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)
|
•
|
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 7, Stockholders’ Equity of the Company;
|
◦
|
Note 8, Partners’ Capital of the Operating Partnership;
|
◦
|
Note 12, Net Income Available to Common Stockholders Per Share of the Company;
|
◦
|
Note 13, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
|
◦
|
Note 14, Supplemental Cash Flow Information of the Company; and
|
◦
|
Note 15, 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.
|
|
||
|
|
||
|
|
||
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||
|
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||
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|
||
Item 2.
|
|
||
Item 3.
|
|
||
Item 4.
|
|
||
|
|
PART II – OTHER INFORMATION
|
|
Item 1.
|
|
||
Item 1A.
|
|
||
Item 2.
|
|
||
Item 3.
|
|
||
Item 4.
|
|
||
Item 5.
|
|
||
Item 6.
|
|
||
|
March 31, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
(unaudited)
|
|
|
||||
REAL ESTATE ASSETS:
|
|
|
|
||||
Land and improvements
|
$
|
1,108,971
|
|
|
$
|
1,108,971
|
|
Buildings and improvements
|
4,962,732
|
|
|
4,938,250
|
|
||
Undeveloped land and construction in progress
|
1,087,678
|
|
|
1,013,533
|
|
||
Total real estate assets held for investment
|
7,159,381
|
|
|
7,060,754
|
|
||
Accumulated depreciation and amortization
|
(1,186,246
|
)
|
|
(1,139,853
|
)
|
||
Total real estate assets held for investment, net
|
5,973,135
|
|
|
5,920,901
|
|
||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 2)
|
—
|
|
|
9,417
|
|
||
CASH AND CASH EQUIVALENTS (Note 7)
|
478,391
|
|
|
193,418
|
|
||
RESTRICTED CASH
|
7,199
|
|
|
56,711
|
|
||
MARKETABLE SECURITIES (Note 11)
|
15,163
|
|
|
14,773
|
|
||
CURRENT RECEIVABLES, NET (Note 3)
|
13,740
|
|
|
13,460
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 3)
|
225,860
|
|
|
218,977
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET
|
202,499
|
|
|
208,368
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 4)
|
77,678
|
|
|
70,608
|
|
||
TOTAL ASSETS
|
$
|
6,993,665
|
|
|
$
|
6,706,633
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt, net (Notes 5 and 11)
|
$
|
469,670
|
|
|
$
|
472,772
|
|
Unsecured debt, net (Notes 5 and 11)
|
2,096,356
|
|
|
1,847,351
|
|
||
Accounts payable, accrued expenses and other liabilities
|
215,469
|
|
|
202,391
|
|
||
Accrued dividends and distributions (Note 16)
|
38,983
|
|
|
222,306
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net
|
153,369
|
|
|
150,360
|
|
||
Rents received in advance and tenant security deposits
|
53,677
|
|
|
52,080
|
|
||
Liabilities of real estate assets held for sale
|
—
|
|
|
56
|
|
||
Total liabilities
|
3,027,524
|
|
|
2,947,316
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 10)
|
|
|
|
||||
EQUITY:
|
|
|
|
||||
Stockholders’ Equity (Note 7):
|
|
|
|
||||
Preferred stock, $.01 par value, 30,000,000 shares authorized:
|
|
|
|
||||
6.875% Series G Cumulative Redeemable Preferred stock, $.01 par value, no shares issued and outstanding at 3/31/2017, and 4,000,000 shares authorized, issued and outstanding ($100,000 liquidation preference) at 12/31/2016
|
—
|
|
|
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, 98,275,048 and 93,219,439 shares issued and outstanding, respectively
|
983
|
|
|
932
|
|
||
Additional paid-in capital
|
3,782,291
|
|
|
3,457,649
|
|
||
Distributions in excess of earnings
|
(120,207
|
)
|
|
(107,997
|
)
|
||
Total stockholders’ equity
|
3,759,323
|
|
|
3,542,995
|
|
||
Noncontrolling Interests:
|
|
|
|
||||
Common units of the Operating Partnership (Note 6)
|
77,432
|
|
|
85,590
|
|
||
Noncontrolling interests in consolidated property partnerships (Note 1)
|
129,386
|
|
|
130,732
|
|
||
Total noncontrolling interests
|
206,818
|
|
|
216,322
|
|
||
Total equity
|
3,966,141
|
|
|
3,759,317
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
6,993,665
|
|
|
$
|
6,706,633
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
REVENUES
|
|
|
|
||||
Rental income
|
$
|
156,648
|
|
|
$
|
133,755
|
|
Tenant reimbursements
|
19,296
|
|
|
11,404
|
|
||
Other property income
|
3,364
|
|
|
287
|
|
||
Total revenues
|
179,308
|
|
|
145,446
|
|
||
EXPENSES
|
|
|
|
||||
Property expenses
|
31,241
|
|
|
25,965
|
|
||
Real estate taxes
|
17,964
|
|
|
11,032
|
|
||
Provision for bad debts
|
1,298
|
|
|
—
|
|
||
Ground leases
|
1,642
|
|
|
829
|
|
||
General and administrative expenses
|
14,933
|
|
|
13,437
|
|
||
Acquisition-related expenses (Note 1)
|
—
|
|
|
62
|
|
||
Depreciation and amortization
|
60,919
|
|
|
50,440
|
|
||
Total expenses
|
127,997
|
|
|
101,765
|
|
||
OTHER (EXPENSES) INCOME
|
|
|
|
||||
Interest income and other net investment gains (Note 11)
|
1,065
|
|
|
271
|
|
||
Interest expense (Note 5)
|
(17,352
|
)
|
|
(11,829
|
)
|
||
Total other (expenses) income
|
(16,287
|
)
|
|
(11,558
|
)
|
||
INCOME FROM OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
35,024
|
|
|
32,123
|
|
||
Gains on sales of depreciable operating properties (Note 2)
|
2,257
|
|
|
145,990
|
|
||
NET INCOME
|
37,281
|
|
|
178,113
|
|
||
Net income attributable to noncontrolling common units of the Operating Partnership (Note 6)
|
(623
|
)
|
|
(3,610
|
)
|
||
Net income attributable to noncontrolling interests in consolidated property partnerships (Note 1)
|
(3,133
|
)
|
|
(195
|
)
|
||
Total income attributable to noncontrolling interests
|
(3,756
|
)
|
|
(3,805
|
)
|
||
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
|
33,525
|
|
|
174,308
|
|
||
Preferred dividends
|
(3,351
|
)
|
|
(3,313
|
)
|
||
Original issuance costs of redeemed preferred stock and preferred units (Note 7)
|
(3,845
|
)
|
|
—
|
|
||
Total preferred dividends
|
(7,196
|
)
|
|
(3,313
|
)
|
||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
26,329
|
|
|
$
|
170,995
|
|
Net income available to common stockholders per share – basic (Note 12)
|
$
|
0.27
|
|
|
$
|
1.85
|
|
Net income available to common stockholders per share – diluted (Note 12)
|
$
|
0.26
|
|
|
$
|
1.84
|
|
Weighted average common shares outstanding – basic (Note 12)
|
97,388,137
|
|
|
92,224,522
|
|
||
Weighted average common shares outstanding – diluted (Note 12)
|
98,018,157
|
|
|
92,734,543
|
|
||
Dividends declared per common share
|
$
|
0.375
|
|
|
$
|
0.350
|
|
|
|
|
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, 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
|
|
||||||||||||
Non-cash 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
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2016
