
$7.2 million
and
$11.5 million
, respectively, as of
March 31, 2016
.
|
(3)
|
As of
March 31, 2016
,
88.6%
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 an accrual basis and scheduled maturity dates.
|
(4)
|
As of
March 31, 2016
,
8.2%
of our debt bore interest at variable rates that 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
March 31, 2016
. The information in the table above reflects our projected interest rate obligations for these variable-rate payments based on outstanding principal balances as of
March 31, 2016
, the scheduled interest payment dates and the contractual maturity dates.
|
(5)
|
As of
March 31, 2016
,
3.2%
of our debt bore interest at variable rates which was incurred under the unsecured revolving credit facility. The variable interest rate payments are based on LIBOR plus a spread of
1.050%
as of
March 31, 2016
. The information in the table above reflects our projected interest rate obligations for these variable-rate payments based on outstanding principal balances as of
March 31, 2016
, the scheduled interest payment dates and the contractual maturity dates.
|
(6)
|
Reflects minimum lease payments through the contractual lease expiration date before the impact of extension options.
|
(7)
|
Amounts represent commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements and for other contractual commitments. The timing of these expenditures may fluctuate.
|
(8)
|
Amounts represent commitments under signed leases for pre-leased development projects, contractual commitments for projects under construction, in lease-up, in addition to $60.0 million in trailing costs for two projects recently stabilized as of
March 31, 2016
. The timing of these expenditures may fluctuate based on the ultimate progress of construction. We may start additional construction during the remainder of
2016
(see “—Development Activities” for additional information).
|
•
|
Decreases in our cash flows from operations, which could create further dependence on the unsecured revolving credit facility;
|
•
|
An increase in the proportion of variable-rate debt, which could increase our sensitivity to interest rate fluctuations in the future; and
|
•
|
A decrease in the value of our properties, which could have an adverse effect on the Operating Partnership’s ability to incur additional debt, refinance existing debt at competitive rates, or comply with its existing debt obligations.
|
Unsecured Credit Facility, Unsecured Term Loan Facility and Unsecured Term Loan
(as defined in the applicable Credit Agreements):
|
|
Covenant Level
|
|
Actual Performance
as of March 31, 2016
|
Total debt to total asset value
|
|
less than 60%
|
|
28%
|
Fixed charge coverage ratio
|
|
greater than 1.5x
|
|
2.5x
|
Unsecured debt ratio
|
|
greater than 1.67x
|
|
3.30x
|
Unencumbered asset pool debt service coverage
|
|
greater than 1.75x
|
|
3.57x
|
|
|
|
|
|
Unsecured Senior Notes due 2018, 2020, 2023, 2025 and 2029
(as defined in the applicable Indentures):
|
|
|
|
|
Total debt to total asset value
|
|
less than 60%
|
|
34%
|
Interest coverage
|
|
greater than 1.5x
|
|
7.4x
|
Secured debt to total asset value
|
|
less than 40%
|
|
6%
|
Unencumbered asset pool value to unsecured debt
|
|
greater than 150%
|
|
303%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2016
|
|
2015
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
($ in thousands)
|
|||||||||||||
Net cash provided by operating activities
|
$
|
78,204
|
|
|
$
|
54,979
|
|
|
$
|
23,225
|
|
|
42.2
|
%
|
Net cash used in investing activities
|
(126,733
|
)
|
|
(77,309
|
)
|
|
(49,424
|
)
|
|
63.9
|
%
|
|||
Net cash provided by financing activities
|
30,666
|
|
|
48,730
|
|
|
(18,064
|
)
|
|
(37.1
|
)%
|
|
Three Months Ended March 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(in thousands)
|
||||||
Net income available to common stockholders
|
$
|
170,995
|
|
|
$
|
39,874
|
|
Adjustments:
|
|
|
|
||||
Net income attributable to noncontrolling common units of the Operating Partnership
|
3,610
|
|
|
815
|
|
||
Depreciation and amortization of real estate assets
|
49,578
|
|
|
50,843
|
|
||
Gains on sales of depreciable real estate
|
(145,990
|
)
|
|
—
|
|
||
Funds From Operations
(1)(2)
|
$
|
78,193
|
|
|
$
|
91,532
|
|
(1)
|
Reported amounts are attributable to common stockholders and common unitholders.
