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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Kilroy Realty Corporation
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Maryland
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95-4598246
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Kilroy Realty, L.P.
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Delaware
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95-4612685
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064
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(Address of principal executive offices) (Zip Code)
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Registrant’s telephone number, including area code: (310) 481-8400
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Securities registered pursuant to Section 12(b) of the Act:
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Registrant
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Title of each class
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Name of each exchange on which registered
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Kilroy Realty Corporation
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Common Stock, $.01 par value
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New York Stock Exchange
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Registrant
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Title of each class
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Kilroy Realty, L.P.
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Common Units Representing Limited Partnership Interests
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Kilroy Realty Corporation
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x
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
(Do not check if a smaller reporting company
)
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o
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Smaller reporting company
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o
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Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Kilroy Realty, L.P.
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o
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Large accelerated filer
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o
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Accelerated filer
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x
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Non-accelerated filer
(Do not check if a smaller reporting company)
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o
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Smaller reporting company
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o
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Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
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•
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Combined reports better reflect how management and the analyst community view the business as a single operating unit;
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Combined reports enhance investors’ understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management;
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Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and
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Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review.
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Item 6. Selected Financial Data – Kilroy Realty Corporation;
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Item 6. Selected Financial Data – Kilroy Realty, L.P.;
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations:
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◦
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—Liquidity and Capital Resources of the Company; and
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—Liquidity and Capital Resources of the Operating Partnership;
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•
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consolidated financial statements;
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the following notes to the consolidated financial statements:
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◦
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Note 8, Secured and Unsecured Debt of the Company;
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Note 9, Secured and Unsecured Debt of the Operating Partnership;
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Note 11, Noncontrolling Interests on the Company’s Consolidated Financial Statements;
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Note 12, Noncontrolling Interests on the Operating Partnership’s Consolidated Financial Statements;
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Note 13, Stockholders’ Equity of the Company;
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◦
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Note 14, Partners’ Capital of the Operating Partnership;
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◦
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Note 21, Net Income Available to Common Stockholders Per Share of the Company;
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Note 22, Net Income Available to Common Unitholders Per Unit of the Operating Partnership;
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◦
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Note 23, Supplemental Cash Flow Information of the Company;
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◦
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Note 24, Supplemental Cash Flow Information of the Operating Partnership;
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◦
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Note 26, Quarterly Financial Information of the Company (Unaudited); and
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Note 27, Quarterly Financial Information of the Operating Partnership (Unaudited).
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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ITEM 1.
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BUSINESS
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Number of
Buildings
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Rentable
Square Feet
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Number of
Tenants
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Percentage
Occupied
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Percentage Leased
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Stabilized Office Properties
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94
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13,232,580
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482
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94.4
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%
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96.6
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%
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Number of
Buildings |
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Number of Units
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2018 Average Occupancy
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Stabilized Residential Property
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1
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200
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79.7
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%
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Number of
Properties/Projects
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Estimated Rentable
Square Feet
(1)
(unaudited)
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In-process development projects - tenant improvement
(2)
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2
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1,150,000
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In-process development projects - under construction
(3)
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3
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1,290,000
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(1)
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Estimated rentable square feet upon completion.
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(2)
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Includes
88,000
square feet of Production, Distribution, and Repair (“PDR”) space.
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(3)
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In addition to the estimated office and PDR rentable square feet noted above, development projects under construction also include
96,000
square feet of retail space and
801
residential units.
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•
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Corporate Governance Guidelines;
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Code of Business Conduct and Ethics;
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Audit Committee Charter;
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Executive Compensation Committee Charter;
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Nominating / Corporate Governance Committee Charter; and
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Corporate Social Responsibility and Sustainability Committee Charter.
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the quality, geographic location, physical characteristics and operating sustainability of our properties;
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our ability to efficiently manage our assets as a low cost provider of commercial real estate through our seasoned management team possessing core capabilities in all aspects of real estate ownership, including property management, leasing, marketing, financing, accounting, legal, and construction and development management;
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our access to development, redevelopment, acquisition and leasing opportunities as a result of our extensive experience and significant working relationships with major West Coast property owners, corporate tenants, municipalities and landowners given our over 70-year presence in the West Coast markets;
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our active development program and our future development pipeline of undeveloped land sites (see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Factors That May Influence Future Results of Operations” for additional information pertaining to the Company’s in-process and future development pipeline);
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our capital recycling program (see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Liquidity and Capital Resources of the Operating Partnership” for additional information pertaining to the Company’s capital recycling program and related property and land dispositions);
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our ability to capitalize on inflection points in a real estate cycle to add quality assets to our portfolio at substantial discounts to long-term value, through either acquisition, development or redevelopment; and
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our strong financial position that has and will continue to allow us to pursue attractive acquisition and development and redevelopment opportunities.
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maximizing cash flow from our properties through active leasing, early renewals and effective property management;
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structuring leases to maximize returns;
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managing portfolio credit risk through effective underwriting, including the use of credit enhancements and interests in collateral to mitigate portfolio credit risk;
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managing operating expenses through the efficient use of internal property management, leasing, marketing, financing, accounting, legal, and construction and development management functions;
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maintaining and developing long-term relationships with a diverse tenant base;
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continuing to effectively manage capital improvements to enhance our properties’ competitive advantages in their respective markets and improve the efficiency of building systems;
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continuing to expand our management team with individuals who have extensive regional and product-type experience and are highly knowledgeable in their respective markets and product types; and
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attracting and retaining motivated employees by providing financial and other incentives to meet our operating and financial goals.
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own land sites in highly populated, amenity rich locations that are attractive to a broad array of tenants;
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be the premier provider of modern and collaborative office and mixed-use projects on the West Coast with a focus on design and environment;
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maintain a disciplined approach by commencing development when appropriate based on market conditions, focusing on pre-leasing, developing in stages or phasing, and cost control;
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reinvest capital from dispositions of selective assets into new state-of-the-art development and acquisition opportunities with higher cash flow and rates of return;
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execute on our development projects under construction and future development pipeline, including expanding entitlements; and
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evaluate redevelopment opportunities in supply-constrained markets because such efforts generally achieve similar returns to new development with reduced entitlement risk and shorter construction periods.
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provide attractive yields and significant potential for growth in cash flow from property operations;
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present growth opportunities in our existing or other strategic markets; and
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demonstrate the potential for improved performance through intensive management, repositioning, capital investment and leasing that should result in increased occupancy and rental revenues.
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maintaining financial flexibility, including a low secured to unsecured debt ratio;
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maximizing our ability to access a variety of both public and private capital sources;
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maintaining a staggered debt maturity schedule in which the maturity dates of our debt are spread over several years to limit risk exposure at any particular point in the capital and credit market cycles;
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completing financing in advance of the need for capital;
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managing interest rate exposure by generally maintaining a greater amount of fixed-rate debt as compared to variable-rate debt; and
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maintaining our credit ratings.
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managing our properties to offer the maximum degree of utility and operational efficiency to our tenants. We offer tenant sustainability programs focused on helping our tenants reduce their energy and water consumption and increase their recycling diversion rates. Many of our assets are in zones that have been impacted by drought and, as such, face the risk of increased water costs and fines for high consumption. We endeavor to mitigate these risks through comprehensive, proactive water reduction efforts throughout our portfolio, including domestic fixture upgrades, cooling tower optimizations, a comprehensive leak detection program and irrigation systems retrofits. We also incorporate green lease language into 100% of our new leases, including a cost recovery clause for resource-efficiency related capital expenditures in full-service gross leases, which seek to align tenant and landlord interests on energy, water and waste efficiency. Green leases (also known as aligned leases, high performance leases or energy efficient leases) aim to align the financial and energy incentives of building owners and tenants so they can work together to save money, conserve resources
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Year
(1)
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Energy Consumption Data Coverage as % of Total Floor Area
(2)
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Total Energy Consumed by Floor Area with Data Coverage (MWh)
(3)
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% of Energy Generated From Renewable Sources
(4)
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Like-for-Like Change in Energy Consumption of Floor Area with Data Coverage
(5)
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% of Eligible Portfolio that has Obtained an Energy Rating and is Certified to ENERGY STAR
(6)
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2017
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96
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%
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382,688
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3
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%
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(1
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)%
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73
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%
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2016
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97
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%
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381,295
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3
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%
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(2
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)%
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68
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%
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2015
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92
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%
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254,518
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3
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%
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(5
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)%
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65
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%
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Year
(1)
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Water Withdrawal Data Coverage as a % of Total Floor Area
(7)
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Total Water Withdrawn by Portfolio (m3)
(8)
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Like-for-like Change in Water Withdrawn for Floor Area with Data Coverage
(5)
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2017
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98
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%
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898,990
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—
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%
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2016
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94
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%
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856,290
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(2
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)%
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2015
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94
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%
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908,822
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(11
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)%
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Year
(1)
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Scope 1 GHG Data Coverage as a % of Total Floor Area
(9)
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Scope 1 GHG Emissions (Tonnes CO2)
(10)
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Like-for-like Change in Scope 1 GHG Emissions Data
(5)
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2017
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100
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%
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4,641
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6
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%
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2016
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100
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%
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4,059
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N/A
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*
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Energy consumption, water consumption and GHG emissions data was assured by way of a Type 2, moderate level assurance assessment, using the AA1000AS (2008) assurance standard in connection with the assurance of the content of our sustainability report by DNV GL Business Assurance USA, Inc. GHG emissions reporting follows the World Business Council for Sustainable Development (WBSCD)/World Resources Institute (WRI) Greenhouse Gas Protocol.
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(1)
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Full 2018 calendar year energy, water and GHG emissions data is not available until after March 30, 2019.
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(2)
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Percentage based on gross square footage of portfolio floor area with complete energy consumption data coverage as of the end of the applicable year. Floor area is considered to have complete energy consumption data coverage when energy consumption data (i.e., energy types and amounts consumed) is obtained by the Company for all types of energy consumed in the relevant floor area during the fiscal year, regardless of when such data was obtained.
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(3)
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Energy includes energy purchased from sources external to the Company and its tenants or produced by the Company or its tenants themselves (self-generated) and energy from all sources, including direct fuel usage, purchased electricity, and heating, cooling and steam energy. Total energy consumption based on floor area with complete energy consumption data coverage as of the end of the applicable year.
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(4)
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Renewable sources include renewable energy the Company directly produced and renewable energy the Company purchased if purchased through a renewable power purchase agreement that explicitly includes renewable energy certificates (“RECs”) or Guarantees of Origin (“GOs”), a Green-e Energy Certified utility or supplier program or other green power products that explicitly include RECs or GOs or for which Green-e Energy Certified RECs are paired with grid electricity. Percentage is based total energy consumption during applicable year.
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(5)
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Data reported on a like-for-like comparison excludes assets that have been acquired or disposed over the past twenty-four months as of the end of the applicable year.
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(6)
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Eligible portfolio represents our office and residential properties that have had 50% or greater occupancy for 12 consecutive months at any point during the applicable year. Percentage is based on rentable square footage of our eligible portfolio that has obtained an energy rating and is certified to ENERGY STAR
®
as of the end of the applicable year.
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(7)
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Percentage based on gross square footage of portfolio floor area with complete water withdrawal data coverage as of the end of the applicable year. Floor area is considered to have complete water withdrawal data coverage when water withdrawal data (i.e., amounts withdrawn) is obtained by the Company for the relevant floor area during the fiscal year, regardless of when such data was obtained.
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(8)
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Water sources include surface water (including water from wetlands, rivers, lakes and oceans), groundwater, rainwater collected directly and stored by the Company, wastewater obtained from other entities, municipal water supplies or supply from other water utilities. Total water withdrawal based on floor area with complete water withdrawal data coverage as of the end of the applicable year.
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(9)
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Percentage based on gross square footage of portfolio floor area with complete Scope 1 GHG emissions data coverage as of the end of the applicable year. Floor area is considered to have complete Scope 1 GHG emissions data coverage when GHG emission data (i.e., amounts emitted) is obtained by the Company for the relevant floor area during the fiscal year, regardless of when such data was obtained.
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(10)
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Scope 1 emissions represent those produced by onsite natural gas consumption procured by the Company.
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(11)
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Percentage based on gross square footage of portfolio floor area with complete Scope 2 GHG emissions data coverage as of the end of the applicable year. Floor area is considered to have complete Scope 2 GHG emissions data coverage when GHG emission data is obtained by the Company for the relevant floor area during the fiscal year, regardless of when such data was obtained.
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(12)
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Scope 2 emissions represent those produced by onsite electricity consumption procured by the Company. The Scope 2 emissions were calculated using a location-based method per the GHG Protocol Scope 2 Guidance.
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building our current development projects to Leadership in Energy and Environmental Design (“LEED”) specifications. All of our office development projects are now designed to achieve LEED certification, either LEED Platinum or Gold.
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•
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actively pursuing LEED certification for approximately
1.3 million
square feet of office space under construction. In addition, an analysis of energy performance is included in our standard due diligence process for acquisitions, and reducing energy use year over year is a comprehensive goal of our operational strategy. This is accomplished through systematic energy auditing, mechanical, lighting and other building upgrades, optimizing operations and engaging tenants. During the past few years, we have significantly enhanced the sustainability profile of our portfolio, ending
2018
with 63% of our properties LEED certified and 79% of our properties ENERGY STAR certified (in each case as a percentage of our total rentable square feet as of December 31, 2018). During 2018, the Company was recognized for our sustainability efforts with multiple industry leadership awards, including NAREIT’s 2018 Office Leader in the Light Award for the fifth consecutive year, and in 2018 it won NAREIT’s Most Innovative Leader in the Light Award as well. In addition, the Company was recognized with the ENERGY STAR Partner of the Year Sustained Excellence Award for the fifth time. The Company was also recognized by GRESB as the North American sustainability leader in the listed office sector, and we continue to be listed on the Dow Jones Sustainability World Index.
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•
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identifying climate change as a risk to our business, an opportunity for long-term value creation and a key driver in long-term strategic business decisions. These risks and opportunities include policy, market, technology and reputational concerns and are a focus area for the Board and management. Climate-related risks and opportunities are governed by the Board through the Corporate Social Responsibility and Sustainability Committee (the “Committee”). In 2018, the Committee endorsed the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) and tasked management with assessing and reporting against climate related risk for the Company. Recognizing the importance of reducing the Company’s greenhouse gas impact on the environment, we have committed to achieving carbon neutral operations by December 31, 2020. This means that the entirety of our scope 1 and scope 2 emissions will be offset by this date through a combination of energy efficiency measures and both onsite and offsite renewables. This exceeds our carbon reduction goals previously validated by Science-Based Targets. Science-Based Targets is a collaboration between the Carbon Disclosure Project, the United Nations Global Compact, the World Resources Institute and the World Wide Fund for Nature, which independently assesses and approves the carbon reduction goals of companies.
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•
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the financial condition of our tenants, many of which are technology; life science and healthcare; finance, insurance and real estate; media and professional business and other service firms, may be adversely affected, which may result in tenant defaults under leases due to bankruptcy, lack of liquidity, operational failures or for other reasons;
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•
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significant job losses in the financial and professional services industries may occur, which may decrease demand for our office space, causing market rental rates and property values to be negatively impacted;
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•
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our ability to obtain financing on terms and conditions that we find acceptable, or at all, may be limited, which could reduce our ability to pursue acquisition and development opportunities and refinance existing debt, reduce our returns from our acquisition and development activities and increase our future interest expense;
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•
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reduced values of our properties may limit our ability to dispose of assets at attractive prices or to obtain debt financing secured by our properties and may reduce the availability of unsecured loans; and
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one or more lenders under the Operating Partnership’s unsecured revolving credit facility could refuse to fund their financing commitment to us or could fail and we may not be able to replace the financing commitment of any such lenders on favorable terms, or at all.
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local oversupply or reduction in demand for office, mixed-use or other commercial space, which may result in decreasing rental rates and greater concessions to tenants;
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inability to collect rent from tenants;
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vacancies or inability to rent space on favorable terms or at all;
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inability to finance property development and acquisitions on favorable terms or at all;
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increased operating costs, including insurance premiums, utilities and real estate taxes;
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costs of complying with changes in governmental regulations;
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the relative illiquidity of real estate investments;
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declines in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing;
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changing submarket demographics;
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changes in space utilization by our tenants due to technology, economic conditions and business culture;
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the development of harmful mold or other airborne toxins or contaminants that could damage our properties or expose us to third-party liabilities; and
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property damage resulting from seismic activity or other natural disasters.
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we may potentially be unable to acquire a desired property because of competition from other real estate investors with significant capital, including both publicly traded and private REITs, institutional investment funds and other real estate investors;
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even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;
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even if we enter into agreements for the acquisition of a desired property, we may be unable to complete such acquisitions because they remain subject to customary conditions to closing, including the completion of due diligence investigations to management’s satisfaction;
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we may be unable to finance acquisitions on favorable terms or at all;
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we may spend more than budgeted amounts in operating costs or to make necessary improvements or renovations to acquired properties;
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we may lease acquired properties at economic lease terms different than projected;
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we may acquire properties that are subject to liabilities for which we may have limited or no recourse; and
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•
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we may be unable to complete an acquisition after making a nonrefundable deposit and incurring certain other acquisition-related costs.
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•
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we may be unable to lease acquired, developed or redeveloped properties on lease terms projected at the time of acquisition, development or redevelopment or within budgeted timeframes;
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•
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the operating expenses at acquired, developed or redeveloped properties may be greater than projected at the time of acquisition, development or redevelopment, resulting in our investment being less profitable than we expected;
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•
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we may not commence or complete development or redevelopment properties on schedule or within budgeted amounts or at all;
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•
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we may not be able to develop or redevelop the estimated square footage and other features of our development and redevelopment properties;
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•
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we may suspend development or redevelopment projects after construction has begun due to changes in economic conditions or other factors, and this may result in the write-off of costs, payment of additional costs or increases in overall costs when the development or redevelopment project is restarted;
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•
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we may expend funds on and devote management’s time to acquisition, development or redevelopment properties that we may not complete and as a result we may lose deposits or fail to recover expenses already incurred;
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•
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we may encounter delays or refusals in obtaining all necessary zoning, land use, and other required entitlements, and building, occupancy, and other required governmental permits and authorizations;
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•
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we may encounter delays, refusals, unforeseen cost increases and other impairments resulting from third-party litigation; and
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•
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we may fail to obtain the financial results expected from properties we acquire, develop or redevelop.
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•
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we would not be able to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity, which would allow for impasses on decisions that could restrict our ability to sell or transfer our interests in such entity or such entity’s ability to transfer or sell its assets;
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•
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partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions, which could delay construction or development of a property or increase our financial commitment to the partnership or joint venture;
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•
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partners or co-venturers may pursue economic or other business interests, policies or objectives that are competitive or inconsistent with ours;
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•
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if we become a limited partner or non-managing member in any partnership or limited liability company, and such entity takes or expects to take actions that could jeopardize our status as a REIT or require us to pay tax, we may be forced to dispose of our interest in such entity;
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•
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disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business; and
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•
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we may, in certain circumstances, be liable for the actions of our third-party partners or co-venturers.
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•
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borrowers may fail to make debt service payments or pay the principal when due;
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•
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the value of the mortgaged property may be less than the principal amount of the mortgage note securing the property; and
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•
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interest rates payable on the mortgages may be lower than our cost for the funds used to acquire these mortgages.
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•
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direct obligations issued by the U.S. Treasury;
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•
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obligations issued or guaranteed by the U.S. government or its agencies;
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•
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taxable municipal securities;
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•
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obligations (including certificates of deposits) of banks and thrifts;
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•
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commercial paper and other instruments consisting of short-term U.S. dollar denominated obligations issued by corporations and banks;
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•
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repurchase agreements collateralized by corporate and asset-backed obligations;
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•
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both registered and unregistered money market funds; and
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•
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other highly rated short-term securities.
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•
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result in unauthorized access to, destruction, loss, theft, misappropriation or release of proprietary, confidential, sensitive or otherwise valuable information of ours or others, including personally identifiable and account information that could be used to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
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•
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result in unauthorized access to or changes to our financial accounting and reporting systems and related data;
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•
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result in the theft of funds;
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•
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result in our inability to maintain building systems relied on by our tenants;
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•
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require significant management attention and resources to remedy any damage that results;
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•
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subject us to regulatory penalties or claims for breach of contract, damages, credits, penalties or terminations of leases or other agreements; or
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•
|
damage our reputation among our tenants and investors.
|
•
|
actual or anticipated variations in our operating results, funds from operations, cash flows, liquidity or distributions;
|
•
|
our ability to successfully execute on our development plans;
|
•
|
our ability to successfully complete acquisitions and operate acquired properties;
|
•
|
earthquakes;
|
•
|
changes in our earnings estimates or those of analysts;
|
•
|
publication of research reports about us, the real estate industry generally or the office and residential sectors in which we operate;
|
•
|
the failure to maintain our current credit ratings or comply with our debt covenants;
|
•
|
increases in market interest rates;
|
•
|
changes in market valuations of similar companies;
|
•
|
adverse market reaction to any debt or equity securities we may issue or additional debt we incur in the future;
|
•
|
additions or departures of key management personnel;
|
•
|
actions by institutional investors;
|
•
|
speculation in the press or investment community;
|
•
|
high levels of volatility in the credit markets;
|
•
|
general market and economic conditions; and
|
•
|
the realization of any of the other risk factors included in this report.
|
•
|
the Company’s charter authorizes the board of directors to issue up to 30,000,000 shares of the Company’s preferred stock, including convertible preferred stock, without stockholder approval. The board of directors may establish the preferences, rights and other terms, including the right to vote and the right to convert into common stock any shares issued. The issuance of preferred stock could delay or prevent a tender offer or a change of control even if a tender offer or a change of control was in our security holders’ interest; and
|
•
|
the Company’s charter states that any director, or the entire board of directors, may be removed from office at any time, but only for cause and then only by the affirmative vote of the holders of at least two thirds of the votes of the Company’s capital stock entitled to be cast in the election of directors.
|
•
|
the Company would not be allowed a deduction for dividends paid to its stockholders in computing the Company’s taxable income and would be subject to federal income tax at regular corporate rates;
|
•
|
the Company could be subject to increased state and local taxes; and
|
•
|
unless entitled to relief under statutory provisions, the Company could not elect to be taxed as a REIT for four taxable years following the year during which the Company was disqualified.
|
•
|
temporarily reducing individual U.S. federal income tax rates on ordinary income; the highest individual U.S. federal income tax rate has been reduced from 39.6% to 37% for taxable years beginning after December 31, 2017 and before January 1, 2026;
|
•
|
permanently eliminating the progressive corporate tax rate structure, which previously imposed a maximum corporate tax rate of 35%, and replacing it with a flat corporate tax rate of 21%;
|
•
|
permitting a deduction for certain pass-through business income, including dividends received by our stockholders from us that are not designated by us as capital gain dividends or qualified dividend income, which will allow individuals, trusts, and estates to deduct up to 20% of such amounts for taxable years beginning after December 31, 2017 and before January 1, 2026;
|
•
|
reducing the highest rate of withholding with respect to our distributions to non-U.S. stockholders that are treated as attributable to gains from the sale or exchange of U.S. real property interests from 35% to 21%;
|
•
|
limiting our deduction for net operating losses arising in taxable years beginning after December 31, 2017 to 80% of REIT taxable income determined without regard to the dividends paid deduction;
|
•
|
generally limiting the deduction for net business interest expense in excess of 30% of a business’ “adjusted taxable income,” except for taxpayers (including most equity REITs) that engage in certain real estate businesses and elect out of this rule (provided that such electing taxpayers must use an alternative depreciation system with longer depreciation periods);
|
•
|
eliminating the corporate alternative minimum tax, for taxable years after December 31, 2017;
|
•
|
requiring us to take into account certain income no later than when we take it into account on applicable financial statements, even if the financial statements take such income into account before it accrues under otherwise applicable Code rules; and
|
•
|
repealing the performance-based compensation exception to the $1 million deduction limit on executive compensation and expanding the scope of employees to whom the limit applies.
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
|
Number of
Tenants
|
|
Percentage
Occupied
|
|
Percentage Leased
|
|||||
Stabilized Office Properties
|
94
|
|
|
13,232,580
|
|
|
482
|
|
|
94.4
|
%
|
|
96.6
|
%
|
|
Number of
Buildings |
|
Number of Units
|
|
2018 Average Occupancy
|
|||
Stabilized Residential Property
|
1
|
|
|
200
|
|
|
79.7
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
(1)
(unaudited)
|
|
In-process development projects - tenant improvement
(2)
|
2
|
|
1,150,000
|
|
In-process development projects - under construction
(3)
|
3
|
|
1,290,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
(2)
|
Includes
88,000
square feet of Production, Distribution, and Repair (“PDR”) space.
|
(3)
|
In addition to the estimated office and PDR rentable square feet noted above, development projects under construction also include
96,000
square feet of retail space and
801
residential units.
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2018
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
Greater Los Angeles
|
|
|
|
|
|
|
||||||||||||
2829 Townsgate Road,
Thousand Oaks, California |
(3)
|
1
|
|
1990
|
|
84,098
|
|
|
80.5
|
%
|
|
$
|
1,984
|
|
|
$
|
29.31
|
|
2240 E. Imperial Highway,
El Segundo, California |
(4)
|
1
|
|
1983/ 2008
|
|
122,870
|
|
|
100.0
|
%
|
|
3,950
|
|
|
32.15
|
|
||
2250 E. Imperial Highway,
El Segundo, California |
(7)
|
1
|
|
1983
|
|
298,728
|
|
|
100.0
|
%
|
|
10,206
|
|
|
34.31
|
|
||
2260 E. Imperial Highway,
El Segundo, California |
(4)
|
1
|
|
1983/ 2012
|
|
298,728
|
|
|
100.0
|
%
|
|
10,510
|
|
|
35.18
|
|
||
909 N. Pacific Coast Highway,
El Segundo, California |
(8)
|
1
|
|
1972/ 2005
|
|
244,136
|
|
|
99.5
|
%
|
|
7,658
|
|
|
31.90
|
|
||
999 N. Pacific Coast Highway,
El Segundo, California |
(9)
|
1
|
|
1962/ 2003
|
|
128,588
|
|
|
96.9
|
%
|
|
3,844
|
|
|
32.19
|
|
||
6115 W. Sunset Blvd.,
Los Angeles, California |
(10)
|
1
|
|
1938/ 2015
|
|
26,105
|
|
|
100.0
|
%
|
|
1,615
|
|
|
61.88
|
|
||
6121 W. Sunset Blvd.,
Los Angeles, California |
(5)
|
1
|
|
1938/ 2015
|
|
91,173
|
|
|
100.0
|
%
|
|
4,612
|
|
|
50.59
|
|
||
1525 N. Gower St.,
Los Angeles, California |
(4)
|
1
|
|
2016
|
|
9,610
|
|
|
100.0
|
%
|
|
652
|
|
|
67.88
|
|
||
1575 N. Gower St.,
Los Angeles, California |
(11)
|
1
|
|
2016
|
|
251,245
|
|
|
100.0
|
%
|
|
16,169
|
|
|
64.36
|
|
||
1500 N. El Centro Ave.,
Los Angeles, California |
(3)
|
1
|
|
2016
|
|
104,504
|
|
|
100.0
|
%
|
|
7,104
|
|
|
67.98
|
|
||
6255 Sunset Blvd,
Los Angeles, California |
(12)
|
1
|
|
1971/ 1999
|
|
323,920
|
|
|
97.6
|
%
|
|
13,750
|
|
|
44.82
|
|
||
3750 Kilroy Airport Way,
Long Beach, California |
(13)
|
1
|
|
1989
|
|
10,457
|
|
|
100.0
|
%
|
|
158
|
|
|
47.28
|
|
||
3760 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1989
|
|
165,278
|
|
|
94.0
|
%
|
|
4,827
|
|
|
31.57
|
|
||
3780 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1989
|
|
219,777
|
|
|
78.9
|
%
|
|
4,909
|
|
|
29.67
|
|
||
3800 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
2000
|
|
192,476
|
|
|
96.1
|
%
|
|
5,917
|
|
|
31.99
|
|
||
3840 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1999
|
|
136,026
|
|
|
100.0
|
%
|
|
4,882
|
|
|
35.89
|
|
||
3880 Kilroy Airport Way,
Long Beach, California |
(14)
|
1
|
|
1987/ 2013
|
|
96,035
|
|
|
100.0
|
%
|
|
2,839
|
|
|
29.56
|
|
||
3900 Kilroy Airport Way,
Long Beach, California |
(3)
|
1
|
|
1987
|
|
129,893
|
|
|
91.4
|
%
|
|
3,092
|
|
|
26.08
|
|
||
8560 West Sunset Blvd, West Hollywood, California
|
(3)
|
1
|
|
1963/ 2007
|
|
71,875
|
|
|
100.0
|
%
|
|
5,187
|
|
|
72.79
|
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2018
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
8570 West Sunset Blvd, West Hollywood, California
|
(15)
|
1
|
|
2002/ 2007
|
|
43,603
|
|
|
99.2
|
%
|
|
2,607
|
|
|
68.53
|
|
||
8580 West Sunset Blvd, West Hollywood, California
|
(5)
|
1
|
|
2002/ 2007
|
|
7,126
|
|
|
100.0
|
%
|
|
—
|
|
|
—
|
|
||
8590 West Sunset Blvd, West Hollywood, California
|
(5)
|
1
|
|
2002/ 2007
|
|
56,095
|
|
|
87.6
|
%
|
|
1,437
|
|
|
30.95
|
|
||
12100 W. Olympic Blvd.,
Los Angeles, California |
(3)
|
1
|
|
2003
|
|
152,048
|
|
|
100.0
|
%
|
|
8,502
|
|
|
55.92
|
|
||
12200 W. Olympic Blvd.,
Los Angeles, California |
(3)
|
1
|
|
2000
|
|
150,832
|
|
|
91.9
|
%
|
|
7,026
|
|
|
67.46
|
|
||
12233 W. Olympic Blvd.,
Los Angeles, California |
(16)
|
1
|
|
1980/ 2011
|
|
151,029
|
|
|
94.3
|
%
|
|
5,357
|
|
|
56.73
|
|
||
12312 W. Olympic Blvd.,
Los Angeles, California |
(6)
|
1
|
|
1950/ 1997
|
|
76,644
|
|
|
100.0
|
%
|
|
4,096
|
|
|
53.44
|
|
||
1633 26th Street,
Santa Monica, California |
(17)
|
1
|
|
1972/ 1997
|
|
43,857
|
|
|
—
|
%
|
|
—
|
|
|
—
|
|
||
2100/2110 Colorado Avenue,
Santa Monica, California |
(3)
|
3
|
|
1992/ 2009
|
|
102,864
|
|
|
100.0
|
%
|
|
4,357
|
|
|
42.36
|
|
||
3130 Wilshire Blvd.,
Santa Monica, California |
(3)
|
1
|
|
1969/ 1998
|
|
90,074
|
|
|
96.0
|
%
|
|
3,682
|
|
|
42.58
|
|
||
501 Santa Monica Blvd.,
Santa Monica, California |
(18)
|
1
|
|
1974
|
|
76,803
|
|
|
82.7
|
%
|
|
4,242
|
|
|
66.80
|
|
||
Subtotal/Weighted Average –
Los Angeles and Ventura Counties |
|
33
|
|
|
|
3,956,497
|
|
|
95.1
|
%
|
|
$
|
155,171
|
|
|
$
|
42.68
|
|
Orange County
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
2211 Michelson,
Irvine, California
|
(19)
|
1
|
|
2007
|
|
271,556
|
|
|
89.6
|
%
|
|
$
|
8,993
|
|
|
$
|
37.67
|
|
Subtotal/Weighted Average –
Orange County
|
|
1
|
|
|
|
271,556
|
|
|
89.6
|
%
|
|
$
|
8,993
|
|
|
$
|
37.67
|
|
San Diego County
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
12225 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
1998
|
|
58,401
|
|
|
100.0
|
%
|
|
$
|
2,041
|
|
|
$
|
34.95
|
|
12235 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
1998
|
|
53,751
|
|
|
88.9
|
%
|
|
2,225
|
|
|
46.57
|
|
||
12340 El Camino Real,
Del Mar, California
|
(20)
|
1
|
|
2002
|
|
89,272
|
|
|
45.8
|
%
|
|
1,780
|
|
|
43.52
|
|
||
12348 High Bluff Drive,
Del Mar, California
|
(21)
|
1
|
|
1999
|
|
38,806
|
|
|
100.0
|
%
|
|
1,314
|
|
|
33.86
|
|
||
12390 El Camino Real,
Del Mar, California
|
(4)
|
1
|
|
2000
|
|
70,140
|
|
|
44.9
|
%
|
|
1,296
|
|
|
41.15
|
|
||
12400 High Bluff Drive,
Del Mar, California
|
(4)
|
1
|
|
2004
|
|
209,220
|
|
|
100.0
|
%
|
|
10,671
|
|
|
51.00
|
|
||
12770 El Camino Real,
Del Mar, California
|
(3)
|
1
|
|
2016
|
|
73,032
|
|
|
100.0
|
%
|
|
3,392
|
|
|
53.16
|
|
||
12780 El Camino Real,
Del Mar, California |
(6)
|
1
|
|
2013
|
|
140,591
|
|
|
100.0
|
%
|
|
6,883
|
|
|
48.96
|
|
||
12790 El Camino Real,
Del Mar, California |
(22)
|
1
|
|
2013
|
|
78,836
|
|
|
100.0
|
%
|
|
3,263
|
|
|
41.39
|
|
||
3579 Valley Centre Drive,
Del Mar, California
|
(4)
|
1
|
|
1999
|
|
52,418
|
|
|
100.0
|
%
|
|
2,058
|
|
|
39.26
|
|
||
3611 Valley Centre Drive,
Del Mar, California
|
(23)
|
1
|
|
2000
|
|
129,656
|
|
|
100.0
|
%
|
|
5,518
|
|
|
42.56
|
|
||
3661 Valley Centre Drive,
Del Mar, California
|
(24)
|
1
|
|
2001
|
|
128,364
|
|
|
100.0
|
%
|
|
6,025
|
|
|
49.60
|
|
||
3721 Valley Centre Drive,
Del Mar, California
|
(25)
|
1
|
|
2003
|
|
115,193
|
|
|
100.0
|
%
|
|
5,310
|
|
|
46.09
|
|
||
3811 Valley Centre Drive,
Del Mar, California
|
(6)
|
1
|
|
2000
|
|
112,067
|
|
|
100.0
|
%
|
|
5,199
|
|
|
46.39
|
|
||
13280 Evening Creek Drive South,
I-15 Corridor, California |
(26)
|
1
|
|
2008
|
|
41,196
|
|
|
100.0
|
%
|
|
1,132
|
|
|
27.47
|
|
||
13290 Evening Creek Drive South,
I-15 Corridor, California |
(4)
|
1
|
|
2008
|
|
61,180
|
|
|
100.0
|
%
|
|
1,453
|
|
|
23.75
|
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2018
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
13480 Evening Creek Drive North,
I-15 Corridor, California |
(3)
|
1
|
|
2008
|
|
154,157
|
|
|
94.4
|
%
|
|
5,037
|
|
|
34.61
|
|
||
13500 Evening Creek Drive North,
I-15 Corridor, California |
(3)
|
1
|
|
2004
|
|
137,658
|
|
|
24.2
|
%
|
|
1,220
|
|
|
36.59
|
|
||
13520 Evening Creek Drive North,
I-15 Corridor, California |
(27)
|
1
|
|
2004
|
|
146,701
|
|
|
94.2
|
%
|
|
4,667
|
|
|
35.82
|
|
||
2305 Historic Decatur Road,
Point Loma, California
|
(28)
|
1
|
|
2009
|
|
107,456
|
|
|
100.0
|
%
|
|
3,694
|
|
|
34.38
|
|
||
4690 Executive Drive,
UTC, California
|
(3)
|
1
|
|
1999
|
|
47,846
|
|
|
91.4
|
%
|
|
1,424
|
|
|
32.58
|
|
||
Subtotal/Weighted Average –
San Diego County
|
|
21
|
|
|
|
2,045,941
|
|
|
89.3
|
%
|
|
$
|
75,602
|
|
|
$
|
41.92
|
|
San Francisco Bay Area
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
4100 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1985
|
|
47,379
|
|
|
100.0
|
%
|
|
$
|
1,719
|
|
|
$
|
36.27
|
|
4200 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1987
|
|
45,451
|
|
|
100.0
|
%
|
|
2,171
|
|
|
47.77
|
|
||
4300 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1988
|
|
63,079
|
|
|
100.0
|
%
|
|
3,203
|
|
|
50.78
|
|
||
4400 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1988
|
|
48,146
|
|
|
100.0
|
%
|
|
1,567
|
|
|
37.38
|
|
||
4500 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1990
|
|
63,078
|
|
|
100.0
|
%
|
|
2,041
|
|
|
32.35
|
|
||
4600 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1990
|
|
48,147
|
|
|
93.0
|
%
|
|
2,603
|
|
|
58.16
|
|
||
4700 Bohannon Drive,
Menlo Park, California
|
(5)
|
1
|
|
1989
|
|
63,078
|
|
|
100.0
|
%
|
|
2,275
|
|
|
36.07
|
|
||
1290-1300 Terra Bella Avenue,
Mountain View, California
|
(5)
|
1
|
|
1961
|
|
114,175
|
|
|
100.0
|
%
|
|
5,152
|
|
|
45.12
|
|
||
331 Fairchild Drive,
Mountain View, California |
(6)
|
1
|
|
2013
|
|
87,147
|
|
|
100.0
|
%
|
|
4,185
|
|
|
48.03
|
|
||
680 E. Middlefield Road,
Mountain View, California
|
(6)
|
1
|
|
2014
|
|
170,090
|
|
|
100.0
|
%
|
|
7,729
|
|
|
45.44
|
|
||
690 E. Middlefield Road,
Mountain View, California
|
(6)
|
1
|
|
2014
|
|
170,823
|
|
|
100.0
|
%
|
|
7,763
|
|
|
45.44
|
|
||
1701 Page Mill Road,
Palo Alto, California
|
(5)
|
1
|
|
2015
|
|
128,688
|
|
|
100.0
|
%
|
|
8,461
|
|
|
65.75
|
|
||
3150 Porter Drive,
Palo Alto, California
|
(6)
|
1
|
|
1998
|
|
36,897
|
|
|
100.0
|
%
|
|
2,051
|
|
|
55.59
|
|
||
900 Jefferson Avenue,
Redwood City, California |
(5)
|
1
|
|
2015
|
|
228,505
|
|
|
100.0
|
%
|
|
13,670
|
|
|
59.82
|
|
||
900 Middlefield Road,
Redwood City, California |
(5)
|
1
|
|
2015
|
|
118,764
|
|
|
97.3
|
%
|
|
6,835
|
|
|
59.38
|
|
||
100 First Street,
San Francisco, California
|
(29)
|
1
|
|
1988
|
|
467,095
|
|
|
97.5
|
%
|
|
30,124
|
|
|
69.11
|
|
||
201 Third Street,
San Francisco, California
|
(30)
|
1
|
|
1983
|
|
346,538
|
|
|
98.8
|
%
|
|
23,142
|
|
|
68.53
|
|
||
250 Brannan Street,
San Francisco, California
|
(4)
|
1
|
|
1907/ 2001
|
|
100,850
|
|
|
100.0
|
%
|
|
6,912
|
|
|
68.53
|
|
||
301 Brannan Street,
San Francisco, California
|
(4)
|
1
|
|
1909/ 1989
|
|
82,834
|
|
|
100.0
|
%
|
|
4,733
|
|
|
57.14
|
|
||
303 Second Street,
San Francisco, California
|
(31)
|
1
|
|
1988
|
|
740,047
|
|
|
91.3
|
%
|
|
40,942
|
|
|
60.82
|
|
||
333 Brannan Street,
San Francisco, California
|
(32)
|
1
|
|
2016
|
|
185,602
|
|
|
100.0
|
%
|
|
9,423
|
|
|
50.77
|
|
||
350 Mission Street,
San Francisco, California
|
(5)
|
1
|
|
2016
|
|
455,340
|
|
|
99.7
|
%
|
|
24,027
|
|
|
53.19
|
|
||
360 Third Street,
San Francisco, California
|
(33)
|
1
|
|
2013
|
|
429,796
|
|
|
84.5
|
%
|
|
19,592
|
|
|
54.11
|
|
||
345 Brannan Street,
San Francisco, California
|
(4)
|
1
|
|
2015
|
|
110,030
|
|
|
99.7
|
%
|
|
8,273
|
|
|
75.40
|
|
||
345 Oyster Point Boulevard,
South San Francisco, California
|
(5)
|
1
|
|
2001
|
|
40,410
|
|
|
100.0
|
%
|
|
2,192
|
|
|
54.24
|
|
Property Location
|
|
No. of
Buildings
|
|
Year Built/
Renovated
|
|
Rentable
Square Feet
|
|
Percentage
Occupied at
12/31/2018
(1)
|
|
Annualized
Base Rent
(in $000’s)
(2)
|
|
Annualized Rent Per Square Foot
(2)
|
||||||
347 Oyster Point Boulevard,
South San Francisco, California |
(5)
|
1
|
|
1998
|
|
39,780
|
|
|
100.0
|
%
|
|
2,158
|
|
|
54.24
|
|
||
349 Oyster Point Boulevard,
South San Francisco, California |
(5)
|
1
|
|
1999
|
|
65,340
|
|
|
52.2
|
%
|
|
1,961
|
|
|
57.51
|
|
||
505 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2014
|
|
212,322
|
|
|
100.0
|
%
|
|
9,449
|
|
|
44.50
|
|
||
555 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2014
|
|
212,322
|
|
|
100.0
|
%
|
|
9,449
|
|
|
44.50
|
|
||
599 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2000
|
|
76,031
|
|
|
100.0
|
%
|
|
3,610
|
|
|
47.48
|
|
||
605 N. Mathilda Avenue,
Sunnyvale, California
|
(5)
|
1
|
|
2014
|
|
162,785
|
|
|
100.0
|
%
|
|
7,244
|
|
|
44.50
|
|
||
Subtotal/Weighted Average –
San Francisco
|
|
31
|
|
|
|
5,160,569
|
|
|
96.4
|
%
|
|
$
|
274,656
|
|
|
$
|
55.63
|
|
Greater Seattle
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
601 108th Avenue NE,
Bellevue, Washington
|
(34)
|
1
|
|
2000
|
|
488,470
|
|
|
89.7
|
%
|
|
$
|
15,887
|
|
|
$
|
36.67
|
|
10900 NE 4th Street,
Bellevue, Washington
|
(35)
|
1
|
|
1983
|
|
428,557
|
|
|
89.1
|
%
|
|
13,491
|
|
|
35.46
|
|
||
837 N. 34th Street,
Lake Union, Washington
|
(5)
|
1
|
|
2008
|
|
111,580
|
|
|
83.0
|
%
|
|
3,284
|
|
|
35.46
|
|
||
701 N. 34th Street,
Lake Union, Washington
|
(36)
|
1
|
|
1998
|
|
138,994
|
|
|
100.0
|
%
|
|
4,098
|
|
|
29.49
|
|
||
801 N. 34th Street,
Lake Union, Washington
|
(6)
|
1
|
|
1998
|
|
169,412
|
|
|
100.0
|
%
|
|
5,789
|
|
|
34.17
|
|
||
320 Westlake Avenue North,
Lake Union, Washington
|
(5)
|
1
|
|
2007
|
|
184,644
|
|
|
100.0
|
%
|
|
6,822
|
|
|
36.95
|
|
||
321 Terry Avenue North,
Lake Union, Washington
|
(5)
|
1
|
|
2013
|
|
135,755
|
|
|
100.0
|
%
|
|
5,680
|
|
|
41.84
|
|
||
401 Terry Avenue North,
Lake Union, Washington
|
(6)
|
1
|
|
2003
|
|
140,605
|
|
|
100.0
|
%
|
|
7,008
|
|
|
49.84
|
|
||
Subtotal/Weighted Average –
Greater Seattle
|
|
8
|
|
|
|
1,798,017
|
|
|
93.6
|
%
|
|
$
|
62,059
|
|
|
$
|
37.04
|
|
TOTAL/WEIGHTED AVERAGE
|
|
94
|
|
|
|
13,232,580
|
|
|
94.4
|
%
|
|
$
|
576,481
|
|
|
$
|
46.90
|
|
(1)
|
Based on all leases at the respective properties in effect as of
December 31, 2018
. Includes month-to-month leases as of
December 31, 2018
.