|
$
|
192,411
|
|
|
93,219,439
|
|
|
$
|
932
|
|
|
$
|
3,457,649
|
|
|
$
|
(107,997
|
)
|
|
$
|
3,542,995
|
|
|
$
|
216,322
|
|
|
$
|
3,759,317
|
|
Net income
|
|
|
|
|
|
|
|
|
33,525
|
|
|
33,525
|
|
|
3,756
|
|
|
37,281
|
|
|||||||||||
Redemption of Series G preferred stock (Note 7)
|
(96,155
|
)
|
|
|
|
|
|
|
|
(3,845
|
)
|
|
(100,000
|
)
|
|
|
|
(100,000
|
)
|
|||||||||||
Issuance of common stock (Note 7)
|
|
|
4,427,500
|
|
|
44
|
|
|
308,805
|
|
|
|
|
308,849
|
|
|
|
|
308,849
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
4,164
|
|
|
|
|
4,164
|
|
|
|
|
4,164
|
|
||||||||||||
Non-cash amortization of share-based compensation
|
|
|
|
|
|
|
6,169
|
|
|
|
|
6,169
|
|
|
|
|
6,169
|
|
||||||||||||
Exercise of stock options (Note 9)
|
|
|
200,000
|
|
|
2
|
|
|
8,520
|
|
|
|
|
8,522
|
|
|
|
|
8,522
|
|
||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
257,824
|
|
|
3
|
|
|
(3
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(134,065
|
)
|
|
(1
|
)
|
|
(11,013
|
)
|
|
|
|
(11,014
|
)
|
|
|
|
(11,014
|
)
|
||||||||||
Exchange of common units of the Operating Partnership
|
|
|
304,350
|
|
|
3
|
|
|
10,936
|
|
|
|
|
10,939
|
|
|
(10,939
|
)
|
|
—
|
|
|||||||||
Contributions from noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
250
|
|
|
250
|
|
||||||||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(4,728
|
)
|
|
(4,728
|
)
|
||||||||||||
Adjustment for noncontrolling interest
|
|
|
|
|
|
|
(2,936
|
)
|
|
|
|
(2,936
|
)
|
|
2,936
|
|
|
—
|
|
|||||||||||
Preferred dividends
|
|
|
|
|
|
|
|
|
(3,351
|
)
|
|
(3,351
|
)
|
|
|
|
(3,351
|
)
|
||||||||||||
Dividends declared per common share and common unit ($0.375 per share/unit)
|
|
|
|
|
|
|
|
|
(38,539
|
)
|
|
(38,539
|
)
|
|
(779
|
)
|
|
(39,318
|
)
|
|||||||||||
BALANCE AS OF MARCH 31, 2017
|
$
|
96,256
|
|
|
98,275,048
|
|
|
$
|
983
|
|
|
$
|
3,782,291
|
|
|
$
|
(120,207
|
)
|
|
$
|
3,759,323
|
|
|
$
|
206,818
|
|
|
$
|
3,966,141
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
37,281
|
|
|
$
|
178,113
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of real estate assets and leasing costs
|
59,734
|
|
|
49,664
|
|
||
Depreciation of non-real estate furniture, fixtures and equipment
|
1,185
|
|
|
776
|
|
||
Increase in provision for bad debts (Note 3)
|
1,298
|
|
|
—
|
|
||
Non-cash amortization of share-based compensation awards
|
4,134
|
|
|
4,703
|
|
||
Non-cash amortization of deferred financing costs and debt discounts and premiums
|
738
|
|
|
609
|
|
||
Non-cash amortization of net below market rents
|
(2,412
|
)
|
|
(1,603
|
)
|
||
Gains on sales of depreciable operating properties (Note 2)
|
(2,257
|
)
|
|
(145,990
|
)
|
||
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements
|
(3,695
|
)
|
|
(2,888
|
)
|
||
Straight-line rents
|
(7,611
|
)
|
|
(9,451
|
)
|
||
Net change in other operating assets
|
(1,811
|
)
|
|
1,561
|
|
||
Net change in other operating liabilities
|
9,791
|
|
|
2,710
|
|
||
Net cash provided by operating activities
|
96,375
|
|
|
78,204
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for development properties and undeveloped land
|
(67,957
|
)
|
|
(63,702
|
)
|
||
Expenditures for operating properties and other capital assets
|
(21,446
|
)
|
|
(25,938
|
)
|
||
Expenditures for acquisition of undeveloped land
|
—
|
|
|
(33,513
|
)
|
||
Net proceeds received from dispositions (Note 2)
|
11,865
|
|
|
262,409
|
|
||
Increase in acquisition-related deposits
|
(8,850
|
)
|
|
(4,085
|
)
|
||
Increase in note receivable
|
—
|
|
|
(1,000
|
)
|
||
Net cash (used in) provided by investing activities
|
(86,388
|
)
|
|
134,171
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from issuance of common stock (Note 7)
|
308,849
|
|
|
—
|
|
||
Redemption of Series G preferred stock (Note 7)
|
(100,000
|
)
|
|
—
|
|
||
Proceeds from the issuance of unsecured debt (Note 5)
|
250,000
|
|
|
—
|
|
||
Borrowings on unsecured revolving credit facility
|
—
|
|
|
80,000
|
|
||
Repayments on unsecured revolving credit facility
|
—
|
|
|
(5,000
|
)
|
||
Principal payments on secured debt
|
(2,705
|
)
|
|
(2,377
|
)
|
||
Financing costs
|
(1,866
|
)
|
|
(337
|
)
|
||
Repurchase of common stock and restricted stock units
|
(11,014
|
)
|
|
(5,619
|
)
|
||
Proceeds from exercise of stock options
|
8,522
|
|
|
256
|
|
||
Contributions from noncontrolling interests in consolidated property partnerships
|
250
|
|
|
—
|
|
||
Distributions to noncontrolling interests in consolidated property partnerships
|
(4,728
|
)
|
|
—
|
|
||
Dividends and distributions paid to common stockholders and common unitholders
|
(217,643
|
)
|
|
(32,944
|
)
|
||
Dividends and distributions paid to preferred stockholders and preferred unitholders
|
(4,191
|
)
|
|
(3,313
|
)
|
||
Net cash provided by financing activities
|
225,474
|
|
|
30,666
|
|
||
Net increase in cash and cash equivalents and restricted cash
|
235,461
|
|
|
243,041
|
|
||
Cash and cash equivalents and restricted cash, beginning of period
|
250,129
|
|
|
57,204
|
|
||
Cash and cash equivalents and restricted cash, end of period
|
$
|
485,590
|
|
|
$
|
300,245
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
REVENUES
|
|
|
|
||||
Rental income
|
$
|
156,648
|
|
|
$
|
133,755
|
|
Tenant reimbursements
|
19,296
|
|
|
11,404
|
|
||
Other property income
|
3,364
|
|
|
287
|
|
||
Total revenues
|
179,308
|
|
|
145,446
|
|
||
EXPENSES
|
|
|
|
||||
Property expenses
|
31,241
|
|
|
25,965
|
|
||
Real estate taxes
|
17,964
|
|
|
11,032
|
|
||
Provision for bad debts
|
1,298
|
|
|
—
|
|
||
Ground leases
|
1,642
|
|
|
829
|
|
||
General and administrative expenses
|
14,933
|
|
|
13,437
|
|
||
Acquisition-related expenses (Note 1)
|
—
|
|
|
62
|
|
||
Depreciation and amortization
|
60,919
|
|
|
50,440
|
|
||
Total expenses
|
127,997
|
|
|
101,765
|
|
||
OTHER (EXPENSES) INCOME
|
|
|
|
||||
Interest income and other net investment gains (Note 11)
|
1,065
|
|
|
271
|
|
||
Interest expense (Note 5)
|
(17,352
|
)
|
|
(11,829
|
)
|
||
Total other (expenses) income
|
(16,287
|
)
|
|
(11,558
|
)
|
||
INCOME FROM OPERATIONS BEFORE GAINS ON SALES OF REAL ESTATE
|
35,024
|
|
|
32,123
|
|
||
Gains on sales of depreciable operating properties (Note 2)
|
2,257
|
|
|
145,990
|
|
||
NET INCOME
|
37,281
|
|
|
178,113
|
|
||
Net income attributable to noncontrolling interests in consolidated property partnerships and subsidiaries
(Note 1)
|
(3,227
|
)
|
|
(280
|
)
|
||
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.