|
(2)
|
FFO includes amortization of deferred revenue related to tenant-funded tenant improvements of
$2.9 million
and
$3.0 million
for the
three
months ended
March 31, 2016
and
2015
, respectively.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number of Shares of Stock Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) that May Yet be Purchased Under the Plans or Programs
|
|
|||||
January 1, 2016 - January 31, 2016
|
|
33,897
|
|
(1)
|
$
|
62.11
|
|
(1)
|
—
|
|
|
—
|
|
|
February 1, 2016 - February 29, 2016
|
|
1,022
|
|
(1)
|
$
|
50.51
|
|
(1)
|
—
|
|
|
—
|
|
|
March 1, 2016 - March 31, 2016
|
|
52,199
|
|
|
$
|
55.45
|
|
|
52,199
|
|
(2)
|
4,935,826
|
|
(2)
|
Total
|
|
87,118
|
|
|
$
|
58.01
|
|
|
52,199
|
|
|
4,935,826
|
|
|
(1)
|
Includes shares of common stock remitted to the Company to satisfy tax withholding obligations in connection with the distribution of, or the vesting and distribution of, restricted stock units or restricted stock in shares of common stock. The value of such shares of common stock remitted to the Company was based on the closing price of the Company’s common stock on the applicable withholding date.
|
(2)
|
On January 1, 2016, the Company's publicly announced share repurchase program had a total repurchase authorization of 4,000,000 shares (under which 988,025 shares remained available for repurchase). On February 23, 2016, the Company's board of directors approved a 4,000,000 share increase to the Company's existing share repurchase program bringing the total current repurchase authorization under this program to
4,988,025
shares. This program does not have a termination date, and repurchases may be discontinued at any time.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description
|
|
|
|
3.(i)1
|
|
Kilroy Realty Corporation Articles of Restatement (previously filed by Kilroy Realty Corporation as an exhibit on Form 10-Q for the quarter ended June 30, 2012)
|
|
|
|
3.(i)2
|
|
Certificate of Limited Partnership of Kilroy Realty, L.P. (previously filed by Kilroy Realty, L.P., as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010)
|
|
|
|
3.(i)3
|
|
Amendment to the Certificate of Limited Partnership of Kilroy Realty, L.P. (previously filed by Kilroy Realty, L.P., as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010)
|
|
|
|
3.(i)4
|
|
Articles Supplementary designating Kilroy Realty Corporation's 6.375% Series H Cumulative Redeemable Preferred Stock (previously filed by Kilroy Realty Corporation on Form 8-A as filed with the Securities and Exchange Commission on August 10, 2012)
|
|
|
|
3.(ii)1
|
|
Fourth 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 February 23, 2016)
|
|
|
|
3.(ii)2
|
|
Seventh Amended and Restated Agreement of Limited Partnership of Kilroy Realty, L.P. dated as of August 15, 2012, as amended (previously filed by Kilroy Realty Corporation on Form 10-Q for the quarter ended June 30, 2014)
|
|
|
|
10.1†*
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and Jeffrey C. Hawken, dated January 9, 2016
|
|
|
|
10.2†*
|
|
Amended and Restated Employment Agreement and Non-Competition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and Tyler H. Rose effective as of January 28, 2016
|
|
|
|
10.3†*
|
|
Amended and Restated Employment Agreement and Non-Competition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and Justin W. Smart effective as of January 28, 2016
|
|
|
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty Corporation
|
|
|
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty Corporation
|
|
|
|
31.3*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty, L.P.
|
|
|
|
31.4*
|
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty, L.P.
|
|
|
|
32.1*
|
|
Section 1350 Certification of Chief Executive Officer of Kilroy Realty Corporation
|
|
|
|
32.2*
|
|
Section 1350 Certification of Chief Financial Officer of Kilroy Realty Corporation
|
|
|
|
32.3*
|
|
Section 1350 Certification of Chief Executive Officer of Kilroy Realty, L.P.
|
|
|
|
32.4*
|
|
Section 1350 Certification of Chief Financial Officer of Kilroy Realty, L.P.
|
|
|
|
101.1
|
|
The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended March 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Equity (unaudited), (iv) Consolidated Statements of Capital (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to the Consolidated Financial Statements (unaudited).