|
(2)
|
Annualized base rental revenue includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue. Excludes month-to-month leases and vacant space as of
December 31, 2018
. Includes 100% of annualized base rent of consolidated property partnerships.
|
(3)
|
For these properties, the leases are written on a full service gross basis.
|
(4)
|
For these properties, the leases are written on a modified gross basis.
|
(5)
|
For these properties, the leases are written on a triple net basis.
|
(6)
|
For these properties, the leases are written on a modified net basis.
|
(7)
|
For this property, leases of approximately 264,000 rentable square feet are written on a modified gross basis and approximately 35,000 rentable square feet are written on a full service gross basis.
|
(8)
|
For this property, leases of approximately 238,000 rentable square feet are written on a full service gross basis and approximately 5,000 rentable square feet are written on a triple net basis.
|
(9)
|
For this property, leases of approximately 115,000 rentable square feet are written on a full service gross basis and approximately 9,000 rentable square feet are written on a gross basis.
|
(10)
|
For this property, leases of approximately 15,000 rentable square feet are written on a triple net basis, approximately 6,000 rentable square feet are written on a gross basis, and approximately 5,000 rentable square feet are written on a full service gross basis.
|
(11)
|
For this property, leases of approximately 236,000 rentable square feet are written on a modified gross basis and approximately 15,000 rentable square feet are written on a full service gross basis.
|
(12)
|
For this property, leases of approximately 295,000 rentable square feet are written on a full service gross basis, approximately 16,000 rentable square feet are written on a triple net basis and approximately 5,000 rentable square feet are written on a modified gross basis.
|
(13)
|
For this property, leases of approximately 7,000 rentable square feet are written on a full service gross basis and approximately 4,000 rentable square feet are written on a modified gross basis.
|
(14)
|
For this property, leases of approximately 50,000 rentable square feet are written on a full service gross basis and approximately 46,000 rentable square feet are written on a modified net basis.
|
(15)
|
For this property, leases of approximately 34,000 rentable square feet are written on a full service gross basis and approximately 8,000 rentable square feet are written on a triple net basis.
|
(16)
|
For this property, leases of approximately 108,000 rentable square feet are written on a modified gross basis, approximately 25,000 rentable square feet are written on a gross basis and approximately 8,000 rentable square feet are written on a full service gross basis.
|
(17)
|
As of the date of this report, 30,642 rentable square feet is leased.
|
(18)
|
For this property, leases of approximately 60,000 rentable square feet are written on a full service gross basis, and approximately 4,000 rentable square feet are written on a triple net basis.
|
(19)
|
For this property, leases of approximately 235,000 rentable square feet are written on a full service gross basis and approximately 8,000 rentable square feet are written on a modified gross basis.
|
(20)
|
For this property, leases of approximately 23,000 rentable square feet are written on a modified gross basis and approximately 18,000 rentable square feet are written on a full service gross basis.
|
(21)
|
For this property, leases of approximately 36,000 rentable square feet are written on a full service gross basis and approximately 3,000 rentable square feet are written on a modified gross basis.
|
(22)
|
For this property, leases of approximately 69,000 rentable square feet are written on a modified gross basis and approximately 9,000 rentable square feet are written on a full service gross basis.
|
(23)
|
For this property, leases of approximately 125,000 rentable square feet are written on a modified gross basis and approximately 5,000 rentable square feet are written on a full service gross basis.
|
(24)
|
For this property, leases of approximately 80,000 rentable square feet are written on a modified gross basis and approximately 48,000 rentable square feet are written on a full service gross basis.
|
(25)
|
For this property, leases of approximately 92,000 rentable square feet are written on a modified gross basis and approximately 24,000 rentable square feet are written on a full service gross basis.
|
(26)
|
For this property, leases of approximately 37,000 rentable square feet are written on a full service gross basis and approximately 4,000 rentable square feet are written on a modified gross basis.
|
(27)
|
For this property, leases of approximately 101,000 rentable square feet are written on a modified gross basis and approximately 37,000 rentable square feet are written on a full service gross basis.
|
(28)
|
For this property, leases of approximately 81,000 rentable square feet are written on a full service gross basis, approximately 23,000 rentable square feet are written on a gross basis and approximately 4,000 rentable square feet are written on a modified gross basis.
|
(29)
|
For this property, leases of approximately 210,000 rentable square feet are written on a modified gross basis, approximately 164,000 rentable square feet are written on a full service gross basis, approximately 73,000 rentable square feet are written on a gross basis, and approximately 8,000 rentable square feet are written on a triple net basis.
|
(30)
|
For this property, leases of approximately 186,000 rentable square feet are written on a full service gross basis, approximately 134,000 rentable square feet are written on a modified gross basis, approximately 11,000 rentable square feet are written on a triple net basis and approximately 2,000 rentable square feet are written on a gross basis.
|
(31)
|
For this property, leases of approximately 357,000 rentable square feet are written on a modified gross basis, approximately 257,000 rentable square feet are written on a full service gross basis, approximately 38,000 rentable square feet are written on a gross basis and approximately 24,000 rentable square feet are written on a triple net basis.
|
(32)
|
For this property, leases of approximately 182,000 rentable square feet are written on a modified gross basis and approximately 4,000 rentable square feet are written on a triple net basis.
|
(33)
|
For this property, leases of approximately 360,000 rentable square feet are written on a modified gross basis and approximately 2,000 rentable square feet are written on a triple net basis.
|
(34)
|
For this property, leases of approximately 427,000 rentable square feet are written on a triple net basis, approximately 7,000 rentable square feet are written on a modified gross basis and approximately 5,000 rentable square feet is written on a full service gross basis.
|
(35)
|
For this property, leases of approximately 233,000 rentable square feet are written on a triple net basis and approximately 149,000 rentable square feet are written on a full service gross basis.
|
(36)
|
For this property, leases of approximately 108,000 rentable square feet are written on a triple net basis and approximately 29,000 rentable square feet are written on a full service gross basis.
|
|
|
Location
|
|
Construction Start Date
|
|
Estimated Stabilization Date
(2)
|
|
Estimated Rentable Square Feet
|
|
Office % Leased
|
|
Office % Occupied
|
|
Total Project % Leased
|
|
TENANT IMPROVEMENT
(1)
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Francisco Bay Area
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100 Hooper
(3)
|
|
SOMA
|
|
4Q 2016
|
|
2Q 2019
|
|
400,000
|
|
|
100%
|
|
100%
|
|
86%
|
The Exchange on 16th
(4)
|
|
Mission Bay
|
|
2Q 2015
|
|
3Q 2019 -
3Q 2020 |
|
750,000
|
|
|
100%
|
|
—%
|
|
99%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
|
|
|
|
|
1,150,000
|
|
|
100%
|
|
30%
|
|
95%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Construction Start Date
|
|
Estimated Stabilization Date
(2)
|
|
Estimated Rentable Square Feet
|
|
Office % Leased
|
|
Retail % Leased
|
|
UNDER CONSTRUCTION
|
|
Location
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater Seattle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
333 Dexter
|
|
South Lake Union
|
|
2Q 2017
|
|
3Q 2020
|
|
650,000
|
|
|
—%
|
|
N/A
|
Mixed-Use
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Greater Los Angeles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hollywood development - Office
(5)
|
|
Hollywood
|
|
1Q 2018
|
|
1Q 2021
|
|
355,000
|
|
|
100%
|
|
N/A
|
Hollywood development - Residential
(5)
|
|
Hollywood
|
|
4Q 2018
|
|
4Q 2020
|
|
193 Resi Units
|
|
|
N/A
|
|
N/A
|
San Diego County
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One Paseo - Phases I & II (Retail and Residential)
|
|
Del Mar
|
|
4Q 2016
|
|
1Q 2019 -
3Q 2020 |
|
96,000 Retail
608 Resi Units |
|
|
N/A
|
|
91%
|
One Paseo - Phase III (Office)
|
|
Del Mar
|
|
4Q 2018
|
|
2Q 2021
|
|
285,000
|
|
|
42%
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL:
|
|
|
|
|
|
|
|
|
|
37%
|
|
91%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service.
|
(2)
|
For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For residential, represents when construction is complete and the project is available for occupancy. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope.
|
(3)
|
The office component of this project, which consists of approximately 312,000 rentable square feet, is 100% leased to Adobe Systems, Inc. and the lease commenced in October 2018. The remaining PDR space of approximately 88,000 rentable square feet is 38% leased and 18% occupied.
|
(4)
|
The Company has an executed 15-year lease for 100% of the office space with Dropbox, Inc.
|
(5)
|
In the fourth quarter, the Company signed a 12-year lease for 100% of the office space with Netflix, Inc.
|
Future Development Pipeline
|
|
Location
|
|
Approx. Developable Square Feet
(1)
|
|
|
|
|
|
San Diego County
|
|
|
|
|
2100 Kettner
|
|
Little Italy
|
|
175,000
|
9455 Towne Centre Drive
|
|
University Towne Center
|
|
150,000
|
Santa Fe Summit – Phases II and III
|
|
56 Corridor
|
|
600,000
|
San Francisco Bay Area
|
|
|
|
|
Kilroy Oyster Point
|
|
South San Francisco
|
|
2,500,000
|
Flower Mart
|
|
SOMA
|
|
TBD
|
(1)
|
The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design.
|
Tenant Name
|
|
Region
|
|
Annualized Base Rental Revenue
(1)(2)
|
|
Percentage of Total Annualized Base Rental Revenue
(1)
|
|
Lease Expiration Date
|
||
|
|
|
|
(in thousands)
|
|
|
|
|
||
LinkedIn Corporation / Microsoft Corporation
|
|
San Francisco Bay Area / Greater Seattle
|
|
$
|
34,096
|
|
|
5.9%
|
|
Various
(3)
|
Adobe Systems Inc.
|
|
San Francisco Bay Area / Greater Seattle
|
|
26,751
|
|
|
4.6%
|
|
Various
(4)
|
|
salesforce.com, inc.
|
|
San Francisco Bay Area
|
|
23,449
|
|
|
4.1%
|
|
Various
(5)
|
|
DIRECTV, LLC
|
|
Greater Los Angeles
|
|
23,152
|
|
|
4.0%
|
|
September 2027
|
|
Box, Inc.
|
|
San Francisco Bay Area
|
|
22,441
|
|
|
3.9%
|
|
Various
(6)
|
|
Dropbox, Inc.
|
|
San Francisco Bay Area
|
|
22,234
|
|
|
3.9%
|
|
Various
(7)
|
|
Okta, Inc.
|
|
San Francisco Bay Area
|
|
17,129
|
|
|
3.0%
|
|
October 2028
|
|
Riot Games, Inc.
|
|
Greater Los Angeles
|
|
15,514
|
|
|
2.7%
|
|
Various
(8)
|
|
Synopsys, Inc.
|
|
San Francisco Bay Area
|
|
15,492
|
|
|
2.7%
|
|
August 2030
|
|
Viacom International, Inc.
|
|
Greater Los Angeles
|
|
13,718
|
|
|
2.4%
|
|
December 2028
|
|
Cisco Systems, Inc.
|
|
San Francisco Bay Area
|
|
10,792
|
|
|
1.9%
|
|
May 2023
|
|
Concur Technologies
|
|
Greater Seattle
|
|
10,643
|
|
|
1.9%
|
|
Various
(9)
|
|
Capital One, N.A.
|
|
San Francisco Bay Area
|
|
9,170
|
|
|
1.6%
|
|
September 2024
|
|
AMN Healthcare, Inc.
|
|
San Diego County
|
|
9,001
|
|
|
1.6%
|
|
July 2027
|
|
Stanford University School of Medicine
|
|
San Francisco Bay Area
|
|
8,461
|
|
|
1.5%
|
|
September 2029
|
|
Total
|
|
|
|
$
|
262,043
|
|
|
45.7%
|
|
|
(1)
|
Annualized base rental revenue includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases, and expense reimbursement revenue. Excludes month-to-month leases and vacant space as of
December 31, 2018
.
|
(2)
|
Includes 100% of the annualized base rental revenues of consolidated property partnerships.
|
(3)
|
The LinkedIn Corporation / Microsoft Corporation leases, which contribute $4.3 million, $3.6 million and $26.2 million, expire in February 2019, October 2024, and September 2026, respectively.
|
(4)
|
The Adobe Systems Inc. leases, which contribute $5.8 million and $21.0 million, expire in July 2031 and August 2031, respectively.
|
(5)
|
The salesforce.com, inc. leases, which contribute $12.9 million, $5.7 million and $4.8 million, expire in March 2029, December 2030 and September 2032, respectively.
|
(6)
|
The Box, Inc. leases, which contribute $2.0 million and $20.4 million, expire in August 2021 and June 2028, respectively.
|
(7)
|
The Dropbox, Inc. leases, which contribute $4.7 million and $17.5 million, expire in January 2019 and August 2019, respectively. The table above does not include the executed lease with Dropbox, Inc. at The Exchange on 16th which will commence in phases beginning in the second half of 2019. Refer to "In-Process Development Projects and Future Development Pipeline" above.
|
(8)
|
The Riot Games leases, which contribute $5.7 million, $2.1 million, and $7.7 million, expire in September 2020, November 2020, and November 2024, respectively.
|
(9)
|
The Concur Technologies leases, which contribute $1.8 million and $8.8 million, expire in April 2025 and December 2025, respectively.
|
Year of Lease Expiration
|
# of Expiring Leases
|
|
Total Square Feet
|
|
% of Total Leased Square Feet
|
|
Annualized Base
Rent (000’s)
(1) (2)
|
|
% of Total Annualized
Base Rent
(1)
|
|
Annualized Rent per Square Foot
(1)
|
||||||||
2019
(3)
|
98
|
|
|
1,410,267
|
|
|
11.5
|
%
|
|
$
|
63,201
|
|
|
11.0
|
%
|
|
$
|
44.81
|
|
2020
|
96
|
|
|
1,445,161
|
|
|
11.8
|
%
|
|
58,889
|
|
|
10.2
|
%
|
|
40.75
|
|
||
2021
|
83
|
|
|
862,910
|
|
|
7.0
|
%
|
|
37,914
|
|
|
6.6
|
%
|
|
43.94
|
|
||
2022
|
52
|
|
|
639,915
|
|
|
5.2
|
%
|
|
27,523
|
|
|
4.7
|
%
|
|
43.01
|
|
||
2023
|
71
|
|
|
1,271,112
|
|
|
10.4
|
%
|
|
66,383
|
|
|
11.5
|
%
|
|
52.22
|
|
||
2024
|
44
|
|
|
897,244
|
|
|
7.3
|
%
|
|
42,339
|
|
|
7.3
|
%
|
|
47.19
|
|
||
2025
|
24
|
|
|
409,532
|
|
|
3.3
|
%
|
|
20,104
|
|
|
3.5
|
%
|
|
49.09
|
|
||
2026
|
25
|
|
|
1,365,016
|
|
|
11.1
|
%
|
|
56,863
|
|
|
9.9
|
%
|
|
41.66
|
|
||
2027
|
19
|
|
|
1,134,864
|
|
|
9.3
|
%
|
|
47,434
|
|
|
8.2
|
%
|
|
41.80
|
|
||
2028
|
16
|
|
|
816,535
|
|
|
6.7
|
%
|
|
53,663
|
|
|
9.3
|
%
|
|
65.72
|
|
||
2029 and beyond
|
22
|
|
|
2,016,209
|
|
|
16.4
|
%
|
|
102,170
|
|
|
17.8
|
%
|
|
50.67
|
|
||
Total
(4)
|
550
|
|
|
12,268,765
|
|
|
100.0
|
%
|
|
$
|
576,483
|
|
|
100.0
|
%
|
|
$
|
46.99
|
|
(1)
|
Annualized base rent includes the impact of straight-lining rent escalations and the amortization of free rent periods and excludes the impact of the following: amortization of deferred revenue related tenant-funded tenant improvements, amortization of above/below market rents, amortization for lease incentives due under existing leases and expense reimbursement revenue. Additionally, the underlying leases contain various expense structures including full service gross, modified gross and triple net. Amounts represent percentage of total portfolio annualized contractual base rental revenue.
|
(2)
|
Includes 100% of annualized based rent of consolidated property partnerships.
|
(3)
|
Adjusting for leasing transactions executed as of
December 31, 2018
but not yet commenced, the 2019 expirations would be reduced by
929,141
square feet.
|
(4)
|
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
December 31, 2018
, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of
December 31, 2018
.
|
ITEM 3.
|
LEGAL PROCEEDINGS
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
MARKET FOR KILROY REALTY CORPORATION’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
2018
|
|
Per Share Common
Stock Dividends
Declared
|
||
First quarter
|
|
$
|
0.4250
|
|
Second quarter
|
|
0.4550
|
|
|
Third quarter
|
|
0.4550
|
|
|
Fourth quarter
|
|
0.4550
|
|
|
2017
|
|
Per Share Common
Stock Dividends
Declared
|
||
First quarter
|
|
$
|
0.3750
|
|
Second quarter
|
|
0.4250
|
|
|
Third quarter
|
|
0.4250
|
|
|
Fourth quarter
|
|
0.4250
|
|
2018
|
|
Per Unit Common
Unit Distribution
Declared
|
|
|
First quarter
|
|
$
|
0.4250
|
|
Second quarter
|
|
0.4550
|
|
|
Third quarter
|
|
0.4550
|
|
|
Fourth quarter
|
|
0.4550
|
|
|
2017
|
|
Per Unit Common
Unit Distribution
Declared
|
|
|
First quarter
|
|
$
|
0.3750
|
|
Second quarter
|
|
0.4250
|
|
|
Third quarter
|
|
0.4250
|
|
|
Fourth quarter
|
|
0.4250
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA – KILROY REALTY CORPORATION
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues from continuing operations
|
$
|
747,298
|
|
|
$
|
719,001
|
|
|
$
|
642,572
|
|
|
$
|
581,275
|
|
|
$
|
521,725
|
|
Income from continuing operations
|
277,926
|
|
|
180,615
|
|
|
303,798
|
|
|
238,604
|
|
|
59,313
|
|
|||||
Income from discontinued operations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124,495
|
|
|||||
Net income available to common stockholders
|
258,415
|
|
|
151,249
|
|
|
280,538
|
|
|
220,831
|
|
|
166,969
|
|
|||||
Per Share Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average shares of common stock outstanding – basic
|
99,972,359
|
|
|
98,113,561
|
|
|
92,342,483
|
|
|
89,854,096
|
|
|
83,090,235
|
|
|||||
Weighted average shares of common stock outstanding – diluted
|
100,482,365
|
|
|
98,727,331
|
|
|
93,023,034
|
|
|
90,395,775
|
|
|
84,967,720
|
|
|||||
Income from continuing operations available to common stockholders per share of common stock – basic
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
3.00
|
|
|
$
|
2.44
|
|
|
$
|
0.52
|
|
Income from continuing operations available to common stockholders per share of common stock – diluted
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.97
|
|
|
$
|
2.42
|
|
|
$
|
0.51
|
|
Net income available to common stockholders per share – basic
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
3.00
|
|
|
$
|
2.44
|
|
|
$
|
1.99
|
|
Net income available to common stockholders per share – diluted
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.97
|
|
|
$
|
2.42
|
|
|
$
|
1.95
|
|
Dividends declared per share
(2)
|
$
|
1.790
|
|
|
$
|
1.650
|
|
|
$
|
3.375
|
|
|
$
|
1.400
|
|
|
$
|
1.400
|
|
(1)
|
The Company adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2014-08 effective January 1, 2015. As a result, results of operations for properties classified as held for sale and/or disposed of subsequent to January 1, 2015 are presented in continuing operations. Prior to January 1, 2015, properties classified as held for sale and/or disposed of are presented in discontinued operations.
|
(2)
|
Dividends declared for the year ended December 31, 2016 includes a special dividend of $1.90 per share of common stock that was paid on January 13, 2017.
|
|
December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total real estate held for investment, before accumulated depreciation and amortization
|
$
|
8,426,632
|
|
|
$
|
7,417,777
|
|
|
$
|
7,060,754
|
|
|
$
|
6,328,146
|
|
|
$
|
6,057,932
|
|
Total assets
(1)
|
7,765,707
|
|
|
6,802,838
|
|
|
6,706,633
|
|
|
5,926,430
|
|
|
5,621,262
|
|
|||||
Total debt
(1)
|
2,932,601
|
|
|
2,347,063
|
|
|
2,320,123
|
|
|
2,225,469
|
|
|
2,456,939
|
|
|||||
Total preferred stock
|
—
|
|
|
—
|
|
|
192,411
|
|
|
192,411
|
|
|
192,411
|
|
|||||
Total noncontrolling interests
(2)
|
271,354
|
|
|
259,523
|
|
|
216,322
|
|
|
63,620
|
|
|
57,726
|
|
|||||
Total equity
(2)
|
4,201,261
|
|
|
3,960,316
|
|
|
3,759,317
|
|
|
3,234,586
|
|
|
2,723,936
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Funds From Operations
(3) (4)
|
$
|
360,491
|
|
|
$
|
346,787
|
|
|
$
|
333,742
|
|
|
$
|
316,612
|
|
|
$
|
250,744
|
|
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
$
|
410,043
|
|
|
$
|
347,012
|
|
|
$
|
345,054
|
|
|
$
|
272,008
|
|
|
$
|
245,253
|
|
Investing activities
(5)
|
(808,915
|
)
|
|
(359,102
|
)
|
|
(579,420
|
)
|
|
(337,241
|
)
|
|
(476,031
|
)
|
|||||
Financing activities
|
503,108
|
|
|
(171,241
|
)
|
|
427,291
|
|
|
23,471
|
|
|
244,587
|
|
|||||
Office Property Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rentable square footage
|
13,232,580
|
|
|
13,720,597
|
|
|
14,025,856
|
|
|
13,032,406
|
|
|
14,096,617
|
|
|||||
Occupancy
|
94.4
|
%
|
|
95.2
|
%
|
|
96
|
%
|
|
94.8
|
%
|
|
94.4
|
%
|
|||||
Residential Property Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of units
|
200
|
|
|
200
|
|
|
200
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Average occupancy
(6)
|
79.7
|
%
|
|
70.2
|
%
|
|
46.0
|
%
|
|
N/A
|
|
|
N/A
|
|
(1)
|
On January 1, 2016, the Company adopted FASB ASU No. 2015-03 and 2015-15 which require deferred financing costs, except costs paid for the unsecured line of credit, to be reclassified as a reduction to the debt liability balance instead of being reported as an asset as historically presented. As a result, total assets and total debt have been adjusted from prior amounts reported to reflect this change for all periods presented.
|
(2)
|
Includes the noncontrolling interests of the common units of the Operating Partnership and consolidated property partnerships (see Note 2 “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in this report for additional information).
|
(3)
|
We calculate FFO in accordance with the White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders.
|
(4)
|
FFO includes amortization of deferred revenue related to tenant-funded tenant improvements of
$18.4 million
,
$16.8 million
,
$13.2 million
,
$13.3 million
and
$11.0 million
for the years ended
December 31, 2018
,
2017
,
2016
,
2015
and
2014
, respectively.
|
(5)
|
On January 1, 2017, the Company adopted FASB ASU No. 2016-18 which requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, cash flows provided by (used in) investing activities have been adjusted from prior amounts reported to reflect this change for all periods presented.
|
(6)
|
For the year ended December 31, 2016, represents occupancy at December 31, 2016.
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues from continuing operations
|
$
|
747,298
|
|
|
$
|
719,001
|
|
|
$
|
642,572
|
|
|
$
|
581,275
|
|
|
$
|
521,725
|
|
Income from continuing operations
|
277,926
|
|
|
180,615
|
|
|
303,798
|
|
|
238,604
|
|
|
59,313
|
|
|||||
Income from discontinued operations
(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
124,495
|
|
|||||
Net income available to common unitholders
|
263,210
|
|
|
154,077
|
|
|
286,813
|
|
|
224,887
|
|
|
170,298
|
|
|||||
Per Unit Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average common units outstanding – basic
|
102,025,276
|
|
|
100,246,567
|
|
|
94,771,688
|
|
|
91,645,578
|
|
|
84,894,498
|
|
|||||
Weighted average common units outstanding – diluted
|
102,535,282
|
|
|
100,860,337
|
|
|
95,452,239
|
|
|
92,187,257
|
|
|
86,771,983
|
|
|||||
Income from continuing operations available to common unitholders per common unit – basic
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
2.99
|
|
|
$
|
2.44
|
|
|
$
|
0.52
|
|
Income from continuing operations available to common unitholders per common unit – diluted
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.96
|
|
|
$
|
2.42
|
|
|
$
|
0.51
|
|
Net income available to common unitholders per unit – basic
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
2.99
|
|
|
$
|
2.44
|
|
|
$
|
1.99
|
|
Net income available to common unitholders per unit – diluted
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.96
|
|
|
$
|
2.42
|
|
|
$
|
1.94
|
|
Distributions declared per common unit
(2)
|
$
|
1.790
|
|
|
$
|
1.650
|
|
|
$
|
3.375
|
|
|
$
|
1.400
|
|
|
$
|
1.400
|
|
(1)
|
The Company adopted FASB ASU No. 2014-08 effective January 1, 2015. As a result, results of operations for properties classified as held for sale and/or disposed of subsequent to January 1, 2015 are presented in continuing operations. Prior to January 1, 2015, properties classified as held for sale and/or disposed of are presented in discontinued operations.
|
(2)
|
The year ended December 31, 2016 includes a special distribution of $1.90 per common unit that was paid on January 13, 2017.
|
|
December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total real estate held for investment, before accumulated depreciation and amortization
|
$
|
8,426,632
|
|
|
$
|
7,417,777
|
|
|
$
|
7,060,754
|
|
|
$
|
6,328,146
|
|
|
$
|
6,057,932
|
|
Total assets
(1)
|
7,765,707
|
|
|
6,802,838
|
|
|
6,706,633
|
|
|
5,926,430
|
|
|
5,621,262
|
|
|||||
Total debt
(1)
|
2,932,601
|
|
|
2,347,063
|
|
|
2,320,123
|
|
|
2,225,469
|
|
|
2,456,939
|
|
|||||
Total preferred capital
|
—
|
|
|
—
|
|
|
192,411
|
|
|
192,411
|
|
|
192,411
|
|
|||||
Total noncontrolling interests
(2)
|
197,561
|
|
|
186,375
|
|
|
135,138
|
|
|
10,566
|
|
|
9,625
|
|
|||||
Total capital
(2)
|
4,201,261
|
|
|
3,960,316
|
|
|
3,759,317
|
|
|
3,234,586
|
|
|
2,723,936
|
|
|||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
410,043
|
|
|
347,012
|
|
|
345,054
|
|
|
272,008
|
|
|
245,253
|
|
|||||
Investing activities
(3)
|
(808,915
|
)
|
|
(359,102
|
)
|
|
(579,420
|
)
|
|
(337,241
|
)
|
|
(476,031
|
)
|
|||||
Financing activities
|
503,108
|
|
|
(171,241
|
)
|
|
427,291
|
|
|
23,471
|
|
|
244,587
|
|
|||||
Office Property Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Rentable square footage
|
13,232,580
|
|
|
13,720,597
|
|
|
14,025,856
|
|
|
13,032,406
|
|
|
14,096,617
|
|
|||||
Occupancy
|
94.4
|
%
|
|
95.2
|
%
|
|
96
|
%
|
|
94.8
|
%
|
|
94.4
|
%
|
|||||
Residential Property Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of units
|
200
|
|
|
200
|
|
|
200
|
|
|
N/A
|
|
|
N/A
|
|
|||||
Average occupancy
(4)
|
79.7
|
%
|
|
70.2
|
%
|
|
46.0
|
%
|
|
N/A
|
|
|
N/A
|
|
(1)
|
On January 1, 2016, the Company adopted FASB ASU No. 2015-03 and 2015-15 which require deferred financing costs, except costs paid for the unsecured line of credit, to be reclassified as a reduction to the debt liability balance instead of being reported as an asset as historically presented. As a result, total assets and total debt have been adjusted from prior amounts reported to reflect this change for all periods presented.
|
(2)
|
Includes the noncontrolling interests in consolidated property partnerships and subsidiaries (see Note 2 “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in this report for additional information).
|
(3)
|
On January 1, 2017, the Company adopted FASB ASU No. 2016-18 which requires that a statement of cash flows explain the change during the period in the total cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, cash flows provided by (used in) investing activities have been adjusted from prior amounts reported to reflect this change for all periods presented.
|
(4)
|
For the year ended December 31, 2016, represents occupancy at December 31, 2016.