|
34,054
|
|
|
177,833
|
|
||
Preferred distributions
|
(3,351
|
)
|
|
(3,313
|
)
|
||
Original issuance costs of redeemed preferred units (Note 8)
|
(3,845
|
)
|
|
—
|
|
||
Total preferred dividends
|
(7,196
|
)
|
|
(3,313
|
)
|
||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS
|
$
|
26,858
|
|
|
$
|
174,520
|
|
Net income available to common unitholders per unit – basic (Note 13)
|
$
|
0.26
|
|
|
$
|
1.85
|
|
Net income available to common unitholders per unit – diluted (Note 13)
|
$
|
0.26
|
|
|
$
|
1.84
|
|
Weighted average common units outstanding – basic (Note 13)
|
99,691,684
|
|
|
94,188,520
|
|
||
Weighted average common units outstanding – diluted (Note 13)
|
100,321,704
|
|
|
94,698,541
|
|
||
Dividends declared per common unit
|
$
|
0.375
|
|
|
$
|
0.350
|
|
|
Partners’ Capital
|
|
Total
Partners’
Capital
|
|
Noncontrolling Interests in Consolidated Property Partnerships and 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
|
|
|
867,701
|
|
|
48,033
|
|
|
48,033
|
|
|
|
|
48,033
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
404
|
|
|
404
|
|
|
|
|
404
|
|
||||||||
Non-cash 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners’ Capital
|
|
Total
Partners’
Capital
|
|
Noncontrolling Interests in Consolidated Property Partnerships and Subsidiaries
|
|
|
|||||||||||||||
|
Preferred
Units
|
|
Number of
Common
Units
|
|
Common
Units
|
|
|
Total
Capital
|
||||||||||||||
BALANCE AS OF DECEMBER 31, 2016
|
$
|
192,411
|
|
|
95,600,982
|
|
|
$
|
3,431,768
|
|
|
$
|
3,624,179
|
|
|
$
|
135,138
|
|
|
$
|
3,759,317
|
|
Net income
|
|
|
|
|
34,054
|
|
|
34,054
|
|
|
3,227
|
|
|
37,281
|
|
|||||||
Redemption of Series G preferred units (Note 8)
|
(96,155
|
)
|
|
|
|
(3,845
|
)
|
|
(100,000
|
)
|
|
|
|
(100,000
|
)
|
|||||||
Issuance of common units (Note 8)
|
|
|
4,427,500
|
|
|
308,849
|
|
|
308,849
|
|
|
|
|
308,849
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
4,164
|
|
|
4,164
|
|
|
|
|
4,164
|
|
||||||||
Non-cash amortization of share-based compensation
|
|
|
|
|
6,169
|
|
|
6,169
|
|
|
|
|
6,169
|
|
||||||||
Exercise of stock options (Note 9)
|
|
|
200,000
|
|
|
8,522
|
|
|
8,522
|
|
|
|
|
8,522
|
|
|||||||
Settlement of restricted stock units
|
|
|
257,824
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Repurchase of common units, stock options and restricted stock units
|
|
|
(134,065
|
)
|
|
(11,014
|
)
|
|
(11,014
|
)
|
|
|
|
(11,014
|
)
|
|||||||
Contributions from noncontrolling interests in consolidated property partnerships
|
|
|
|
|
—
|
|
|
—
|
|
|
250
|
|
|
250
|
|
|||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
(4,728
|
)
|
|
(4,728
|
)
|
||||||||
Preferred distributions
|
|
|
|
|
(3,351
|
)
|
|
(3,351
|
)
|
|
|
|
(3,351
|
)
|
||||||||
Distributions declared per common unit ($0.375 per unit)
|
|
|
|
|
(39,318
|
)
|
|
(39,318
|
)
|
|
|
|
(39,318
|
)
|
||||||||
BALANCE AS OF MARCH 31, 2017
|
$
|
96,256
|
|
|
100,352,241
|
|
|
$
|
3,735,998
|
|
|
$
|
3,832,254
|
|
|
$
|
133,887
|
|
|
$
|
3,966,141
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
37,281
|
|
|
$
|
178,113
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization of real estate assets and leasing costs
|
59,734
|
|
|
49,664
|
|
||
Depreciation of non-real estate furniture, fixtures and equipment
|
1,185
|
|
|
776
|
|
||
Increase in provision for bad debts (Note 3)
|
1,298
|
|
|
—
|
|
||
Non-cash amortization of share-based compensation awards
|
4,134
|
|
|
4,703
|
|
||
Non-cash amortization of deferred financing costs and debt discounts and premiums
|
738
|
|
|
609
|
|
||
Non-cash amortization of net below market rents
|
(2,412
|
)
|
|
(1,603
|
)
|
||
Gains on sales of depreciable operating properties (Note 2)
|
(2,257
|
)
|
|
(145,990
|
)
|
||
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements
|
(3,695
|
)
|
|
(2,888
|
)
|
||
Straight-line rents
|
(7,611
|
)
|
|
(9,451
|
)
|
||
Net change in other operating assets
|
(1,811
|
)
|
|
1,561
|
|
||
Net change in other operating liabilities
|
9,791
|
|
|
2,710
|
|
||
Net cash provided by operating activities
|
96,375
|
|
|
78,204
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Expenditures for development properties and undeveloped land
|
(67,957
|
)
|
|
(63,702
|
)
|
||
Expenditures for operating properties and other capital assets
|
(21,446
|
)
|
|
(25,938
|
)
|
||
Expenditures for acquisition of undeveloped land
|
—
|
|
|
(33,513
|
)
|
||
Net proceeds received from dispositions (Note 2)
|
11,865
|
|
|
262,409
|
|
||
Increase in acquisition-related deposits
|
(8,850
|
)
|
|
(4,085
|
)
|
||
Increase in note receivable
|
—
|
|
|
(1,000
|
)
|
||
Net cash (used in) provided by investing activities
|
(86,388
|
)
|
|
134,171
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Net proceeds from issuance of common units (Note 8)
|
308,849
|
|
|
—
|
|
||
Redemption of Series G preferred units (Note 8)
|
(100,000
|
)
|
|
—
|
|
||
Proceeds from the issuance of unsecured debt (Note 5)
|
250,000
|
|
|
—
|
|
||
Borrowings on unsecured revolving credit facility
|
—
|
|
|
80,000
|
|
||
Repayments on unsecured revolving credit facility
|
—
|
|
|
(5,000
|
)
|
||
Principal payments on secured debt
|
(2,705
|
)
|
|
(2,377
|
)
|
||
Financing costs
|
(1,866
|
)
|
|
(337
|
)
|
||
Repurchase of common stock and restricted stock units
|
(11,014
|
)
|
|
(5,619
|
)
|
||
Proceeds from exercise of stock options
|
8,522
|
|
|
256
|
|
||
Contributions from noncontrolling interests in consolidated property partnerships
|
250
|
|
|
—
|
|
||
Distributions to noncontrolling interests in consolidated property partnerships
|
(4,728
|
)
|
|
—
|
|
||
Distributions paid to common unitholders
|
(217,643
|
)
|
|
(32,944
|
)
|
||
Distributions paid to preferred unitholders
|
(4,191
|
)
|
|
(3,313
|
)
|
||
Net cash provided by financing activities
|
225,474
|
|
|
30,666
|
|
||
Net increase in cash and cash equivalents and restricted cash
|
235,461
|
|
|
243,041
|
|
||
Cash and cash equivalents and restricted cash, beginning of period
|
250,129
|
|
|
57,204
|
|
||
Cash and cash equivalents and restricted cash, end of period
|
$
|
485,590
|
|
|
$
|
300,245
|
|
|
Number of
Buildings
|
|
Rentable
Square Feet
(unaudited)
|
|
Number of
Tenants
|
|
Percentage
Occupied (unaudited)
|
|
Percentage Leased (unaudited)
|
|||||
Stabilized Office Properties
|
111
|
|
|
14,394,806
|
|
|
543
|
|
|
94.1
|
%
|
|
95.7
|
%
|
|
Number of
Buildings |
|
Number of Units
|
|
Percentage
Occupied
(unaudited)
|
|
Percentage Leased
(unaudited)
|
||||
Stabilized Residential Property
|
1
|
|
|
200
|
|
|
64.9
|
%
|
|
71.3
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
(1)
|
|
Development projects under construction
(2)
|
3
|
|
1,150,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
(2)
|
Development projects under construction also include
96,000
square feet of retail space and
237
residential units in addition to the estimated office rentable square feet noted above.
|
Location
|
|
Property Type
|
|
Month of Disposition
|
|
Number of Buildings
|
|
Rentable Square Feet
|
|
Sales Price
(1)
(in millions)
|
|||
5717 Pacific Center Boulevard, San Diego, CA
(2)
|
|
Office
|
|
January
|
|
1
|
|
67,995
|
|
|
$
|
12.1
|
|
Total Dispositions
|
|
|
|
|
|
1
|
|
67,995
|
|
|
$
|
12.1
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents gross sales price before the impact of broker commissions and closing costs.
|
(2)
|
This property was classified as held for sale at
December 31, 2016
.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Current receivables
|
$
|
15,956
|
|
|
$
|
15,172
|
|
Allowance for uncollectible tenant receivables
|
(2,216
|
)
|
|
(1,712
|
)
|
||
Current receivables, net
|
$
|
13,740
|
|
|
$
|
13,460
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Deferred rent receivables
|
$
|
228,112
|
|
|
$
|
220,501
|
|
Allowance for deferred rent receivables
|
(2,252
|
)
|
|
(1,524
|
)
|
||
Deferred rent receivables, net
|
$
|
225,860
|
|
|
$
|
218,977
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Furniture, fixtures and other long-lived assets, net
|
$
|
39,371
|
|
|
$
|
40,395
|
|
Notes receivable
(1)
|
19,833
|
|
|
19,439
|
|
||
Prepaid expenses & deposits
|
18,474
|
|
|
10,774
|
|
||
Total Prepaid Expenses and Other Assets, Net
|
$
|
77,678
|
|
|
$
|
70,608
|
|
(1)
|
Approximately
$15.1 million
of our notes receivables are secured by real estate.
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
—
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
600,000
|
|
|
600,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
2.03
|
%
|
|
1.82
|
%
|
||
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)
|
The interest rate on our unsecured revolving credit facility is based on an annual rate of LIBOR plus
1.050%
.
|
(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, 2017
and
December 31, 2016
,
$3.0 million
and
$3.3 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.