(1)
|
*
|
Filed herewith
|
†
|
Management contract or compensatory plan or arrangement.
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
|
KILROY REALTY CORPORATION
|
||
|
|
|
|
By:
|
/s/ John Kilroy
|
|
|
John Kilroy
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Tyler H. Rose
|
|
|
Tyler H. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
By:
|
/s/ Heidi R. Roth
|
|
|
Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
|
KILROY REALTY, L.P.
|
||
|
|
|
BY:
|
KILROY REALTY CORPORATION
|
|
|
Its general partner
|
|
|
|
|
|
By:
|
/s/ John Kilroy
|
|
|
John Kilroy
President and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Tyler H. Rose
|
|
|
Tyler H. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
|
By:
|
/s/ Heidi R. Roth
|
|
|
Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
|
Total Number of RSUs
:
|
33,910
|
|
Grant Date
:
|
January 9, 2016 (the "
Grant Date
")
|
|
|
KILROY REALTY CORPORATION
,
a Maryland corporation
|
|
PARTICIPANT
:
|
|
|
/s/ Tyler H. Rose
|
|
/s/ Jeffrey C. Hawken
|
|
|
By: Tyler H. Rose,
Executive Vice President and Chief Financial Officer
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Jeffrey C. Hawken
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KILROY REALTY CORPORATION
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a Maryland corporation
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/s/ Joseph E. Magri
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By: Joseph E. Magri,
Senior Vice President and Corporate Counsel
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Page
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1.
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EMPLOYMENT
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1
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2.
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TERM
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1
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3.
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OFFICES AND DUTIES
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2
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(a) Generally
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2
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(b) Devotion of Time and Effort
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2
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(c) Place of Employment
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2
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4.
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SALARY AND ANNUAL INCENTIVE COMPENSATION
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2
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(a) Base Salary
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2
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(b) Annual Incentive Compensation
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3
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5.
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COMPENSATION PLAN, BENEFITS, DEFERRED
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COMPENSATION, AND EXPENSE REIMBURSEMENT
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3
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(a) Executive Compensation Plans
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3
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(b) Employee and Executive Benefit Plans
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4
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(c) Deferral of Compensation
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4
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(d) Reimbursement of Expenses
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4
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(e) Office, Staff and Equipment
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4
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(f) Indemnification Agreement
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4
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(g) Limitations Under code Section 409A
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5
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6.
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TERMINATION DUE TO RETIREMENT, DEATH OR DISABILITY
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7
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(a) Retirement
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7
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(b) Death
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8
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(c) Disability
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9
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(d) Other Terms of Payment Following Retirement, Death, or Disability
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10
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7.
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TERMINATION OF EMPLOYMENT FOR REASONS OTHER THAN
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RETIREMENT, DEATH OR DISABILITY
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11
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(a) Termination by the Company for Cause
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11
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(b) Termination by Executive Other than for Good Reason
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11
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(c) Termination by the Company Without Cause
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11
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(d) Termination by Executive for Good Reason
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13
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(e) Other Terms Relating to Certain Terminations of Employment
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13
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8.
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DEFINITIONS RELATING TO TERMINATING EVENTS
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14
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(a) "Annual Incentives"
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14
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Page
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(b) "Cause"
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14
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(c) "Change in Control"
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14
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(d) "Compensation Accrued at Termination"
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16
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(e) "Disability"
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16
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(f) "Good Reason"
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16
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(g) "Partial Year Bonus"
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17
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(h) Intentionally omitted
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17
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(i) "Reasonably Anticipated Performance"
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17
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9.
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PAYMENT OF FINANCIAL OBLIGATIONS
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18
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10.
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RABBI TRUST OBLIGATION; EXCISE TAX-RELATED PROVISIONS
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18
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(a) Rabbi Trust Funding
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18
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(b) Parachute Payments-Best After-Tax Result
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18
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11.