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
global market and general economic conditions and their effect on our liquidity and financial conditions and those of our tenants;
|
•
|
adverse economic or real estate conditions generally, and specifically, in the States of California and Washington;
|
•
|
risks associated with our investment in real estate assets, which are illiquid, and with trends in the real estate industry;
|
•
|
defaults on or non-renewal of leases by tenants;
|
•
|
any significant downturn in tenants’ businesses;
|
•
|
our ability to re-lease property at or above current market rates;
|
•
|
costs to comply with government regulations, including environmental remediations;
|
•
|
the availability of cash for distribution and debt service and exposure to risk of default under debt obligations;
|
•
|
increases in interest rates and our ability to manage interest rate exposure;
|
•
|
the availability of financing on attractive terms or at all, which may adversely impact our future interest expense and our ability to pursue development, redevelopment and acquisition opportunities and refinance existing debt;
|
•
|
a decline in real estate asset valuations, which may limit our ability to dispose of assets at attractive prices or obtain or maintain debt financing, and which may result in write-offs or impairment charges;
|
•
|
significant competition, which may decrease the occupancy and rental rates of properties;
|
•
|
potential losses that may not be covered by insurance;
|
•
|
the ability to successfully complete acquisitions and dispositions on announced terms;
|
•
|
the ability to successfully operate acquired, developed and redeveloped properties;
|
•
|
the ability to successfully complete development and redevelopment projects on schedule and within budgeted amounts;
|
•
|
delays or refusals in obtaining all necessary zoning, land use and other required entitlements, governmental permits and authorizations for our development and redevelopment properties;
|
•
|
increases in anticipated capital expenditures, tenant improvement and/or leasing costs;
|
•
|
defaults on leases for land on which some of our properties are located;
|
•
|
adverse changes to, or enactment or implementations of, tax laws or other applicable laws, regulations or legislation, as well as business and consumer reactions to such changes;
|
•
|
risks associated with joint venture investments, including our lack of sole decision-making authority, our reliance on co-venturers’ financial condition and disputes between us and our co-venturers;
|
•
|
environmental uncertainties and risks related to natural disasters; and
|
•
|
our ability to maintain our status as a REIT.
|
•
|
whether the lease agreement requires landlord approval of how the tenant improvement allowance is spent prior to installation of the tenant improvements;
|
•
|
whether the lease agreement requires the tenant to provide evidence to the landlord supporting the cost and what the tenant improvement allowance was spent on prior to payment by the landlord for such tenant improvements;
|
•
|
whether the tenant improvements are unique to the tenant or reusable by other tenants;
|
•
|
whether the tenant is permitted to alter or remove the tenant improvements without the consent of the landlord or without compensating the landlord for any lost utility or diminution in fair value; and
|
•
|
whether the ownership of the tenant improvements remains with the landlord or remains with the tenant at the end of the lease term.
|
•
|
estimating the final expenses, net of accruals, that are recoverable;
|
•
|
estimating the fixed and variable components of operating expenses for each building;
|
•
|
conforming recoverable expense pools to those used in establishing the base year or base allowance for the applicable underlying lease; and
|
•
|
concluding whether an expense or capital expenditure is recoverable pursuant to the terms of the underlying lease.
|
•
|
low occupancy levels, forecasted low occupancy levels or near term lease expirations at a specific property;
|
•
|
current period operating or cash flow losses combined with a historical pattern or future projection of potential continued operating or cash flow losses at a specific property;
|
•
|
deterioration in rental rates for a specific property as evidenced by sudden significant rental rate decreases or continuous rental rate decreases over numerous quarters, which could signal a continued decrease in future cash flow for that property;
|
•
|
deterioration of a given rental submarket as evidenced by significant increases in market vacancy and/or negative absorption rates or continuous increases in market vacancy and/or negative absorption rates over numerous quarters, which could signal a decrease in future cash flow for properties within that submarket;
|
•
|
significant increases in property sales yields, continuous increases in property sales yields over several quarters, or recent property sales at a loss within a given submarket, each of which could signal a decrease in the market value of properties;
|
•
|
significant change in strategy or use of a specific property or any other event that could result in a decreased holding period, including classifying a property as held for sale, or significant development delay;
|
•
|
evidence of material physical damage to the property; and
|
•
|
default by a significant tenant when any of the other indicators above are present.
|
•
|
provide benefit in future periods;
|
•
|
extend the useful life of the asset beyond our original estimates; and
|
•
|
increase the quality of the asset beyond our original estimates.
|
•
|
100 Hooper, SOMA, San Francisco, California, which we acquired in July 2015 and commenced construction on in November 2016. This project encompasses approximately
312,000
square feet of office and approximately
88,000
square feet of production, distribution and repair (“PDR”) space configured in two buildings with a total estimated investment of approximately
$270.0 million
. The office portion of the project is
100%
leased to Adobe Systems Inc. and the PDR space is
38%
leased. We commenced revenue recognition on the lease with Adobe Systems Inc. on October 1, 2018 and cash rents will commence in the first quarter of 2019 through the second quarter of 2020. The project is currently expected to be stabilized in the second quarter of 2019.
|
•
|
The Exchange on 16th, Mission Bay, San Francisco, California, which we acquired in May 2014 and commenced construction on in June 2015. This project will encompass approximately
750,000
gross rentable square feet consisting of
736,000
square feet of office space and
14,000
square feet of retail space at a total estimated investment of
$585.0 million
. The office space in the project is
100%
pre-leased to Dropbox, Inc. Cash rents will commence in the third quarter of 2019 through the first quarter of 2020. The estimated stabilization dates for Phase I, Phase II, and Phase III are the third quarter of 2019, the fourth quarter of 2019, and the third quarter of 2020, respectively.
|
•
|
Hollywood development, Hollywood, California, which we acquired in 2013. We commenced construction on the office component of this mixed-use project in January 2018, which includes the project’s overall infrastructure and site work and approximately
355,000
square feet of office space for a total estimated investment of
$300.0 million
. The office space of this project is 100% pre-leased to Netflix, Inc. We commenced construction on the residential component of the project in December 2018, which encompasses
193
residential units at a total estimated investment of
$195.0 million
. The residential component is currently expected to be completed in the fourth quarter of 2020.
|
•
|
333 Dexter, South Lake Union, Washington, which we acquired in February 2015 and commenced construction on in June 2017. This project encompasses approximately
650,000
square feet of office space at a total
|
•
|
One Paseo - Del Mar Heights, San Diego, California, which we acquired in November 2007. We commenced construction on the retail and residential components of this mixed-use project in December 2016, which includes site work and related infrastructure for the entire project, as well as
608
residential units and approximately
96,000
square feet of retail space. The total estimated investment for the retail and residential components of the project is approximately
$470.0 million
. The project is expected to be stabilized in phases beginning in the first quarter of 2019 for the retail space through the third quarter of 2020 for the residential units. As of the date of this report, the retail space of the project was
91%
leased. We commenced construction on the office component of the project in December 2018, which encompasses
285,000
square feet of office space at a total estimated investment of
$205.0 million
. As of the date of this report, the office component of the project was
42%
pre-leased.
|
Future Development Pipeline
|
|
Location
|
|
Approx. Developable Square Feet / Resi Units
(1)
|
|
Total Costs
as of 12/31/2018
($ in millions)
(2)
|
||
|
|
|
|
|
|
|
||
San Diego County
|
|
|
|
|
|
|
||
2100 Kettner
|
|
Little Italy
|
|
175,000
|
|
$
|
26.0
|
|
9455 Towne Centre Drive
|
|
University Towne Center
|
|
150,000
|
|
16.4
|
|
|
Santa Fe Summit – Phases II and III
|
|
56 Corridor
|
|
600,000
|
|
79.9
|
|
|
San Francisco Bay Area
|
|
|
|
|
|
|
||
Kilroy Oyster Point
|
|
South San Francisco
|
|
2,500,000
|
|
399.7
|
|
|
Flower Mart
|
|
SOMA
|
|
TBD
|
|
251.2
|
|
|
TOTAL:
|
|
|
|
|
|
$
|
773.2
|
|
(1)
|
The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design.
|
(2)
|
Represents cash paid and costs incurred, including accrued liabilities in accordance with GAAP, as of
December 31, 2018
.
|
|
1st & 2nd Generation
(1)(2)
|
|
2nd Generation
(1)(2)
|
||||||||||||||||||||||||||||
|
Number of
Leases
(3)
|
|
Rentable
Square Feet
(3)
|
|
Retention Rates
(4)
|
|
TI/LC per
Sq. Ft.
(5)
|
|
TI/LC per
Sq. Ft. / Year |
|
Changes in
Rents
(6)(7)
|
|
Changes in
Cash Rents
(8)
|
|
Weighted Average Lease Term (in months)
|
||||||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|
||||||||||||||||||||||
Year Ended December 31, 2018
|
79
|
|
|
58
|
|
|
1,033,085
|
|
|
1,161,596
|
|
|
49.1
|
%
|
|
$
|
47.09
|
|
|
$
|
7.24
|
|
|
25.4
|
%
|
|
10.7
|
%
|
|
78
|
|
|
1st & 2nd Generation
(1)(2)
|
|
2nd Generation
(1)(2)
|
|||||||||||||||||||||||||
|
Number of Leases
(3)
|
|
Rentable Square Feet
(3)
|
|
TI/LC per Sq. Ft.
(5)
|
|
TI/LC Per Sq. Ft. / Year
|
|
Changes in
Rents
(6)(7)
|
|
Changes in
Cash Rents
(8)
|
|
Weighted Average Lease Term
(in months)
|
|||||||||||||||
|
New
|
|
Renewal
|
|
New
|
|
Renewal
|
|
|
|
||||||||||||||||||
Year Ended December 31, 2018
|
89
|
|
|
58
|
|
|
1,667,447
|
|
|
1,161,596
|
|
|
$
|
56.90
|
|
|
$
|
7.11
|
|
|
36.0
|
%
|
|
14.8
|
%
|
|
96
|
|
(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 were signed during the period, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction.
|
(4)
|
Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration.
|
(5)
|
Tenant improvements and leasing commissions per square foot exclude tenant-funded tenant improvements.
|
(6)
|
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.
|
(7)
|
Excludes commenced and executed leases of approximately
471,880
and
386,587
rentable square feet, respectively, for the year ended
December 31, 2018
, 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 more meaningful market comparison.
|
(8)
|
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.
|
(9)
|
For the year ended
December 31, 2018
,
38
new leases totaling
1,138,133
rentable square feet were signed but not commenced as of
December 31, 2018
.
|
Year of Lease Expiration
|
|
Number of
Expiring
Leases
|
|
Total Square Feet
|
|
% of Total Leased Sq. Ft.
|
|
Annualized Base Rent
(2)(3)
|
|
% of Total Annualized Base Rent
(2)
|
|
Annualized Base Rent per Sq. Ft.
(2)
|
||||||||
2019
|
|
98
|
|
|
1,410,267
|
|
|
11.5
|
%
|
|
$
|
63,201
|
|
|
11.0
|
%
|
|
$
|
44.81
|
|
2020
|
|
96
|
|
|
1,445,161
|
|
|
11.8
|
%
|
|
58,889
|
|
|
10.2
|
%
|
|
40.75
|
|
||
2021
|
|
83
|
|
|
862,910
|
|
|
7.0
|
%
|
|
37,914
|
|
|
6.6
|
%
|
|
43.94
|
|
||
2022
|
|
52
|
|
|
639,915
|
|
|
5.2
|
%
|
|
27,523
|
|
|
4.7
|
%
|
|
43.01
|
|
||
2023
|
|
71
|
|
|
1,271,112
|
|
|
10.4
|
%
|
|
66,383
|
|
|
11.5
|
%
|
|
52.22
|
|
||
Total
|
|
400
|
|
|
5,629,365
|
|
|
45.9
|
%
|
|
$
|
253,910
|
|
|
44.0
|
%
|
|
$
|
45.10
|
|
Year
|
|
Region
|
|
# of
Expiring Leases
|
|
Total
Square Feet
|
|
% of Total
Leased Sq. Ft.
|
|
Annualized
Base Rent
(2)(3)
|
|
% of Total
Annualized
Base Rent
(2)
|
|
Annualized Rent
per Sq. Ft.
(2)
|
||||||||
2019
(4)
|
|
Greater Los Angeles
|
|
52
|
|
|
279,163
|
|
|
2.3
|
%
|
|
$
|
9,533
|
|
|
1.7
|
%
|
|
$
|
34.15
|
|
|
Orange County
|
|
5
|
|
|
74,181
|
|
|
0.6
|
%
|
|
3,137
|
|
|
0.5
|
%
|
|
42.29
|
|
|||
|
San Diego
|
|
16
|
|
|
174,063
|
|
|
1.4
|
%
|
|
6,648
|
|
|
1.2
|
%
|
|
38.19
|
|
|||
|
San Francisco Bay Area
|
|
16
|
|
|
721,554
|
|
|
5.9
|
%
|
|
38,313
|
|
|
6.6
|
%
|
|
53.10
|
|
|||
|
Greater Seattle
|
|
9
|
|
|
161,306
|
|
|
1.3
|
%
|
|
5,570
|
|
|
1.0
|
%
|
|
34.53
|
|
|||
|
Total
|
|
98
|
|
|
1,410,267
|
|
|
11.5
|
%
|
|
$
|
63,201
|
|
|
11.0
|
%
|
|
$
|
44.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2020
|
|
Greater Los Angeles
|
|
49
|
|
|
457,339
|
|
|
3.8
|
%
|
|
$
|
18,372
|
|
|
3.2
|
%
|
|
$
|
40.17
|
|
|
Orange County
|
|
5
|
|
|
38,526
|
|
|
0.3
|
%
|
|
1,238
|
|
|
0.2
|
%
|
|
32.13
|
|
|||
|
San Diego
|
|
16
|
|
|
263,513
|
|
|
2.1
|
%
|
|
10,455
|
|
|
1.8
|
%
|
|
39.68
|
|
|||
|
San Francisco Bay Area
|
|
21
|
|
|
566,361
|
|
|
4.6
|
%
|
|
26,263
|
|
|
4.6
|
%
|
|
46.37
|
|
|||
|
Greater Seattle
|
|
5
|
|
|
119,422
|
|
|
1.0
|
%
|
|
2,561
|
|
|
0.4
|
%
|
|
21.44
|
|
|||
|
Total
|
|
96
|
|
|
1,445,161
|
|
|
11.8
|
%
|
|
$
|
58,889
|
|
|
10.2
|
%
|
|
$
|
40.75
|
|
(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
December 31, 2018
, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of
December 31, 2018
.
|
(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.”
|
(3)
|
Includes 100% of annualized base rent of consolidated property partnerships.
|
(4)
|
Adjusting for leases executed as of
December 31, 2018
but not yet commenced, the 2019 expirations would be reduced by
929,141
square feet.
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
(1)
|
|
In-process development projects - tenant improvement
(2)
|
2
|
|
1,150,000
|
|
In-process development projects - under construction
(3)
|
3
|
|
1,290,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
(2)
|
Includes
88,000
square feet of Production, Distribution, and Repair (“PDR”) space.
|
(3)
|
In addition to the estimated office and PDR rentable square feet noted above, development projects under construction also include
96,000
square feet of retail space and
801
residential units.
|
|
Number of
Buildings
|
|
Rentable
Square Feet
|
||
Total as of December 31, 2017
|
101
|
|
|
13,720,597
|
|
Acquisitions
|
4
|
|
|
255,560
|
|
Dispositions
|
(11
|
)
|
|
(772,246
|
)
|
Remeasurement
|
—
|
|
|
28,669
|
|
Total as of December 31, 2018
(1)
|
94
|
|
|
13,232,580
|
|
(1)
|
Includes
four
properties owned by consolidated property partnerships (see Note 2 “Basis of Presentation and Significant Accounting Policies” to our consolidated financial statements included in this report for additional information).
|
Region
|
Number of
Buildings |
|
Rentable Square Feet
|
|
Occupancy at
(1)
|
|||||||||
|
12/31/2018
|
|
12/31/2017
|
|
12/31/2016
|
|||||||||
Greater Los Angeles
|
33
|
|
|
3,956,497
|
|
|
95.1
|
%
|
|
93.3
|
%
|
|
95.0
|
%
|
Orange County
|
1
|
|
|
271,556
|
|
|
89.6
|
%
|
|
86.6
|
%
|
|
97.8
|
%
|
San Diego County
|
21
|
|
|
2,045,941
|
|
|
89.3
|
%
|
|
97.4
|
%
|
|
93.2
|
%
|
San Francisco Bay Area
|
31
|
|
|
5,160,569
|
|
|
96.4
|
%
|
|
96.1
|
%
|
|
97.6
|
%
|
Greater Seattle
|
8
|
|
|
1,798,017
|
|
|
93.6
|
%
|
|
95.4
|
%
|
|
97.2
|
%
|
Total Stabilized Portfolio
|
94
|
|
|
13,232,580
|
|
|
94.4
|
%
|
|
95.2
|
%
|
|
96.0
|
%
|
|
Average Occupancy
|
||||
|
Year Ended December 31,
|
||||
|
2018
|
|
2017
|
||
Stabilized Portfolio
(1)
|
94.1
|
%
|
|
94.1
|
%
|
Same Store Portfolio
(2)
|
94.1
|
%
|
|
94.5
|
%
|
Residential Portfolio
(3)
|
79.7
|
%
|
|
70.2
|
%
|
(1)
|
Occupancy percentages reported are based on our stabilized office portfolio as of the end of the period presented and exclude occupancy percentages of properties held for sale.
|
(2)
|
Occupancy percentages reported are based on office properties owned and stabilized as of January 1,
2017
and still owned and stabilized as of
December 31, 2018
. See discussion under “Results of Operations” for additional information.
|
(3)
|
Our residential portfolio consists of our 200-unit residential tower located in Hollywood, California.
|
•
|
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,
2017
and still owned and included in the stabilized portfolio as of
December 31, 2018
, including our residential tower in Hollywood, California;
|
•
|
Development Properties – includes the results generated by one office development project that was added to the stabilized portfolio in the first quarter of 2017 and our in-process and future development projects, including a project in the tenant improvement phase at which revenue recognition commenced in the fourth quarter of 2018;
|
•
|
Acquisition Properties – includes the results, from the dates of acquisition through the periods presented, for the four office buildings we acquired during 2018; and
|
•
|
Disposition Properties – includes the results of the
eleven
properties disposed of in the fourth quarter of 2018 and the
eleven
properties disposed of in 2017.
|
Group
|
|
# of Buildings
|
|
Rentable
Square Feet
|
||
Same Store Properties
|
|
87
|
|
|
12,611,661
|
|
Development Properties - Stabilized
(1)
|
|
3
|
|
|
365,359
|
|
Acquisition Properties
|
|
4
|
|
|
255,560
|
|
Total Stabilized Portfolio
|
|
94
|
|
13,232,580
|
|
(1)
|
Excludes development projects in the tenant improvement phase, our in-process development projects and future development projects.
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2018
|
|
2017
|
|
||||||||||
|
($ in thousands)
|
|||||||||||||
Reconciliation of Net Income Available to Common Stockholders to Net Operating Income, as defined:
|
|
|
|
|
|
|
|
|||||||
Net Income Available to Common Stockholders
|
$
|
258,415
|
|
|
$
|
151,249
|
|
|
$
|
107,166
|
|
|
70.9
|
%
|
Preferred dividends
|
—
|
|
|
5,774
|
|
|
(5,774
|
)
|
|
(100.0
|
)
|
|||
Original issuance costs of redeemed preferred stock
|
—
|
|
|
7,589
|
|
|
(7,589
|
)
|
|
(100.0
|
)
|
|||
Net income attributable to Kilroy Realty Corporation
|
258,415
|
|
|
164,612
|
|
|
93,803
|
|
|
57.0
|
|
|||
Net income attributable to noncontrolling common units of the Operating Partnership
|
5,193
|
|
|
3,223
|
|
|
1,970
|
|
|
61.1
|
|
|||
Net income attributable to noncontrolling interests in consolidated property partnerships
|
14,318
|
|
|
12,780
|
|
|
1,538
|
|
|
12.0
|
|
|||
Net income
|
$
|
277,926
|
|
|
$
|
180,615
|
|
|
$
|
97,311
|
|
|
53.9
|
%
|
Unallocated expense (income):
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
90,471
|
|
|
60,581
|
|
|
29,890
|
|
|
49.3
|
|
|||
Depreciation and amortization
|
254,281
|
|
|
245,886
|
|
|
8,395
|
|
|
3.4
|
|
|||
Interest income and other net investment loss (gain)
|
559
|
|
|
(5,503
|
)
|
|
6,062
|
|
|
(110.2
|
)
|
|||
Interest expense
|
49,721
|
|
|
66,040
|
|
|
(16,319
|
)
|
|
(24.7
|
)
|
|||
Loss on early extinguishment of debt
|
12,623
|
|
|
5,312
|
|
|
7,311
|
|
|
137.6
|
|
|||
Net gain on sales of land
|
(11,825
|
)
|
|
(449
|
)
|
|
(11,376
|
)
|
|
2,533.6
|
|
|||
Gains on sales of depreciable operating properties
|
(142,926
|
)
|
|
(39,507
|
)
|
|
(103,419
|
)
|
|
261.8
|
|
|||
Net Operating Income, as defined
|
$
|
530,830
|
|
|
$
|
512,975
|
|
|
$
|
17,855
|
|
|
3.5
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
2018
|
|
2017
|
||||||||||||||||||||||||||||||||||||
|
Same
Store
|
|
Develop-ment
|
|
Acquisitions
|
|
Disposi-tions
|
|
Total
|
|
Same
Store
|
|
Develop-ment
|
|
Acquisitions
|
|
Disposi-tions
|
|
Total
|
||||||||||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Rental income
|
$
|
596,479
|
|
|
$
|
31,426
|
|
|
$
|
6,458
|
|
|
$
|
22,268
|
|
|
$
|
656,631
|
|
|
$
|
577,084
|
|
|
$
|
21,380
|
|
|
$
|
—
|
|
|
$
|
35,432
|
|
|
$
|
633,896
|
|
Tenant reimbursements
|
73,094
|
|
|
1,230
|
|
|
1,378
|
|
|
5,280
|
|
|
80,982
|
|
|
69,659
|
|
|
—
|
|
|
—
|
|
|
6,900
|
|
|
76,559
|
|
||||||||||
Other property income
|
9,243
|
|
|
11
|
|
|
210
|
|
|
221
|
|
|
9,685
|
|
|
7,221
|
|
|
1,013
|
|
|
—
|
|
|
312
|
|
|
8,546
|
|
||||||||||
Total
|
678,816
|
|
|
32,667
|
|
|
8,046
|
|
|
27,769
|
|
|
747,298
|
|
|
653,964
|
|
|
22,393
|
|
|
—
|
|
|
42,644
|
|
|
719,001
|
|
||||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Property expenses
|
121,663
|
|
|
6,025
|
|
|
598
|
|
|
5,501
|
|
|
133,787
|
|
|
117,816
|
|
|
4,279
|
|
|
—
|
|
|
7,876
|
|
|
129,971
|
|
||||||||||
Real estate taxes
|
62,648
|
|
|
4,168
|
|
|
1,072
|
|
|
2,932
|
|
|
70,820
|
|
|
58,554
|
|
|
3,552
|
|
|
—
|
|
|
4,343
|
|
|
66,449
|
|
||||||||||
Provision for bad debts
|
5,742
|
|
|
17
|
|
|
—
|
|
|
(74
|
)
|
|
5,685
|
|
|
2,962
|
|
|
—
|
|
|
—
|
|
|
307
|
|
|
3,269
|
|
||||||||||
Ground leases
|
6,176
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,176
|
|
|
6,337
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,337
|
|
||||||||||
Total
|
196,229
|
|
|
10,210
|
|
|
1,670
|
|
|
8,359
|
|
|
216,468
|
|
|
185,669
|
|
|
7,831
|
|
|
—
|
|
|
12,526
|
|
|
206,026
|
|
||||||||||
Net Operating Income, as defined
|
$
|
482,587
|
|
|
$
|
22,457
|
|
|
$
|
6,376
|
|
|
$
|
19,410
|
|
|
$
|
530,830
|
|
|
$
|
468,295
|
|
|
$
|
14,562
|
|
|
$
|
—
|
|
|
$
|
30,118
|
|
|
$
|
512,975
|
|
|
Year Ended December 31, 2018 as compared to the Year Ended December 31, 2017
|
|||||||||||||||||||||||||||||||||
|
Same Store
|
|
Development
|
|
Acquisitions
|
|
Dispositions
|
|
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
|
$
|
19,395
|
|
|
3.4
|
%
|
|
$
|
10,046
|
|
|
47.0
|
%
|
|
$
|
6,458
|
|
|
100.0
|
%
|
|
$
|
(13,164
|
)
|
|
(37.2
|
)%
|
|
$
|
22,735
|
|
|
3.6
|
%
|
Tenant reimbursements
|
3,435
|
|
|
4.9
|
|
|
1,230
|
|
|
100.0
|
|
|
1,378
|
|
|
100.0
|
|
|
(1,620
|
)
|
|
(23.5
|
)
|
|
4,423
|
|
|
5.8
|
|
|||||
Other property income
|
2,022
|
|
|
28.0
|
|
|
(1,002
|
)
|
|
(98.9
|
)
|
|
210
|
|
|
100.0
|
|
|
(91
|
)
|
|
(29.2
|
)
|
|
1,139
|
|
|
13.3
|
|
|||||
Total
|
24,852
|
|
|
3.8
|
|
|
10,274
|
|
|
45.9
|
|
|
8,046
|
|
|
100.0
|
|
|
(14,875
|
)
|
|
(34.9
|
)
|
|
28,297
|
|
|
3.9
|
|
|||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property expenses
|
3,847
|
|
|
3.3
|
|
|
1,746
|
|
|
40.8
|
|
|
598
|
|
|
100.0
|
|
|
(2,375
|
)
|
|
(30.2
|
)
|
|
3,816
|
|
|
2.9
|
|
|||||
Real estate taxes
|
4,094
|
|
|
7.0
|
|
|
616
|
|
|
17.3
|
|
|
1,072
|
|
|
100.0
|
|
|
(1,411
|
)
|
|
(32.5
|
)
|
|
4,371
|
|
|
6.6
|
|
|||||
Provision for bad debts
|
2,780
|
|
|
93.9
|
|
|
17
|
|
|
100.0
|
|
|
—
|
|
|
—
|
|
|
(381
|
)
|
|
(124.1
|
)
|
|
2,416
|
|
|
73.9
|
|
|||||
Ground leases
|
(161
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(161
|
)
|
|
(2.5
|
)
|
|||||
Total
|
10,560
|
|
|
5.7
|
|
|
2,379
|
|
|
30.4
|
|
|
1,670
|
|
|
100.0
|
|
|
(4,167
|
)
|
|
(33.3
|
)
|
|
10,442
|
|
|
5.1
|
|
|||||
Net Operating Income,
as defined
|
$
|
14,292
|
|
|
3.1
|
%
|
|
$
|
7,895
|
|
|
54.2
|
%
|
|
$
|
6,376
|
|
|
100.0
|
%
|
|
$
|
(10,708
|
)
|
|
(35.6
|
)%
|
|
$
|
17,855
|
|
|
3.5
|
%
|
•
|
An increase of
$14.3 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase in rental income of
$19.4 million
primarily due to the following:
|
◦
|
$20.2 million increase due primarily to new leases and renewals at higher overall average rental rates across all regions; partially offset by
|
◦
|
$0.6 million decrease due to lower occupancy primarily resulting from lease expirations for one tenant in the Greater Seattle region and one tenant in the San Diego region;
|
•
|
An increase in tenant reimbursements of
$3.4 million
primarily due to:
|
◦
|
$2.6 million increase due to higher recurring expenses related to security, parking, janitorial, contract services, insurance and repairs and maintenance at certain properties;
|
◦
|
$0.6 million increase due to $1.2 million of higher annual property taxes in 2018 primarily in the Greater Seattle region; offset by $0.6 million lower supplemental taxes primarily due to two properties in the San Francisco Bay area;
|
◦
|
$0.8 million increase due to new triple net tenants replacing base year tenants and higher occupancy primarily in the Greater Seattle region; offset by
|
◦
|
$0.6 million decrease due to higher abated tenant reimbursements as compared to the prior year in addition to decreased tenant reimbursements related to base year adjustments;
|
•
|
An increase in other property income of
$2.0 million
primarily due to higher early lease termination fees for three leases each in different regions, partially offset by
|
•
|
An increase in property and related expenses of
$10.6 million
primarily resulting from:
|
•
|
An increase of
$3.8 million
in property expenses primarily resulting from:
|
◦
|
$4.5 million increase in certain recurring operating costs due to increased demand and higher rates related to security, parking, janitorial, contract services and insurance, as well as higher repairs and maintenance and various other reimbursable expenses; offset by
|
◦
|
$0.6 million decrease in non-reimbursable expenses primarily due to non-recurring parking costs incurred in 2017;
|
•
|
An increase of
$4.1 million
in real estate taxes primarily due to:
|
◦
|
$2.4 million increase in supplemental taxes primarily due to a reduction in 2017 supplemental taxes at one property that was redeveloped in 2013;
|
◦
|
$1.6 million from regular annual property tax increases in 2018;
|
•
|
An increase of
$2.8 million
in provision for bad debts primarily due to a provision recorded for one tenant partially offset by a decrease in the provision for another tenant due to the assignment of its lease to a credit tenant. During the year ended
December 31, 2018
, we recorded a $7.0 million increase in the provision for bad debts related to one tenant based on our discussions with this tenant and consistent with our accounting policies. As of
December 31, 2018
, our lease with this tenant represented approximately 1% of our total annualized base rental revenues.
|
•
|
An increase of
$7.9 million
attributable to the Development Properties;
|
•
|
An increase of
$6.4 million
attributable to the Acquisition Properties; and
|
•
|
A decrease of
$10.7 million
attributable to the Disposition Properties.
|
•
|
An increase of $12.1 million relating to accrued executive retirement benefits;
|
•
|
An increase of $11.5 million due to higher stock compensation amortization as well as higher compensation and office expenses related to the growth of the Company; and
|
•
|
An increase of $6.5 million resulting from higher professional service costs primarily related to legal fees incurred in connection with a previously disclosed litigation matter.
|
•
|
An increase of $6.6 million attributable to the Same Store Properties;
|
•
|
An increase of $4.7 million attributable to the Acquisition Properties;
|
•
|
An increase of $2.8 million attributable to the Development Properties; partially offset by
|
•
|
A decrease of $5.7 million attributable to the Disposition Properties.