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
(1)
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Interest rate
(2)
|
2.10
|
%
|
|
1.85
|
%
|
||
Maturity date
|
July 2019
|
(1)
|
As of
March 31, 2017
and
December 31, 2016
,
$0.6 million
and
$0.7 million
of unamortized deferred financing costs, respectively, 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%
.
|
Year
|
(in thousands)
|
||
Remaining 2017
|
$
|
4,581
|
|
2018
|
451,669
|
|
|
2019
|
265,309
|
|
|
2020
|
255,137
|
|
|
2021
|
5,342
|
|
|
Thereafter
|
1,599,023
|
|
|
Total
(1)
|
$
|
2,581,061
|
|
(1)
|
Includes gross principal balance of outstanding debt before the effect of the following at
March 31, 2017
:
$12.6 million
of unamortized deferred financing costs,
$6.4 million
of unamortized discounts for the unsecured senior notes and
$3.9 million
of unamortized premiums for the secured debt.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Gross interest expense
|
$
|
27,515
|
|
|
$
|
26,175
|
|
Capitalized interest and deferred financing costs
|
(10,163
|
)
|
|
(14,346
|
)
|
||
Interest expense
|
$
|
17,352
|
|
|
$
|
11,829
|
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2016
|
|||
Company owned common units in the Operating Partnership
|
98,275,048
|
|
|
93,219,439
|
|
|
92,229,464
|
|
Company owned general partnership interest
|
97.9
|
%
|
|
97.5
|
%
|
|
97.2
|
%
|
Noncontrolling common units of the Operating Partnership
|
2,077,193
|
|
|
2,381,543
|
|
|
2,631,276
|
|
Ownership interest of noncontrolling interest
|
2.1
|
%
|
|
2.5
|
%
|
|
2.8
|
%
|
|
Fair Value Assumptions
|
Fair value per share at February 24, 2017
|
$80.89
|
Expected share price volatility
|
21.00%
|
Risk-free interest rate
|
1.39%
|
Remaining expected life
|
2.8 years
|
|
Fair Value (Level 1)
(1)
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Description
|
(in thousands)
|
||||||
Marketable securities
(2)
|
$
|
15,163
|
|
|
$
|
14,773
|
|
(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,
|
||||||
|
2017
|
|
2016
|
||||
Description
|
(in thousands)
|
||||||
Net gain on marketable securities
|
$
|
671
|
|
|
$
|
137
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying
Value |
|
Fair
Value (1) |
|
Carrying
Value |
|
Fair
Value (1) |
||||||||
|
(in thousands)
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Secured debt, net
|
$
|
469,670
|
|
|
$
|
468,549
|
|
|
$
|
472,772
|
|
|
$
|
469,234
|
|
Unsecured debt, net
|
2,096,356
|
|
|
2,163,637
|
|
|
1,847,351
|
|
|
1,900,487
|
|
(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,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands, except share and per share amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to Kilroy Realty Corporation
|
$
|
33,525
|
|
|
$
|
174,308
|
|
Total preferred dividends
|
(7,196
|
)
|
|
(3,313
|
)
|
||
Allocation to participating securities
(1)
|
(448
|
)
|
|
(395
|
)
|
||
Numerator for basic and diluted net income available to common stockholders
|
$
|
25,881
|
|
|
$
|
170,600
|
|
Denominator:
|
|
|
|
||||
Basic weighted average vested shares outstanding
|
97,388,137
|
|
|
92,224,522
|
|
||
Effect of dilutive securities
|
630,020
|
|
|
510,021
|
|
||
Diluted weighted average vested shares and common share equivalents outstanding
|
98,018,157
|
|
|
92,734,543
|
|
||
Basic earnings per share:
|
|
|
|
||||
Net income available to common stockholders per share
|
$
|
0.27
|
|
|
$
|
1.85
|
|
Diluted earnings per share:
|
|
|
|
||||
Net income available to common stockholders per share
|
$
|
0.26
|
|
|
$
|
1.84
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands, except unit and per unit amounts)
|
||||||
Numerator:
|
|
|
|
||||
Net income attributable to Kilroy Realty, L.P.
|
$
|
34,054
|
|
|
$
|
177,833
|
|
Total preferred distributions
|
(7,196
|
)
|
|
(3,313
|
)
|
||
Allocation to participating securities
(1)
|
(448
|
)
|
|
(395
|
)
|
||
Numerator for basic and diluted net income available to common unitholders
|
$
|
26,410
|
|
|
$
|
174,125
|
|
Denominator:
|
|
|
|
||||
Basic weighted average vested units outstanding
|
99,691,684
|
|
|
94,188,520
|
|
||
Effect of dilutive securities
|
630,020
|
|
|
510,021
|
|
||
Diluted weighted average vested units and common unit equivalents outstanding
|
100,321,704
|
|
|
94,698,541
|
|
||
Basic earnings per unit:
|
|
|
|
||||
Net income available to common unitholders per unit
|
$
|
0.26
|
|
|
$
|
1.85
|
|
Diluted earnings per unit:
|
|
|
|
||||
Net income available to common unitholders per unit
|
$
|
0.26
|
|
|
$
|
1.84
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest of $9,829 and $13,815 as of March 31, 2017 and 2016, respectively
|
$
|
18,206
|
|
|
$
|
13,797
|
|
NON-CASH INVESTING TRANSACTIONS:
|
|
|
|
||||
Accrual for expenditures for operating properties and development properties
|
$
|
50,056
|
|
|
$
|
59,218
|
|
Tenant improvements funded directly by tenants
|
$
|
7,416
|
|
|
$
|
10,664
|
|
Assumption of accrued liabilities in connection with acquisitions
|
$
|
—
|
|
|
$
|
4,741
|
|
NON-CASH FINANCING TRANSACTIONS:
|
|
|
|
||||
Accrual of dividends and distributions payable to common stockholders and common unitholders
|
$
|
38,176
|
|
|
$
|
33,677
|
|
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders
|
$
|
797
|
|
|
$
|
1,656
|
|
Exchange of common units of the Operating Partnership into shares of the Company’s common stock
|
$
|
10,939
|
|
|
$
|
39
|
|
Issuance of common units of the Operating Partnership in connection with an acquisition
|
$
|
—
|
|
|
$
|
48,033
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
$
|
193,418
|
|
|
$
|
56,508
|
|
Restricted cash at beginning of period
|
56,711
|
|
|
696
|
|
||
Cash and cash equivalents and restricted cash at beginning of period
|
$
|
250,129
|
|
|
$
|
57,204
|
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
478,391
|
|
|
$
|
38,645
|
|
Restricted cash at end of period
|
7,199
|
|
|
261,600
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
485,590
|
|
|
$
|
300,245
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
||||
Cash paid for interest, net of capitalized interest of $9,829 and $13,815 as of March 31, 2017 and 2016, respectively
|
$
|
18,206
|
|
|
$
|
13,797
|
|
NON-CASH INVESTING TRANSACTIONS:
|
|
|
|
||||
Accrual for expenditures for operating properties and development properties
|
$
|
50,056
|
|
|
$
|
59,218
|
|
Tenant improvements funded directly by tenants
|
$
|
7,416
|
|
|
$
|
10,664
|
|
Assumption of accrued liabilities in connection with acquisitions
|
$
|
—
|
|
|
$
|
4,741
|
|
NON-CASH FINANCING TRANSACTIONS:
|
|
|
|
||||
Accrual of distributions payable to common unitholders
|
$
|
38,176
|
|
|
$
|
33,677
|
|
Accrual of distributions payable to preferred unitholders
|
$
|
797
|
|
|
$
|
1,656
|
|
Issuance of common units of the Operating Partnership in connection with an acquisition
|
$
|
—
|
|
|
$
|
48,033
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
$
|
193,418
|
|
|
$
|
56,508
|
|
Restricted cash at beginning of period
|
56,711
|
|
|
696
|
|||
Cash and cash equivalents and restricted cash at beginning of period
|
$
|
250,129
|
|
|
$
|
57,204
|
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
478,391
|
|
|
$
|
38,645
|
|
Restricted cash at end of period
|
7,199
|
|
|
261,600
|
|
||
Cash and cash equivalents and restricted cash at end of period
|
$
|
485,590
|
|
|
$
|
300,245
|
|
•
|
Columbia Square Phase 2 - Office, 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
365,359
rentable square feet with a total estimated investment of approximately
$230 million
. As of
March 31, 2017
, the project was
86%
leased and
75%
occupied.
|
•
|
The Exchange on 16th, Mission Bay, San Francisco, California, which we acquired in May 2014 and commenced construction on in June 2015. This project is currently anticipated to encompass approximately
750,000
gross rentable square feet of office and life science space in four buildings at a total estimated investment of
$560.0 million
. Construction is currently in progress and the building and core shell are currently estimated to be completed in the first half of 2018.