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RESTRICTIVE COVENANTS; RELEASE OF CLAIMS
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19
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(a) Restrictive Covenants
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19
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(b) Release of Employment Claims
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19
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(c) Forfeiture of Outstanding Options and Other Equity Awards
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19
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(d) Survival
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19
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12.
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GOVERNING LAW; DISPUTES; ARBITRATION
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19
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(a) Governing Law
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19
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(b) Reimbursement of Expenses in Enforcing Rights
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19
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(c) Arbitration
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20
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(d) Interest on Unpaid Amounts
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20
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(e) LIMITATION ON LIABILITIES
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20
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(f) WAIVER OF JURY TRIAL
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20
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13.
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MISCELLANEOUS
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21
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(a) Integration
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21
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(b) Successors; Transferability
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21
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(c) Beneficiaries
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21
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(d) Notices
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21
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(e) Reformation
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22
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(f) Headings
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22
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(g) No General Waivers
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22
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(h) No Obligation to Mitigate
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22
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(i) Offsets; Withholding
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22
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(j) Successors and Assigns
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22
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(k) Counterparts
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23
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(l) Due Authority and Execution
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23
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(m) Representations of Executive
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23
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14.
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D&O INSURANCE
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23
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1.
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Employment
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2.
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Term
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3.
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Offices and Duties
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4.
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Salary and Annual Incentive Compensation
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5.
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Compensation Plans, Benefits, Deferred Compensation, and Expense Reimbursement
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(i)
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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 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, the Executive would receive any payment that, absent the application of this Section 5(g), would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six (6) months and one day after Executive’s termination date, (2) Executive’s death or (3) such other date (the “Delay Period”) as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment). In particular, with respect to any lump sum payment otherwise required hereunder, in the event of any delay in the payment date as a result of Section 409A(a)(2)(A)(i) and (B)(i) of the Code, the Company will adjust the payments to reflect the deferred payment date by crediting interest thereon at the prime rate in effect at the time such amount first becomes payable, as quoted by the Company’s principal bank.
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(ii)
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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.
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(iii)
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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.
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(iv)
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For purposes of Section 409A of the Code, each payment made after termination of employment, including COBRA continuation reimbursement payment, will be considered one of a series of separate payments.
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(v)
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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 unless such termination is also a “separation from service” within the meaning of Section 409A of the Code and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.”
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(vi)
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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.
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(vii)
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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.
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(viii)
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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.
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(ix)
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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.
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(x)
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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
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6.
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Termination Due to Retirement, Death, or Disability
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(i)
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Executive’s Compensation Accrued at Termination (as defined in Section 8(d));
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(ii)
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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));
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(iii)
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All equity awards held by Executive at termination that vest based on time shall be fully vested and all other terms of such awards shalt 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);
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(iv)
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Unless otherwise expressly provided for in an applicable award agreement, any performance objectives upon which the earning of performance-based restricted stock, restricted stock units (“RSUs”), and other equity awards and other long-term incentive awards (including cash awards, but excluding any Outperformance Incentive Award) 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, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;
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(v)
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All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
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(vi)
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The Company will pay or reimburse Executive for his premiums charged to continue medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“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,
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(i)
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Executive’s Compensation Accrued at Termination;
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(ii)
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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));
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(iii)
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A single severance payment in an amount equal to the sum of: (i) one times the Executive’s Base Salary plus (ii) one times the average of the two highest Annual Incentives (as defined in Section 8(a)) received by Executive during the preceding three completed performance years, provided that the Annual Stock Target provided for in this Agreement instead of the actual Annual Stock Incentive shall be used in the calculation of the severance payment. Such payment shall be in addition to any life insurance payments to which the Executive is otherwise entitled and any other compensation earned by Executive hereunder;
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(iv)
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All equity awards held by Executive at termination that vest based on time shall be fully vested and all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to Section 11(c) hereof);
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(v)
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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, but excluding any Outperformance Incentive Award) 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, and, in other respects, such awards shall be governed by the
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(vi)
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All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
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(vii)
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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 twelfth (12
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.