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2018
|
|
2017
|
|
|
|||||||||
|
($ in thousands)
|
|||||||||||||
Gross interest expense
|
$
|
117,789
|
|
|
$
|
112,577
|
|
|
$
|
5,212
|
|
|
4.6
|
%
|
Capitalized interest and deferred financing costs
|
(68,068
|
)
|
|
(46,537
|
)
|
|
(21,531
|
)
|
|
46.3
|
|
|||
Interest expense
|
$
|
49,721
|
|
|
$
|
66,040
|
|
|
$
|
(16,319
|
)
|
|
(24.7
|
)%
|
•
|
Same Store Properties – includes the results of all of the office properties that were owned and included in our stabilized portfolio for two comparable reporting periods, i.e., owned and included in our stabilized portfolio as of January 1,
2016
and still owned and included in the stabilized portfolio as of
December 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 during 2016; and
|
•
|
Dispositions, and Other Properties – includes the results of the ten properties disposed of in the third quarter of 2017, 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
|
|
88
|
|
|
12,182,805
|
|
Stabilized Development Properties
|
|
6
|
|
|
1,079,333
|
|
Acquisition Properties
|
|
7
|
|
|
458,459
|
|
Total Stabilized Portfolio
|
|
101
|
|
13,720,597
|
|
|
Year Ended December 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
|
$
|
151,249
|
|
|
$
|
280,538
|
|
|
$
|
(129,289
|
)
|
|
(46.1
|
)%
|
Preferred dividends
|
5,774
|
|
|
13,250
|
|
|
(7,476
|
)
|
|
(56.4
|
)
|
|||
Original issuance costs of redeemed preferred stock
|
7,589
|
|
|
—
|
|
|
7,589
|
|
|
100.0
|
|
|||
Net income attributable to Kilroy Realty Corporation
|
164,612
|
|
|
293,788
|
|
|
(129,176
|
)
|
|
(44.0
|
)
|
|||
Net income attributable to noncontrolling common units of the Operating Partnership
|
3,223
|
|
|
6,635
|
|
|
(3,412
|
)
|
|
(51.4
|
)
|
|||
Net income attributable to noncontrolling interests in consolidated property partnerships
|
12,780
|
|
|
3,375
|
|
|
9,405
|
|
|
278.7
|
|
|||
Net income
|
$
|
180,615
|
|
|
$
|
303,798
|
|
|
$
|
(123,183
|
)
|
|
(40.5
|
)%
|
Unallocated expense (income):
|
|
|
|
|
|
|
|
|||||||
General and administrative expenses
|
60,581
|
|
|
57,029
|
|
|
3,552
|
|
|
6.2
|
|
|||
Acquisition-related expenses
|
—
|
|
|
1,902
|
|
|
(1,902
|
)
|
|
(100.0
|
)
|
|||
Depreciation and amortization
|
245,886
|
|
|
217,234
|
|
|
28,652
|
|
|
13.2
|
|
|||
Interest income and other net investment gains
|
(5,503
|
)
|
|
(1,764
|
)
|
|
(3,739
|
)
|
|
212.0
|
|
|||
Interest expense
|
66,040
|
|
|
55,803
|
|
|
10,237
|
|
|
18.3
|
|
|||
Loss on early extinguishment of debt
|
5,312
|
|
|
—
|
|
|
5,312
|
|
|
100.0
|
|
|||
Net (gain) loss on sales of land
|
(449
|
)
|
|
295
|
|
|
(744
|
)
|
|
(252.2
|
)
|
|||
Gains on sales of depreciable operating properties
|
(39,507
|
)
|
|
(164,302
|
)
|
|
124,795
|
|
|
(76.0
|
)
|
|||
Net Operating Income, as defined
|
$
|
512,975
|
|
|
$
|
469,995
|
|
|
$
|
42,980
|
|
|
9.1
|
%
|
|
Year Ended December 31,
|
||||||||||||||||||||||||||||||||||||||
|
2017
|
|
2016
|
||||||||||||||||||||||||||||||||||||
|
Same
Store
|
|
Stabilized Develop-ment
|
|
Acquisitions
|
|
Dispositi-ons & Other
|
|
Total
|
|
Same
Store
|
|
Stabilized Develop-ment
|
|
Acquisitions
|
|
Dispositi-ons & Other
|
|
Total
|
||||||||||||||||||||
|
(in thousands)
|
|
(in thousands)
|
||||||||||||||||||||||||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Rental income
|
$
|
520,312
|
|
|
$
|
72,411
|
|
|
$
|
29,358
|
|
|
$
|
11,815
|
|
|
$
|
633,896
|
|
|
$
|
515,813
|
|
|
$
|
36,737
|
|
|
$
|
4,250
|
|
|
$
|
17,613
|
|
|
$
|
574,413
|
|
Tenant reimbursements
|
57,411
|
|
|
10,027
|
|
|
7,687
|
|
|
1,434
|
|
|
76,559
|
|
|
50,472
|
|
|
7,363
|
|
|
922
|
|
|
2,322
|
|
|
61,079
|
|
||||||||||
Other property income
|
6,093
|
|
|
345
|
|
|
821
|
|
|
1,287
|
|
|
8,546
|
|
|
1,499
|
|
|
93
|
|
|
53
|
|
|
5,435
|
|
|
7,080
|
|
||||||||||
Total
|
583,816
|
|
|
82,783
|
|
|
37,866
|
|
|
14,536
|
|
|
719,001
|
|
|
567,784
|
|
|
44,193
|
|
|
5,225
|
|
|
25,370
|
|
|
642,572
|
|
||||||||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Property expenses
|
104,428
|
|
|
17,900
|
|
|
4,992
|
|
|
2,651
|
|
|
129,971
|
|
|
97,672
|
|
|
10,913
|
|
|
477
|
|
|
4,870
|
|
|
113,932
|
|
||||||||||
Real estate taxes
|
47,543
|
|
|
10,553
|
|
|
6,321
|
|
|
2,032
|
|
|
66,449
|
|
|
45,468
|
|
|
6,408
|
|
|
446
|
|
|
2,884
|
|
|
55,206
|
|
||||||||||
Provision for bad debts
|
1,755
|
|
|
(101
|
)
|
|
1,471
|
|
|
144
|
|
|
3,269
|
|
|
(124
|
)
|
|
116
|
|
|
50
|
|
|
(42
|
)
|
|
—
|
|
||||||||||
Ground leases
|
3,927
|
|
|
—
|
|
|
2,410
|
|
|
—
|
|
|
6,337
|
|
|
3,356
|
|
|
—
|
|
|
83
|
|
|
—
|
|
|
3,439
|
|
||||||||||
Total
|
157,653
|
|
|
28,352
|
|
|
15,194
|
|
|
4,827
|
|
|
206,026
|
|
|
146,372
|
|
|
17,437
|
|
|
1,056
|
|
|
7,712
|
|
|
172,577
|
|
||||||||||
Net Operating Income, as defined
|
$
|
426,163
|
|
|
$
|
54,431
|
|
|
$
|
22,672
|
|
|
$
|
9,709
|
|
|
$
|
512,975
|
|
|
$
|
421,412
|
|
|
$
|
26,756
|
|
|
$
|
4,169
|
|
|
$
|
17,658
|
|
|
$
|
469,995
|
|
|
Year Ended December 31, 2017 as compared to the Year Ended December 31, 2016
|
|||||||||||||||||||||||||||||||||
|
Same Store
|
|
Stabilized Development
|
|
Acquisitions
|
|
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
|
$
|
4,499
|
|
|
0.9
|
%
|
|
$
|
35,674
|
|
|
97.1
|
%
|
|
$
|
25,108
|
|
|
590.8
|
%
|
|
$
|
(5,798
|
)
|
|
(32.9
|
)%
|
|
$
|
59,483
|
|
|
10.4
|
%
|
Tenant reimbursements
|
6,939
|
|
|
13.7
|
|
|
2,664
|
|
|
36.2
|
|
|
6,765
|
|
|
733.7
|
|
|
(888
|
)
|
|
(38.2
|
)
|
|
15,480
|
|
|
25.3
|
|
|||||
Other property income
|
4,594
|
|
|
306.5
|
|
|
252
|
|
|
271.0
|
|
|
768
|
|
|
NM*
|
|
(4,148
|
)
|
|
(76.3
|
)
|
|
1,466
|
|
|
20.7
|
|
||||||
Total
|
16,032
|
|
|
2.8
|
|
|
38,590
|
|
|
87.3
|
|
|
32,641
|
|
|
624.7
|
|
|
(10,834
|
)
|
|
(42.7
|
)
|
|
76,429
|
|
|
11.9
|
|
|||||
Property and related expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Property expenses
|
6,756
|
|
|
6.9
|
|
|
6,987
|
|
|
64.0
|
|
|
4,515
|
|
|
946.5
|
|
|
(2,219
|
)
|
|
(45.6
|
)
|
|
16,039
|
|
|
14.1
|
|
|||||
Real estate taxes
|
2,075
|
|
|
4.6
|
|
|
4,145
|
|
|
64.7
|
|
|
5,875
|
|
|
NM*
|
|
(852
|
)
|
|
(29.5
|
)
|
|
11,243
|
|
|
20.4
|
|
||||||
Provision for bad debts
|
1,879
|
|
|
NM*
|
|
(217
|
)
|
|
(187.1
|
)
|
|
1,421
|
|
|
NM*
|
|
186
|
|
|
442.9
|
|
|
3,269
|
|
|
100.0
|
|
|||||||
Ground leases
|
571
|
|
|
17.0
|
|
|
—
|
|
|
—
|
|
|
2,327
|
|
|
NM*
|
|
—
|
|
|
—
|
|
|
2,898
|
|
|
84.3
|
|
||||||
Total
|
11,281
|
|
|
7.7
|
|
|
10,915
|
|
|
62.6
|
|
|
14,138
|
|
|
NM*
|
|
(2,885
|
)
|
|
(37.4
|
)
|
|
33,449
|
|
|
19.4
|
|
||||||
Net Operating Income,
as defined
|
$
|
4,751
|
|
|
1.1
|
%
|
|
$
|
27,675
|
|
|
103.4
|
%
|
|
$
|
18,503
|
|
|
443.8
|
%
|
|
$
|
(7,949
|
)
|
|
(45.0
|
)%
|
|
$
|
42,980
|
|
|
9.1
|
%
|
•
|
An increase of
$4.8 million
attributable to the Same Store Properties primarily resulting from:
|
•
|
An increase in rental income of
$4.5 million
primarily due to the following:
|
◦
|
$14.3 million increase due primarily to new leases and renewals at higher overall average rental rates in the San Francisco Bay Area, Greater Los Angeles and Greater Seattle regions; partially offset by
|
◦
|
$9.8 million decrease due to lease expirations and early terminations primarily in the San Francisco Bay Area;
|
•
|
An increase in tenant reimbursements of
$6.9 million
primarily due to:
|
◦
|
$3.8 million increase due to higher recurring expenses related to utilities, security, parking, contract services, repairs and maintenance and property taxes at certain properties;
|
◦
|
$0.9 million increase due to higher reimbursable supplemental in 2017 at two properties related to supplemental property tax adjustments and $1.6 million increase due to lower reimbursable supplemental taxes in 2016 as a result of a change in estimate at one property;
|
◦
|
$1.1 million increase due to lower abated tenant reimbursements as compared to the prior year in addition to increased tenant reimbursements from tenants with 2016 base years; partially offset by
|
◦
|
$0.5 million decrease due to lower occupancy primarily for two properties in the Greater Seattle region that are 100% and 83% leased as of the date of this filing;
|
•
|
An increase in other property income of
$4.6 million
primarily due to early lease termination fees in the San Francisco Bay Area and San Diego regions, of which $2.3 million was attributed to one lease; partially offset by
|
•
|
An increase in property and related expenses of
$11.3 million
primarily resulting from:
|
•
|
An increase of
$6.8 million
in property expenses primarily resulting from:
|
◦
|
$5.1 million increase in certain recurring operating costs due to increased demand and higher rates related to utilities, security, parking and contract services, as well as higher repairs and maintenance and various other reimbursable expenses;
|
◦
|
$1.2 million increase in non-reimbursable expenses primarily due to $0.5 million of non-recurring legal expenses and a $0.4 million increase due to non-recurring parking facility costs;
|
◦
|
$0.5 million increase in property management personnel costs;
|
•
|
An increase of
$2.1 million
in real estate taxes primarily due to:
|
◦
|
$1.8 million from regular annual property tax increases in 2017;
|
◦
|
$2.9 million of lower supplemental taxes at three properties in the San Francisco Bay Area region in 2016; partially offset by
|
◦
|
$2.6 million reduction in 2017 supplemental taxes at one property that was redeveloped in 2013;
|
•
|
An increase of
$1.9 million
in provision for bad debts primarily related to one tenant; and
|
•
|
An increase of $0.6 million in ground rent primarily due to higher percentage ground rent for one of our ground leases in the Greater Seattle Area due to higher operating revenues at the related property;
|
•
|
An increase of
$27.7 million
attributable to the Stabilized Development Properties;
|
•
|
An increase of
$18.5 million
attributable to the Acquisition Properties; and
|
•
|
A decrease of
$7.9 million
attributable to the Dispositions & Other Properties primarily due to the following:
|
◦
|
$5.0 million of other property income received in 2016 relating to a property damage settlement; and
|
◦
|
$2.9 million of lower Net Operating Income primarily due dispositions that occurred in the third quarter of 2017.
|
•
|
An increase of approximately $2.3 million related to higher payroll costs and office expenses related to the growth of the company; and
|
•
|
An increase of $1.3 million attributable to compensation expense related to the mark-to-market adjustment for the Company’s deferred compensation plan. The compensation expense was offset by gains on the underlying marketable securities included in interest income and other net investment gains in the consolidated statements of operations.
|
•
|
An increase of $3.9 million attributable to the Same Store Properties;
|
•
|
An increase of $9.7 million attributable to the Stabilized Development Properties;
|
•
|
An increase of $18.0 million attributable to the Acquisition Properties; partially offset by
|
•
|
A decrease of $2.9 million attributable to the Dispositions & Other Properties.
|
|
Year Ended December 31,
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
|
($ in thousands)
|
|||||||||||||
Gross interest expense
|
$
|
112,577
|
|
|
$
|
105,263
|
|
|
$
|
7,314
|
|
|
6.9
|
%
|
Capitalized interest and deferred financing costs
|
(46,537
|
)
|
|
(49,460
|
)
|
|
2,923
|
|
|
5.9
|
|
|||
Interest expense
|
$
|
66,040
|
|
|
$
|
55,803
|
|
|
$
|
10,237
|
|
|
18.3
|
%
|
|
Shares/Units at
December 31, 2018
|
|
Aggregate
Principal
Amount or
$ Value
Equivalent
|
|
% of Total
Market
Capitalization
|
|||
|
($ in thousands)
|
|||||||
Debt:
(1)
|
|
|
|
|
|
|||
Unsecured Line of Credit
|
|
|
$
|
45,000
|
|
|
0.5
|
%
|
Unsecured Term Loan Facility
|
|
|
150,000
|
|
|
1.6
|
|
|
Unsecured Senior Notes due 2023
|
|
|
300,000
|
|
|
3.2
|
|
|
Unsecured Senior Notes due 2024
|
|
|
425,000
|
|
|
4.5
|
|
|
Unsecured Senior Notes due 2025
|
|
|
400,000
|
|
|
4.3
|
|
|
Unsecured Senior Notes Series A & B due 2026
|
|
|
250,000
|
|
|
2.6
|
|
|
Unsecured Senior Notes due 2028
|
|
|
400,000
|
|
|
4.3
|
|
|
Unsecured Senior Notes due 2029
|
|
|
400,000
|
|
|
4.3
|
|
|
Unsecured Senior Notes Series A & B due 2027 & 2029
|
|
|
250,000
|
|
|
2.6
|
|
|
Secured debt
|
|
|
335,811
|
|
|
3.5
|
|
|
Total debt
|
|
|
2,955,811
|
|
|
31.4
|
|
|
Equity and Noncontrolling Interests in the Operating Partnership:
(2)
|
|
|
|
|
|
|||
Common limited partnership units outstanding
(2)
|
2,025,287
|
|
127,350
|
|
|
1.3
|
|
|
Shares of common stock outstanding
(3) (4)
|
100,746,988
|
|
6,334,971
|
|
|
67.3
|
|
|
Total Equity and Noncontrolling Interests in the Operating Partnership
|
|
|
6,462,321
|
|
|
68.6
|
|
|
Total Market Capitalization
|
|
|
$
|
9,418,132
|
|
|
100.0
|
%
|
(1)
|
Represents gross aggregate principal amount due at maturity before the effect of the following at
December 31, 2018
:
$17.4 million
of unamortized deferred financing costs on the unsecured term loan facility, unsecured senior notes and secured debt,
$6.6 million
of unamortized discounts for the unsecured senior notes and
$0.8 million
of unamortized premiums for the secured debt.
|
(2)
|
Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships.
|
(3)
|
Value based on closing price per share of our common stock of
$62.88
as of
December 31, 2018
.
|
(4)
|
In August, the Company completed a public offering of 5,000,000 shares of common stock priced at $72.10 per share structured as a forward sale. Shares of common stock outstanding do not include any amounts related to this public offering as the Company has not issued any shares of our common stock under the related forward sale agreements as of the date of this report.
|
•
|
Net cash flow from operations;
|
•
|
Borrowings under the Operating Partnership’s unsecured revolving credit facility and term loan facility;
|
•
|
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 security holders;
|
•
|
Repurchases and redemptions of outstanding common stock of the Company; and
|
•
|
Outstanding debt repurchases, redemptions and repayments.
|
•
|
During the
year
ended
December 31, 2018
, we completed the sale of
11
office buildings to unaffiliated third parties for gross sales proceeds totaling approximately
$373.0 million
.
|
•
|
In addition to obtaining funding from our capital recycling program during
2018
, we successfully completed the following financing and capital raising activities to fund our continued growth. We continued to strengthen our balance sheet and lower our overall cost of capital.
|
•
|
Borrowed the full
$150.0 million
borrowing capacity of our unsecured term loan facility;
|
•
|
Completed the previously existing at-the-market stock offering program (the “2014 At-The-Market Program”), and commenced a new at-the-market stock offering program (the “2018 At-The-Market Program”) under which we may currently offer and sell shares of our common stock with an aggregate gross sales price of up to
$500.0 million
. During 2018, a total of
1,817,195
shares of common stock
|
•
|
Issued
$50.0 million
of 8-year
4.30%
unsecured senior notes and
$200.0 million
of 8-year
4.35%
unsecured senior notes maturing in
July 2026
and
October 2026
, respectively, in connection with a private placement;
|
•
|
Entered into forward equity sale agreements in connection with an underwritten public offering of
5,000,000
common shares at an initial gross offering price of
$360.5 million
, or
$72.10
per share. The full amount of this offering remains available for future settlement as of the date of this filing;
|
•
|
Issued
$400.0 million
aggregate principal amount of 10-year,
4.750%
senior unsecured notes maturing in
December 2028
in an underwritten public offering; and
|
•
|
Completed the early redemption of all
$250.0 million
of the Company’s
6.625%
unsecured senior notes due
June 2020
, resulting in a
$12.6 million
loss on early extinguishment of debt.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
45,000
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
705,000
|
|
|
750,000
|
|
||
Total borrowing capacity
(1)
|
$
|
750,000
|
|
|
$
|
750,000
|
|
Interest rate
(2)
|
3.48
|
%
|
|
2.56
|
%
|
||
Facility fee-annual rate
(3)
|
0.200%
|
||||||
Maturity date
|
July 2022
|
(1)
|
We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional
$600.0 million
under an accordion feature under the terms of the unsecured revolving credit facility and unsecured term loan facility.
|
(2)
|
Our unsecured revolving credit facility interest rate was calculated based on the contractual rate of LIBOR plus
1.000%
as of
December 31, 2018
and
2017
, respectively.
|
(3)
|
Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of
December 31, 2018
and
2017
,
$4.7 million
and
$6.0 million
of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the maturity date of our unsecured revolving credit facility.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
150,000
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
—
|
|
|
150,000
|
|
||
Total borrowing capacity
(1)
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Interest rate
(2)
|
3.49
|
%
|
|
2.66
|
%
|
||
Undrawn facility fee-annual rate
(3)
|
0.200%
|
||||||
Maturity date
|
July 2022
|
(1)
|
As of
December 31, 2018
and
2017
,
$0.9 million
and
$1.2 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 the contractual rate of LIBOR plus
1.100%
as of
December 31, 2018
and
2017
.
|
(3)
|
Prior to borrowing the full capacity of our unsecured term loan facility, the undrawn facility fee was calculated based on any unused borrowing capacity and was paid on a quarterly basis.
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in millions, except share and per share data)
|
||||||
Shares of common stock sold during the year
|
1,817,195
|
|
|
235,077
|
|
||
Weighted average price per share of common stock
|
$
|
73.64
|
|
|
$
|
75.40
|
|
Aggregate gross proceeds
|
$
|
133.8
|
|
|
$
|
17.7
|
|
Aggregate net proceeds after selling commissions
|
$
|
132.1
|
|
|
$
|
17.5
|
|
|
Aggregate Principal
Amount Outstanding
(1)
|
||
|
(in thousands)
|
||
Unsecured Line of Credit
|
$
|
45,000
|
|
Unsecured Term Loan Facility
|
150,000
|
|
|
Unsecured Senior Notes due 2023
|
300,000
|
|
|
Unsecured Senior Notes due 2024
|
425,000
|
|
|
Unsecured Senior Notes due 2025
|
400,000
|
|
|
Unsecured Senior Notes Series A & B due 2026
|
250,000
|
|
|
Unsecured Senior Notes due 2028
|
400,000
|
|
|
Unsecured Senior Notes due 2029
|
400,000
|
|
|
Unsecured Senior Notes Series A & B due 2027 & 2029
|
250,000
|
|
|
Secured Debt
|
335,811
|
|
|
Total Unsecured and Secured Debt
|
2,955,811
|
|
|
Less: Unamortized Net Discounts and Deferred Financing Costs
(1)
|
(23,210
|
)
|
|
Total Debt, Net
|
$
|
2,932,601
|
|
(1)
|
Includes
$17.4 million
of unamortized deferred financing costs on the unsecured term loan facility, unsecured senior notes, and secured debt,
$6.6 million
of unamortized discounts for the unsecured senior notes and
$0.8 million
of unamortized premiums for the secured debt. Excludes unamortized deferred financing costs on the unsecured revolving credit facility.
|
|
Percentage of Total Debt
(1)
|
|
Weighted Average Interest Rate
(1)
|
||||||||
|
December 31, 2018
|
|
December 31, 2017
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
Secured vs. unsecured:
|
|
|
|
|
|
|
|
||||
Unsecured
(2)
|
88.6
|
%
|
|
85.6
|
%
|
|
4.0
|
%
|
|
4.2
|
%
|
Secured
|
11.4
|
%
|
|
14.4
|
%
|
|
4.4
|
%
|
|
4.4
|
%
|
Variable-rate vs. fixed-rate:
|
|
|
|
|
|
|
|
||||
Variable-rate
(2)
|
6.6
|
%
|
|
—
|
%
|
|
3.5
|
%
|
|
—
|
%
|
Fixed-rate
(3)
|
93.4
|
%
|
|
100.0
|
%
|
|
4.1
|
%
|
|
4.2
|
%
|
Stated rate
(3)
|
|
|
|
|
4.1
|
%
|
|
4.2
|
%
|
||
GAAP effective rate
(4)
|
|
|
|
|
4.0
|
%
|
|
4.2
|
%
|
||
GAAP effective rate including debt issuance costs
|
|
|
|
|
4.2
|
%
|
|
4.4
|
%
|
(1)
|
As of the end of the period presented.
|
(2)
|
As of December 31, 2017, there were no outstanding balances on both the unsecured revolving credit facility and the unsecured term loan facility.
|
(3)
|
Excludes the impact of the amortization of any debt discounts/premiums and deferred financing costs
|
|
Payment Due by Period
|
|
|
||||||||||||||||
|
Less than
1 Year
(2019)
|
|
2-3 Years
(2020-2021)
|
|
4-5 Years
(2022-2023)
|
|
More than
5 Years
(After 2023)
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Principal payments: secured debt
(1)
|
$
|
76,309
|
|
|
$
|
10,479
|
|
|
$
|
11,329
|
|
|
$
|
237,694
|
|
|
$
|
335,811
|
|
Principal payments: unsecured debt
(2)
|
—
|
|
|
—
|
|
|
495,000
|
|
|
2,125,000
|
|
|
2,620,000
|
|
|||||
Interest payments: fixed-rate debt
(3)
|
109,479
|
|
|
217,461
|
|
|
205,682
|
|
|
323,736
|
|
|
856,358
|
|
|||||
Interest payments: variable-rate debt
(4)
|
5,235
|
|
|
10,470
|
|
|
3,083
|
|
|
—
|
|
|
18,788
|
|
|||||
Interest payments: unsecured revolving credit facility
(5)
|
1,566
|
|
|
3,132
|
|
|
922
|
|
|
—
|
|
|
5,620
|
|
|||||
Ground lease obligations
(6)
|
5,154
|
|
|
10,308
|
|
|
10,308
|
|
|
233,619
|
|
|
259,389
|
|
|||||
Lease and other contractual commitments
(7)
|
168,000
|
|
|
9,000
|
|
|
100
|
|
|
—
|
|
|
177,100
|
|
|||||
Development commitments
(8)
|
412,000
|
|
|
371,000
|
|
|
—
|
|
|
—
|
|
|
783,000
|
|
|||||
Total
|
$
|
777,743
|
|
|
$
|
631,850
|
|
|
$
|
726,424
|
|
|
$
|
2,920,049
|
|
|
$
|
5,056,066
|
|
(1)
|
Represents gross aggregate principal amount before the effect of the unamortized premium and deferred financing costs of approximately
$0.8 million
and
$1.0 million
as of
December 31, 2018
.
|
(2)
|
Represents gross aggregate principal amount before the effect of the unamortized discount and deferred financing costs of approximately
$6.6 million
and
$16.3 million
as of
December 31, 2018
.
|
(3)
|
As of
December 31, 2018
,
93.4%
of our debt was contractually fixed. The information in the table above reflects our projected interest rate obligations for these fixed-rate payments based on the contractual interest rates on an accrual basis and scheduled maturity dates.
|
(4)
|
As of
December 31, 2018
,
5.1%
of our debt bore interest at variable rates which was incurred under the unsecured term loan facility. The variable interest rate payments are based on the contractual rate of LIBOR plus
1.100%
as of
December 31, 2018
. The information in the table above reflects our projected interest rate obligations for these variable-rate payments based on the outstanding principal balance as of
December 31, 2018
, the scheduled interest payment dates and the contractual maturity date.
|
(5)
|
As of
December 31, 2018
,
1.5%
of our debt bore interest at variable rates which was incurred under the unsecured revolving credit facility. The variable interest rate payments are based the contractual rate of LIBOR plus
1.000%
as of
December 31, 2018
. The information in the table above reflects our projected interest rate obligations for these variable-rate payments based on the outstanding principal balances as of
December 31, 2018
, the scheduled interest payment dates and the contractual maturity date.
|
(6)
|
Reflects minimum lease payments through the contractual lease expiration date before the impact of extension options. See Note 18 “Commitments and Contingencies” to our consolidated financial statements included in this report for further information.
|
(7)
|
Amounts represent cash commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements, and for other contractual commitments. The timing of these expenditures may fluctuate.
|
(8)
|
Amounts represent commitments under signed leases for pre-leased development projects and contractual commitments for projects in the tenant improvement phase and under construction as of
December 31, 2018
. The timing of these expenditures may fluctuate based on the ultimate progress of construction. We may start additional construction in
2019
(see “—Development” for additional information).
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Office Properties:
(1)
|
|
|
|
|
|
||||||
Capital Expenditures:
|
|
|
|
|
|
||||||
Capital expenditures per square foot
|
$
|
2.00
|
|
|
$
|
1.18
|
|
|
$
|
1.58
|
|
Tenant Improvement and Leasing Costs
(2)
|
|
|
|
|
|
||||||
Replacement tenant square feet
(3)
|
717,427
|
|
|
825,653
|
|
|
583,461
|
|
|||
Tenant improvements per square foot commenced
|
$
|
41.87
|
|
|
$
|
55.10
|
|
|
$
|
40.98
|
|
Leasing commissions per square foot commenced
|
$
|
14.77
|
|
|
$
|
16.36
|
|
|
$
|
14.30
|
|
Total per square foot
|
$
|
56.64
|
|
|
$
|
71.46
|
|
|
$
|
55.28
|
|
Renewal tenant square feet
|
1,161,596
|
|
|
944,865
|
|
|
476,011
|
|
|||
Tenant improvements per square foot commenced
|
$
|
26.64
|
|
|
$
|
21.66
|
|
|
$
|
10.66
|
|
Leasing commissions per square foot commenced
|
$
|
14.55
|
|
|
$
|
6.80
|
|
|
$
|
7.90
|
|
Total per square foot
|
$
|
41.19
|
|
|
$
|
28.46
|
|
|
$
|
18.56
|
|
Total per square foot per year
|
$
|
7.24
|
|
|
$
|
8.09
|
|
|
$
|
7.05
|
|
Average remaining lease term (in years)
|
6.5
|
|
|
6.0
|
|
|
5.5
|
|
(1)
|
Excludes development properties and includes 100% of consolidated property partnerships.
|
(2)
|
Includes tenants with lease terms of 12 months or longer. Excludes leases for month-to-month and first generation tenants.
|
(3)
|
Excludes leases for which the space was vacant for longer than one year, or vacant when the property was acquired by the Company.
|
•
|
Decreases in our cash flows from operations, which could create further dependence on the unsecured revolving credit facility;
|
•
|
An increase in the proportion of variable-rate debt, which could increase our sensitivity to interest rate fluctuations in the future; and
|
•
|
A decrease in the value of our properties, which could have an adverse effect on the Operating Partnership’s ability to incur additional debt, refinance existing debt at competitive rates, or comply with its existing debt obligations.
|
Unsecured Credit and Term Loan Facility and Private Placement Notes (as defined in the applicable Credit Agreements):
|
|
Covenant
|
|
Actual Performance
as of December 31, 2018
|
Total debt to total asset value
|
|
less than 60%
|
|
28%
|
Fixed charge coverage ratio
|
|
greater than 1.5x
|
|
3.4x
|
Unsecured debt ratio
|
|
greater than 1.67x
|
|
3.06x
|
Unencumbered asset pool debt service coverage
|
|
greater than 1.75x
|
|
4.43x
|
|
|
|
|
|
Unsecured Senior Notes due 2023, 2024, 2025, 2028 and 2029 (as defined in the applicable Indentures):
|
|
|
|
|
Total debt to total asset value
|
|
less than 60%
|
|
34%
|
Interest coverage
|
|
greater than 1.5x
|
|
9.6x
|
Secured debt to total asset value
|
|
less than 40%
|
|
4%
|
Unencumbered asset pool value to unsecured debt
|
|
greater than 150%
|
|
299%
|
|
Year Ended December 31,
|
|
|
|
|
|||||||||
|
2018
|
|
2017
|
|
Dollar
Change
|
|
Percentage
Change
|
|||||||
|
($ in thousands)
|
|||||||||||||
Net cash provided by operating activities
|
$
|
410,043
|
|
|
$
|
347,012
|
|
|
$
|
63,031
|
|
|
18.2
|
%
|
Net cash used in investing activities
|
(808,915
|
)
|
|
(359,102
|
)
|
|
(449,813
|
)
|
|
125.3
|
%
|
|||
Net cash provided by (used in) financing activities
|
503,108
|
|
|
(171,241
|
)
|
|
674,349
|
|
|
393.8
|
%
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
104,236
|
|
|
$
|
(183,331
|
)
|
|
$
|
287,567
|
|
|
156.9
|
%
|
|
Year ended December 31,
|
||||||||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Net income available to common stockholders
|
$
|
258,415
|
|
|
$
|
151,249
|
|
|
$
|
280,538
|
|
|
$
|
220,831
|
|
|
$
|
166,969
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership
|
5,193
|
|
|
3,223
|
|
|
6,635
|
|
|
4,339
|
|
|
3,589
|
|
|||||
Net income attributable to noncontrolling interests in consolidated property partnerships
|
14,318
|
|
|
12,780
|
|
|
3,375
|
|
|
184
|
|
|
—
|
|
|||||
Depreciation and amortization of real estate assets
|
249,882
|
|
|
241,862
|
|
|
213,156
|
|
|
201,480
|
|
|
202,108
|
|
|||||
Gains on sales of depreciable real estate
|
(142,926
|
)
|
|
(39,507
|
)
|
|
(164,302
|
)
|
|
(109,950
|
)
|
|
(121,922
|
)
|
|||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships
|
(24,391
|
)
|
|
(22,820
|
)
|
|
(5,660
|
)
|
|
(272
|
)
|
|
—
|
|
|||||
Funds From Operations
(1) (2)
|
$
|
360,491
|
|
|
$
|
346,787
|
|
|
$
|
333,742
|
|
|
$
|
316,612
|
|
|
$
|
250,744
|
|
(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
$18.4 million
,
$16.8 million
,
$13.2 million
,
$13.3 million
and
$11.0 million
for the years ended
December 31, 2018
,
2017
,
2016
,
2015
and
2014
, respectively.
|
|
Year Ended December 31,
|
|||||||||||||
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|||||
Weighted average shares of common stock outstanding
|
99,972,359
|
|
|
98,113,561
|
|
|
92,342,483
|
|
|
89,854,096
|
|
|
83,090,235
|
|
Weighted average common units outstanding
|
2,052,917
|
|
|
2,133,006
|
|
|
2,429,205
|
|
|
1,791,482
|
|
|
1,804,263
|
|
Effect of participating securities – nonvested shares and restricted stock units
|
1,142,053
|
|
|
1,196,044
|
|
|
1,139,669
|
|
|
1,170,571
|
|
|
1,228,807
|
|
Total basic weighted average shares / units outstanding
|
103,167,329
|
|
|
101,442,611
|
|
|
95,911,357
|
|
|
92,816,149
|
|
|
86,123,305
|
|
Effect of dilutive securities – Exchangeable Notes, shares issuable under executed forward equity sale agreements, stock options and contingently issuable shares
|
510,006
|
|
|
613,770
|
|
|
680,551
|
|
|
541,679
|
|
|
1,877,485
|
|
Total diluted weighted average shares / units outstanding
|
103,677,335
|
|
|
102,056,381
|
|
|
96,591,908
|
|
|
93,357,828
|
|
|
88,000,790
|
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
ITEM 9B.
|
OTHER INFORMATION
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
Exhibit
Number
|
|
Description
|
3.(i)1
|
|
|
3.(i)2
|
|
|
3.(i)3
|
|
|
3.(i)4
|
|
|
3.(i)5
|
|
|
3.(ii)1
|
|
3.(ii)2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
Officers’ Certificate, dated November 29, 2018, pursuant to Sections 102, 201, 301 and 303 of the Indenture dated March 1, 2011, as amended and supplemented, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.750% Senior Notes due 2028,” including the form of 4.750% Senior Note due 2028 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on November 29, 2018)
|
4.12
|
|
The Company is party to agreements in connection with long-term debt obligations, none of which individually exceeds ten percent of the total assets of the Company on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Company agrees to furnish copies of these agreements to the Commission upon request
|
10.1
|
|
|
10.2†
|
|
|
10.3
|
|
|
10.4†
|
|
|
10.5†
|
|
|
10.6†
|
|
|
10.7†
|
|
|
10.8†
|
|
|
10.9†
|
|
|
10.10†
|
|
|
10.11†
|
|
|
10.12†
|
|
|
10.13†
|
|
|
10.14†
|
|
|
10.15†
|
|
|
10.16†
|
|
|
10.17†
|
|
|
10.18†
|
|
|
10.19†
|
|
10.20†
|
|
|
10.21†
|
|
Employment Agreement, as amended and restated December 27, 2018, by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr. (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 31, 2018)
|
10.22†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and John B. Kilroy, Jr., dated December 27, 2018 (with retirement as to Time-Based RSUs) (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 31, 2018)
|
10.23†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and John B. Kilroy, Jr., dated December 27, 2018 (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 31, 2018)
|
10.24†*
|
|
|
10.25
|
|
|
10.26
|
|
Amendment to Note Purchase Agreement dated May 11, 2018 (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 14, 2018)
|
10.27
|
|
|
10.28
|
|
|
10.29
|
|
|
10.30
|
|
|
10.31
|
|
|
10.32
|
|
|
10.33
|
|
|
10.34†
|
|
Kilroy Realty Corporation 2007 Deferred Compensation Plan, as amended and restated effective January 1, 2017 (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 10-K for the year ended December 31, 2016)
|
10.35
|
|
|
10.36†
|
|
|
10.37
|
|
|
10.38
|
|
10.39
|
|
|
10.40
|
|
|
10.41
|
|
|
10.42
|
|
|
21.1*
|
|
|
21.2*
|
|
|
23.1*
|
|
|
23.2*
|
|
|
24.1*
|
|
|
31.1*
|
|
|
31.2*
|
|
|
31.3*
|
|
|
31.4*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
32.3*
|
|
|
32.4*
|
|
|
101.1
|
|
The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Capital, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.
(1)
|
*
|
Filed herewith
|
†
|
Management contract or compensatory plan or arrangement.