|
•
|
100 Hooper, San Francisco, California, which we acquired in July 2015 and commenced construction on in November 2016. This project is fully entitled for approximately 314,000 square feet of office and approximately 86,000 square feet of PDR space configured in two, four-story buildings. The total estimated cost for this project is approximately
$270.0 million
. Construction is currently in process and the core and shell of the project is currently expected to be completed in the first half of 2018. The office portion of the project is
100%
pre-leased to Adobe Systems Inc. In connection with 100 Hooper, the Company also intends to develop an adjacent 50,000 square foot PDR space located at 150 Hooper with a total estimated investment of approximately $22.0 million.
|
•
|
One Paseo - Phase I (Retail and Residential), San Diego, California, which we acquired in November 2007 and commenced construction on in December 2016. Phase I of this mixed-use project includes site work and related infrastructure for the entire project, as well as 237 residential units and approximately 96,000 square feet of retail space. The total estimated
|
Near-Term Development Pipeline
(1)
|
|
Location
|
|
Potential Start Date
(2)
|
|
Approx. Developable Square Feet
|
|
Total Estimated Investment
($ in millions)
|
|
Total Costs as of 3/31/2017
(3)
($ in millions)
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
333 Dexter
(4)
|
|
South Lake Union
|
|
2017
|
|
700,000
|
|
$
|
385
|
|
|
$
|
75.5
|
|
Academy Project
|
|
Hollywood
|
|
2017
|
|
545,000
|
|
390
|
|
|
77.3
|
|
||
One Paseo - Phases II and III
|
|
Del Mar
|
|
TBD
|
|
640,000
|
|
440
|
|
|
137.3
|
|
||
Total Near-Term Development Pipeline
|
|
|
|
|
|
1,885,000
|
|
$
|
1,215
|
|
|
$
|
290.1
|
|
(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.
|
(3)
|
Represents cash paid and costs incurred as of
March 31, 2017
.
|
(4)
|
Consists of four adjacent parcels in the South Lake Union submarket of Seattle.
|
|
1st & 2nd Generation
(2)
|
|
2nd Generation
(2)
|
||||||||||||||||||||||||
|
Number of Leases
(3)
|
|
Rentable Square Feet
(3)
|
|
TI/LC per
Sq. Ft.
(4)
|
|
Changes in
Rents
(5)(6)
|
|
Changes in
Cash Rents
(7)
|
|
Retention Rates
(8)
|
|
Weighted Average Lease Term (in months)
|
||||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|||||||||||||||||||
Three Months Ended
March 31, 2017
|
17
|
|
|
21
|
|
|
128,816
|
|
|
386,980
|
|
|
$
|
23.41
|
|
|
30.6
|
%
|
|
19.7
|
%
|
|
54.0
|
%
|
|
46
|
|
|
1st & 2nd Generation
(2)
|
|
2nd Generation
(2)
|
|||||||||||||||||||||
|
Number of Leases
(3)
|
|
Rentable Square Feet
(3)
|
|
TI/LC per Sq. Ft.
(4)
|
|
Changes in
Rents
(5)(6)
|
|
Changes in
Cash Rents
(7)
|
|
Weighted Average Lease Term
(in months)
|
|||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|
|
||||||||||||||
Three Months Ended
March 31, 2017 |
21
|
|
|
21
|
|
|
256,502
|
|
|
386,980
|
|
|
$
|
38.90
|
|
|
28.9
|
%
|
|
15.2
|
%
|
|
57
|
|
(1)
|
Includes 100% of consolidated property partnerships.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
Tenant improvements and leasing commissions per square foot exclude tenant-funded tenant improvements.
|
(5)
|
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.
|
(6)
|
Excludes commenced and executed leases of approximately 44,661 and 30,854 square feet, respectively, for the
three
months ended
March 31, 2017
, 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.
|
(7)
|
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.
|
(8)
|
Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
|
(9)
|
For the
three
months ended
March 31, 2017
,
16
leases totaling
236,716
rentable square feet were signed but not commenced as of
March 31, 2017
.
|
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 2017
|
|
75
|
|
|
757,355
|
|
|
5.7
|
%
|
|
$
|
29,381
|
|
|
5.3
|
%
|
|
$
|
38.79
|
|
2018
|
|
83
|
|
|
1,240,669
|
|
|
9.3
|
%
|
|
52,258
|
|
|
9.2
|
%
|
|
42.12
|
|
||
2019
|
|
105
|
|
|
1,684,218
|
|
|
12.7
|
%
|
|
61,233
|
|
|
10.9
|
%
|
|
36.36
|
|
||
2020
|
|
110
|
|
|
2,061,335
|
|
|
15.5
|
%
|
|
78,858
|
|
|
14.0
|
%
|
|
38.26
|
|
||
2021
|
|
85
|
|
|
1,107,331
|
|
|
8.3
|
%
|
|
47,360
|
|
|
8.4
|
%
|
|
42.77
|
|
||
2022
|
|
48
|
|
|
558,528
|
|
|
4.2
|
%
|
|
21,740
|
|
|
3.8
|
%
|
|
38.92
|
|
||
Total
|
|
506
|
|
|
7,409,436
|
|
|
55.7
|
%
|
|
$
|
290,830
|
|
|
51.6
|
%
|
|
$
|
39.25
|
|
(1)
|
For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of
March 31, 2017
, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of
March 31, 2017
.
|
(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
(1)
|
|
Development projects under construction
(2)
|
3
|
|
1,150,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
(2)
|
Development projects under construction also include
96,000
square feet of retail space and
237
residential units in addition to the estimated office rentable square feet noted above.
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
||
Total as of March 31, 2016
|
103
|
|
|
13,671,730
|
|
Acquisitions
|
7
|
|
|
458,459
|
|
Completed development properties placed in-service
|
4
|
|
|
438,391
|
|
Dispositions
|
(3
|
)
|
|
(204,903
|
)
|
Remeasurement
|
—
|
|
|
31,129
|
|
Total as of March 31, 2017
(1)
|
111
|
|
|
14,394,806
|
|
(1)
|
Includes
four
properties owned by consolidated property partnerships.
|
Region
|
|
Number of
Buildings |
|
Rentable Square Feet
|
|
Occupancy at
(1)
|
|||||||||
|
3/31/2017
|
|
12/31/2016
|
|
9/30/2016
|
||||||||||
Los Angeles and Ventura Counties
|
|
36
|
|
|
4,181,047
|
|
|
91.5
|
%
|
|
95.0
|
%
|
|
94.8
|
%
|
Orange County
|
|
1
|
|
|
271,556
|
|
|
95.5
|
%
|
|
97.8
|
%
|
|
97.8
|
%
|
San Diego
|
|
31
|
|
|
2,718,541
|
|
|
92.8
|
%
|
|
93.2
|
%
|
|
94.5
|
%
|
San Francisco Bay Area
|
|
31
|
|
|
5,157,524
|
|
|
95.5
|
%
|
|
97.6
|
%
|
|
98.3
|
%
|
Greater Seattle
|
|
12
|
|
|
2,066,138
|
|
|
97.2
|
%
|
|
97.2
|
%
|
|
98.2
|
%
|
Total Stabilized Portfolio
|
|
111
|
|
|
14,394,806
|
|
|
94.1
|
%
|
|
96.0
|
%
|
|
96.6
|
%
|
-
|
Average Occupancy
|
||||
|
Three Months Ended March 31,
|
||||
|
2017
|
|
2016
|
||
Stabilized Portfolio
(1)
|
94.3
|
%
|
|
94.7
|
%
|
Same Store Portfolio
(2)
|
95.0
|
%
|
|
95.7
|
%
|
(1)
|
Occupancy percentages reported are based on our stabilized office portfolio as of the end of the period presented and excludes occupancy percentages of properties held for sale.
|
(2)
|
Occupancy percentages reported are based on office properties owned and stabilized as of January 1,
2016
and still owned and stabilized as of
March 31, 2017
. See discussion under “Results of Operations” for additional information.
|
Tenant Name
|
|
Annualized Base Rental Revenue
(1)
($ in thousands)
|
|
Rentable
Square Feet
|
|
Percentage of Total Annualized Base Rental Revenue
|
|
Percentage of
Total Rentable
Square Feet
|
||||||
LinkedIn Corporation
|
|
$
|
28,344
|
|
|
663,239
|
|
|
5.0
|
%
|
|
4.6
|
%
|
|
salesforce.com, inc.