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(i)
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Executive’s Compensation Accrued at Termination;
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(ii)
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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));
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(iii)
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A single severance payment in an amount equal to the sum of: (i) two times the Executive’s Base Salary plus (ii) two times the average of the two highest Annual Incentives (as defined in Section 8(a)) received by Executive during the preceding three completed performance years, provided that the Annual Stock Target provided for in this Agreement instead of the actual Annual Stock Incentive shall be used in the calculation of the severance payment; provided further, however, that these payments may be provided under an insurance policy purchased by the Company.
Such payment shall be in addition to any disability insurance
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(iv)
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All equity awards held by Executive at termination that vest based on time shall be fully vested and all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to Section 11(c) hereof);
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(v)
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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, but excluding any Outperformance Incentive Award) 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, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;
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(vi)
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Disability benefits shall be payable in accordance with the Company’s plans, programs and policies;
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(vii)
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All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
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(viii)
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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 twelfth (12
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.
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7.
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Termination of Employment For Reasons Other Than Retirement, Death, or Disability
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(i)
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Executive’s Compensation Accrued at Termination;
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(ii)
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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 awards were granted (subject to Section 11(c) hereof); and
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(iii)
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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.
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(i)
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Executive’s Compensation Accrued at Termination;
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(ii)
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A single severance payment in cash in an aggregate amount equal to the sum of: (i) two times the Executive’s Base Salary plus (ii) two times the average of the two highest Annual Incentives (as defined in Section 8(a)) received by Executive during the preceding three completed performance years, provided that the Annual Stock Target provided for in this Agreement instead of the actual Annual Stock Incentive shall be used in the calculation of the severance payment;
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(iii)
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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));
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(iv)
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All equity awards held by Executive at termination which vest based on time shall become vested and all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted (subject to Section 11(c) hereof);
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(v)
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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, but excluding any Outperformance Incentive Award) 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, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;
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(vi)
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All deferral arrangements under Section 5(c) will be settled in accordance with the plans and programs governing the deferral;
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(vii)
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All other rights under any other compensatory or benefit plan, including any deferral under Section 5(c), shall be governed by such plan; and
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(viii)
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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
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8.
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Definitions Relating to Termination Events
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(a)
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“
Annual Incentives
”. For purposes of this Agreement, Annual Incentives shall mean the Annual Cash Award and the Annual Stock Target.
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(b)
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“
Cause
”. For purposes of this Agreement, “Cause” shall mean Executive’s:
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(i)
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conviction for commission of a felony or a crime involving moral turpitude;
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(ii)
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willful commission of any act of theft, fraud, embezzlement or misappropriation against the Company or its subsidiaries or affiliates; or
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(iii)
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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), 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.
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(c)
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“
Change in Control
”. For purposes of this Agreement, a “Change in Control” means and includes each of the following:
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(i)
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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)
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(ii)
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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
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(iii)
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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:
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A.
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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 indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and;
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B.
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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
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(iv)
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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.
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(d)
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“
Compensation Accrued at Termination
”. For purposes of this Agreement, “Compensation Accrued at Termination” means the following:
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(i)
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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;
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(ii)
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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
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(iii)
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Reasonable business expenses and disbursements incurred by Executive prior to Executive’s termination of employment, 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.
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(e)
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“
Disability
”. For purposes of this Agreement, “Disability” means that Executive qualifies to receive long-term disability payments under the Company’s or the Operating Partnership’s long-term disability insurance program, as it may be amended from time to time.
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(f)
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“
Good Reason
”. For purposes of this Agreement, “Good Reason” shall mean, without Executive’s express written consent, the occurrence of any of the following circumstances unless, if correctable, such circumstances are fully corrected within 30 days of the notice of termination given in respect thereof:
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(i)
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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); 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
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(ii)
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on or after a Change in Control (A) a material reduction by the Company in Executive’s Base Salary, (B) the setting of Executive’s annual target incentive opportunity or payment of earned Annual Incentives in amounts materially less than specified under or otherwise not in conformity with Section 4 hereof, or (C) a material adverse change in benefits not in conformity with Section 5;
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(iii)
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the material failure by the Company to pay to Executive any portion of Executive’s base salary or to pay to Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company within seven days of the date such compensation is due;
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(iv)
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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, as existed at the time of the Change in Control;
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(v)
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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
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(vi)
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any other failure by the Company to perform any material obligation under, or breach by the Company of any material provision of, this Agreement.