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
|
|
KILROY REALTY CORPORATION
|
||
|
|
|
|
|
By
|
|
/s/ Heidi R. Roth
|
|
|
|
Heidi R. Roth
Executive Vice President and Chief Accounting Officer
|
Name
|
|
Title
|
Date
|
|
|
|
|
/s/ John Kilroy
|
|
Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
|
February 14, 2019
|
John Kilroy
|
|
|
|
/s/ Tyler H. Rose
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 14, 2019
|
Tyler H. Rose
|
|
|
|
/s/ Heidi R. Roth
|
|
Executive Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
February 14, 2019
|
Heidi R. Roth
|
|
|
|
/s/ Edward F. Brennan, PhD
|
|
Director
|
February 12, 2019
|
Edward F. Brennan, PhD
|
|
|
|
/s/ Jolie Hunt
|
|
Director
|
February 12, 2019
|
Jolie Hunt
|
|
|
|
/s/ Scott S. Ingraham
|
|
Director
|
February 12, 2019
|
Scott S. Ingraham
|
|
|
|
/s/ Gary R. Stevenson
|
|
Director
|
February 12, 2019
|
Gary R. Stevenson
|
|
|
|
/s/ Peter B. Stoneberg
|
|
Director
|
February 12, 2019
|
Peter B. Stoneberg
|
|
|
|
|
KILROY REALTY, L.P.
|
||
|
|
|
|
|
By
|
|
/s/ Heidi R. Roth
|
|
|
|
Heidi R. Roth
Executive Vice President and Chief Accounting Officer
|
Name
|
|
Title
|
Date
|
|
|
|
|
/s/ John Kilroy
|
|
Chairman of the Board, President and Chief Executive Officer (Principal Executive Officer)
|
February 14, 2019
|
John Kilroy
|
|
|
|
/s/ Tyler H. Rose
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer)
|
February 14, 2019
|
Tyler H. Rose
|
|
|
|
/s/ Heidi R. Roth
|
|
Executive Vice President and Chief Accounting Officer (Principal Accounting Officer)
|
February 14, 2019
|
Heidi R. Roth
|
|
|
|
/s/ Edward F. Brennan, PhD
|
|
Director
|
February 12, 2019
|
Edward F. Brennan, PhD
|
|
|
|
/s/ Jolie Hunt
|
|
Director
|
February 12, 2019
|
Jolie Hunt
|
|
|
|
/s/ Scott S. Ingraham
|
|
Director
|
February 12, 2019
|
Scott S. Ingraham
|
|
|
|
/s/ Gary R. Stevenson
|
|
Director
|
February 12, 2019
|
Gary R. Stevenson
|
|
|
|
/s/ Peter B. Stoneberg
|
|
Director
|
February 12, 2019
|
Peter B. Stoneberg
|
|
|
|
|
Page
|
FINANCIAL STATEMENTS OF KILROY REALTY CORPORATION:
|
|
FINANCIAL STATEMENTS OF KILROY REALTY, L.P.:
|
|
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
REAL ESTATE ASSETS (Notes 2, 3 and 4):
|
|
|
|
||||
Land and improvements
|
$
|
1,160,138
|
|
|
$
|
1,076,172
|
|
Buildings and improvements
|
5,207,984
|
|
|
4,908,797
|
|
||
Undeveloped land and construction in progress
|
2,058,510
|
|
|
1,432,808
|
|
||
Total real estate assets held for investment
|
8,426,632
|
|
|
7,417,777
|
|
||
Accumulated depreciation and amortization
|
(1,391,368
|
)
|
|
(1,264,162
|
)
|
||
Total real estate assets held for investment, net
|
7,035,264
|
|
|
6,153,615
|
|
||
CASH AND CASH EQUIVALENTS (Note 23)
|
51,604
|
|
|
57,649
|
|
||
RESTRICTED CASH (Notes 4 and 23)
|
119,430
|
|
|
9,149
|
|
||
MARKETABLE SECURITIES (Notes 16 and 19)
|
21,779
|
|
|
20,674
|
|
||
CURRENT RECEIVABLES, NET (Note 6)
|
20,176
|
|
|
16,926
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 6)
|
267,007
|
|
|
246,391
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 3 and 5)
|
197,574
|
|
|
183,728
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 7)
|
52,873
|
|
|
114,706
|
|
||
TOTAL ASSETS
|
$
|
7,765,707
|
|
|
$
|
6,802,838
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt, net (Notes 8, 9 and 19)
|
$
|
335,531
|
|
|
$
|
340,800
|
|
Unsecured debt, net (Notes 8, 9 and 19)
|
2,552,070
|
|
|
2,006,263
|
|
||
Unsecured line of credit (Notes 8, 9 and 19)
|
45,000
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities (Note 18)
|
374,415
|
|
|
249,637
|
|
||
Accrued dividends and distributions (Notes 13 and 28)
|
47,559
|
|
|
43,448
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 3, 5 and 10)
|
149,646
|
|
|
145,890
|
|
||
Rents received in advance and tenant security deposits
|
60,225
|
|
|
56,484
|
|
||
Total liabilities
|
3,564,446
|
|
|
2,842,522
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 18)
|
|
|
|
||||
EQUITY (Notes 11 and 13):
|
|
|
|
||||
Stockholders’ Equity:
|
|
|
|
||||
Common stock, $.01 par value, 150,000,000 shares authorized,
100,746,988 and 98,620,333 shares issued and outstanding, respectively
|
1,007
|
|
|
986
|
|
||
Additional paid-in capital
|
3,976,953
|
|
|
3,822,492
|
|
||
Distributions in excess of earnings
|
(48,053
|
)
|
|
(122,685
|
)
|
||
Total stockholders’ equity
|
3,929,907
|
|
|
3,700,793
|
|
||
Noncontrolling Interests (Note 11):
|
|
|
|
||||
Common units of the Operating Partnership
|
78,991
|
|
|
77,948
|
|
||
Noncontrolling interests in consolidated property partnerships (Note 2)
|
192,363
|
|
|
181,575
|
|
||
Total noncontrolling interests
|
271,354
|
|
|
259,523
|
|
||
Total equity
|
4,201,261
|
|
|
3,960,316
|
|
||
TOTAL LIABILITIES AND EQUITY
|
$
|
7,765,707
|
|
|
$
|
6,802,838
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Rental income
|
$
|
656,631
|
|
|
$
|
633,896
|
|
|
$
|
574,413
|
|
Tenant reimbursements
|
80,982
|
|
|
76,559
|
|
|
61,079
|
|
|||
Other property income (Note 18)
|
9,685
|
|
|
8,546
|
|
|
7,080
|
|
|||
Total revenues
|
747,298
|
|
|
719,001
|
|
|
642,572
|
|
|||
EXPENSES:
|
|
|
|
|
|
||||||
Property expenses
|
133,787
|
|
|
129,971
|
|
|
113,932
|
|
|||
Real estate taxes
|
70,820
|
|
|
66,449
|
|
|
55,206
|
|
|||
Provision for bad debts (Note 20)
|
5,685
|
|
|
3,269
|
|
|
—
|
|
|||
Ground leases (Notes 5 and 18)
|
6,176
|
|
|
6,337
|
|
|
3,439
|
|
|||
General and administrative expenses (Note 15)
|
90,471
|
|
|
60,581
|
|
|
57,029
|
|
|||
Acquisition-related expenses (Note 2)
|
—
|
|
|
—
|
|
|
1,902
|
|
|||
Depreciation and amortization (Notes 2 and 5)
|
254,281
|
|
|
245,886
|
|
|
217,234
|
|
|||
Total expenses
|
561,220
|
|
|
512,493
|
|
|
448,742
|
|
|||
OTHER (EXPENSES) INCOME:
|
|
|
|
|
|
||||||
Interest income and other net investment (loss) gain (Note 19)
|
(559
|
)
|
|
5,503
|
|
|
1,764
|
|
|||
Interest expense (Note 9)
|
(49,721
|
)
|
|
(66,040
|
)
|
|
(55,803
|
)
|
|||
Loss on early extinguishment of debt (Note 9)
|
(12,623
|
)
|
|
(5,312
|
)
|
|
—
|
|
|||
Net gain (loss) on sales of land (Note 4)
|
11,825
|
|
|
449
|
|
|
(295
|
)
|
|||
Gains on sales of depreciable operating properties (Note 4)
|
142,926
|
|
|
39,507
|
|
|
164,302
|
|
|||
Total other income (expenses)
|
91,848
|
|
|
(25,893
|
)
|
|
109,968
|
|
|||
NET INCOME
|
277,926
|
|
|
180,615
|
|
|
303,798
|
|
|||
Net income attributable to noncontrolling common units of the Operating Partnership (Notes 2 and 11)
|
(5,193
|
)
|
|
(3,223
|
)
|
|
(6,635
|
)
|
|||
Net income attributable to noncontrolling interests in consolidated property partnerships (Notes 2 and 11)
|
(14,318
|
)
|
|
(12,780
|
)
|
|
(3,375
|
)
|
|||
Total income attributable to noncontrolling interests
|
(19,511
|
)
|
|
(16,003
|
)
|
|
(10,010
|
)
|
|||
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION
|
258,415
|
|
|
164,612
|
|
|
293,788
|
|
|||
Preferred dividends (Note 13)
|
—
|
|
|
(5,774
|
)
|
|
(13,250
|
)
|
|||
Original issuance costs of redeemed preferred stock and preferred units (Note 13)
|
—
|
|
|
(7,589
|
)
|
|
—
|
|
|||
Total preferred dividends
|
—
|
|
|
(13,363
|
)
|
|
(13,250
|
)
|
|||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
|
$
|
258,415
|
|
|
$
|
151,249
|
|
|
$
|
280,538
|
|
Net income available to common stockholders per share – basic (Note 21)
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
3.00
|
|
Net income available to common stockholders per share – diluted (Note 21)
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.97
|
|
Weighted average shares of common stock outstanding – basic (Note 21)
|
99,972,359
|
|
|
98,113,561
|
|
|
92,342,483
|
|
|||
Weighted average shares of common stock outstanding – diluted (Note 21)
|
100,482,365
|
|
|
98,727,331
|
|
|
93,023,034
|
|
|
Preferred
Stock
|
|
Common Stock
|
|
Total
Stock-
holders’
Equity
|
|
Noncontrolling
Interests
|
|
Total
Equity
|
|||||||||||||||||||||
Number
of
Shares
|
|
Common
Stock
|
|
Additional
Paid-in
Capital
|
|
Distributions
in Excess of
Earnings
|
|
|||||||||||||||||||||||
BALANCE 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
|
|
|
|
|
|
|
|
|
293,788
|
|
|
293,788
|
|
|
10,010
|
|
|
303,798
|
|
|||||||||||
Issuance of common stock
|
|
|
451,398
|
|
|
4
|
|
|
31,113
|
|
|
|
|
31,117
|
|
|
|
|
31,117
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
|
|
1,827
|
|
|
|
|
1,827
|
|
|
|
|
1,827
|
|
||||||||||
Non-cash amortization of share-based compensation
|
|
|
|
|
|
|
26,624
|
|
|
|
|
26,624
|
|
|
|
|
26,624
|
|
||||||||||||
Exercise of stock options
|
|
|
286,500
|
|
|
3
|
|
|
12,205
|
|
|
|
|
12,208
|
|
|
|
|
12,208
|
|
||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(137,126
|
)
|
|
(1
|
)
|
|
(8,874
|
)
|
|
|
|
(8,875
|
)
|
|
|
|
(8,875
|
)
|
||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
109,044
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Issuance of common units in connection with acquisition
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
48,033
|
|
|
48,033
|
|
||||||||||||
Exchange of common units of the Operating Partnership
|
|
|
250,933
|
|
|
2
|
|
|
8,891
|
|
|
|
|
8,893
|
|
|
(8,893
|
)
|
|
—
|
|
|||||||||
Initial contributions by noncontrolling interest in consolidated property partnership, net of transaction costs
|
|
|
|
|
|
|
328,997
|
|
|
|
|
328,997
|
|
|
124,452
|
|
|
453,449
|
|
|||||||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(3,615
|
)
|
|
(3,615
|
)
|
||||||||||||
Adjustment for noncontrolling interest in the Operating Partnership
|
|
|
|
|
|
|
8,973
|
|
|
|
|
8,973
|
|
|
(8,973
|
)
|
|
—
|
|
|||||||||||
Preferred dividends and distributions
|
|
|
|
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||||||
Dividends declared per share of common stock and common unit ($3.375 per share/unit)
|
|
|
|
|
|
|
|
|
(318,273
|
)
|
|
(318,273
|
)
|
|
(8,312
|
)
|
|
(326,585
|
)
|
|||||||||||
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
|
|
|
|
|
|
|
|
|
164,612
|
|
|
164,612
|
|
|
16,003
|
|
|
180,615
|
|
|||||||||||
Redemption of Series G & H Preferred stock
|
(192,411
|
)
|
|
|
|
|
|
|
|
(7,589
|
)
|
|
(200,000
|
)
|
|
|
|
(200,000
|
)
|
|||||||||||
Issuance of common stock
|
|
|
4,662,577
|
|
|
46
|
|
|
326,012
|
|
|
|
|
326,058
|
|
|
|
|
326,058
|
|
||||||||||
Issuance of share-based compensation awards
|
|
|
|
|
|
|
5,890
|
|
|
|
|
5,890
|
|
|
|
|
5,890
|
|
||||||||||||
Non-cash amortization of share-based compensation
|
|
|
|
|
|
|
26,319
|
|
|
|
|
26,319
|
|
|
|
|
26,319
|
|
||||||||||||
Exercise of stock options
|
|
|
285,000
|
|
|
4
|
|
|
12,175
|
|
|
|
|
12,179
|
|
|
|
|
12,179
|
|
||||||||||
Settlement of restricted stock units for shares of common stock
|
|
|
317,848
|
|
|
3
|
|
|
(3
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Repurchase of common stock, stock options and restricted stock units
|
|
|
(168,881
|
)
|
|
(2
|
)
|
|
(12,984
|
)
|
|
|
|
(12,986
|
)
|
|
|
|
(12,986
|
)
|
||||||||||
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
|
|
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
54,604
|
|
|
54,604
|
|
|||||||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(16,542
|
)
|
|
(16,542
|
)
|
||||||||||||
Adjustment for noncontrolling interest in the Operating Partnership
|
|
|
|
|
|
|
(3,502
|
)
|
|
|
|
(3,502
|
)
|
|
3,502
|
|
|
—
|
|
|||||||||||
Preferred dividends and distributions
|
|
|
|
|
|
|
|
|
(5,774
|
)
|
|
(5,774
|
)
|
|
|
|
(5,774
|
)
|
||||||||||||
Dividends declared per share of common stock and common unit ($1.65 per share/unit)
|
|
|
|
|
|
|
|
|
(165,937
|
)
|
|
(165,937
|
)
|
|
(3,427
|
)
|
|
(169,364
|
)
|
|||||||||||
BALANCE AS OF DECEMBER 31, 2017
|
—
|
|
|
98,620,333
|
|
|
986
|
|
|
3,822,492
|
|
|
(122,685
|
)
|
|
3,700,793
|
|
|
259,523
|
|
|
3,960,316
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
|
258,415
|
|
|
258,415
|
|
|
19,511
|
|
|
277,926
|
|
|||||||||||
Issuance of common stock (Note 13)
|
|
|
1,817,195
|
|
|
18
|
|
|
130,675
|
|
|
|
|
130,693
|
|
|
|
|
130,693
|
|
||||||||||
Issuance of share-based compensation awards (Note 15)
|
|
|
|
|
|
|
3,926
|
|
|
|
|
3,926
|
|
|
|
|
3,926
|
|
||||||||||||
Non-cash amortization of share-based compensation (Note 15)
|
|
|
|
|
|
|
35,890
|
|
|
|
|
35,890
|
|
|
|
|
35,890
|
|
||||||||||||
Exercise of stock options
|
|
|
1,000
|
|
|
—
|
|
|
41
|
|
|
|
|
41
|
|
|
|
|
41
|
|
||||||||||
Settlement of restricted stock units for shares of common stock (Note 15)
|
|
|
488,354
|
|
|
4
|
|
|
(4
|
)
|
|
|
|
—
|
|
|
|
|
—
|
|
||||||||||
Repurchase of common stock and restricted stock units (Note 15)
|
|
|
(231,800
|
)
|
|
(2
|
)
|
|
(16,551
|
)
|
|
|
|
(16,553
|
)
|
|
|
|
(16,553
|
)
|
||||||||||
Exchange of common units of the Operating Partnership
|
|
|
51,906
|
|
|
1
|
|
|
1,961
|
|
|
|
|
1,962
|
|
|
(1,962
|
)
|
|
—
|
|
|||||||||
Contributions from noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
8,273
|
|
|
8,273
|
|
||||||||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(11,803
|
)
|
|
(11,803
|
)
|
||||||||||||
Adjustment for noncontrolling interest in the Operating Partnership (Note 2)
|
|
|
|
|
|
|
(1,477
|
)
|
|
|
|
(1,477
|
)
|
|
1,477
|
|
|
—
|
|
|||||||||||
Dividends declared per share of common stock and common unit ($1.79 per share/unit) (Notes 13 and 28)
|
|
|
|
|
|
|
|
|
(183,783
|
)
|
|
(183,783
|
)
|
|
(3,665
|
)
|
|
(187,448
|
)
|
|||||||||||
BALANCE AS OF DECEMBER 31, 2018
|
$
|
—
|
|
|
100,746,988
|
|
|
$
|
1,007
|
|
|
$
|
3,976,953
|
|
|
$
|
(48,053
|
)
|
|
$
|
3,929,907
|
|
|
$
|
271,354
|
|
|
$
|
4,201,261
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
277,926
|
|
|
$
|
180,615
|
|
|
$
|
303,798
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization of real estate assets and leasing costs
|
249,882
|
|
|
241,862
|
|
|
213,156
|
|
|||
Depreciation of non-real estate furniture, fixtures and equipment
|
4,400
|
|
|
4,024
|
|
|
4,078
|
|
|||
Increase in provision for bad debts (Note 20)
|
5,685
|
|
|
3,269
|
|
|
—
|
|
|||
Non-cash amortization of share-based compensation awards (Note 15)
|
27,932
|
|
|
19,046
|
|
|
21,064
|
|
|||
Non-cash amortization of deferred financing costs and net debt discounts
|
1,084
|
|
|
3,247
|
|
|
2,720
|
|
|||
Non-cash amortization of net below market rents (Note 5)
|
(9,748
|
)
|
|
(8,528
|
)
|
|
(7,166
|
)
|
|||
Loss on early extinguishment of debt (Note 9)
|
12,623
|
|
|
5,312
|
|
|
—
|
|
|||
(Gain) loss on sale of land (Note 4)
|
(11,825
|
)
|
|
(449
|
)
|
|
295
|
|
|||
Gains on sales of depreciable operating properties (Note 4)
|
(142,926
|
)
|
|
(39,507
|
)
|
|
(164,302
|
)
|
|||
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements (Note 10)
|
(18,429
|
)
|
|
(16,767
|
)
|
|
(13,244
|
)
|
|||
Straight-line rents
|
(26,976
|
)
|
|
(33,275
|
)
|
|
(29,629
|
)
|
|||
Net change in other operating assets
|
(7,930
|
)
|
|
(17,732
|
)
|
|
(5,214
|
)
|
|||
Net change in other operating liabilities
|
48,345
|
|
|
5,895
|
|
|
19,498
|
|
|||
Net cash provided by operating activities
|
410,043
|
|
|
347,012
|
|
|
345,054
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Expenditures for development properties and undeveloped land
|
(489,236
|
)
|
|
(397,440
|
)
|
|
(351,012
|
)
|
|||
Expenditures for acquisitions of development properties and undeveloped land (Note 3)
|
(311,299
|
)
|
|
(19,829
|
)
|
|
(33,513
|
)
|
|||
Expenditures for acquisitions of operating properties (Note 3)
|
(257,340
|
)
|
|
—
|
|
|
(393,767
|
)
|
|||
Expenditures for operating properties and other capital assets
|
(166,440
|
)
|
|
(88,425
|
)
|
|
(111,961
|
)
|
|||
Net proceeds received from dispositions (Note 4)
|
364,300
|
|
|
182,492
|
|
|
325,031
|
|
|||
Decrease (increase) in acquisition-related deposits
|
36,000
|
|
|
(35,900
|
)
|
|
1,902
|
|
|||
Proceeds received from repayment of note receivable (Note 7)
|
15,100
|
|
|
—
|
|
|
—
|
|
|||
Issuance of notes receivable
|
—
|
|
|
—
|
|
|
(16,100
|
)
|
|||
Net cash used in investing activities
|
(808,915
|
)
|
|
(359,102
|
)
|
|
(579,420
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from issuance of common stock (Note 13)
|
130,693
|
|
|
326,058
|
|
|
31,117
|
|
|||
Redemption of Series G and H Preferred stock (Note 13)
|
—
|
|
|
(200,000
|
)
|
|
—
|
|
|||
Net proceeds from the issuance of unsecured debt (Note 9)
|
648,537
|
|
|
674,447
|
|
|
—
|
|
|||
Repayments of unsecured debt (Note 9)
|
(261,823
|
)
|
|
(519,024
|
)
|
|
—
|
|
|||
Borrowings on unsecured revolving credit facility
|
765,000
|
|
|
270,000
|
|
|
305,000
|
|
|||
Repayments on unsecured revolving credit facility
|
(690,000
|
)
|
|
(270,000
|
)
|
|
(305,000
|
)
|
|||
Borrowings on unsecured debt (Note 9)
|
120,000
|
|
|
—
|
|
|
—
|
|
|||
Principal payments and repayments of secured debt (Note 9)
|
(3,584
|
)
|
|
(130,371
|
)
|
|
(74,140
|
)
|
|||
Proceeds from the issuance of secured debt (Note 9)
|
—
|
|
|
—
|
|
|
170,000
|
|
|||
Financing costs
|
(6,262
|
)
|
|
(11,500
|
)
|
|
(2,159
|
)
|
|||
Repurchase of common stock and restricted stock units (Note 15)
|
(16,553
|
)
|
|
(12,986
|
)
|
|
(8,875
|
)
|
|||
Proceeds from exercise of stock options
|
41
|
|
|
12,179
|
|
|
12,208
|
|
|||
Contributions from noncontrolling interests in consolidated property partnerships (Note 11)
|
8,273
|
|
|
54,604
|
|
|
453,449
|
|
|||
Distributions to noncontrolling interests in consolidated property partnerships
|
(11,803
|
)
|
|
(16,542
|
)
|
|
(3,615
|
)
|
|||
Dividends and distributions paid to common stockholders and common unitholders
|
(179,411
|
)
|
|
(340,697
|
)
|
|
(137,444
|
)
|
|||
Dividends and distributions paid to preferred stockholders and preferred unitholders
|
—
|
|
|
(7,409
|
)
|
|
(13,250
|
)
|
|||
Net cash provided by (used in) financing activities
|
503,108
|
|
|
(171,241
|
)
|
|
427,291
|
|
|||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
104,236
|
|
|
(183,331
|
)
|
|
192,925
|
|
|||
Cash and cash equivalents and restricted cash, beginning of year
|
66,798
|
|
|
250,129
|
|
|
57,204
|
|
|||
Cash and cash equivalents and restricted cash, end of year
|
$
|
171,034
|
|
|
$
|
66,798
|
|
|
$
|
250,129
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
ASSETS
|
|
|
|
||||
REAL ESTATE ASSETS (Notes 2, 3 and 4):
|
|
|
|
||||
Land and improvements
|
$
|
1,160,138
|
|
|
$
|
1,076,172
|
|
Buildings and improvements
|
5,207,984
|
|
|
4,908,797
|
|
||
Undeveloped land and construction in progress
|
2,058,510
|
|
|
1,432,808
|
|
||
Total real estate assets held for investment
|
8,426,632
|
|
|
7,417,777
|
|
||
Accumulated depreciation and amortization
|
(1,391,368
|
)
|
|
(1,264,162
|
)
|
||
Total real estate assets held for investment, net
|
7,035,264
|
|
|
6,153,615
|
|
||
CASH AND CASH EQUIVALENTS (Note 24)
|
51,604
|
|
|
57,649
|
|
||
RESTRICTED CASH (Notes 4 and 24)
|
119,430
|
|
|
9,149
|
|
||
MARKETABLE SECURITIES (Notes 16 and 19)
|
21,779
|
|
|
20,674
|
|
||
CURRENT RECEIVABLES, NET (Note 6)
|
20,176
|
|
|
16,926
|
|
||
DEFERRED RENT RECEIVABLES, NET (Note 6)
|
267,007
|
|
|
246,391
|
|
||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 3 and 5)
|
197,574
|
|
|
183,728
|
|
||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 7)
|
52,873
|
|
|
114,706
|
|
||
TOTAL ASSETS
|
$
|
7,765,707
|
|
|
$
|
6,802,838
|
|
LIABILITIES AND CAPITAL
|
|
|
|
||||
LIABILITIES:
|
|
|
|
||||
Secured debt, net (Notes 9 and 19)
|
$
|
335,531
|
|
|
$
|
340,800
|
|
Unsecured debt, net (Notes 9 and 19)
|
2,552,070
|
|
|
2,006,263
|
|
||
Unsecured line of credit (Notes 9 and 19)
|
45,000
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities (Note 18)
|
374,415
|
|
|
249,637
|
|
||
Accrued distributions (Notes 14 and 28)
|
47,559
|
|
|
43,448
|
|
||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 3, 5 and 10)
|
149,646
|
|
|
145,890
|
|
||
Rents received in advance and tenant security deposits
|
60,225
|
|
|
56,484
|
|
||
Total liabilities
|
3,564,446
|
|
|
2,842,522
|
|
||
COMMITMENTS AND CONTINGENCIES (Note 18)
|
|
|
|
||||
CAPITAL (Notes 12 and 14):
|
|
|
|
||||
Common units, 100,746,988 and 98,620,333 held by the general partner and 2,025,287 and 2,077,193 held by common limited partners issued and outstanding, respectively
|
4,003,700
|
|
|
3,773,941
|
|
||
Total partners’ capital
|
4,003,700
|
|
|
3,773,941
|
|
||
Noncontrolling interests in consolidated property partnerships and subsidiaries (Notes 2 and 12)
|
197,561
|
|
|
186,375
|
|
||
Total capital
|
4,201,261
|
|
|
3,960,316
|
|
||
TOTAL LIABILITIES AND CAPITAL
|
$
|
7,765,707
|
|
|
$
|
6,802,838
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
REVENUES:
|
|
|
|
|
|
||||||
Rental income
|
$
|
656,631
|
|
|
$
|
633,896
|
|
|
$
|
574,413
|
|
Tenant reimbursements
|
80,982
|
|
|
76,559
|
|
|
61,079
|
|
|||
Other property income (Note 18)
|
9,685
|
|
|
8,546
|
|
|
7,080
|
|
|||
Total revenues
|
747,298
|
|
|
719,001
|
|
|
642,572
|
|
|||
EXPENSES:
|
|
|
|
|
|
|
|||||
Property expenses
|
133,787
|
|
|
129,971
|
|
|
113,932
|
|
|||
Real estate taxes
|
70,820
|
|
|
66,449
|
|
|
55,206
|
|
|||
Provision for bad debts (Note 20)
|
5,685
|
|
|
3,269
|
|
|
—
|
|
|||
Ground leases (Notes 5 and 18)
|
6,176
|
|
|
6,337
|
|
|
3,439
|
|
|||
General and administrative expenses (Note 15)
|
90,471
|
|
|
60,581
|
|
|
57,029
|
|
|||
Acquisition-related expenses (Note 2)
|
—
|
|
|
—
|
|
|
1,902
|
|
|||
Depreciation and amortization (Notes 2 and 5)
|
254,281
|
|
|
245,886
|
|
|
217,234
|
|
|||
Total expenses
|
561,220
|
|
|
512,493
|
|
|
448,742
|
|
|||
OTHER (EXPENSES) INCOME:
|
|
|
|
|
|
|
|||||
Interest income and other net investment (loss) gain (Note 19)
|
(559
|
)
|
|
5,503
|
|
|
1,764
|
|
|||
Interest expense (Note 9)
|
(49,721
|
)
|
|
(66,040
|
)
|
|
(55,803
|
)
|
|||
Loss on early extinguishment of debt (Note 9)
|
(12,623
|
)
|
|
(5,312
|
)
|
|
—
|
|
|||
Net gain (loss) on sales of land (Note 4)
|
11,825
|
|
|
449
|
|
|
(295
|
)
|
|||
Gains on sales of depreciable operating properties (Note 4)
|
142,926
|
|
|
39,507
|
|
|
164,302
|
|
|||
Total other income (expenses)
|
91,848
|
|
|
(25,893
|
)
|
|
109,968
|
|
|||
NET INCOME
|
277,926
|
|
|
180,615
|
|
|
303,798
|
|
|||
Net income attributable to noncontrolling interests in consolidated property partnerships and subsidiaries (Notes 2 and 12)
|
(14,716
|
)
|
|
(13,175
|
)
|
|
(3,735
|
)
|
|||
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P.
|
263,210
|
|
|
167,440
|
|
|
300,063
|
|
|||
Preferred distributions (Note 14)
|
—
|
|
|
(5,774
|
)
|
|
(13,250
|
)
|
|||
Original issuance costs of redeemed preferred units (Note 14)
|
—
|
|
|
(7,589
|
)
|
|
—
|
|
|||
Total preferred distributions
|
—
|
|
|
(13,363
|
)
|
|
(13,250
|
)
|
|||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS
|
$
|
263,210
|
|
|
$
|
154,077
|
|
|
$
|
286,813
|
|
Net income available to common unitholders per unit – basic (Note 22)
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
2.99
|
|
Net income available to common unitholders per unit – diluted (Note 22)
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.96
|
|
Weighted average common units outstanding – basic (Note 22)
|
102,025,276
|
|
|
100,246,567
|
|
|
94,771,688
|
|
|||
Weighted average common units outstanding – diluted (Note 22)
|
102,535,282
|
|
|
100,860,337
|
|
|
95,452,239
|
|
|
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
|
|
|
|
|
300,063
|
|
|
300,063
|
|
|
3,735
|
|
|
303,798
|
|
|||||||
Issuance of common units
|
|
|
451,398
|
|
|
31,117
|
|
|
31,117
|
|
|
|
|
31,117
|
|
|||||||
Issuance of common units in connection with acquisition
|
|
|
867,701
|
|
|
48,033
|
|
|
48,033
|
|
|
|
|
48,033
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
1,827
|
|
|
1,827
|
|
|
|
|
1,827
|
|
||||||||
Non-cash amortization of share-based compensation
|
|
|
|
|
26,624
|
|
|
26,624
|
|
|
|
|
26,624
|
|
||||||||
Exercise of stock options
|
|
|
286,500
|
|
|
12,208
|
|
|
12,208
|
|
|
|
|
12,208
|
|
|||||||
Repurchase of common units and restricted stock units
|
|
|
(137,126
|
)
|
|
(8,875
|
)
|
|
(8,875
|
)
|
|
|
|
(8,875
|
)
|
|||||||
Settlement of restricted stock units
|
|
|
109,044
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Initial contributions from noncontrolling interest in consolidated property partnership, net of transaction costs
|
|
|
|
|
328,997
|
|
|
328,997
|
|
|
124,452
|
|
|
453,449
|
|
|||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
(3,615
|
)
|
|
(3,615
|
)
|
|||||||||
Preferred distributions
|
|
|
|
|
(13,250
|
)
|
|
(13,250
|
)
|
|
|
|
(13,250
|
)
|
||||||||
Distributions declared per common unit ($3.375per unit)
|
|
|
|
|
(326,585
|
)
|
|
(326,585
|
)
|
|
|
|
(326,585
|
)
|
||||||||
BALANCE AS OF DECEMBER 31, 2016
|
192,411
|
|
|
95,600,982
|
|
|
3,431,768
|
|
|
3,624,179
|
|
|
135,138
|
|
|
3,759,317
|
|
|||||
Net income
|
|
|
|
|
167,440
|
|
|
167,440
|
|
|
13,175
|
|
|
180,615
|
|
|||||||
Redemption of Series G & H Preferred stock
|
(192,411
|
)
|
|
|
|
(7,589
|
)
|
|
(200,000
|
)
|
|
|
|
(200,000
|
)
|
|||||||
Issuance of common units
|
|
|
4,662,577
|
|
|
326,058
|
|
|
326,058
|
|
|
|
|
326,058
|
|
|||||||
Issuance of share-based compensation awards
|
|
|
|
|
5,890
|
|
|
5,890
|
|
|
|
|
5,890
|
|
||||||||
Non-cash amortization of share-based compensation
|
|
|
|
|
26,319
|
|
|
26,319
|
|
|
|
|
26,319
|
|
||||||||
Exercise of stock options
|
|
|
285,000
|
|
|
12,179
|
|
|
12,179
|
|
|
|
|
12,179
|
|
|||||||
Settlement of restricted stock units
|
|
|
317,848
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Repurchase of common units and restricted stock units
|
|
|
(168,881
|
)
|
|
(12,986
|
)
|
|
(12,986
|
)
|
|
|
|
(12,986
|
)
|
|||||||
Contributions from noncontrolling interest in consolidated property partnership
|
|
|
|
|
|
|
—
|
|
|
54,604
|
|
|
54,604
|
|
||||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
|
(16,542
|
)
|
|
(16,542
|
)
|
||||||||
Preferred distributions
|
|
|
|
|
(5,774
|
)
|
|
(5,774
|
)
|
|
|
|
(5,774
|
)
|
||||||||
Distributions declared per common unit ($1.65 per unit)
|
|
|
|
|
(169,364
|
)
|
|
(169,364
|
)
|
|
|
|
(169,364
|
)
|
||||||||
BALANCE AS OF DECEMBER 31, 2017
|
—
|
|
|
100,697,526
|
|
|
3,773,941
|
|
|
3,773,941
|
|
|
186,375
|
|
|
3,960,316
|
|
|||||
Net income
|
|
|
|
|
263,210
|
|
|
263,210
|
|
|
14,716
|
|
|
277,926
|
|
|||||||
Issuance of common units (Note 14)
|
|
|
1,817,195
|
|
|
130,693
|
|
|
130,693
|
|
|
|
|
130,693
|
|
|||||||
Issuance of share-based compensation awards (Note 15)
|
|
|
|
|
3,926
|
|
|
3,926
|
|
|
|
|
3,926
|
|
||||||||
Non-cash amortization of share-based compensation
(Note 15)
|
|
|
|
|
35,890
|
|
|
35,890
|
|
|
|
|
35,890
|
|
||||||||
Exercise of stock options
|
|
|
1,000
|
|
|
41
|
|
|
41
|
|
|
|
|
41
|
|
|||||||
Settlement of restricted stock units (Note 15)
|
|
|
488,354
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|||||||
Repurchase of common units and restricted stock units (Note 15)
|
|
|
(231,800
|
)
|
|
(16,553
|
)
|
|
(16,553
|
)
|
|
|
|
(16,553
|
)
|
|||||||
Contributions from noncontrolling interest in consolidated property partnership
|
|
|
|
|
—
|
|
|
—
|
|
|
8,273
|
|
|
8,273
|
|
|||||||
Distributions to noncontrolling interests in consolidated property partnerships
|
|
|
|
|
|
|
|
|
(11,803
|
)
|
|
(11,803
|
)
|
|||||||||
Distributions declared per common unit ($1.79 per unit) (Notes 14 and 28)
|
|
|
|
|
(187,448
|
)
|
|
(187,448
|
)
|
|
|
|
(187,448
|
)
|
||||||||
BALANCE AS OF DECEMBER 31, 2018
|
$
|
—
|
|
|
102,772,275
|
|
|
$
|
4,003,700
|
|
|
$
|
4,003,700
|
|
|
$
|
197,561
|
|
|
$
|
4,201,261
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Net income
|
$
|
277,926
|
|
|
$
|
180,615
|
|
|
$
|
303,798
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization of real estate assets and leasing costs
|
249,882
|
|
|
241,862
|
|
|
213,156
|
|
|||
Depreciation of non-real estate furniture, fixtures and equipment
|
4,400
|
|
|
4,024
|
|
|
4,078
|
|
|||
Increase in provision for bad debts (Note 20)
|
5,685
|
|
|
3,269
|
|
|
—
|
|
|||
Non-cash amortization of share-based compensation awards (Note 15)
|
27,932
|
|
|
19,046
|
|
|
21,064
|
|
|||
Non-cash amortization of deferred financing costs and net debt discounts
|
1,084
|
|
|
3,247
|
|
|
2,720
|
|
|||
Non-cash amortization of net below market rents (Note 5)
|
(9,748
|
)
|
|
(8,528
|
)
|
|
(7,166
|
)
|
|||
Loss on early extinguishment of debt (Note 9)
|
12,623
|
|
|
5,312
|
|
|
—
|
|
|||
(Gain) loss on sale of land (Note 4)
|
(11,825
|
)
|
|
(449
|
)
|
|
295
|
|
|||
Gains on sales of depreciable operating properties (Note 4)
|
(142,926
|
)
|
|
(39,507
|
)
|
|
(164,302
|
)
|
|||
Non-cash amortization of deferred revenue related to tenant-funded tenant improvements (Note 10)
|
(18,429
|
)
|
|
(16,767
|
)
|
|
(13,244
|
)
|
|||
Straight-line rents
|
(26,976
|
)
|
|
(33,275
|
)
|
|
(29,629
|
)
|
|||
Net change in other operating assets
|
(7,930
|
)
|
|
(17,732
|
)
|
|
(5,214
|
)
|
|||
Net change in other operating liabilities
|
48,345
|
|
|
5,895
|
|
|
19,498
|
|
|||
Net cash provided by operating activities
|
410,043
|
|
|
347,012
|
|
|
345,054
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Expenditures for development properties and undeveloped land
|
(489,236
|
)
|
|
(397,440
|
)
|
|
(351,012
|
)
|
|||
Expenditures for acquisitions of development properties and undeveloped land (Note 3)
|
(311,299
|
)
|
|
(19,829
|
)
|
|
(33,513
|
)
|
|||
Expenditures for acquisitions of operating properties (Note 3)
|
(257,340
|
)
|
|
—
|
|
|
(393,767
|
)
|
|||
Expenditures for operating properties and other capital assets
|
(166,440
|
)
|
|
(88,425
|
)
|
|
(111,961
|
)
|
|||
Net proceeds received from dispositions (Note 4)
|
364,300
|
|
|
182,492
|
|
|
325,031
|
|
|||
Decrease (increase) in acquisition-related deposits
|
36,000
|
|
|
(35,900
|
)
|
|
1,902
|
|
|||
Proceeds received from repayment of note receivable (Note 7)
|
15,100
|
|
|
—
|
|
|
—
|
|
|||
Issuance of notes receivable
|
—
|
|
|
—
|
|
|
(16,100
|
)
|
|||
Net cash used in investing activities
|
(808,915
|
)
|
|
(359,102
|
)
|
|
(579,420
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Net proceeds from issuance of common units (Note 14)
|
130,693
|
|
|
326,058
|
|
|
31,117
|
|
|||
Redemption of Series G and H Preferred units (Note 14)
|
—
|
|
|
(200,000
|
)
|
|
—
|
|
|||
Net proceeds from the issuance of unsecured debt (Note 9)
|
648,537
|
|
|
674,447
|
|
|
—
|
|
|||
Repayments of unsecured debt (Note 9)
|
(261,823
|
)
|
|
(519,024
|
)
|
|
—
|
|
|||
Borrowings on unsecured revolving credit facility
|
765,000
|
|
|
270,000
|
|
|
305,000
|
|
|||
Repayments on unsecured revolving credit facility
|
(690,000
|
)
|
|
(270,000
|
)
|
|
(305,000
|
)
|
|||
Borrowings on unsecured debt (Note 9)
|
120,000
|
|
|
—
|
|
|
—
|
|
|||
Principal payments and repayments of secured debt (Note 9)
|
(3,584
|
)
|
|
(130,371
|
)
|
|
(74,140
|
)
|
|||
Proceeds from the issuance of secured debt (Note 9)
|
—
|
|
|
—
|
|
|
170,000
|
|
|||
Financing costs
|
(6,262
|
)
|
|
(11,500
|
)
|
|
(2,159
|
)
|
|||
Repurchase of common units and restricted stock units (Note 15)
|
(16,553
|
)
|
|
(12,986
|
)
|
|
(8,875
|
)
|
|||
Proceeds from exercise of stock options
|
41
|
|
|
12,179
|
|
|
12,208
|
|
|||
Contributions from noncontrolling interests in consolidated property partnerships (Note 12)
|
8,273
|
|
|
54,604
|
|
|
453,449
|
|
|||
Distributions to noncontrolling interests in consolidated property partnerships
|
(11,803
|
)
|
|
(16,542
|
)
|
|
(3,615
|
)
|
|||
Distributions paid to common unitholders
|
(179,411
|
)
|
|
(340,697
|
)
|
|
(137,444
|
)
|
|||
Distributions paid to preferred unitholders
|
—
|
|
|
(7,409
|
)
|
|
(13,250
|
)
|
|||
Net cash provided by (used in) financing activities
|
503,108
|
|
|
(171,241
|
)
|
|
427,291
|
|
|||
Net increase (decrease) in cash and cash equivalents and restricted cash
|
104,236
|
|
|
(183,331
|
)
|
|
192,925
|
|
|||
Cash and cash equivalents and restricted cash, beginning of year
|
66,798
|
|
|
250,129
|
|
|
57,204
|
|
|||
Cash and cash equivalents and restricted cash, end of year
|
$
|
171,034
|
|
|
$
|
66,798
|
|
|
$
|
250,129
|
|
1.