(2)
|
|
24,183
|
|
|
468,445
|
|
|
4.3
|
%
|
|
3.3
|
%
|
||
DIRECTV, LLC
|
|
22,467
|
|
|
667,852
|
|
|
4.0
|
%
|
|
4.6
|
%
|
||
Box, Inc.
|
|
22,441
|
|
|
371,792
|
|
|
4.0
|
%
|
|
2.6
|
%
|
||
Synopsys, Inc.
|
|
15,492
|
|
|
340,913
|
|
|
2.8
|
%
|
|
2.4
|
%
|
||
Dropbox, Inc.
|
|
14,827
|
|
|
182,054
|
|
|
2.6
|
%
|
|
1.3
|
%
|
||
Bridgepoint Education, Inc.
|
|
14,064
|
|
|
296,708
|
|
|
2.5
|
%
|
|
2.1
|
%
|
||
Viacom International, Inc.
|
|
13,718
|
|
|
211,307
|
|
|
2.4
|
%
|
|
1.5
|
%
|
||
Delta Dental of California
|
|
10,313
|
|
|
188,143
|
|
|
1.8
|
%
|
|
1.3
|
%
|
||
AMN Healthcare, Inc.
|
|
9,001
|
|
|
176,075
|
|
|
1.6
|
%
|
|
1.2
|
%
|
||
Concur Technologies
|
|
8,852
|
|
|
243,429
|
|
|
1.6
|
%
|
|
1.7
|
%
|
||
Biotech/Healthcare Industry Tenant
|
|
8,461
|
|
|
128,688
|
|
|
1.5
|
%
|
|
0.9
|
%
|
||
Riot Games, Inc.
|
|
7,355
|
|
|
131,537
|
|
|
1.3
|
%
|
|
0.9
|
%
|
||
Adobe Systems, Inc.
|
|
6,596
|
|
|
204,757
|
|
|
1.2
|
%
|
|
1.4
|
%
|
||
Group Health Cooperative
|
|
6,372
|
|
|
183,422
|
|
|
1.1
|
%
|
|
1.3
|
%
|
||
Total Top Fifteen Tenants
|
|
$
|
212,486
|
|
|
4,458,361
|
|
|
37.7
|
%
|
|
31.1
|
%
|
(1)
|
Includes 100% of annualized base rental revenues of consolidated property partnerships.
|
(2)
|
The Company has entered into leases with various affiliates of the tenant
.
|
•
|
Same Store Properties – includes the consolidated 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,
2016
and still owned and included in the stabilized portfolio as of
March 31, 2017
;
|
•
|
Stabilized Development Properties – includes the results generated by the following:
|
◦
|
One office development project that was added to the stabilized portfolio in the first quarter of 2017;
|
◦
|
Two office development projects that were completed and stabilized in March 2016;
|
◦
|
Our residential project that was completed in June 2016; and
|
◦
|
One office development project that was added to the stabilized portfolio in the fourth quarter of 2016;
|
•
|
Acquisition Properties – includes the results, from the dates of acquisition through the periods presented, for the four office and three retail buildings we acquired in three transactions during 2016; and
|
•
|
Dispositions and Other – includes the results of the one property disposed of during the first quarter of 2017, the
six
properties disposed of in 2016 and expenses for certain of our in-process, near-term and future development projects.
|
Group
|
|
# of Buildings
|
|
Rentable
Square Feet
|
||
Same Store Properties
|
|
98
|
|
|
12,857,014
|
|
Stabilized Development Properties
|
|
6
|
|
|
1,079,333
|
|
Acquisition Properties
|
|
7
|
|
|
458,459
|
|
Total Stabilized Office Portfolio
|
|
111
|
|
|
14,394,806
|
|
|
Three Months Ended March 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2017
|
|
2016
|
|
||||||||||
|
($ in thousands)
|
|||||||||||||
Reconciliation of Net Income Available to Common Stockholders to Net Operating Income, as defined:
|
|
|
|
|
|
|
|
|
||||||
Net Income Available to Common Stockholders
|
$
|
26,329
|
|
|
$
|
170,995
|
|
|
$
|
(144,666
|
)
|
|
(84.6
|
)%
|
Preferred dividends
|
3,351
|
|
|
3,313
|
|
|
38
|
|
|
1.1
|
|
|||
Original issuance costs of redeemed preferred stock and preferred units
|
3,845
|
|
|
—
|
|
|
3,845
|
|
|
100.0
|
|
|||
Net income attributable to Kilroy Realty Corporation
|
$
|
33,525
|
|
|
$
|
174,308
|
|
|
$
|
(140,783
|
)
|
|
(80.8
|
)%
|
Net income attributable to noncontrolling common units of the Operating Partnership
|
623
|
|
|
3,610
|
|
|
(2,987
|
)
|
|
(82.7
|
)
|
|||
Net income attributable to noncontrolling interests in consolidated property partnerships
|
3,133
|
|
|
195
|
|
|
2,938
|
|
|
1,506.7
|
|
|||
Net income
|
$
|
37,281
|
|
|
$
|
178,113
|
|
|
$
|
(140,832
|
)
|
|
(79.1
|
)%
|
Unallocated expense (income):
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
14,933
|
|
|
13,437
|
|
|
1,496
|
|
|
11.1
|
|
|||
Acquisition-related expenses
|
—
|
|
|
62
|
|
|
(62
|
)
|
|
(100.0
|
)
|
|||
Depreciation and amortization
|
60,919
|
|
|
50,440
|
|
|
10,479
|
|
|
20.8
|
|
|||
Interest income and other net investment gains
|
(1,065
|
)
|
|
(271
|
)
|
|
(794
|
)
|
|
293.0
|
|
|||
Interest expense
|
17,352
|
|
|
11,829
|
|
|
5,523
|
|
|
46.7
|
|
|||
Gains on sales of depreciable operating properties
|
(2,257
|
)
|
|
(145,990
|
)
|
|
143,733
|
|
|
(98.5
|
)
|
|||
Net Operating Income, as defined
|
$
|
127,163
|
|
|
$
|
107,620
|
|
|
$
|
19,543
|
|
|
18.2
|
%
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized
Develop-ment |
|
Acquisi-tion Properties
|
|
Disposi-tions & Other
|
|
Total
|
|
Same Store
|
|
Stabilized
Develop-ment |
|
Acquisi-tion Property
|
|
Disposi-tions & Other
|
|
Total
|
||||||||||||||||||||
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Rental income
|
$
|
132,605
|
|
|
$
|
16,736
|
|
|
$
|
7,307
|
|
|
$
|
—
|
|
|
$
|
156,648
|
|
|
$
|
131,136
|
|
|
$
|
1,310
|
|
|
$
|
—
|
|
|
$
|
1,309
|
|
|
$
|
133,755
|
|
Tenant reimbursements
|
14,283
|
|
|
2,713
|
|
|
2,300
|
|
|
—
|
|
|
19,296
|
|
|
10,427
|
|
|
757
|
|
|
—
|
|
|
220
|
|
|
11,404
|
|
||||||||||
Other property income
|
3,048
|
|
|
113
|
|
|
203
|
|
|
—
|
|
|
3,364
|
|
|
285
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
287
|
|
||||||||||
Total
|
149,936
|
|
|
19,562
|
|
|
9,810
|
|
|
—
|
|
|
179,308
|
|
|
141,848
|
|
|
2,067
|
|
|
—
|
|
|
1,531
|
|
|
145,446
|
|
||||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Property expenses
|
26,247
|
|
|
3,809
|
|
|
1,121
|
|
|
64
|
|
|
31,241
|
|
|
24,603
|
|
|
747
|
|
|
—
|
|
|
615
|
|
|
25,965
|
|
||||||||||
Real estate taxes
|
12,820
|
|
|
2,952
|
|
|
2,040
|
|
|
152
|
|
|
17,964
|
|
|
10,465
|
|
|
204
|
|
|
—
|
|
|
363
|
|
|
11,032
|
|
||||||||||
Provision for bad debts
|
939
|
|
|
—
|
|
|
359
|
|
|
—
|
|
|
1,298
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||||
Ground leases
|
1,043
|
|
|
—
|
|
|
599
|
|
|
—
|
|
|
1,642
|
|
|
829
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
829
|
|
||||||||||
Total
|
41,049
|
|
|
6,761
|
|
|
4,119
|
|
|
216
|
|
|
52,145
|
|
|
35,897
|
|
|
951
|
|
|
—
|
|
|
978
|
|
|
37,826
|
|
||||||||||
Net Operating Income,
as defined
|
$
|
108,887
|
|
|
$
|
12,801
|
|
|
$
|
5,691
|
|
|
$
|
(216
|
)
|
|
$
|
127,163
|
|
|
$
|
105,951
|
|
|
$
|
1,116
|
|
|
$
|
—
|
|
|
$
|
553
|
|
|
$
|
107,620
|
|
|
Three Months Ended March 31, 2017 as compared to the Three Months Ended March 31, 2016
|
|||||||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized Development
|
|
Acquisition Properties
|
|
Dispositions & Other
|
|
Total
|
|||||||||||||||||||||||||
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|
Dollar Change
|
|
Percent Change
|
|||||||||||||||
|
($ in thousands)
|