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(g)
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“
Partial Year Bonus
”. For purposes of this Agreement, a Partial Year Bonus is an amount equal to the annual incentive compensation that would have become payable to Executive for that year if his employment had not terminated, based on the performance actually achieved prior to the date Executive’s employment terminates and the Reasonably Anticipated Performance for the remainder of the year.
|
(h)
|
Intentionally omitted
|
(i)
|
“
Reasonably Anticipated Performance
”. For purposes of this Agreement, “Reasonably Anticipated Performance” is performance reasonably anticipated at the time of termination of employment, as determined by the Board, in good faith, based on discussions with management of the Company and Executive and based on documents (including term sheets, leases and letters of intent) and, in the absence of documentation, material negotiations have commenced at the time of termination and the transaction in question is completed, and other facts and circumstances in existence at the time of termination.
|
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/ Jeffrey C. Hawken
|
|
|
|
|
|
Name: Jeffrey C. Hawken
|
|
|
|
|
|
Title: Executive Vice President and Chief Operating 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/ Jeffrey C. Hawken
|
|
|
|
|
|
|
Name: Jeffrey C. Hawken
|
|
|
|
|
|
|
Title: Executive Vice President and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Joseph E. Magri
|
|
|
|
|
|
|
Name: Joseph E. Magri
|
|
|
|
|
|
|
Title: Senior Vice President and Corporate Counsel
|
|
|
|
|
|
||
|
|
EXECUTIVE
|
|
||
|
|
|
|
||
|
|
/s/ Tyler H. Rose
|
|
||
|
|
Tyler H. Rose
|
|
||
|
|
|
|
|
|
|
|
|
|
||
|
|
KILROY REALTY CORPORATION,
|
|
||
|
|
a Maryland corporation
|
|
||
|
|
By:
|
|
/s/ Jeffrey C. Hawken
|
|
|
|
|
|
Name: Jeffrey C. Hawken
|
|
|
|
|
|
Title: Executive Vice President and Chief Operating 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/ Jeffrey C. Hawken
|
|
|
|
|
|
|
Name: Jeffrey C. Hawken
|
|
|
|
|
|
|
Title: Executive Vice President and Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Joseph E. Magri
|
|
|
|
|
|
|
Name: Joseph E. Magri
|
|
|
|
|
|
|
Title: Senior Vice President and Corporate Counsel
|
|
|
|
|
|
||
|
|
EXECUTIVE
|
|
||
|
|
|
|
||
|
|
/s/ Tyler H. Rose
|
|
||
|
|
Tyler H. Rose
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
Date
|
|
|
|
Tyler H. Rose
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
Kilroy Realty Corporation
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
Kilroy Realty Corporation
|
|
|
|
|
|
|
||
Tyler H. Rose
|
1. Position/Title:
|
Executive Vice President-Development and Construction Services
|
2. Term:
|
Effective as of the Effective Date and ending March 1, 2019, and automatically extended on March 1, 2019 and each March 1 thereafter for an additional 12 month term unless either the Company or you provides notice to the other party at least 90 days before the March 1 extension date electing not to extend the Term further as of that March 1.
|
3. Base Salary:
|
During the Term, the Company will pay you a base salary at the annual rate of $500,000. Your annual base salary shall be reviewed by the Executive Compensation Committee of the board of directors of the Company (the “Board”) each year of the Term, beginning in 2016, and may be increased above, but may not be reduced below, the
then-current rate of such base salary.
|
Equity Awards:
|
An annual cash award (the “Annual Cash Award”) and annual equity or equity-based awards (the “Annual Stock Incentive”) (collectively, the “Annual Incentives”). The annual target incentive opportunity for the Annual Cash Award for a particular fiscal year of the Company shall be not less than One Hundred Percent (100%) of the base salary paid to you by the Company for that fiscal year. The target grant date fair value (as determined by the Company based on its financial reporting methodology)
|
5. Benefits:
|
All employee and executive benefit plans and programs of the Company, as presently in effect or as they may be modified or added to by the Company from time to time, to the extent such plans are generally available to other senior executives or employees of the Company, subject to the eligibility and other requirements of such plans and programs.