|
Organization and Ownership
|
|
Number of
Buildings
|
|
Rentable
Square Feet (unaudited)
|
|
Number of
Tenants
|
|
Percentage
Occupied
(unaudited)
|
|
Percentage Leased
(unaudited)
|
|||||
Stabilized Office Properties
|
94
|
|
|
13,232,580
|
|
|
482
|
|
|
94.4
|
%
|
|
96.6
|
%
|
|
Number of
Buildings |
|
Number of Units
|
|
2018 Average Occupancy
(unaudited) |
|||
Stabilized Residential Property
|
1
|
|
|
200
|
|
|
79.7
|
%
|
|
Number of
Properties/Projects
|
|
Estimated Rentable
Square Feet
(1)
(unaudited)
|
|
In-process development projects - tenant improvement
(2)
|
2
|
|
1,150,000
|
|
In-process development projects - under construction
(3)
|
3
|
|
1,290,000
|
|
(1)
|
Estimated rentable square feet upon completion.
|
(2)
|
Includes
88,000
square feet of Production, Distribution, and Repair (“PDR”) space.
|
(3)
|
In addition to the estimated office and PDR rentable square feet noted above, development projects under construction also include
96,000
square feet of retail space and
801
residential units.
|
2.
|
Basis of Presentation and Significant Accounting Policies
|
•
|
For office and retail development and redevelopment properties that are pre-leased, we cease capitalization when revenue recognition commences, which is upon substantial completion of tenant improvements deemed to be the Company’s asset for accounting purposes.
|
•
|
For office and retail development and redevelopment properties that are not pre-leased, we may not immediately build out the tenant improvements. Therefore, we cease capitalization when revenue recognition commences upon substantial completion of the tenant improvements deemed to be the Company's asset for accounting purposes, but in any event, no later than one year after the cessation of major construction activities. We also cease capitalization on a development or redevelopment property when activities necessary to prepare the property for its intended use have been suspended.
|
•
|
For office and retail development or redevelopment properties with multiple tenants and staged leasing, we cease capitalization and begin depreciation on the portion of the development or redevelopment property for which revenue recognition has commenced.
|
•
|
For residential development properties, we cease capitalization when the property is substantially complete and available for occupancy.
|
Asset Description
|
|
Depreciable Lives
|
Buildings and improvements
|
|
25 – 40 years
|
Tenant improvements
|
|
1 – 20 years
(1)
|
(1)
|
Tenant improvements are amortized over the shorter of the lease term or the estimated useful life.
|
•
|
Level 1 –
quoted prices for identical instruments in active markets;
|
•
|
Level 2 –
quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and
|
•
|
Level 3 –
fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
3.
|
Acquisitions
|
Property
|
|
Date of Acquisition
|
|
Number of Buildings
|
|
Rentable Square Feet (unaudited)
|
|
Occupancy as of December 31, 2018 (unaudited)
|
|
Purchase Price (in millions)
(1)
|
||||
2018 Acquisitions
|
|
|
|
|
|
|
|
|
|
|
||||
345, 347 & 349 Oyster Point Boulevard, South San Francisco, CA
|
|
January 31, 2018
|
|
3
|
|
145,530
|
|
|
78.5
|
%
|
|
$
|
111.0
|
|
345 Brannan Street, San Francisco, CA
(2)
|
|
December 21, 2018
|
|
1
|
|
110,030
|
|
|
99.7
|
%
|
|
146.0
|
|
|
Total
(3)
|
|
|
|
4
|
|
255,560
|
|
|
|
|
$
|
257.0
|
|
(1)
|
Excludes acquisition-related costs.
|
(2)
|
At
December 31, 2018
, this property was temporarily being held in a separate VIE to facilitate potential Section 1031 Exchanges. During January 2019, the Company completed the Section 1031 Exchange related to this VIE. See Note 2 “Basis of Presentation and Significant Accounting Policies.”
|
(3)
|
The results of operations for the properties acquired during 2018 contributed
$8.0 million
and
$1.7 million
to revenue and net income, respectively, for the year ended December 31, 2018.
|
|
Total 2018 Operating Property Acquisitions
(1)
|
||
|
|
||
Assets
|
|
||
Land and improvements
|
$
|
80,269
|
|
Buildings and improvements
(2)
|
172,059
|
|
|
Deferred leasing costs and acquisition-related intangible assets
(3)
|
13,593
|
|
|
Total assets acquired
|
$
|
265,921
|
|
Liabilities
|
|
||
Acquisition-related intangible liabilities
(4)
|
$
|
8,921
|
|
Total liabilities assumed
|
8,921
|
|
|
Net assets and liabilities acquired
|
$
|
257,000
|
|
(1)
|
The purchase price of the
two
acquisitions completed during the year ended
December 31, 2018
were individually less than
5%
and in aggregate less than
10%
of the Company’s total assets as of
December 31, 2017
.
|
(2)
|
Represents buildings, building improvements and tenant improvements.
|
(3)
|
Represents in-place leases (approximately
$11.8 million
with a weighted average amortization period of
1.3 years
years) and leasing commissions (approximately
$1.8 million
with a weighted average amortization period of
6.6 years
years).
|
(4)
|
Represents below-market leases (approximately
$8.9 million
with a weighted average amortization period of
9.8 years
years).
|
Project
|
|
Date of Acquisition
|
|
City/Submarket
|
|
Type
|
|
Purchase Price (in millions)
(1)
|
||
Kilroy Oyster Point
|
|
June 1, 2018
|
|
South San Francisco
|
|
Land
|
|
$
|
308.2
|
|
(1)
|
Excludes acquisition-related costs. In connection with this acquisition, we also recorded
$40.6 million
in accrued liabilities and environmental remediation liabilities at the date of acquisition, which are not included in the purchase price above. As of
December 31, 2018
, the purchase price and our current estimate of assumed liabilities are included in undeveloped land and construction in progress and the assumed liabilities are included in accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets.
|
Location
|
|
Month of Disposition
|
|
Number of Buildings
|
|
Rentable
Square Feet (unaudited)
|
|
Sales Price
(in millions)
(1)
|
|||
2018 Dispositions
|
|
|
|
|
|
|
|
|
|||
1310-1327 Chesapeake Terrace, Sunnyvale, CA
|
|
November
|
|
4
|
|
266,982
|
|
|
$
|
160.3
|
|
Plaza Yarrow Bay Properties
(2)
|
|
November
|
|
4
|
|
279,924
|
|
|
134.5
|
|
|
23925, 23975, & 24025 Park Sorrento, Calabasas, CA
|
|
December
|
|
3
|
|
225,340
|
|
|
78.2
|
|
|
Total 2018 Dispositions
|
|
|
|
11
|
|
772,246
|
|
|
$
|
373.0
|
|
|
|
|
|
|
|
|
|
|
|||
2017 Dispositions
|
|
|
|
|
|
|
|
|
|||
5717 Pacific Center Boulevard, San Diego, CA
|
|
January
|
|
1
|
|
67,995
|
|
|
$
|
12.1
|
|
Sorrento Mesa and Mission Valley Properties
(3)
|
|
September
|
|
10
|
|
675,143
|
|
|
174.5
|
|
|
Total 2017 Dispositions
|
|
|
|
11
|
|
743,138
|
|
|
$
|
186.6
|
|
|
|
|
|
|
|
|
|
|
|||
2016 Dispositions
|
|
|
|
|
|
|
|
|
|||
Torrey Santa Fe Properties
(4)
|
|
January
|
|
4
|
|
465,812
|
|
|
$
|
262.3
|
|
4930, 4939 & 4955 Directors Place, San Diego, CA
(5)
|
|
July
|
|
2
|
|
136,908
|
|
|
49.0
|
|
|
Total 2016 Dispositions
|
|
|
|
6
|
|
602,720
|
|
|
$
|
311.3
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents gross sales price before the impact of broker commissions and closing costs.
|
(2)
|
The Plaza Yarrow Bay Properties include the following properties: 10210, 10220 and 10230 NE Points Drive & 3933 Lake Washington Boulevard NE in Kirkland, Washington.
|
(3)
|
The Sorrento Mesa and Mission Valley Properties includes the following properties: 10390, 10394, 10398, 10421, 10445 and 10455 Pacific Center Court, 2355, 2365, 2375 and 2385 Northside Drive and Pacific Corporate Center - Lot 8, a
5.0
acre undeveloped land parcel.
|
(4)
|
The Torrey Santa Fe Properties include the following properties: 7525, 7535, 7545 and 7555 Torrey Santa Fe.
|
(5)
|
Includes
two
operating properties totaling
136,908
rentable square feet and a
7.0
acre undeveloped land parcel.
|
Properties
|
|
Submarket
|
|
Month of Disposition
|
|
Gross Site Acreage
(unaudited)
|
|
Sales Price
(1)
(in millions)
|
||
2016 Land Dispositions
|
|
|
|
|
|
|
|
|
||
Carlsbad Oaks - Lot 7
|
|
Carlsbad
|
|
January
|
|
7.6
|
|
$
|
4.5
|
|
Carlsbad Oaks - Lots 4 & 5
|
|
Carlsbad
|
|
June
|
|
11.2
|
|
6.0
|
|
|
Carlsbad Oaks - Lot 8
|
|
Carlsbad
|
|
June
|
|
13.2
|
|
8.9
|
|
|
Total 2016 Land Dispositions
(2)(3)
|
|
|
|
|
|
32.0
|
|
$
|
19.4
|
|
(1)
|
Represents gross sales price before the impact of commissions and closing costs.
|
(2)
|
In connection with these land dispositions,
$2.3 million
of secured debt was assumed by the buyers.
|
(3)
|
The 2016 land dispositions resulted in a net loss on sales of
$0.3 million
.
|
5.
|
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Deferred Leasing Costs and Acquisition-related Intangible Assets, net:
|
|
|
|
||||
Deferred leasing costs
|
$
|
266,905
|
|
|
$
|
248,598
|
|
Accumulated amortization
|
(100,805
|
)
|
|
(101,917
|
)
|
||
Deferred leasing costs, net
|
166,100
|
|
|
146,681
|
|
||
Above-market operating leases
|
2,836
|
|
|
4,199
|
|
||
Accumulated amortization
|
(2,150
|
)
|
|
(3,068
|
)
|
||
Above-market operating leases, net
|
686
|
|
|
1,131
|
|
||
In-place leases
|
66,526
|
|
|
82,097
|
|
||
Accumulated amortization
|
(36,174
|
)
|
|
(46,625
|
)
|
||
In-place leases, net
|
30,352
|
|
|
35,472
|
|
||
Below-market ground lease obligation
|
490
|
|
|
490
|
|
||
Accumulated amortization
|
(54
|
)
|
|
(46
|
)
|
||
Below-market ground lease obligation, net
|
436
|
|
|
444
|
|
||
Total deferred leasing costs and acquisition-related intangible assets, net
|
$
|
197,574
|
|
|
$
|
183,728
|
|
Acquisition-related Intangible Liabilities, net:
(1)
|
|
|
|
||||
Below-market operating leases
|
$
|
53,523
|
|
|
$
|
65,440
|
|
Accumulated amortization
|
(29,978
|
)
|
|
(40,495
|
)
|
||
Below-market operating leases, net
|
23,545
|
|
|
24,945
|
|
||
Above-market ground lease obligation
|
6,320
|
|
|
6,320
|
|
||
Accumulated amortization
|
(727
|
)
|
|
(626
|
)
|
||
Above-market ground lease obligation, net
|
5,593
|
|
|
5,694
|
|
||
Total acquisition-related intangible liabilities, net
|
$
|
29,138
|
|
|
$
|
30,639
|
|
(1)
|
Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Deferred leasing costs
(1)
|
$
|
34,341
|
|
|
$
|
31,675
|
|
|
$
|
28,639
|
|
Above-market operating leases
(2)
|
444
|
|
|
2,240
|
|
|
1,509
|
|
|||
In-place leases
(1)
|
15,915
|
|
|
18,650
|
|
|
11,676
|
|
|||
Below-market ground lease obligation
(3)
|
8
|
|
|
8
|
|
|
8
|
|
|||
Below-market operating leases
(4)
|
(10,192
|
)
|
|
(10,768
|
)
|
|
(8,674
|
)
|
|||
Above-market ground lease obligation
(5)
|
(101
|
)
|
|
(101
|
)
|
|
(101
|
)
|
|||
Total
|
$
|
40,415
|
|
|
$
|
41,704
|
|
|
$
|
33,057
|
|
(1)
|
The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense and the amortization of lease incentives is recorded as a reduction to rental income in the consolidated statements of operations for the periods presented.
|
(2)
|
The amortization of above-market operating leases is recorded as a decrease to rental income in the consolidated statements of operations for the periods presented.
|
(3)
|
The amortization of the below-market ground lease obligation is recorded as an increase to ground lease expense in the consolidated statements of operations for the periods presented.
|
(4)
|
The amortization of below-market operating leases is recorded as an increase to rental income in the consolidated statements of operations for the periods presented.
|
(5)
|
The amortization of the above-market ground lease obligation is recorded as a decrease to ground lease expense in the consolidated statements of operations for the periods presented.
|
Year
|
Deferred Leasing Costs
|
|
Above-Market Operating Leases
(1)
|
|
In-Place Leases
|
|
Below-Market Ground Lease Obligation
(2)
|
|
Below-Market Operating Leases
(3)
|
|
Above-Market Ground Lease Obligation
(4)
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
2019
|
31,980
|
|
|
192
|
|
|
16,675
|
|
|
8
|
|
|
(7,779
|
)
|
|
(100
|
)
|
||||||
2020
|
26,868
|
|
|
38
|
|
|
5,963
|
|
|
8
|
|
|
(4,621
|
)
|
|
(100
|
)
|
||||||
2021
|
21,787
|
|
|
38
|
|
|
2,861
|
|
|
8
|
|
|
(1,938
|
)
|
|
(100
|
)
|
||||||
2022
|
18,683
|
|
|
38
|
|
|
1,589
|
|
|
8
|
|
|
(1,486
|
)
|
|
(100
|
)
|
||||||
2023
|
14,914
|
|
|
38
|
|
|
648
|
|
|
8
|
|
|
(988
|
)
|
|
(100
|
)
|
||||||
Thereafter
|
51,868
|
|
|
342
|
|
|
2,616
|
|
|
396
|
|
|
(6,733
|
)
|
|
(5,093
|
)
|
||||||
Total
|
$
|
166,100
|
|
|
$
|
686
|
|
|
$
|
30,352
|
|
|
$
|
436
|
|
|
$
|
(23,545
|
)
|
|
$
|
(5,593
|
)
|
(1)
|
Represents estimated annual amortization related to above-market operating leases. Amounts will be recorded as a decrease to rental income in the consolidated statements of operations.
|
(2)
|
Represents estimated annual amortization related to below-market ground lease obligations. Amounts will be recorded as an increase to ground lease expense in the consolidated statements of operations.
|
(3)
|
Represents estimated annual amortization related to below-market operating leases. Amounts will be recorded as an increase to rental income in the consolidated statements of operations.
|
(4)
|
Represents estimated annual amortization related to above-market ground lease obligations. Amounts will be recorded as a decrease to ground lease expense in the consolidated statements of operations.
|
6.
|
Receivables
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Current receivables
|
$
|
24,815
|
|
|
$
|
19,235
|
|
Allowance for uncollectible tenant receivables
|
(4,639
|
)
|
|
(2,309
|
)
|
||
Current receivables, net
|
$
|
20,176
|
|
|
$
|
16,926
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Deferred rent receivables
|
$
|
270,346
|
|
|
$
|
249,629
|
|
Allowance for deferred rent receivables
|
(3,339
|
)
|
|
(3,238
|
)
|
||
Deferred rent receivables, net
|
$
|
267,007
|
|
|
$
|
246,391
|
|
7.
|
Prepaid Expenses and Other Assets, Net
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Furniture, fixtures and other long-lived assets, net
|
$
|
36,833
|
|
|
$
|
39,686
|
|
Notes receivable
(1)
|
2,113
|
|
|
19,912
|
|
||
Prepaid expenses & acquisition deposits
|
13,927
|
|
|
55,108
|
|
||
Total Prepaid Expenses and Other Assets, Net
|
$
|
52,873
|
|
|
$
|
114,706
|
|
(1)
|
During the
year
ended
December 31, 2018
, a note receivable with a balance of
$15.1 million
was repaid to the Company. Notes receivable are shown net of a valuation allowance of approximately
$2.9 million
as of
December 31, 2018
.
|
|
Annual Stated Interest Rate
(1)
|
|
GAAP
Effective Rate
(1)(2)
|
|
Maturity Date
|
|
December 31,
|
||||||
Type of Debt
|
|
|
|
2018
|
|
2017
|
|||||||
|
|
|
|
|
|
|
(in thousands)
|
||||||
Mortgage note payable
|
3.57%
|
|
3.57%
|
|
December 2026
|
|
$
|
170,000
|
|
|
$
|
170,000
|
|
Mortgage note payable
(3)
|
4.48%
|
|
4.48%
|
|
July 2027
|
|
91,332
|
|
|
93,081
|
|
||
Mortgage note payable
(3)(4)
|
6.05%
|
|
3.50%
|
|
June 2019
|
|
75,238
|
|
|
78,894
|
|
||
Total secured debt
|
|
|
|
|
|
|
$
|
336,570
|
|
|
$
|
341,975
|
|
Unamortized Deferred Financing Costs
|
|
|
|
|
|
|
(1,039
|
)
|
|
(1,175
|
)
|
||
Total secured debt, net
|
|
|
|
|
|
|
$
|
335,531
|
|
|
$
|
340,800
|
|
(1)
|
All interest rates presented are fixed-rate interest rates.
|
(2)
|
Represents the effective interest rate including the amortization of initial issuance discounts/premiums excluding the amortization of deferred financing costs.
|
(3)
|
The secured debt and the related properties that secure the debt are held in a special purpose entity and the properties are not available to satisfy the debts and other obligations of the Company or the Operating Partnership.
|
(4)
|
As of
December 31, 2018
and
2017
, the mortgage loan had unamortized debt premiums of
$0.8 million
and
$2.6 million
, respectively. In February 2019, the Company repaid this mortgage note payable at par.
|
|
|
|
|
|
|
|
|
|
Net Carrying Amount
as of December 31, |
||||||
|
Issuance date
|
|
Maturity date
|
|
Stated
coupon rate
|
|
Effective interest rate
(1)
|
|
2018
|
|
2017
|
||||
|
|
|
|
|
|
|
|
|
(in thousands)
|
||||||
4.750% Unsecured Senior Notes
(2)
|
November 2018
|
|
December 2028
|
|
4.750%
|
|
4.800%
|
|
$
|
400,000
|
|
|
$
|
—
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(4,960
|
)
|
|
—
|
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
395,040
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.350% Unsecured Senior Notes
(3)
|
October 2018
|
|
October 2026
|
|
4.350%
|
|
4.350%
|
|
$
|
200,000
|
|
|
$
|
—
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(1,375
|
)
|
|
—
|
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
198,625
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.300% Unsecured Senior Notes
(3)
|
July 2018
|
|
July 2026
|
|
4.300%
|
|
4.300%
|
|
$
|
50,000
|
|
|
$
|
—
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(342
|
)
|
|
—
|
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
49,658
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.450% Unsecured Senior Notes
(4)
|
December 2017
|
|
December 2024
|
|
3.450%
|
|
3.470%
|
|
$
|
425,000
|
|
|
$
|
425,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(3,493
|
)
|
|
(4,047
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
421,507
|
|
|
$
|
420,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.450% Unsecured Senior Notes
(5)
|
February 2017
|
|
February 2029
|
|
3.450%
|
|
3.450%
|
|
$
|
75,000
|
|
|
$
|
75,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(432
|
)
|
|
(475
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
74,568
|
|
|
$
|
74,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.350% Unsecured Senior Notes
(5)
|
February 2017
|
|
February 2027
|
|
3.350%
|
|
3.350%
|
|
$
|
175,000
|
|
|
$
|
175,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(941
|
)
|
|
(1,056
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
174,059
|
|
|
$
|
173,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.375% Unsecured Senior Notes
(6)
|
September 2015
|
|
October 2025
|
|
4.375%
|
|
4.444%
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(3,738
|
)
|
|
(4,292
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
396,262
|
|
|
$
|
395,708
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
4.250% Unsecured Senior Notes
(7)
|
July 2014
|
|
August 2029
|
|
4.250%
|
|
4.350%
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(5,632
|
)
|
|
(6,164
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
394,368
|
|
|
$
|
393,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
3.800% Unsecured Senior Notes
(8)
|
January 2013
|
|
January 2023
|
|
3.800%
|
|
3.800%
|
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
(1,108
|
)
|
|
(1,382
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
298,892
|
|
|
$
|
298,618
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
6.625% Unsecured Senior Notes
(9)
|
May 2010
|
|
June 2020
|
|
6.625%
|
|
6.744%
|
|
$
|
—
|
|
|
$
|
250,000
|
|
Unamortized discount and deferred financing costs
|
|
|
|
|
|
|
|
|
—
|
|
|
(1,321
|
)
|
||
Net carrying amount
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
248,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total Unsecured Senior Notes, Net
|
|
|
|
|
|
|
|
|
$
|
2,402,979
|
|
|
$
|
2,006,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the effective interest rate including the amortization of initial issuance discounts, excluding the amortization of deferred financing costs.
|
(2)
|
Interest on these notes is payable semi-annually in arrears on June 15th and December 15th of each year, beginning on June 15, 2019.
|
(3)
|
Interest on these notes is payable semi-annually in arrears on April 18th and October 18th of each year, beginning in April 18, 2019.
|
(4)
|
Interest on these notes is payable semi-annually in arrears on June 15th and December 15th of each year.
|
(5)
|
Interest on these notes is payable semi-annually in arrears on February 17th and August 17th of each year.
|
(6)
|
Interest on these notes is payable semi-annually in arrears on April 1st and October 1st of each year.
|
(7)
|
Interest on these notes is payable semi-annually in arrears on February 15th and August 15th of each year.
|
(8)
|
Interest on these notes is payable semi-annually in arrears on January 15th and July 15th of each year.
|
(9)
|
Interest on these notes is payable semi-annually in arrears on June 1st and December 1st of each year.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
45,000
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
705,000
|
|
|
750,000
|
|
||
Total borrowing capacity
(1)
|
$
|
750,000
|
|
|
$
|
750,000
|
|
Interest rate
(2)
|
3.48
|
%
|
|
2.56
|
%
|
||
Facility fee-annual rate
(3)
|
0.200%
|
||||||
Maturity date
|
July 2022
|
(1)
|
We may elect to borrow, subject to bank approval and obtaining commitments for any additional borrowing capacity, up to an additional
$600.0 million
under an accordion feature under the terms of the unsecured revolving credit facility and unsecured term loan facility.
|
(2)
|
Our unsecured revolving credit facility interest rate was calculated based on the contractual rate of LIBOR plus
1.000%
as of
December 31, 2018
and
2017
.
|
(3)
|
Our facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we incurred debt origination and legal costs. As of
December 31, 2018
and
2017
,
$4.7 million
and
$6.0 million
of unamortized deferred financing costs, respectively, which are included in prepaid expenses and other assets, net on our consolidated balance sheets, remained to be amortized through the maturity date of our unsecured revolving credit facility.
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Outstanding borrowings
|
$
|
150,000
|
|
|
$
|
—
|
|
Remaining borrowing capacity
|
—
|
|
|
150,000
|
|
||
Total borrowing capacity
(1)
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Interest rate
(2)
|
3.49
|
%
|
|
2.66
|
%
|
||
Undrawn facility fee-annual rate
(3)
|
0.200%
|
||||||
Maturity date
|
July 2022
|
(1)
|
As of
December 31, 2018
and
2017
,
$0.9 million
and
$1.2 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 the contractual rate of LIBOR plus
1.100%
as of
December 31, 2018
and
2017
.
|
(3)
|
Prior to borrowing the full capacity of our unsecured term loan facility, the undrawn facility fee was calculated based on any unused borrowing capacity and was paid on a quarterly basis.
|
Year
|
(in thousands)
|
||
2019
|
$
|
76,309
|
|
2020
|
5,137
|
|
|
2021
|
5,342
|
|
|
2022
|
200,554
|
|
|
2023
|
305,775
|
|
|
Thereafter
|
2,362,694
|
|
|
Total aggregate principal value
(1)
|
$
|
2,955,811
|
|
(1)
|
Includes gross principal balance of outstanding debt before the effect of the following at
December 31, 2018
:
$17.4 million
of unamortized deferred financing costs for the unsecured term loan facility, unsecured senior notes and secured debt,
$6.6 million
of unamortized discounts for the unsecured senior notes and
$0.8 million
of unamortized premiums for the secured debt.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Gross interest expense
|
$
|
117,789
|
|
|
$
|
112,577
|
|
|
$
|
105,263
|
|
Capitalized interest and deferred financing costs
|
(68,068
|
)
|
|
(46,537
|
)
|
|
(49,460
|
)
|
|||
Interest expense
|
$
|
49,721
|
|
|
$
|
66,040
|
|
|
$
|
55,803
|
|
10.
|
Deferred Revenue and Acquisition-Related Intangible Liabilities, net
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Deferred revenue related to tenant-funded tenant improvements
|
$
|
104,558
|
|
|
$
|
104,260
|
|
Other deferred revenue
|
15,950
|
|
|
10,991
|
|
||
Acquisition-related intangible liabilities, net
(1)
|
29,138
|
|
|
30,639
|
|
||
Total
|
$
|
149,646
|
|
|
$
|
145,890
|
|
(1)
|
See Note 5 “Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net” for additional information regarding our acquisition-related intangible liabilities.
|
Year Ending
|
(in thousands)
|
||
2019
|
$
|
16,973
|
|
2020
|
16,265
|
|
|
2021
|
14,612
|
|
|
2022
|
13,603
|
|
|
2023
|
11,857
|
|
|
Thereafter
|
31,248
|
|
|
Total
|
$
|
104,558
|
|
13.
|
Stockholders’ Equity of the Company
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions, except share data)
|
||||||||||
Shares of common stock sold during the period
|
1,817,195
|
|
|
235,077
|
|
|
451,398
|
|
|||
Weighted average price per share of common stock
|
$
|
73.64
|
|
|
$
|
75.40
|
|
|
$
|
71.50
|
|
Aggregate gross proceeds
|
$
|
133.8
|
|
|
$
|
17.7
|
|
|
$
|
32.3
|
|
Aggregate net proceeds after selling commissions
|
$
|
132.1
|
|
|
$
|
17.5
|
|
|
$
|
31.9
|
|
|
December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(in thousands)
|
||||||
Dividends and Distributions payable to:
|
|
|
|
||||
Common stockholders
|
$
|
45,840
|
|
|
$
|
41,914
|
|
Noncontrolling common unitholders of the Operating Partnership
|
922
|
|
|
883
|
|
||
RSU holders
(1)
|
797
|
|
|
651
|
|
||
Total accrued dividends and distribution to common stockholders and noncontrolling unitholders
|
$
|
47,559
|
|
|
$
|
43,448
|
|
(1)
|
The amount includes the value of the dividend equivalents that will be paid with additional RSUs (see Note 15 “Share-Based Compensation” for additional information).