|||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Rental income
|
$
|
1,469
|
|
|
1.1
|
%
|
|
$
|
15,426
|
|
|
1,177.6
|
%
|
|
$
|
7,307
|
|
|
100.0
|
%
|
|
$
|
(1,309
|
)
|
|
(100.0
|
)%
|
|
$
|
22,893
|
|
|
17.1
|
%
|
Tenant reimbursements
|
3,856
|
|
|
37.0
|
|
|
1,956
|
|
|
258.4
|
|
|
2,300
|
|
|
100.0
|
|
|
(220
|
)
|
|
(100.0
|
)
|
|
7,892
|
|
|
69.2
|
|
|||||
Other property income
|
2,763
|
|
|
969.5
|
|
|
113
|
|
|
100.0
|
|
|
203
|
|
|
100.0
|
|
|
(2
|
)
|
|
(100.0
|
)
|
|
3,077
|
|
|
1,072.1
|
|
|||||
Total
|
8,088
|
|
|
5.7
|
|
|
17,495
|
|
|
846.4
|
|
|
9,810
|
|
|
100.0
|
|
|
(1,531
|
)
|
|
(100.0
|
)
|
|
33,862
|
|
|
23.3
|
|
|||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Property expenses
|
1,644
|
|
|
6.7
|
|
|
3,062
|
|
|
409.9
|
|
|
1,121
|
|
|
100.0
|
|
|
(551
|
)
|
|
(89.6
|
)
|
|
5,276
|
|
|
20.3
|
|
|||||
Real estate taxes
|
2,355
|
|
|
22.5
|
|
|
2,748
|
|
|
1,347.1
|
|
|
2,040
|
|
|
100.0
|
|
|
(211
|
)
|
|
(58.1
|
)
|
|
6,932
|
|
|
62.8
|
|
|||||
Provision for bad debts
|
939
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
359
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
1,298
|
|
|
—
|
|
|||||
Ground leases
|
214
|
|
|
25.8
|
|
|
—
|
|
|
—
|
|
|
599
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
813
|
|
|
98.1
|
|
|||||
Total
|
5,152
|
|
|
14.4
|
|
|
5,810
|
|
|
610.9
|
|
|
4,119
|
|
|
100.0
|
|
|
(762
|
)
|
|
(77.9
|
)
|
|
14,319
|
|
|
37.9
|
|
|||||
Net Operating Income,
as defined
|
$
|
2,936
|
|
|
2.8
|
%
|
|
$
|
11,685
|
|
|
1,047.0
|
%
|
|
$
|
5,691
|
|
|
100.0
|
%
|
|
$
|
(769
|
)
|
|
(139.1
|
)%
|
|
$
|
19,543
|
|
|
18.2
|
%
|
•
|
An increase in Net Operating Income of
$2.9 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase
in rental income of
$1.5 million
primarily due to:
|
◦
|
$3.7 million increase from new leases and renewals at higher rates across all regions; partially offset by
|
◦
|
$2.2 million decrease due to lease expirations and early terminations in the San Francisco Bay area;
|
•
|
An increase in tenant reimbursements of
$3.9 million
primarily due to the following:
|
◦
|
$1.6 million increase primarily due to lower reimbursable supplemental taxes in 2016 as a result of a change in estimate at one property;
|
◦
|
$1.3 million increase due to higher reimbursable expenses and increased occupancy at various properties across multiple regions;
|
◦
|
$1.0 million increase due to lower abated tenant reimbursements and leases with higher expenses than their 2016 base years;
|
•
|
An increase in other property income of
$2.8 million
primarily due to early termination fees in the San Francisco Bay area;
|
•
|
A partially offsetting increase in property and related expenses of
$5.2 million
primarily due to the following:
|
◦
|
$2.4 million increase in property taxes due to lower supplemental taxes and property tax refunds at two properties in 2016 and regular annual property tax increases in 2017;
|
◦
|
$1.6 million increase in property expenses due to an increase in security, parking, janitorial, engineering, and various other reimbursable expenses, including a $0.4 million increase in non-reimbursable expenses;
|
◦
|
$0.9 million increase in provision for bad debts primarily due to two tenants;
|
•
|
An increase in Net Operating Income of
$11.7 million
attributable to the Stabilized Development Properties;
|
•
|
An increase in Net Operating Income of
$5.7 million
attributable to the Acquisition Properties; partially offset by
|
•
|
A decrease in Net Operating Income of
$0.8 million
attributable to the Dispositions and Other Properties.
|
•
|
An increase of $5.5 million attributable to the Acquisition Properties;
|
•
|
An increase of $4.1 million attributable to the Stabilized Development Properties;
|
•
|
An increase of $1.3 million attributable to the Same Store Properties; and
|
•
|
A decrease of $0.4 million attributable to Dispositions & Other Properties.
|
|
Shares/Units at
March 31, 2017
|
|
Aggregate
Principal
Amount or
$ Value
Equivalent
|
|
% of Total
Market
Capitalization
|
||||
|
($ in thousands)
|
||||||||
Debt:
(1) (2)
|
|
|
|
|
|
||||
Unsecured Term Loan Facility
|
|
|
$
|
150,000
|
|
|
1.5
|
%
|
|
Unsecured Term Loan
|
|
|
39,000
|
|
|
0.4
|
%
|
||
Unsecured Senior Notes due 2018
|
|
|
325,000
|
|
|
3.3
|
%
|
||
Unsecured Senior Notes due 2020
|
|
|
250,000
|
|
|
2.5
|
%
|
||
Unsecured Senior Notes due 2023
|
|
|
300,000
|
|
|
3.0
|
%
|
||
Unsecured Senior Notes due 2025
|
|
|
400,000
|
|
|
4.0
|
%
|
||
Unsecured Senior Notes due 2029
|
|
|
400,000
|
|
|
4.0
|
%
|
||
Unsecured Senior Notes Series A & B due 2027 & 2029
|
|
|
250,000
|
|
|
2.5
|
%
|
||
Secured debt
|
|
|
467,061
|
|
|
4.8
|
%
|
||
Total debt
|
|
|
$
|
2,581,061
|
|
|
26.0
|
%
|
|
Equity and Noncontrolling Interest in the Operating Partnership:
(3)
|
|
|
|
|
|
||||
6.375% Series H Cumulative Redeemable Preferred stock
(4)
|
4,000,000
|
|
|
100,000
|
|
|
1.0
|
%
|
|
Common limited partnership units outstanding
(5)(6)
|
2,077,193
|
|
|
149,724
|
|
|
1.5
|
%
|
|
Common shares outstanding
(6)
|
98,275,048
|
|
|
7,083,665
|
|
|
71.5
|
%
|
|
Total equity and noncontrolling interest in the Operating Partnership
|
|
|
7,333,389
|
|
|
74.0
|
%
|
||
Total Market Capitalization
|
|
|
$
|
9,914,450
|
|
|
100.0
|
%
|
(1)
|
There was no outstanding balance on the unsecured line of credit as of
March 31, 2017
.
|
(2)
|
Represents gross aggregate principal amount due at maturity before the effect of the following at
March 31, 2017
:
$12.6 million
of unamortized deferred financing costs,
$6.4 million
of unamortized discounts for the unsecured senior notes and
$3.9 million
of unamortized premiums for the secured debt.
|
(3)
|
Includes common units of the Operating Partnership; does not include noncontrolling interests in consolidated property partnerships.
|
(4)
|
Value based on $25.00 per share liquidation preference.
|
(5)
|
Represents common units not owned by the Company.
|
(6)
|
Value based on closing price per share of our common stock of
$72.08
as of
March 31, 2017
.
|
•
|
Net cash flow from operations;
|
•
|
Borrowings under the Operating Partnership’s unsecured revolving credit facility, term loan facility, and unsecured senior notes;
|
•
|
Proceeds from our capital recycling program, including the disposition of nonstrategic assets and the formation of strategic ventures;
|
•
|
Proceeds from additional secured or unsecured debt financings; and
|
•
|
Proceeds from public or private issuance of debt or equity securities.
|
•
|
Development and redevelopment costs;
|
•
|
Operating 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 and redemptions of outstanding common or preferred stock of the Company; and
|
•
|
Outstanding debt repurchases, redemptions and repayments.