|
6. Vacation:
|
5 weeks per year
|
7. Severance:
|
If employment is terminated for reasons other than (i) Cause, (ii) by you other than for Good Reason or (iii) the end of the Term of this Agreement, you shall receive severance payments equal to:
|
•
|
Compensation accrued at termination;
|
•
|
A single severance payment in cash on or as soon as practicable after the first day after the release described in Section 10 becomes irrevocable in accordance with its terms (but in no event later than March 15 of the year following the year in which the termination of employment occurs), in an aggregate amount equal to the sum of: (i) two times Base Salary plus (ii) two times the average of the two highest Annual Incentives received by you during the preceding three completed performance years, provided that the Annual Stock Target provided for in this agreement instead of the actual Annual Stock Incentive shall be used in the calculation of the severance payment; provided, however, if employment is terminated by reason of death,
|
•
|
In lieu of any Annual Cash Award compensation a partial year bonus based on actual performance against bonus targets as of the date of termination, payable within the time period set forth in Section 4 above;
|
•
|
All equity awards held by you at termination which vest based on time shall become fully vested and all other terms of such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;
|
•
|
Unless otherwise expressly provided for in an applicable award agreement, any performance objectives upon which the earning of performance-based restricted stock, RSUs, and other equity awards and other long-term incentive awards (including cash awards) is conditioned shall be deemed to have been met at the greater of (A) target level 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, and, in other respects, such awards shall be governed by the plans and programs and the agreements and other documents pursuant to which such awards were granted;
|
•
|
All other rights under any other compensatory or benefit plan, including any deferrals, shall be governed by such plan; and
|
•
|
The Company will pay or reimburse you for your premiums charged to continue medical coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), at the same or reasonably equivalent medical coverage for you (and, if applicable, your eligible dependents) as in effect immediately prior to the date your employment terminates, to the extent that you elect such continued coverage; provided that the Company’s obligation to make any payment or reimbursement pursuant to this section shall, subject to Section 14 of this Agreement, commence with continuation coverage for the month following the month in which your “separation from service” (as defined in Section 14 of this Agreement) occurs and shall cease with continuation coverage for the twenty-fourth (24
th
) month (or, if your employment terminates due to your death or disability, the twelfth (12
th
) month) following the month in which your separation from service occurs (or, if earlier, shall cease upon the first to occur of the date you become eligible for coverage under the health plan of a future employer or the date the Company ceases to offer group medical coverage to its active executive employees). To the extent you elect COBRA coverage, you shall notify the Company in writing of such election prior to such coverage taking effect and complete any
|
8. Cause:
|
If employment terminates due to Cause, you will receive your compensation accrued through the date of termination and no additional amounts other than what you are entitled to pursuant to the terms of any Company benefit plans.
|
•
|
conviction for commission of a felony or a crime involving moral turpitude;
|
•
|
willful commission of any act of theft, fraud, embezzlement or misappropriation against the Company or its subsidiaries or affiliates; or
|
•
|
willful and continued failure to substantially perform your duties (other than such failure resulting from your incapacity due to physical or mental illness), which failure is not remedied within 30 calendar days after written demand for substantial performance is delivered by the Company which specifically identifies the manner in which the Company believes that you have not substantially performed your duties.
|
9. Good Reason:
|
For purposes of this Agreement, “Good Reason” shall mean, without your express written consent, the occurrence of any of the following circumstances unless, if correctable, such circumstances are fully corrected within 30 days of the notice of termination given in respect thereof which notice must be given within 90 days of the occurrence:
|
•
|
the assignment of duties materially inconsistent with your position and status hereunder, or an alteration, materially adverse to you, in the nature of your duties, responsibilities, and authorities, your positions or the conditions of your employment;
|
•
|
on or after a change in control (A) a material reduction by the Company in your Base Salary, (B) the setting of your annual target incentive opportunities or payment of earned Annual Incentives in amounts materially less than specified above or (C) a material adverse change in benefits;
|
•
|
the failure of the Company to obtain a satisfactory agreement from any successor to the Company to fully assume the Company’s obligations and to perform under this Agreement; or
|
•
|
any other failure by the Company to perform any material obligation under, or breach by the Company of any material provision of, this Agreement.