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||
Outstanding Shares and Units:
|
|
||||
Common stock
(1)
|
100,746,988
|
|
|
98,620,333
|
|
Noncontrolling common units
|
2,025,287
|
|
|
2,077,193
|
|
RSUs
(2)
|
1,711,628
|
|
|
1,488,724
|
|
(1)
|
The amount includes nonvested shares.
|
(2)
|
The amount includes nonvested RSUs. Does not include
1,018,337
and
665,110
market measure-based RSUs because not all the necessary performance conditions have been met as of
December 31, 2018
and
2017
, respectively. Refer to Note 15 “Share-Based Compensation” for additional information.
|
14.
|
Partners' Capital of the Operating Partnership
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in millions, except share and per share data)
|
||||||||||
Shares of common stock contributed by the Company
|
1,817,195
|
|
|
235,077
|
|
|
451,398
|
|
|||
Common units exchanged for shares of common stock by the Company
|
1,817,195
|
|
|
235,077
|
|
|
451,398
|
|
|||
Aggregate gross proceeds
|
$
|
133.8
|
|
|
$
|
17.7
|
|
|
$
|
32.3
|
|
Aggregate net proceeds after selling commissions
|
$
|
132.1
|
|
|
$
|
17.5
|
|
|
$
|
31.9
|
|
|
December 31, 2018
|
|
December 31, 2017
|
||
Company owned common units in the Operating Partnership
|
100,746,988
|
|
|
98,620,333
|
|
Company owned general partnership interest
|
98.0
|
%
|
|
97.9
|
%
|
Noncontrolling common units of the Operating Partnership
|
2,025,287
|
|
|
2,077,193
|
|
Ownership interest of noncontrolling interest
|
2.0
|
%
|
|
2.1
|
%
|
|
December 31, 2018
|
|
December 31, 2017
|
||||
|
(in thousands)
|
||||||
Distributions payable to:
|
|
|
|
||||
General partner
|
$
|
45,840
|
|
|
$
|
41,914
|
|
Common limited partners
|
922
|
|
|
883
|
|
||
RSU holders
(1)
|
797
|
|
|
651
|
|
||
Total accrued distributions to common unitholders
|
$
|
47,559
|
|
|
$
|
43,448
|
|
(1)
|
The amount includes the value of the dividend equivalents that will be paid with additional RSUs (see Note 15 “Share-Based Compensation” for additional information).
|
|
December 31, 2018
|
|
December 31, 2017
|
||
Outstanding Units:
|
|
||||
Common units held by the general partner
|
100,746,988
|
|
|
98,620,333
|
|
Common units held by the limited partners
|
2,025,287
|
|
|
2,077,193
|
|
RSUs
(1)
|
1,711,628
|
|
|
1,488,724
|
|
(1)
|
Does not include
1,018,337
and
665,110
market measure-based RSUs because not all the necessary performance conditions have been met as of
December 31, 2018
and
2017
, respectively. Refer to Note 15 “Share-Based Compensation” for additional information.
|
|
|
December 2018 Market-Based RSU Award Fair Value Assumptions
|
Valuation date
|
|
December 27, 2018
|
Fair value per share on valuation date
|
|
$68.66
|
Expected share price volatility
|
|
23.0%
|
Risk-free interest rate
|
|
2.4%
|
|
2018 Performance-Based RSUs
|
|
2017 Performance-Based RSUs
|
|
2016 Performance-Based RSUs
|
|||
Service vesting period
|
February 14, 2018 - January, 2021
|
|
|
February 24, 2017 - January, 2020
|
|
|
January 28, 2016 - January, 2019
|
|
Target RSUs granted
|
158,205
|
|
|
130,956
|
|
|
168,077
|
|
Estimated RSUs earned
(1)
|
254,235
|
|
|
170,994
|
|
|
241,438
|
|
Date of valuation
|
February 14, 2018
|
|
|
February 24, 2017
|
|
|
January 28, 2016
|
|
(1)
|
Estimated RSUs earned for the 2018 Performance-Based RSUs are based on the actual achievement of the 2018 FFO Performance Condition and assumes target level achievement of the 2018 Debt to EBITDA Ratio Performance Condition and the 2018 Market Condition. Estimated RSUs earned for the 2017 Performance-Based RSUs are based on the actual achievement of the 2017 FFO Performance Condition and assume target level achievement of the 2017 Market Condition and Other 2017 Performance Conditions. The 2016 Performance-Based RSUs earned are based on actual performance of the 2016 Performance Condition and the 2016 Market Condition.
|
|
2018 Award Fair Value Assumptions
|
|
2017 Award Fair Value Assumptions
|
|
2016 Award Fair Value Assumptions
|
Valuation date
|
February 14, 2018
|
|
February 24, 2017
|
|
January 28, 2016
|
Fair value per share on valuation date
|
$70.08
|
|
$80.89
|
|
$57.08
|
Expected share price volatility
|
20.00%
|
|
21.00%
|
|
26.00%
|
Risk-free interest rate
|
2.37%
|
|
1.39%
|
|
1.13%
|
|
December 2018 Time-Based RSU Grant
|
|
2018 Time-Based RSU Grant
(1)
|
|
2017 Time-Based RSU Grant
(2)
|
|
2016 Time-Based RSU Grant
|
||||||||
Service vesting period
|
December 27, 2018 - January 5, 2023
|
|
|
January & February 2018 - January 5, 2021
|
|
|
February 2017 - January 5, 2020
|
|
|
January 28, 2016 - January 5, 2019
|
|
||||
Fair value on valuation date (in millions)
|
$
|
18.5
|
|
|
$
|
8.4
|
|
|
$
|
7.5
|
|
|
$
|
7.1
|
|
Fair value per share
|
$
|
62.00
|
|
|
$
|
70.37
|
|
|
$
|
73.30
|
|
|
$
|
56.23
|
|
Date of fair valuation
|
December 27, 2018
|
|
|
January & February 2018
|
|
|
February 2017
|
|
|
January 28, 2016
|
|
(1)
|
The 2018 Time-Based RSUs consist of
56,015
RSUs granted on January 29, 2018 at a fair value per share of
$70.37
and
67,818
RSUs granted on February 14, 2018 at a fair value per share of
$66.46
.
|
(2)
|
The 2017 Time-Based RSUs consist of
41,119
RSUs granted on February 3, 2017 at a fair value per share of
$73.30
and
57,901
RSUs granted on February 24, 2017 at a fair value per share of
$77.16
.
|
|
Nonvested RSUs
|
|
Vested RSUs
|
|
Total RSUs
|
|||||||
|
Amount
|
|
Weighted-Average
Fair Value Per Share (1) |
|
||||||||
Outstanding at January 1, 2018
|
665,110
|
|
|
$
|
68.83
|
|
|
55,672
|
|
|
720,782
|
|
Granted
|
601,012
|
|
|
68.51
|
|
|
1,067
|
|
|
602,079
|
|
|
Vested
|
(261,875
|
)
|
|
74.25
|
|
|
261,875
|
|
|
—
|
|
|
Settled
(2)
|
|
|
|
|
(285,818
|
)
|
|
(285,818
|
)
|
|||
Issuance of dividend equivalents
(3)
|
14,090
|
|
|
71.75
|
|
|
2,976
|
|
|
17,066
|
|
|
Forfeited
|
—
|
|
|
|
|
(11
|
)
|
|
(11
|
)
|
||
Outstanding as of December 31, 2018
(4)
|
1,018,337
|
|
|
$
|
67.29
|
|
|
35,761
|
|
|
1,054,098
|
|
(1)
|
Represents the grant-date fair value for all awards, excluding the 2014 Performance-Based RSU Grant, which was re-measured upon stockholder approval of the amended 2006 Plan on May 22, 2014, as an insufficient number of shares were available to settle these RSUs upon initial grant on January 29, 2014.
|
(2)
|
Represents vested RSUs that were settled in shares of the Company’s common stock. Total shares settled include
139,933
shares that were tendered in accordance with the terms of the 2006 Plan to satisfy minimum statutory tax withholding requirements related to the RSUs settled. We accept the return of RSUs at the current quoted closing share price of the Company’s common stock to satisfy tax obligations.
|
(3)
|
Represents the issuance of dividend equivalents earned on the underlying RSUs. The dividend equivalents vest based on terms specified under the related RSU award agreement.
|
(4)
|
Outstanding RSUs as of
December 31, 2018
represent the actual achievement of the FFO performance conditions and assumes target levels for the market and other performance conditions. The number of restricted stock units ultimately earned is subject to change based upon actual performance over the three-year vesting period. Dividend equivalents earned will vest along with the underlying award and are also subject to changes based on the number of RSUs ultimately earned for each underlying award.
|
|
RSUs Granted
|
|
RSUs Vested
|
||||||||||
Years ended December 31,
|
Non-Vested
RSUs Granted
(1)
|
|
Weighted-Average
Fair Value
Per Share
(2)
|
|
Vested RSUs
|
|
Total Vest-Date Fair Value
(in thousands)
|
||||||
2018
|
601,012
|
|
|
$
|
68.51
|
|
|
(265,918
|
)
|
|
$
|
18,906
|
|
2017
|
170,994
|
|
|
78.97
|
|
|
(194,991
|
)
|
|
14,270
|
|
||
2016
|
258,393
|
|
|
57.36
|
|
|
(36,914
|
)
|
|
2,788
|
|
(1)
|
Non-vested RSUs granted during the years ended December 31, 2018 and 2017 are based on the actual achievement of the FFO performance conditions and assumes target level achievement for the market and other performance conditions. Non-vested RSUs granted during the year ended December 31, 2016 are based on the final performance of both the 2016 Performance and Market Conditions, and are non-vested as of December 31, 2018 as they were subject to the Compensation Committee’s confirmation of final performance.
|
(2)
|
Represents the grant-date fair value for all awards, excluding the 2014 Performance-Based RSU Grant, which was re-measured upon stockholder approval of the amended 2006 Plan on May 22, 2014, as an insufficient number of shares were available to settle these RSUs upon initial grant on January 29, 2014.
|
|
Nonvested RSUs
|
|
Vested RSUs
|
|
Total RSUs
|
|||||||
|
Amount
|
|
Weighted Average Fair Value
Per Share (1) |
|
||||||||
Outstanding at January 1, 2018
|
331,546
|
|
|
$
|
66.83
|
|
|
1,080,928
|
|
|
1,412,474
|
|
Granted
|
437,216
|
|
|
64.21
|
|
|
—
|
|
|
437,216
|
|
|
Vested
|
(187,209
|
)
|
|
63.85
|
|
|
187,209
|
|
|
—
|
|
|
Settled
(2)
|
|
|
|
|
(202,536
|
)
|
|
(202,536
|
)
|
|||
Issuance of dividend equivalents
(3)
|
6,316
|
|
|
71.75
|
|
|
26,922
|
|
|
33,238
|
|
|
Forfeited
|
(1,090
|
)
|
|
70.62
|
|
|
—
|
|
|
(1,090
|
)
|
|
Canceled
(4)
|
|
|
|
|
(3,435
|
)
|
|
(3,435
|
)
|
|||
Outstanding as of December 31, 2018
|
586,779
|
|
|
$
|
65.87
|
|
|
1,089,088
|
|
|
1,675,867
|
|
(1)
|
Represents the grant-date fair value for all awards, excluding the 2014 Performance-Based RSU Grant, which was re-measured upon stockholder approval of the amended 2006 Plan on May 22, 2014, as an insufficient number of shares were available to settle these RSUs upon initial grant on January 29, 2014.
|
(2)
|
Represents vested RSUs that were settled in shares of the Company’s common stock. Total shares settled include
85,598
shares that were tendered in accordance with the terms of the 2006 Plan to satisfy minimum statutory tax withholding requirements related to the RSUs settled. We accept the return of RSUs at the current quoted closing share price of the Company’s common stock to satisfy tax obligations.
|
(3)
|
Represents the issuance of dividend equivalents earned on the underlying RSUs. The dividend equivalents vest based on terms specified under the related RSU award agreement.
|
(4)
|
For shares vested but not yet settled, we accept the return of RSUs at the current quoted closing share price of the Company’s common stock to satisfy minimum statutory tax-withholding requirements related to either the settlement or vesting of RSUs in accordance with the terms of the 2006 Plan.
|
|
RSUs Granted
|
|
RSUs Vested
|
||||||||||
Year ended December 31,
|
Non-Vested
RSUs Issued
|
|
Weighted-Average Grant Date
Fair Value
Per Share
|
|
Vested RSUs
|
|
Total Vest-Date Fair Value
(1)
(in thousands)
|
||||||
2018
|
437,216
|
|
|
$
|
64.21
|
|
|
(214,131
|
)
|
|
$
|
14,768
|
|
2017
|
142,101
|
|
|
74.91
|
|
|
(228,095
|
)
|
|
16,735
|
|
||
2016
|
173,747
|
|
|
58.29
|
|
|
(130,784
|
)
|
|
8,438
|
|
(1)
|
Total fair value of RSUs vested was calculated based on the quoted closing share price of the Company’s common stock on the NYSE on the day of vesting. Excludes the issuance of dividend equivalents earned on the underlying RSUs. The dividend equivalents vest based on terms specified under the related RSU award agreement.
|
|
Nonvested
Restricted Stock |
|
Weighted-Average
Grant Date Fair Value Per Share |
|||
Outstanding at January 1, 2018
|
22,884
|
|
|
$
|
55.23
|
|
Transferred from time-based RSUs
|
—
|
|
|
—
|
|
|
Vested
(1)
|
(22,884
|
)
|
|
55.23
|
|
|
Outstanding as of December 31, 2018
|
—
|
|
|
$
|
—
|
|
(1)
|
The total shares vested includes
9,637
shares that were tendered in accordance with the terms of the 2006 Plan to satisfy minimum statutory tax withholding requirements related to the restricted shares that have vested. We accept the return of shares at the current quoted closing share price of the Company’s common stock to satisfy tax withholding obligations.
|
|
Shares Granted
|
|
Shares Vested
|
||||||||||
Years ended December 31,
|
Nonvested
Shares Issued
|
|
Weighted-Average Grant Date
Fair Value
Per Share
|
|
Vested Shares
|
|
Total Fair Value at Vest Date
(1)
(in thousands)
|
||||||
2018
|
—
|
|
|
$
|
—
|
|
|
(22,884
|
)
|
|
$
|
1,652
|
|
2017
|
—
|
|
|
—
|
|
|
(24,261
|
)
|
|
1,781
|
|
||
2016
|
—
|
|
|
—
|
|
|
(24,262
|
)
|
|
1,527
|
|
(1)
|
Total fair value of shares vested was calculated based on the quoted closing share price of the Company’s common stock on the NYSE on the date of vesting.
|
16.
|
Employee Benefit Plans
|
17.
|
Future Minimum Rent
|
Year Ending
|
(in thousands)
|
||
2019
|
$
|
566,783
|
|
2020
|
632,875
|
|
|
2021
|
631,835
|
|
|
2022
|
620,684
|
|
|
2023
|
586,371
|
|
|
Thereafter
|
3,240,143
|
|
|
Total
(1)
|
$
|
6,278,691
|
|
(1)
|
Excludes residential leases and leases with a term of
one
year or less.
|
18.
|
Commitments and Contingencies
|
Property
|
Contractual Expiration Date
(1)
|
601 108th Ave NE, Bellevue, WA
|
November 2093
|
701, 801 and 837 N. 34th Street, Seattle, WA
(2)
|
December 2041
|
1701 Page Mill Road and 3150 Porter Drive, Palo Alto, CA
|
December 2067
|
Kilroy Airport Center Phases I, II, and III, Long Beach, CA
|
July 2084
|
(1)
|
Reflects the contractual expiration date prior to the impact of any extension or purchase options held by the Company.
|
(2)
|
The Company has
three
10
-year and
one
45
-year extension options for this ground lease, which if exercised would extend the expiration date to December 2116.
|
Year Ending
|
(in thousands)
|
||
2019
|
$
|
5,154
|
|
2020
|
5,154
|
|
|
2021
|
5,154
|
|
|
2022
|
5,154
|
|
|
2023
|
5,154
|
|
|
Thereafter
|
233,619
|
|
|
Total
(1)(2)(3)(4)(5)
|
$
|
259,389
|
|
(1)
|
Excludes contingent future rent payments based on gross income or adjusted gross income and reflects the minimum ground lease obligations before the impact of ground lease extension options.
|
(2)
|
One of our ground lease obligations is subject to a fair market value adjustment every
five years
; however, the lease includes ground rent subprotection and infrastructure rent credits which currently limit our annual rental obligations to
$1.0 million
. The contractual obligations for that ground lease included above assumes the lesser of
$1.0 million
or annual lease rental obligation in effect as of
December 31, 2018
.
|
(3)
|
One of our ground lease obligations includes a component which is based on the percentage of gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every
five years
based on
50%
of the average annual percentage rent for the previous five years. The contractual obligations for that lease included above assume the current annual ground lease obligation in effect at
December 31, 2018
for the remainder of the lease term since we cannot predict future adjustments.
|
(4)
|
One of our ground lease obligations is subject to a fair market value adjustment every five years based on a combination of CPI adjustments and third-party appraisals limited to maximum increases annually. The contractual obligations for that lease included above assume the current annual ground lease obligation in effect at
December 31, 2018
for the remainder of the lease term since we cannot predict future adjustments.
|
(5)
|
One of our ground lease obligations includes a component which is based on the percentage of adjusted gross income that exceeds the minimum ground rent. The minimum rent is subject to increases every
10 years
by an amount equal to
60%
of the average annual percentage rent for the previous three years. The contractual obligations for this lease included above assume the current annual ground lease obligation in effect at
December 31, 2018
for the remainder of the lease term since we cannot predict future adjustments.
|
|
Fair Value (Level 1)
(1)
|
||||||
|
2018
|
|
2017
|
||||
Description
|
(in thousands)
|
||||||
Marketable securities
(2)
|
$
|
21,779
|
|
|
$
|
20,674
|
|
(1)
|
Based on quoted prices in active markets for identical securities.
|
(2)
|
The marketable securities are held in a limited rabbi trust
.
|
|
December 31,
|
||||||||||||||
|
2018
|
|
2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
(1)
|
|
Carrying Value
|
|
Fair Value
(1)
|
||||||||
|
(in thousands)
|
||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Secured debt, net
|
$
|
335,531
|
|
|
$
|
335,885
|
|
|
$
|
340,800
|
|
|
$
|
346,858
|
|
Unsecured debt, net
|
2,552,070
|
|
|
2,546,386
|
|
|
2,006,263
|
|
|
2,077,199
|
|
||||
Unsecured line of credit
(1)
|
45,000
|
|
|
45,058
|
|
|
—
|
|
|
—
|
|
(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.
|
21.
|
Net Income Available to Common Stockholders Per Share of the Company
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except unit and per unit amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to Kilroy Realty Corporation
|
$
|
258,415
|
|
|
$
|
164,612
|
|
|
$
|
293,788
|
|
Total preferred dividends
|
—
|
|
|
(13,363
|
)
|
|
(13,250
|
)
|
|||
Allocation to participating securities
(1)
|
(2,004
|
)
|
|
(1,975
|
)
|
|
(3,839
|
)
|
|||
Numerator for basic and diluted net income available to common stockholders
|
$
|
256,411
|
|
|
$
|
149,274
|
|
|
$
|
276,699
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average vested shares outstanding
|
99,972,359
|
|
|
98,113,561
|
|
|
92,342,483
|
|
|||
Effect of dilutive securities
|
510,006
|
|
|
613,770
|
|
|
680,551
|
|
|||
Diluted weighted average vested shares and common stock equivalents outstanding
|
100,482,365
|
|
|
98,727,331
|
|
|
93,023,034
|
|
|||
Basic earnings per share:
|
|
|
|
|
|
||||||
Net income available to common stockholders per share
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
3.00
|
|
Diluted earnings per share:
|
|
|
|
|
|
||||||
Net income available to common stockholders per share
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.97
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
22.
|
Net Income Available to Common Unitholders Per Unit of the Operating Partnership
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands, except unit and per unit amounts)
|
||||||||||
Numerator:
|
|
|
|
|
|
||||||
Net income attributable to Kilroy Realty, L.P.
|
$
|
263,210
|
|
|
$
|
167,440
|
|
|
$
|
300,063
|
|
Total preferred distributions
|
—
|
|
|
(13,363
|
)
|
|
(13,250
|
)
|
|||
Allocation to participating securities
(1)
|
(2,004
|
)
|
|
(1,975
|
)
|
|
(3,839
|
)
|
|||
Numerator for basic and diluted net income available to common unitholders
|
$
|
261,206
|
|
|
$
|
152,102
|
|
|
$
|
282,974
|
|
Denominator:
|
|
|
|
|
|
||||||
Basic weighted average vested units outstanding
|
102,025,276
|
|
|
100,246,567
|
|
|
94,771,688
|
|
|||
Effect of dilutive securities
|
510,006
|
|
|
613,770
|
|
|
680,551
|
|
|||
Diluted weighted average vested units and common unit equivalents outstanding
|
102,535,282
|
|
|
100,860,337
|
|
|
95,452,239
|
|
|||
Basic earnings per unit:
|
|
|
|
|
|
||||||
Net income available to common unitholders per unit
|
$
|
2.56
|
|
|
$
|
1.52
|
|
|
$
|
2.99
|
|
Diluted earnings per unit:
|
|
|
|
|
|
||||||
Net income available to common unitholders per unit
|
$
|
2.55
|
|
|
$
|
1.51
|
|
|
$
|
2.96
|
|
(1)
|
Participating securities include nonvested shares, certain time-based RSUs and vested market measure-based RSUs.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for interest, net of capitalized interest of $65,627, $44,757, and $47,675 as of
December 31, 2018, 2017 and 2016, respectively
|
$
|
44,697
|
|
|
$
|
67,336
|
|
|
$
|
54,295
|
|
NON-CASH INVESTING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual for expenditures for operating properties and development and redevelopment
properties
|
$
|
158,626
|
|
|
$
|
116,089
|
|
|
$
|
62,589
|
|
Tenant improvements funded directly by tenants
|
$
|
13,968
|
|
|
$
|
15,314
|
|
|
$
|
18,050
|
|
Assumption of other assets and liabilities in connection with operating and development
property acquisitions, net (Note 3)
|
$
|
40,624
|
|
|
$
|
1,443
|
|
|
$
|
5,863
|
|
Accrual for receivable related to development properties
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
NON-CASH FINANCING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual of dividends and distributions payable to common stockholders and common
unitholders (Notes 13 and 28)
|
$
|
47,559
|
|
|
$
|
43,448
|
|
|
$
|
220,650
|
|
Exchange of common units of the Operating Partnership into shares of the Company’s
common stock
|
$
|
1,962
|
|
|
$
|
10,939
|
|
|
$
|
8,893
|
|
Accrual of dividends and distributions payable to preferred stockholders and preferred
unitholders (Note 13)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,656
|
|
Issuance of common units of the Operating Partnership in connection with an acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48,033
|
|
Secured debt assumed by buyers in connection with land disposition (Note 4)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,322
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of period
|
$
|
57,649
|
|
|
$
|
193,418
|
|
|
$
|
56,508
|
|
Restricted cash at beginning of period
|
9,149
|
|
|
56,711
|
|
|
696
|
|
|||
Cash and cash equivalents and restricted cash at beginning of period
|
$
|
66,798
|
|
|
$
|
250,129
|
|
|
$
|
57,204
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
51,604
|
|
|
$
|
57,649
|
|
|
$
|
193,418
|
|
Restricted cash at end of period
|
119,430
|
|
|
9,149
|
|
|
56,711
|
|
|||
Cash and cash equivalents and restricted cash at end of period
|
$
|
171,034
|
|
|
$
|
66,798
|
|
|
$
|
250,129
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
SUPPLEMENTAL CASH FLOWS INFORMATION:
|
|
|
|
|
|
||||||
Cash paid for interest, net of capitalized interest of $65,627, $44,757, and $47,675 as of
December 31, 2018, 2017 and 2016, respectively
|
$
|
44,697
|
|
|
$
|
67,336
|
|
|
$
|
54,295
|
|
NON-CASH INVESTING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual for expenditures for operating properties and development and redevelopment properties
|
$
|
158,626
|
|
|
$
|
116,089
|
|
|
$
|
62,589
|
|
Tenant improvements funded directly by tenants
|
$
|
13,968
|
|
|
$
|
15,314
|
|
|
$
|
18,050
|
|
Assumption of other assets and liabilities in connection with operating and development property acquisitions, net (Note 3)
|
$
|
40,624
|
|
|
$
|
1,443
|
|
|
$
|
5,863
|
|
Accrual for receivable related to development properties
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,350
|
|
NON-CASH FINANCING TRANSACTIONS:
|
|
|
|
|
|
||||||
Accrual of dividends and distributions payable to common stockholders and common
unitholders (Notes 14 and 28) |
$
|
47,559
|
|
|
$
|
43,448
|
|
|
$
|
220,650
|
|
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders (Note 14)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,656
|
|
Issuance of common units in connection with a development property acquisition
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48,033
|
|
Secured debt assumed by buyers in connection with land disposition (Note 4)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,322
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of period
|
$
|
57,649
|
|
|
$
|
193,418
|
|
|
$
|
56,508
|
|
Restricted cash at beginning of period
|
9,149
|
|
|
56,711
|
|
|
696
|
|
|||
Cash and cash equivalents and restricted cash at beginning of period
|
$
|
66,798
|
|
|
$
|
250,129
|
|
|
$
|
57,204
|
|
|
|
|
|
|
|
||||||
Cash and cash equivalents at end of period
|
$
|
51,604
|
|
|
$
|
57,649
|
|
|
$
|
193,418
|
|
Restricted cash at end of period
|
119,430
|
|
|
9,149
|
|
|
56,711
|
|
|||
Cash and cash equivalents and restricted cash at end of period
|
$
|
171,034
|
|
|
$
|
66,798
|
|
|
$
|
250,129
|
|
|
Year Ended December 31,
|
||||||||||
Dividends
|
2018
|
|
2017
|
|
2016
|
||||||
Dividends declared per share of common stock
|
$
|
1.790
|
|
|
$
|
1.650
|
|
|
$
|
3.375
|
|
Less: Dividends declared in the current year and paid in the following year
|
(0.455
|
)
|
|
(0.425
|
)
|
|
(2.275
|
)
|
|||
Add: Dividends declared in the prior year and paid in the current year
(1)
|
0.425
|
|
|
2.275
|
|
|
0.350
|
|
|||
Dividends paid per share of common stock
|
$
|
1.760
|
|
|
$
|
3.500
|
|
|
$
|
1.450
|
|
(1)
|
The fourth quarter 2016 dividend of
$2.275
per share of common stock consists of a special cash dividend of
$1.90
per share of common stock and a regular quarterly cash dividend of
$0.375
per share of common stock. The
$1.90
per share special distribution is treated as paid in two tax years for income tax purposes:
$1.587
is treated as paid on December 31, 2016 and
$0.313
is treated as paid on January 13, 2017. The
$0.375
per share regular quarterly distribution is considered a 2017 dividend distribution for income tax purposes.
|
|
Year Ended December 31,
|
|||||||||||||||||||
Shares of Common Stock
|
2018
|
|
2017
|
|
2016
|
|||||||||||||||
Ordinary income
(1)
|
$
|
1.474
|
|
|
83.73
|
%
|
|
$
|
1.356
|
|
|
70.87
|
%
|
|
$
|
1.500
|
|
|
49.40
|
%
|
Qualified dividend
|
0.003
|
|
|
0.19
|
|
|
0.002
|
|
|
0.11
|
|
|
0.002
|
|
|
0.06
|
|
|||
Return of capital
|
0.275
|
|
|
15.64
|
|
|
0.344
|
|
|
18.00
|
|
|
—
|
|
|
—
|
|
|||
Capital gains
(2)
|
0.008
|
|
|
0.44
|
|
|
—
|
|
|
—
|
|
|
1.212
|
|
|
39.89
|
|
|||
Unrecaptured section 1250 gains
|
—
|
|
|
—
|
|
|
0.211
|
|
|
11.02
|
|
|
0.323
|
|
|
10.65
|
|
|||
|
$
|
1.760
|
|
|
100.00
|
%
|
|
$
|
1.913
|
|
|
100.00
|
%
|
|
$
|
3.037
|
|
|
100.00
|
%
|
(1)
|
The Tax Cuts and Jobs Act enacted on December 22, 2017 generally allows a deduction for noncorporate taxpayers equal to 20% of ordinary dividends distributed by a REIT (excluding capital gain dividends and qualified dividend income). The amount of dividend eligible for this deduction is referred to as the Section 199A Dividend. For the year ended
December 31, 2018
, the Section 199A Dividend is equal to the total ordinary income dividend.
|
(2)
|
Capital gains are comprised entirely of
20%
rate gains.
|
|
Year Ended December 31,
|
||||||||||||
Preferred Shares
|
2017
|
|
2016
|
||||||||||
Ordinary income
|
$
|
0.371
|
|
|
86.43
|
%
|
|
$
|
0.848
|
|
|
49.31
|
%
|
Qualified dividend
|
0.001
|
|
|
0.14
|
|
|
0.001
|
|
|
0.06
|
|
||
Capital gains
(1)
|
—
|
|
|
—
|
|
|
0.687
|
|
|
39.97
|
|
||
Unrecaptured section 1250 gains
|
0.058
|
|
|
13.43
|
|
|
0.183
|
|
|
10.66
|
|
||
|
$
|
0.430
|
|
|
100.00
|
%
|
|
$
|
1.719
|
|
|
100.00
|
%
|
(1)
|
Capital gains are comprised entirely of
20%
rate gains.
|
|
Year Ended December 31,
|
||||||||||||
Preferred Shares
|
2017
|
|
2016
|
||||||||||
Ordinary income
|
$
|
1.033
|
|
|
86.43
|
%
|
|
$
|
0.786
|
|
|
49.31
|
%
|
Qualified dividend
|
0.002
|
|
|
0.14
|
|
|
0.001
|
|
|
0.06
|
|
||
Capital gains
(1)
|
—
|
|
|
—
|
|
|
0.637
|
|
|
39.97
|
|
||
Unrecaptured section 1250 gains
|
0.160
|
|
|
13.43
|
|
|
0.170
|
|
|
10.66
|
|
||
|
$
|
1.195
|
|
|
100.00
|
%
|
|
$
|
1.594
|
|
|
100.00
|
%
|
(1)
|
Capital gains are comprised entirely of
20%
rate gains.
|
26.
|
Quarterly Financial Information of the Company (Unaudited)
|
|
2018 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
182,822
|
|
|
$
|
187,072
|
|
|
$
|
186,562
|
|
|
$
|
190,842
|
|
Net income
|
40,971
|
|
|
31,755
|
|
|
38,310
|
|
|
166,890
|
|
||||
Net income attributable to Kilroy Realty Corporation
|
36,246
|
|
|
27,549
|
|
|
34,400
|
|
|
160,220
|
|
||||
Net income available to common stockholders
|
36,246
|
|
|
27,549
|
|
|
34,400
|
|
|
160,220
|
|
||||
Net income available to common stockholders per share – basic
|
0.36
|
|
|
0.27
|
|
|
0.34
|
|
|
1.59
|
|
||||
Net income available to common stockholders per share – diluted
|
0.36
|
|
|
0.27
|
|
|
0.33
|
|
|
1.58
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
2017 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per share amounts)
|
||||||||||||||
Revenues
|
$
|
179,308
|
|
|
$
|
180,598
|
|
|
$
|
181,534
|
|
|
$
|
177,561
|
|
Net income
|
37,281
|
|
|
35,306
|
|
|
75,488
|
|
|
32,540
|
|
||||
Net income attributable to Kilroy Realty Corporation
|
33,525
|
|
|
31,448
|
|
|
71,110
|
|
|
28,529
|
|
||||
Preferred dividends and distributions
|
(7,196
|
)
|
|
(1,615
|
)
|
|
(4,552
|
)
|
|
—
|
|
||||
Net income available to common stockholders
|
26,329
|
|
|
29,833
|
|
|
66,558
|
|
|
28,529
|
|
||||
Net income available to common stockholders per share – basic
|
0.27
|
|
|
0.30
|
|
|
0.67
|
|
|
0.28
|
|
||||
Net income available to common stockholders per share – diluted
|
0.26
|
|
|
0.30
|
|
|
0.67
|
|
|
0.28
|
|
(1)
|
The summation of the quarterly financial data may not equal the annual number reported on the consolidated statements of operations due to rounding. For the year ended
December 31, 2018
, the summation of the quarterly net income available to common stockholders per share does not equal the annual number reported on the consolidated statements of operations due to the Company’s at-the-market stock offering programs that occurred during the year.
|
27.
|
Quarterly Financial Information of the Operating Partnership (Unaudited)
|
|
2018 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Revenues
|
$
|
182,822
|
|
|
$
|
187,072
|
|
|
$
|
186,562
|
|
|
$
|
190,842
|
|
Net income
|
40,971
|
|
|
31,755
|
|
|
38,310
|
|
|
166,890
|
|
||||
Net income attributable to the Operating Partnership
|
36,893
|
|
|
28,015
|
|
|
34,993
|
|
|
163,309
|
|
||||
Net income available to common unitholders
|
36,893
|
|
|
28,015
|
|
|
34,993
|
|
|
163,309
|
|
||||
Net income available to common unitholders per unit – basic
|
0.36
|
|
|
0.27
|
|
|
0.34
|
|
|
1.58
|
|
||||
Net income available to common unitholders per unit – diluted
|
0.36
|
|
|
0.27
|
|
|
0.33
|
|
|
1.57
|
|
||||
|
|
|
|
|
|
|
|
||||||||
|
2017 Quarter Ended
(1)
|
||||||||||||||
|
March 31,
|
|
June 30,
|
|
September 30,
|
|
December 31,
|
||||||||
|
(in thousands, except per unit amounts)
|
||||||||||||||
Revenues
|
$
|
179,308
|
|
|
$
|
180,598
|
|
|
$
|
181,534
|
|
|
$
|
177,561
|
|
Net income
|
37,281
|
|
|
35,306
|
|
|
75,488
|
|
|
32,540
|
|
||||
Net income attributable to the Operating Partnership
|
34,054
|
|
|
31,971
|
|
|
72,402
|
|
|
29,013
|
|
||||
Preferred distributions
|
(7,196
|
)
|
|
(1,615
|
)
|
|
(4,552
|
)
|
|
—
|
|
||||
Net income available to common unitholders
|
26,858
|
|
|
30,356
|
|
|
67,850
|
|
|
29,013
|
|
||||
Net income available to common unitholders per unit – basic
|
0.26
|
|
|
0.30
|
|
|
0.67
|
|
|
0.28
|
|
||||
Net income available to common unitholders per unit – diluted
|
0.26
|
|
|
0.30
|
|
|
0.67
|
|
|
0.28
|
|
(1)
|
The summation of the quarterly financial data may not equal the annual number reported on the consolidated statements of operations due to rounding. For the year ended
December 31, 2018
, the summation of the quarterly net income available to common stockholders per share does not equal the annual number reported on the consolidated statements of operations due to the Company’s at-the-market stock offering programs that occurred during the year.
|
28.
|
Subsequent Events
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
(1)
|
|
Recoveries
(Deductions)
|
|
Balance
at End
of Period
|
||||||||
Allowance for Uncollectible Tenant Receivables for the year ended
December 31,
|
|
|
|
|
|
|
|
||||||||
2018 – Allowance for uncollectible tenant receivables
|
$
|
2,309
|
|
|
$
|
2,604
|
|
|
$
|
(274
|
)
|
|
$
|
4,639
|
|
2017 – Allowance for uncollectible tenant receivables
|
1,712
|
|
|
1,517
|
|
|
(920
|
)
|
|
2,309
|
|
||||
2016 – Allowance for uncollectible tenant receivables
|
2,080
|
|
|
—
|
|
|
(368
|
)
|
|
1,712
|
|
||||
Allowance for Deferred Rent Receivables for the year ended
December 31,
|
|
|
|
|
|
|
|
||||||||
2018 – Allowance for deferred rent
|
$
|
3,238
|
|
|
$
|
165
|
|
|
$
|
(64
|
)
|
|
$
|
3,339
|
|
2017 – Allowance for deferred rent
|
1,524
|
|
|
1,752
|
|
|
(38
|
)
|
|
3,238
|
|
||||
2016 – Allowance for deferred rent
|
1,882
|
|
|
—
|
|
|
(358
|
)
|
|
1,524
|
|
(1)
|
In addition, for the year ended
December 31, 2018
,
$2.9 million
was charged to costs and expenses for a valuation allowance for a note receivable.