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
—
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
600,000
|
|
|
600,000
|
|
||
Total borrowing capacity
(1)
|
$
|
600,000
|
|
|
$
|
600,000
|
|
Interest rate
(2)
|
2.03
|
%
|
|
1.82
|
%
|
||
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)
|
The interest rate on our unsecured revolving credit facility is based on an annual rate of LIBOR plus
1.050%
.
|
(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, 2017
and
December 31, 2016
,
$3.0 million
and
$3.3 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
(1)
|
||
|
(in thousands)
|
||
Unsecured Term Loan Facility
|
$
|
150,000
|
|
Unsecured Term Loan
|
39,000
|
|
|
Unsecured Senior Notes due 2018
|
325,000
|
|
|
Unsecured Senior Notes due 2020
|
250,000
|
|
|
Unsecured Senior Notes due 2023
|
300,000
|
|
|
Unsecured Senior Notes due 2025
|
400,000
|
|
|
Unsecured Senior Notes due 2029
|
400,000
|
|
|
Unsecured Senior Notes Series A & B due 2027 & 2029
|
250,000
|
|
|
Secured Debt
|
467,061
|
|
|
Total Unsecured and Secured Debt
|
$
|
2,581,061
|
|
Less: Unamortized Net Discounts and Deferred Financing Costs
|
(15,035
|
)
|
|
Total Debt, Net
|
$
|
2,566,026
|
|
(1)
|
There was no outstanding balance on the unsecured line of credit as of
March 31, 2017
.
|
•
|
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, 2017
|
Total debt to total asset value
|
|
less than 60%
|
|
27%
|
Fixed charge coverage ratio
|
|
greater than 1.5x
|
|
3.2x
|
Unsecured debt ratio
|
|
greater than 1.67x
|
|
3.45x
|
Unencumbered asset pool debt service coverage
|
|
greater than 1.75x
|
|
4.27x
|
|
|
|
|
|
Unsecured Senior Notes due 2018, 2020, 2023, 2025 and 2029
(as defined in the applicable Indentures):
(1)
|
|
|
|
|
Total debt to total asset value
|
|
less than 60%
|
|
33%
|
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%
|
|
316%
|
(1)
|
Excludes the Unsecured Senior Notes Series A & B due 2027 & 2029 offered through a private placement.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
($ in thousands)
|
|
|
|||||||||||
Net cash provided by operating activities
|
$
|
96,375
|
|
|
$
|
78,204
|
|
|
$
|
18,171
|
|
|
23.2
|
%
|
Net cash (used in) provided by investing activities
|
(86,388
|
)
|
|
134,171
|
|
|
(220,559
|
)
|
|
(164.4
|
)%
|
|||
Net cash provided by financing activities
|
225,474
|
|
|
30,666
|
|
|
194,808
|
|
|
635.3
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(in thousands)
|
||||||
Net income available to common stockholders
|
$
|
26,329
|
|
|
$
|
170,995
|
|
Adjustments:
|
|
|
|
||||
Net income attributable to noncontrolling common units of Operating Partnership
|
623
|
|
|
3,610
|
|
||
Net income attributable to noncontrolling interests in consolidated property partnerships
|
3,133
|
|
|
195
|
|
||
Depreciation and amortization of real estate assets
|
59,734
|
|
|
49,664
|
|
||
Gains on sales of depreciable real estate
|
(2,257
|
)
|
|
(145,990
|
)
|
||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships
|
(5,628
|
)
|
|
(281
|
)
|
||
Funds From Operations
(1)(2)
|
$
|
81,934
|
|
|
$
|
78,193
|
|
(1)
|
Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders.
|
(2)
|
FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of
$3.7 million
and
$2.9 million
for the
three
months ended
March 31, 2017
and
2016
, 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
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) that May Yet be Purchased Under the Plans or Programs
|
|
|||||
January 1, 2017 - January 31, 2017
|
|
55,410
|
|
|
$
|
73.81
|
|
|
—
|
|
|
—
|
|
|
February 1, 2017 - February 28, 2017
|
|
70,346
|
|
|
73.32
|
|
|
—
|
|
|
—
|
|
|
|
March 1, 2017 - March 31, 2017
|
|
1,103
|
|
|
71.00
|
|
|
—
|
|
|
—
|
|
|
|
Total
|
|
126,859
|
|
|
$
|
73.51
|
|
|
—
|
|
|
—
|
|
|
(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.
|
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
|
|
Fifth 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 1, 2017)
|
|
|
|
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*
|
|
General Partner Guaranty Agreement, dated February 17, 2017
|
|
|
|
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.
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32.4*
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Section 1350 Certification of Chief Financial Officer of Kilroy Realty, L.P.
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101.1
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The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended March 31, 2017, 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)
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*
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Filed herewith
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†
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Management contract or compensatory plan or arrangement.
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(1)
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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.
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KILROY REALTY CORPORATION
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By:
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/s/ John Kilroy
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John Kilroy
President and Chief Executive Officer
(Principal Executive Officer)
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By:
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/s/ Tyler H. Rose
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Tyler H. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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By:
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/s/ Heidi R. Roth
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Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
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KILROY REALTY, L.P.
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BY:
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KILROY REALTY CORPORATION
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Its general partner
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By:
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/s/ John Kilroy
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John Kilroy
President and Chief Executive Officer
(Principal Executive Officer)
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By:
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/s/ Tyler H. Rose
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Tyler H. Rose
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
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By:
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/s/ Heidi R. Roth
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Heidi R. Roth
Executive Vice President, Chief Accounting Officer and Controller
(Principal Accounting Officer)
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SECTION
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HEADING
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PAGE
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Section 1.
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Guaranty
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1
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Section 2.
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Obligations Absolute
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2
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Section 3.
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Waiver
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3
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Section 4.
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Obligations Unimpaired
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3
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Section 5.
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Subrogation and Subordination
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4
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Section 6.
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Reinstatement of Guaranty
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5
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Section 7.
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Rank of Guaranty
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5
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Section 8.
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Additional Covenants of the Guaranty
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5
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Section 9.
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Representations and Warranties of the Guarantor
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5
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Section 9.1.
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Organization; Power and Authority
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5
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Section 9.2.
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Authorization, Etc
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6
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Section 9.3.
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[Reserved]
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6
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Section 9.4.
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Compliance with laws; Other Instruments, Etc
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6
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Section 9.5
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Governmental Authorizations, Etc
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6
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Section 9.6.
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Information Regarding the Company
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6
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Section 9.7.
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Solvency
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7
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Section 10.
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[Reserved]
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7
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Section 11.
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Term of Guaranty
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7
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Section 12.
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Survival of Representation and Warranties; Entire Agreement
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7
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Section 13.
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Amendment and Waiver
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7
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Section 13.1
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Requirements
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7
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Section 13.2
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Solicitation of Holders of Notes
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7
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Section 13.3
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Binding Effect
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8
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Section 13.4
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Notes held by Company, Etc
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8
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Section 14.
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Notices
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8
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Section 15.
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Miscellaneous
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9
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Section 15.1
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Successors and Assigns
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9
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Section 15.2
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Severability
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9
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Section 15.3
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Construction
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9
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Section 15.4
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Further Assurances
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9
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Section 15.5
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Governing Law
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9
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Section 15.6
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Jurisdiction and Process; Waiver of Jury Trial
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9
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Section 15.7
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[Reserved]
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10
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Section 15.8
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Reproduction of Documents; Execution
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10
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SECTION 1.
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GUARANTY
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SECTION 2.
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OBLIGATIONS ABSOLUTE
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SECTION 3.
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WAIVER
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SECTION 4.
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OBLIGATIONS UNIMPAIRED
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SECTION 5.
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SUBROGATION AND SUBORDINATION
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SECTION 6.
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REINSTATEMENT OF GUARANTY
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SECTION 7.
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RANK OF GUARANTY
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SECTION 8.
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ADDITIONAL COVENANTS OF THE GUARANTORS
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SECTION 9.
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REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR
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SECTION 10.
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[RESERVED]
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SECTION 11.
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TERM OF GUARANTY AGREEMENT
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SECTION 12.
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SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
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SECTION 13.
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AMENDMENT AND WAIVER
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SECTION 14.
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NOTICES
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SECTION 15.
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MISCELLANEOUS
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Kilroy Realty Corporation,
a Maryland corporation
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By:
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/s/ Tyler H. Rose
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Name: Tyler H. Rose
Title: Executive Vice President
Chief Financial Officer |
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By:
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/s/ Michelle Ngo
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Name: Michelle Ngo
Title: Senior Vice President
and Treasurer |
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1.
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I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;
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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:
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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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1.
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I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation;
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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:
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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/ 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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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:
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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:
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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/ 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, 2017
(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, 2017
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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, 2017
(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/ 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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Date:
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April 28, 2017
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(i)
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the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended
March 31, 2017
(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 Operating Partnership.
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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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Date:
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April 28, 2017
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(i)
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the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended
March 31, 2017
(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 Operating Partnership.
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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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Date:
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April 28, 2017
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