|
Claims:
|
You agree as a condition to receipt of any termination payments and benefits provided for in Section 7 herein, that you will execute and not revoke a general release in substantially the form attached hereto as Exhibit A. Such general release shall be provided to you within three (3) days of the date of your termination of employment and you shall execute the general release within 21 days and, pursuant to Exhibit A, the revocation period with respect to such release is 7 days. In the event the release of claims (and the expiration of any revocation rights provided therein) could become effective in one of two (2) of your taxable years depending on when you execute and deliver the release, any payment conditioned on execution of the release shall not be made earlier than the first business day of the later of such tax years.
|
11. Covenants:
|
In connection with the entering into of this Agreement, you and the Company shall enter into the Non-Competition, Non-Solicitation and Non-Disclosure Agreement in the form attached hereto as Exhibit B (the “Non-Competition, Non-Solicitation and Non-Disclosure Agreement”).
|
JURY TRIAL:
|
TO THE EXTENT APPLICABLE, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL FOR ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT.
|
Arbitration:
|
This Agreement is governed by and is to be construed, administered, and enforced in accordance with the laws of the State of California, without regard to conflicts of law principles. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by
|
14. Section 409A:
|
(i) Anything in this Agreement to the contrary notwithstanding, to the maximum extent permitted by applicable law, amounts payable to you pursuant to Section 7 shall be made in reliance upon Treas. Reg. Section 1.409A-1(b)(9) (Separation Pay Plans) or Treas. Reg.
Section 1.409A-1(b)(4) (Short-Term Deferrals). However, if (A) on the date of termination of your employment with the Company or a subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”)), (B) you are determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii), if applicable and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this Section 14(i), would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six (6) months and one day after your termination date, (2) your death or (3) such other date (the “Delay Period”) as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment). In particular, with respect to any lump sum payment otherwise required hereunder, in the event of any delay in the payment date as a result of Code Section 409A(a)(2)(A)(i) and (B)(i), the Company will adjust the
|
15. Integration:
|
This Agreement cancels and supersedes any and all prior agreements and understandings (whether written or oral) between the parties hereto with respect to your employment by the Company, any parent or predecessor company, and the Company’s subsidiaries during the Term, including the Prior Employment Agreement, but excluding (1) existing written contracts relating to compensation under equity compensation and employee benefit plans of the Company and its subsidiaries, and (2) the Non-Competition, Non-Solicitation and Non-Disclosure Agreement.
|
|
|
|
|
||
|
|
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/ Justin W. Smart
|
|
||
|
|
Justin W. Smart
|
|
||
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
Date
|
|
|
|
Justin W. Smart
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
Kilroy Realty Corporation
|
|
|
|
|
|
|
|
|
|
|
Date
|
|
|
|
Kilroy Realty Corporation
|
|
|
|
|
|
|
Justin W. Smart
|
|
|
|
|
||
|
|
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/ Justin W. Smart
|
|
||
|
|
Justin W. Smart
|
|
||
|
|
|
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ John Kilroy
|
John Kilroy
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Tyler H. Rose
|
Tyler H. Rose
|
Executive Vice President and
Chief Financial Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
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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.
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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;
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c.
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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.
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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
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5.
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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):
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a.
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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/ John Kilroy
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John Kilroy
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President and Chief Executive Officer
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Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
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1.
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I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P.;
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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.
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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;
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b.
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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;
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c.
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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.
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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
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5.
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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
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Tyler H. Rose
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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)
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the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended
March 31, 2016
(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
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(ii)
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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
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John Kilroy
|
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President and Chief Executive Officer
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Date:
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April 28, 2016
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(i)
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the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended
March 31, 2016
(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
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(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/ Tyler H. Rose
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|
Tyler H. Rose
|
|
Executive Vice President and
Chief Financial Officer
|
|
|
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Date:
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April 28, 2016
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(i)
|
the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended
March 31, 2016
(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
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(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
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/s/ John Kilroy
|
|
John Kilroy
|
|
President and Chief Executive Officer
|
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
|
|
|
Date:
|
April 28, 2016
|
(i)
|
the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended
March 31, 2016
(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
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(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:
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April 28, 2016
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