|
|
|
Initial Cost
|
|
|
|
Gross Amounts at Which
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Property Location
|
|
Encumb-
rances
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Costs
Capitalized
Subsequent
to
Acquisition/
Improvement
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Total
|
|
Accumulated
Depreciation
|
|
Depreci-
ation
Life
(1)
|
|
Date of
Acquisition
(A)/
Construction
(C)
(2)
|
|
Rentable
Square
Feet
(3)
(unaudited)
|
|||||||||||||||||
|
|
($ in thousands)
|
|||||||||||||||||||||||||||||||||||||
Office Properties:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
2829 Townsgate Rd., Thousand Oaks, CA
|
|
|
|
$
|
5,248
|
|
|
$
|
8,001
|
|
|
$
|
8,267
|
|
|
$
|
5,248
|
|
|
$
|
16,268
|
|
|
$
|
21,516
|
|
|
$
|
11,862
|
|
|
35
|
|
1997
|
|
( A )
|
84,098
|
|
|
2240 E. Imperial Highway, El Segundo, CA
|
|
|
|
1,044
|
|
|
11,763
|
|
|
29,509
|
|
|
1,048
|
|
|
41,268
|
|
|
42,316
|
|
|
25,671
|
|
|
35
|
|
1983
|
|
( C )
|
122,870
|
|
||||||||
2250 E. Imperial Highway, El Segundo, CA
|
|
|
|
2,579
|
|
|
29,062
|
|
|
36,148
|
|
|
2,547
|
|
|
65,242
|
|
|
67,789
|
|
|
52,858
|
|
|
35
|
|
1983
|
|
( C )
|
298,728
|
|
||||||||
2260 E. Imperial Highway, El Segundo, CA
|
|
|
|
2,518
|
|
|
28,370
|
|
|
36,672
|
|
|
2,547
|
|
|
65,013
|
|
|
67,560
|
|
|
14,064
|
|
|
35
|
|
1983
|
|
( C )
|
298,728
|
|
||||||||
909 N. Pacific Coast Highway, El Segundo, CA
|
|
|
|
(4)
|
3,577
|
|
|
34,042
|
|
|
48,056
|
|
|
3,577
|
|
|
82,098
|
|
|
85,675
|
|
|
38,602
|
|
|
35
|
|
2005
|
|
( C )
|
244,136
|
|
|||||||
999 N. Pacific Coast Highway, El Segundo, CA
|
|
|
|
(4)
|
1,407
|
|
|
34,326
|
|
|
16,497
|
|
|
1,407
|
|
|
50,823
|
|
|
52,230
|
|
|
23,178
|
|
|
35
|
|
2003
|
|
( C )
|
128,588
|
|
|||||||
6115 W. Sunset Blvd., Los Angeles, CA
(5)
|
|
|
|
|
1,313
|
|
|
3
|
|
|
16,458
|
|
|
2,455
|
|
|
15,319
|
|
|
17,774
|
|
|
1,483
|
|
|
35
|
|
2015
|
|
( C )
|
26,105
|
|
|||||||
6121 W. Sunset Blvd., Los Angeles, CA
(5)
|
|
|
|
|
11,120
|
|
|
4,256
|
|
|
43,952
|
|
|
8,703
|
|
|
50,625
|
|
|
59,328
|
|
|
5,631
|
|
|
35
|
|
2015
|
|
( C )
|
91,173
|
|
|||||||
1525 N. Gower Street, Los Angeles, CA
(5)
|
|
|
|
|
1,318
|
|
|
3
|
|
|
9,642
|
|
|
1,318
|
|
|
9,645
|
|
|
10,963
|
|
|
870
|
|
|
35
|
|
2016
|
|
( C )
|
9,610
|
|
|||||||
1575 N. Gower Street, Los Angeles, CA
(5)
|
|
|
|
|
22,153
|
|
|
51
|
|
|
119,406
|
|
|
22,153
|
|
|
119,457
|
|
|
141,610
|
|
|
8,149
|
|
|
35
|
|
2016
|
|
( C )
|
251,245
|
|
|||||||
1500 N. El Centro Ave., Los Angeles, CA
(5)
|
|
|
|
|
9,235
|
|
|
21
|
|
|
58,582
|
|
|
9,235
|
|
|
58,603
|
|
|
67,838
|
|
|
4,026
|
|
|
35
|
|
2016
|
|
( C )
|
104,504
|
|
|||||||
1550 N. El Centro Ave., Los Angeles, CA
(5) (6)
|
|
|
|
|
16,970
|
|
|
39
|
|
|
135,583
|
|
|
16,970
|
|
|
135,622
|
|
|
152,592
|
|
|
9,911
|
|
|
35
|
|
2016
|
|
( C )
|
—
|
|
|||||||
6255 W. Sunset Blvd., Los Angeles, CA
|
|
|
|
|
18,111
|
|
|
60,320
|
|
|
44,535
|
|
|
18,111
|
|
|
104,855
|
|
|
122,966
|
|
|
29,278
|
|
|
35
|
|
2012
|
|
( A )
|
323,920
|
|
|||||||
3750 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
1,941
|
|
|
11,153
|
|
|
—
|
|
|
13,094
|
|
|
13,094
|
|
|
10,395
|
|
|
35
|
|
1989
|
|
( C )
|
10,457
|
|
||||||||
3760 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
17,467
|
|
|
13,714
|
|
|
—
|
|
|
31,181
|
|
|
31,181
|
|
|
25,635
|
|
|
35
|
|
1989
|
|
( C )
|
165,278
|
|
||||||||
3780 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
22,319
|
|
|
23,008
|
|
|
—
|
|
|
45,327
|
|
|
45,327
|
|
|
37,365
|
|
|
35
|
|
1989
|
|
( C )
|
219,777
|
|
||||||||
3800 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
19,408
|
|
|
20,838
|
|
|
—
|
|
|
40,246
|
|
|
40,246
|
|
|
23,575
|
|
|
35
|
|
2000
|
|
( C )
|
192,476
|
|
||||||||
3840 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
13,586
|
|
|
10,364
|
|
|
—
|
|
|
23,950
|
|
|
23,950
|
|
|
15,417
|
|
|
35
|
|
1999
|
|
( C )
|
136,026
|
|
||||||||
3880 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
9,704
|
|
|
11,277
|
|
|
—
|
|
|
20,981
|
|
|
20,981
|
|
|
3,820
|
|
|
35
|
|
1997
|
|
( A )
|
96,035
|
|
||||||||
3900 Kilroy Airport Way, Long Beach, CA
|
|
|
|
—
|
|
|
12,615
|
|
|
11,983
|
|
|
—
|
|
|
24,598
|
|
|
24,598
|
|
|
17,147
|
|
|
35
|
|
1997
|
|
( A )
|
129,893
|
|
||||||||
Kilroy Airport Center, Phase IV, Long Beach, CA
(7)
|
|
|
|
—
|
|
|
—
|
|
|
4,997
|
|
|
—
|
|
|
4,997
|
|
|
4,997
|
|
|
4,997
|
|
|
35
|
|
—
|
|
—
|
—
|
|
||||||||
8560 W. Sunset Blvd, West Hollywood, CA
|
|
|
|
9,720
|
|
|
50,956
|
|
|
600
|
|
|
9,720
|
|
|
51,556
|
|
|
61,276
|
|
|
4,209
|
|
|
35
|
|
2016
|
|
( A )
|
71,875
|
|
||||||||
8570 W. Sunset Blvd, West Hollywood, CA
|
|
|
|
31,693
|
|
|
27,974
|
|
|
925
|
|
|
31,693
|
|
|
28,899
|
|
|
60,592
|
|
|
2,085
|
|
|
35
|
|
2016
|
|
( A )
|
43,603
|
|
||||||||
8580 W. Sunset Blvd, West Hollywood, CA
|
|
|
|
10,013
|
|
|
3,695
|
|
|
135
|
|
|
10,013
|
|
|
3,830
|
|
|
13,843
|
|
|
264
|
|
|
35
|
|
2016
|
|
( A )
|
7,126
|
|
||||||||
8590 W. Sunset Blvd, West Hollywood, CA
|
|
|
|
39,954
|
|
|
27,884
|
|
|
1,092
|
|
|
39,954
|
|
|
28,976
|
|
|
68,930
|
|
|
2,267
|
|
|
35
|
|
2016
|
|
( A )
|
56,095
|
|
||||||||
12100 W. Olympic Blvd., Los Angeles, CA
|
|
170,000
|
|
(8)
|
352
|
|
|
45,611
|
|
|
18,518
|
|
|
9,633
|
|
|
54,848
|
|
|
64,481
|
|
|
27,316
|
|
|
35
|
|
2003
|
|
( C )
|
152,048
|
|
|||||||
12200 W. Olympic Blvd., Los Angeles, CA
|
|
|
(8)
|
4,329
|
|
|
35,488
|
|
|
23,707
|
|
|
3,977
|
|
|
59,547
|
|
|
63,524
|
|
|
37,257
|
|
|
35
|
|
2000
|
|
( C )
|
150,832
|
|
||||||||
12233 W. Olympic Blvd., Los Angeles, CA
|
|
|
|
22,100
|
|
|
53,170
|
|
|
3,986
|
|
|
22,100
|
|
|
57,156
|
|
|
79,256
|
|
|
11,832
|
|
|
35
|
|
2012
|
|
( A )
|
151,029
|
|
||||||||
12312 W. Olympic Blvd., Los Angeles, CA
|
|
|
(8)
|
3,325
|
|
|
12,202
|
|
|
11,341
|
|
|
3,399
|
|
|
23,469
|
|
|
26,868
|
|
|
12,017
|
|
|
35
|
|
1997
|
|
( A )
|
76,644
|
|
||||||||
1633 26th St., Santa Monica, CA
|
|
|
|
2,080
|
|
|
6,672
|
|
|
3,139
|
|
|
2,040
|
|
|
9,851
|
|
|
11,891
|
|
|
6,908
|
|
|
35
|
|
1997
|
|
( A )
|
43,857
|
|
||||||||
2100/2110 Colorado Ave., Santa Monica, CA
|
|
91,332
|
|
(9)
|
5,474
|
|
|
26,087
|
|
|
14,620
|
|
|
5,476
|
|
|
40,705
|
|
|
46,181
|
|
|
24,031
|
|
|
35
|
|
1997
|
|
( A )
|
102,864
|
|
|||||||
3130 Wilshire Blvd., Santa Monica, CA
|
|
|
|
8,921
|
|
|
6,579
|
|
|
15,992
|
|
|
9,188
|
|
|
22,304
|
|
|
31,492
|
|
|
14,674
|
|
|
35
|
|
1997
|
|
( A )
|
90,074
|
|
||||||||
501 Santa Monica Blvd., Santa Monica, CA
|
|
|
(4)
|
4,547
|
|
|
12,044
|
|
|
14,129
|
|
|
4,551
|
|
|
26,169
|
|
|
30,720
|
|
|
15,614
|
|
|
35
|
|
1998
|
|
( A )
|
76,803
|
|
||||||||
2211 Michelson, Irvine, CA
|
|
|
(9)
|
9,319
|
|
|
82,836
|
|
|
6,629
|
|
|
9,319
|
|
|
89,465
|
|
|
98,784
|
|
|
27,097
|
|
|
35
|
|
2010
|
|
( A )
|
271,556
|
|
||||||||
12225 El Camino Real, Del Mar, CA
|
|
|
|
1,700
|
|
|
9,633
|
|
|
3,493
|
|
|
1,673
|
|
|
13,153
|
|
|
14,826
|
|
|
8,905
|
|
|
35
|
|
1998
|
|
( A )
|
58,401
|
|
|
|
Initial Cost
|
|
|
|
Gross Amounts at Which
Carried at Close of Period
|
|
|
|
|
|
|
|
|
||||||||||||||||
Property Location
|
|
Encumb-
rances
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Costs
Capitalized
Subsequent
to
Acquisition/
Improvement
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Total
|
|
Accumulated
Depreciation
|
|
Depreci-
ation
Life
(1)
|
|
Date of
Acquisition
(A)/
Construction
(C)
(2)
|
|
Rentable
Square
Feet
(3)
(unaudited)
|
||||||||
|
|
($ in thousands)
|
||||||||||||||||||||||||||||
12235 El Camino Real, Del Mar, CA
|
|
|
|
1,507
|
|
|
8,543
|
|
|
8,965
|
|
|
1,540
|
|
|
17,475
|
|
|
19,015
|
|
|
9,681
|
|
|
35
|
|
1998
|
( A )
|
53,751
|
|
12340 El Camino Real, Del Mar, CA
|
|
|
|
4,201
|
|
|
13,896
|
|
|
9,858
|
|
|
4,201
|
|
|
23,754
|
|
|
27,955
|
|
|
11,257
|
|
|
35
|
|
2002
|
( C )
|
89,272
|
|
12390 El Camino Real, Del Mar, CA
|
|
|
|
3,453
|
|
|
11,981
|
|
|
3,896
|
|
|
3,453
|
|
|
15,877
|
|
|
19,330
|
|
|
8,995
|
|
|
35
|
|
2000
|
( C )
|
70,140
|
|
12348 High Bluff Dr., Del Mar, CA
|
|
|
|
1,629
|
|
|
3,096
|
|
|
6,141
|
|
|
1,629
|
|
|
9,237
|
|
|
10,866
|
|
|
6,206
|
|
|
35
|
|
1999
|
( C )
|
38,806
|
|
12400 High Bluff Dr., Del Mar, CA
|
|
|
(4)
|
15,167
|
|
|
40,497
|
|
|
14,337
|
|
|
15,167
|
|
|
54,834
|
|
|
70,001
|
|
|
27,243
|
|
|
35
|
|
2004
|
( C )
|
209,220
|
|
3579 Valley Centre Dr., Del Mar, CA
|
|
|
|
2,167
|
|
|
6,897
|
|
|
7,449
|
|
|
2,858
|
|
|
13,655
|
|
|
16,513
|
|
|
9,512
|
|
|
35
|
|
1999
|
( C )
|
52,418
|
|
3611 Valley Centre Dr., Del Mar, CA
|
|
|
|
4,184
|
|
|
19,352
|
|
|
18,881
|
|
|
5,259
|
|
|
37,158
|
|
|
42,417
|
|
|
24,251
|
|
|
35
|
|
2000
|
( C )
|
129,656
|
|
3661 Valley Centre Dr., Del Mar, CA
|
|
|
|
4,038
|
|
|
21,144
|
|
|
16,178
|
|
|
4,725
|
|
|
36,635
|
|
|
41,360
|
|
|
20,619
|
|
|
35
|
|
2001
|
( C )
|
128,364
|
|
3721 Valley Centre Dr., Del Mar, CA
|
|
|
|
4,297
|
|
|
18,967
|
|
|
14,569
|
|
|
4,254
|
|
|
33,579
|
|
|
37,833
|
|
|
15,893
|
|
|
35
|
|
2003
|
( C )
|
115,193
|
|
3811 Valley Centre Dr., Del Mar, CA
|
|
|
|
3,452
|
|
|
16,152
|
|
|
20,105
|
|
|
4,457
|
|
|
35,252
|
|
|
39,709
|
|
|
21,545
|
|
|
35
|
|
2000
|
( C )
|
112,067
|
|
12770 El Camino Real, Del Mar, CA
|
|
|
|
9,360
|
|
|
—
|
|
|
33,628
|
|
|
9,360
|
|
|
33,628
|
|
|
42,988
|
|
|
1,950
|
|
|
35
|
|
2015
|
( C )
|
73,032
|
|
12780 El Camino Real, Del Mar, CA
|
|
|
|
18,398
|
|
|
54,954
|
|
|
14,775
|
|
|
18,398
|
|
|
69,729
|
|
|
88,127
|
|
|
11,995
|
|
|
35
|
|
2013
|
( A )
|
140,591
|
|
12790 El Camino Real, Del Mar, CA
|
|
|
|
10,252
|
|
|
21,236
|
|
|
1,426
|
|
|
10,252
|
|
|
22,662
|
|
|
32,914
|
|
|
4,794
|
|
|
35
|
|
2013
|
( A )
|
78,836
|
|
13280 Evening Creek Dr. South, I-15 Corridor, CA
|
|
|
|
3,701
|
|
|
8,398
|
|
|
4,730
|
|
|
3,701
|
|
|
13,128
|
|
|
16,829
|
|
|
5,167
|
|
|
35
|
|
2008
|
( C )
|
41,196
|
|
13290 Evening Creek Dr. South, I-15 Corridor, CA
|
|
|
|
5,229
|
|
|
11,871
|
|
|
5,919
|
|
|
5,229
|
|
|
17,790
|
|
|
23,019
|
|
|
5,950
|
|
|
35
|
|
2008
|
( C )
|
61,180
|
|
13480 Evening Creek Dr. North, I-15 Corridor, CA
|
|
|
|
7,997
|
|
|
—
|
|
|
52,143
|
|
|
7,997
|
|
|
52,143
|
|
|
60,140
|
|
|
18,660
|
|
|
35
|
|
2008
|
( C )
|
154,157
|
|
13500 Evening Creek Dr. North, I-15 Corridor, CA
|
|
|
|
7,581
|
|
|
35,903
|
|
|
15,331
|
|
|
7,580
|
|
|
51,235
|
|
|
58,815
|
|
|
20,471
|
|
|
35
|
|
2004
|
( A )
|
137,658
|
|
13520 Evening Creek Dr. North, I-15 Corridor, CA
|
|
|
|
7,581
|
|
|
35,903
|
|
|
15,427
|
|
|
7,580
|
|
|
51,331
|
|
|
58,911
|
|
|
22,819
|
|
|
35
|
|
2004
|
( A )
|
146,701
|
|
2305 Historic Decatur Rd., Point Loma, CA
|
|
|
|
5,240
|
|
|
22,220
|
|
|
7,309
|
|
|
5,240
|
|
|
29,529
|
|
|
34,769
|
|
|
9,248
|
|
|
35
|
|
2010
|
( A )
|
107,456
|
|
4690 Executive Dr., University Towne Centre, CA
|
|
|
|
1,623
|
|
|
7,926
|
|
|
3,668
|
|
|
1,623
|
|
|
11,594
|
|
|
13,217
|
|
|
7,324
|
|
|
35
|
|
1999
|
( A )
|
47,846
|
|
4100 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
4,835
|
|
|
15,526
|
|
|
525
|
|
|
4,860
|
|
|
16,026
|
|
|
20,886
|
|
|
3,954
|
|
|
35
|
|
2012
|
( A )
|
47,379
|
|
4200 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
4,798
|
|
|
15,406
|
|
|
3,222
|
|
|
4,662
|
|
|
18,764
|
|
|
23,426
|
|
|
4,915
|
|
|
35
|
|
2012
|
( A )
|
45,451
|
|
4300 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
6,527
|
|
|
20,958
|
|
|
2,955
|
|
|
6,470
|
|
|
23,970
|
|
|
30,440
|
|
|
6,996
|
|
|
35
|
|
2012
|
( A )
|
63,079
|
|
4400 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
4,798
|
|
|
15,406
|
|
|
2,943
|
|
|
4,939
|
|
|
18,208
|
|
|
23,147
|
|
|
5,066
|
|
|
35
|
|
2012
|
( A )
|
48,146
|
|
4500 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
6,527
|
|
|
20,957
|
|
|
2,025
|
|
|
6,470
|
|
|
23,039
|
|
|
29,509
|
|
|
5,665
|
|
|
35
|
|
2012
|
( A )
|
63,078
|
|
4600 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
4,798
|
|
|
15,406
|
|
|
3,326
|
|
|
4,939
|
|
|
18,591
|
|
|
23,530
|
|
|
4,924
|
|
|
35
|
|
2012
|
( A )
|
48,147
|
|
4700 Bohannon Dr., Menlo Park, CA
|
|
|
(4)
|
6,527
|
|
|
20,958
|
|
|
1,422
|
|
|
6,470
|
|
|
22,437
|
|
|
28,907
|
|
|
5,492
|
|
|
35
|
|
2012
|
( A )
|
63,078
|
|
1290 - 1300 Terra Bella Ave., Mountain View, CA
|
|
|
|
28,730
|
|
|
27,555
|
|
|
29
|
|
|
28,730
|
|
|
27,584
|
|
|
56,314
|
|
|
3,589
|
|
|
35
|
|
2016
|
( A )
|
114,175
|
|
331 Fairchild Dr., Mountain View, CA
|
|
|
(4)
|
18,396
|
|
|
17,712
|
|
|
7,955
|
|
|
18,396
|
|
|
25,667
|
|
|
44,063
|
|
|
4,674
|
|
|
35
|
|
2013
|
( C )
|
87,147
|
|
680 E. Middlefield Rd., Mountain View, CA
|
|
|
|
34,605
|
|
|
—
|
|
|
56,464
|
|
|
34,605
|
|
|
56,464
|
|
|
91,069
|
|
|
7,908
|
|
|
35
|
|
2014
|
( C )
|
170,090
|
|
690 E. Middlefield Rd., Mountain View, CA
|
|
|
|
34,755
|
|
|
—
|
|
|
56,707
|
|
|
34,755
|
|
|
56,707
|
|
|
91,462
|
|
|
7,942
|
|
|
35
|
|
2014
|
( C )
|
170,823
|
|
1701 Page Mill Rd, Palo Alto, CA
|
|
|
|
—
|
|
|
99,522
|
|
|
25
|
|
|
—
|
|
|
99,547
|
|
|
99,547
|
|
|
6,000
|
|
|
35
|
|
2016
|
( A )
|
128,688
|
|
3150 Porter Drive, Palo Alto, CA
|
|
|
|
—
|
|
|
21,715
|
|
|
4
|
|
|
—
|
|
|
21,719
|
|
|
21,719
|
|
|
1,591
|
|
|
35
|
|
2016
|
( A )
|
36,897
|
|
900 Jefferson Ave., Redwood City, CA
(10)
|
|
|
|
16,668
|
|
|
—
|
|
|
109,313
|
|
|
18,063
|
|
|
107,918
|
|
|
125,981
|
|
|
11,977
|
|
|
35
|
|
2015
|
( C )
|
228,505
|
|
900 Middlefield Rd., Redwood City, CA
(10)
|
|
|
|
7,959
|
|
|
—
|
|
|
49,862
|
|
|
8,626
|
|
|
49,195
|
|
|
57,821
|
|
|
5,204
|
|
|
35
|
|
2015
|
( C )
|
118,764
|
|
303 Second St., San Francisco, CA
(11)
|
|
|
|
63,550
|
|
|
154,153
|
|
|
70,133
|
|
|
63,550
|
|
|
224,286
|
|
|
287,836
|
|
|
71,553
|
|
|
35
|
|
2010
|
( A )
|
740,047
|
|
|
|
Initial Cost
|
|
|
|
Gross Amounts at Which
Carried at Close of Period
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
Property Location
|
|
Encumb-
rances
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Costs
Capitalized
Subsequent
to
Acquisition/
Improvement
|
|
Land and improve-
ments
|
|
Buildings
and
Improve-
ments
|
|
Total
|
|
Accumulated
Depreciation
|
|
Depreci-
ation
Life
(1)
|
|
Date of
Acquisition
(A)/
Construction
(C)
(2)
|
|
Rentable
Square
Feet
(3)
(unaudited)
|
|||||||||||||||||||
|
|
($ in thousands)
|
|||||||||||||||||||||||||||||||||||||||
100 First St., San Francisco, CA
(12)
|
|
|
|
49,150
|
|
|
131,238
|
|
|
63,503
|
|
|
49,150
|
|
|
194,741
|
|
|
243,891
|
|
|
53,081
|
|
|
35
|
|
2010
|
( A )
|
467,095
|
|
|||||||||||
250 Brannan St., San Francisco, CA
|
|
|
|
7,630
|
|
|
22,770
|
|
|
4,466
|
|
|
7,630
|
|
|
27,236
|
|
|
34,866
|
|
|
9,786
|
|
|
35
|
|
2011
|
( A )
|
100,850
|
|
|||||||||||
201 Third St., San Francisco, CA
|
|
|
|
19,260
|
|
|
84,018
|
|
|
66,543
|
|
|
19,260
|
|
|
150,561
|
|
|
169,821
|
|
|
46,541
|
|
|
35
|
|
2011
|
( A )
|
346,538
|
|
|||||||||||
301 Brannan St., San Francisco, CA
|
|
|
|
5,910
|
|
|
22,450
|
|
|
5,109
|
|
|
5,910
|
|
|
27,559
|
|
|
33,469
|
|
|
8,375
|
|
|
35
|
|
2011
|
( A )
|
82,834
|
|
|||||||||||
360 Third St., San Francisco, CA
|
|
|
|
—
|
|
|
88,235
|
|
|
112,885
|
|
|
28,504
|
|
|
172,616
|
|
|
201,120
|
|
|
39,931
|
|
|
35
|
|
2011
|
( A )
|
429,796
|
|
|||||||||||
333 Brannan St., San Francisco, CA
|
|
|
|
18,645
|
|
|
—
|
|
|
78,426
|
|
|
18,645
|
|
|
78,426
|
|
|
97,071
|
|
|
6,451
|
|
|
35
|
|
2016
|
( C )
|
185,602
|
|
|||||||||||
350 Mission Street, San Francisco, CA
|
|
|
|
52,815
|
|
|
—
|
|
|
213,459
|
|
|
52,815
|
|
|
213,459
|
|
|
266,274
|
|
|
17,818
|
|
|
35
|
|
2016
|
( C )
|
455,340
|
|
|||||||||||
100 Hooper Street, San Francisco, CA
(15)
|
|
|
|
78,564
|
|
|
—
|
|
|
179,739
|
|
|
78,564
|
|
|
179,739
|
|
|
258,303
|
|
|
1,043
|
|
1,043
|
|
35
|
0.035
|
|
2018
|
( C )
|
—
|
|
|||||||||
345 Brannan St., San Francisco, CA
|
|
|
|
29,405
|
|
|
113,179
|
|
|
—
|
|
|
29,405
|
|
|
113,179
|
|
|
142,584
|
|
|
—
|
|
—
|
|
35
|
0.035
|
|
2018
|
( A )
|
110,030
|
|
|||||||||
345 Oyster Point Blvd., South San Francisco, CA
|
|
|
|
13,745
|
|
|
18,575
|
|
|
2
|
|
|
13,745
|
|
|
18,577
|
|
|
32,322
|
|
|
611
|
|
|
35
|
|
2018
|
( A )
|
40,410
|
|
|||||||||||
347 Oyster Point Blvd, South San Francisco, CA
|
|
|
|
14,071
|
|
|
18,289
|
|
|
8
|
|
|
14,071
|
|
|
18,297
|
|
|
32,368
|
|
|
602
|
|
|
35
|
|
2018
|
( A )
|
39,780
|
|
|||||||||||
349 Oyster Point Blvd., South San Francisco, CA
|
|
|
|
23,112
|
|
|
22,601
|
|
|
771
|
|
|
23,112
|
|
|
23,372
|
|
|
46,484
|
|
|
919
|
|
|
35
|
|
2018
|
( A )
|
65,340
|
|
|||||||||||
505 Mathilda Ave., Sunnyvale, CA
|
|
|
|
37,843
|
|
|
1,163
|
|
|
50,450
|
|
|
37,943
|
|
|
51,513
|
|
|
89,456
|
|
|
6,388
|
|
|
35
|
|
2014
|
( C )
|
212,322
|
|
|||||||||||
555 Mathilda Ave., Sunnyvale, CA
|
|
|
|
37,843
|
|
|
1,163
|
|
|
50,447
|
|
|
37,943
|
|
|
51,510
|
|
|
89,453
|
|
|
6,387
|
|
|
35
|
|
2014
|
( C )
|
212,322
|
|
|||||||||||
605 Mathilda Ave., Sunnyvale, CA
|
|
|
|
29,014
|
|
|
891
|
|
|
77,281
|
|
|
29,090
|
|
|
78,096
|
|
|
107,186
|
|
|
14,036
|
|
|
35
|
|
2014
|
( C )
|
162,785
|
|
|||||||||||
599 Mathilda Ave., Sunnyvale, CA
|
|
|
|
13,538
|
|
|
12,559
|
|
|
58
|
|
|
13,538
|
|
|
12,617
|
|
|
26,155
|
|
|
3,568
|
|
|
35
|
|
2012
|
( A )
|
76,031
|
|
|||||||||||
601 108th Ave., Bellevue, WA
|
|
|
|
—
|
|
|
214,095
|
|
|
33,860
|
|
|
—
|
|
|
247,955
|
|
|
247,955
|
|
|
70,018
|
|
|
35
|
|
2011
|
( A )
|
488,470
|
|
|||||||||||
10900 NE 4th St., Bellevue, WA
|
|
|
|
25,080
|
|
|
150,877
|
|
|
36,619
|
|
|
25,080
|
|
|
187,496
|
|
|
212,576
|
|
|
46,105
|
|
|
35
|
|
2012
|
( A )
|
428,557
|
|
|||||||||||
837 N. 34th St., Lake Union, WA
|
|
|
|
—
|
|
|
37,404
|
|
|
3,817
|
|
|
—
|
|
|
41,221
|
|
|
41,221
|
|
|
9,697
|
|
|
35
|
|
2012
|
( A )
|
111,580
|
|
|||||||||||
701 N. 34th St., Lake Union, WA
|
|
|
|
—
|
|
|
48,027
|
|
|
7,989
|
|
|
—
|
|
|
56,016
|
|
|
56,016
|
|
|
13,785
|
|
|
35
|
|
2012
|
( A )
|
138,994
|
|
|||||||||||
801 N. 34th St., Lake Union, WA
|
|
|
|
—
|
|
|
58,537
|
|
|
1,657
|
|
|
—
|
|
|
60,194
|
|
|
60,194
|
|
|
14,159
|
|
|
35
|
|
2012
|
( A )
|
169,412
|
|
|||||||||||
320 Westlake Avenue North, WA
|
|
74,479
|
|
(13)
|
14,710
|
|
|
82,018
|
|
|
5,063
|
|
|
14,710
|
|
|
87,081
|
|
|
101,791
|
|
|
16,693
|
|
|
35
|
|
2013
|
( A )
|
184,644
|
|
||||||||||
321 Terry Avenue North, Lake Union, WA
|
|
|
(13)
|
10,430
|
|
|
60,003
|
|
|
9,987
|
|
|
10,430
|
|
|
69,990
|
|
|
80,420
|
|
|
13,046
|
|
|
35
|
|
2013
|
( A )
|
135,755
|
|
|||||||||||
401 Terry Avenue North, Lake Union, WA
|
|
|
|
22,500
|
|
|
77,046
|
|
|
—
|
|
|
22,500
|
|
|
77,046
|
|
|
99,546
|
|
|
12,888
|
|
|
35
|
|
2014
|
( A )
|
140,605
|
|
|||||||||||
TOTAL OPERATING PROPERTIES
|
|
335,811
|
|
|
1,117,915
|
|
|
2,777,476
|
|
|
2,472,731
|
|
|
1,160,138
|
|
|
5,207,984
|
|
|
6,368,122
|
|
|
1,391,368
|
|
|
|
|
|
|
13,232,580
|
|
||||||||||
Undeveloped land and construction in progress
|
|
—
|
|
|
940,092
|
|
|
—
|
|
|
1,118,418
|
|
|
940,092
|
|
|
1,118,418
|
|
|
2,058,510
|
|
|
—
|
|
|
|
|
|
|
—
|
|
||||||||||
TOTAL ALL PROPERTIES
|
|
$
|
335,811
|
|
(14)
|
$
|
2,058,007
|
|
|
$
|
2,777,476
|
|
|
$
|
3,591,149
|
|
|
$
|
2,100,230
|
|
|
$
|
6,326,402
|
|
|
$
|
8,426,632
|
|
|
$
|
1,391,368
|
|
|
|
|
|
|
13,232,580
|
|
(1)
|
The initial costs of buildings and improvements are depreciated over
35 years
using a straight-line method of accounting; improvements capitalized subsequent to acquisition are depreciated over the shorter of the lease term or useful life, generally ranging from
one
to
20
years.
|
(2)
|
Represents our date of construction or acquisition, or of our predecessor, the Kilroy Group.
|
(3)
|
Includes square footage from our stabilized portfolio.
|
(4)
|
These properties secure intercompany promissory notes between KRLP and consolidated property partnerships.
|
(5)
|
These properties include the costs of a shared parking structure for a complex comprised of five office buildings and one residential tower. The costs of the parking structure are allocated amongst the six buildings.
|
(6)
|
This property represents the
200
-unit Columbia Square - Residential tower that stabilized in 2016.
|
(7)
|
These costs represent infrastructure costs incurred in 1989. During the third quarter of 2009, we exercised our option to terminate the ground lease at Kilroy Airport Center, Phase IV in Long Beach, California. We had previously leased this land, which is adjacent to our Office Properties at Kilroy Airport Center, Long Beach, for potential future development opportunities.
|
(8)
|
These properties secure a
$170.0 million
mortgage note.
|
(9)
|
These properties secure a
$91.3 million
mortgage note
|
(10)
|
These properties are owned by Redwood City Partners LLC, a consolidated property partnership.
|
(11)
|
This property is owned by 303 Second Street Member LLC, a consolidated property partnership.
|
(12)
|
This property is owned by 100 First Street Member LLC, a consolidated property partnership.
|
(13)
|
These properties secure a
$74.5 million
mortgage note, which was repaid at par in February 2019.
|
(14)
|
Represents gross aggregate principal amount before the effect of the unamortized premium of approximately
$0.8 million
and deferred financing costs of
$1.0 million
as of
December 31, 2018
.
|
(15)
|
This property is currently in the tenant improvement phase of our in-process development projects and not yet in the stabilized portfolio. The estimated rentable square feet for this property is
400,000
rentable square feet.
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Total real estate held for investment, beginning of year
|
$
|
7,417,777
|
|
|
$
|
7,060,754
|
|
|
$
|
6,328,146
|
|
Additions during period:
|
|
|
|
|
|
||||||
Acquisitions
|
581,671
|
|
|
19,829
|
|
|
460,957
|
|
|||
Improvements, etc.
|
991,008
|
|
|
533,939
|
|
|
386,836
|
|
|||
Total additions during period
|
1,572,679
|
|
|
553,768
|
|
|
847,793
|
|
|||
Deductions during period:
|
|
|
|
|
|
||||||
Cost of real estate sold
|
(286,623
|
)
|
|
(191,610
|
)
|
|
(68,200
|
)
|
|||
Properties held for sale
|
—
|
|
|
—
|
|
|
(13,193
|
)
|
|||
Other
|
(277,201
|
)
|
|
(5,135
|
)
|
|
(33,792
|
)
|
|||
Total deductions during period
|
(563,824
|
)
|
|
(196,745
|
)
|
|
(115,185
|
)
|
|||
Total real estate held for investment, end of year
|
$
|
8,426,632
|
|
|
$
|
7,417,777
|
|
|
$
|
7,060,754
|
|
|
Year Ended December 31,
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
|
(in thousands)
|
||||||||||
Accumulated depreciation, beginning of year
|
$
|
1,264,162
|
|
|
$
|
1,139,853
|
|
|
$
|
994,241
|
|
Additions during period:
|
|
|
|
|
|
||||||
Depreciation of real estate
|
198,578
|
|
|
190,515
|
|
|
171,983
|
|
|||
Total additions during period
|
198,578
|
|
|
190,515
|
|
|
171,983
|
|
|||
Deductions during period:
|
|
|
|
|
|
||||||
Write-offs due to sale
|
(71,372
|
)
|
|
(66,206
|
)
|
|
(22,471
|
)
|
|||
Properties held for sale
|
—
|
|
|
—
|
|
|
(3,900
|
)
|
|||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|||
Total deductions during period
|
(71,372
|
)
|
|
(66,206
|
)
|
|
(26,371
|
)
|
|||
Accumulated depreciation, end of year
|
$
|
1,391,368
|
|
|
$
|
1,264,162
|
|
|
$
|
1,139,853
|
|
Exhibit
Number
|
|
Description
|
3.(i)1
|
|
|
3.(i)2
|
|
|
3.(i)3
|
|
|
3.(i)4
|
|
|
3.(i)5
|
|
|
3.(ii)1
|
|
|
3.(ii)2
|
|
|
4.1
|
|
|
4.2
|
|
|
4.3
|
|
|
4.4
|
|
|
4.5
|
|
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
Exhibit
Number
|
|
Description
|
4.9
|
|
|
4.10
|
|
|
4.11
|
|
Officers’ Certificate, dated November 29, 2018, pursuant to Sections 102, 201, 301 and 303 of the Indenture dated March 1, 2011, as amended and supplemented, among Kilroy Realty, L.P., as issuer, Kilroy Realty Corporation, as guarantor, and U.S. Bank National Association, as trustee, establishing a series of securities entitled “4.750% Senior Notes due 2028,” including the form of 4.750% Senior Note due 2028 and the form of related guarantee (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on November 29, 2018)
|
4.12
|
|
The Company is party to agreements in connection with long-term debt obligations, none of which individually exceeds ten percent of the total assets of the Company on a consolidated basis. Pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, the Company agrees to furnish copies of these agreements to the Commission upon request
|
10.1
|
|
|
10.2†
|
|
|
10.3
|
|
|
10.4†
|
|
|
10.5†
|
|
|
10.6†
|
|
|
10.7†
|
|
|
10.8†
|
|
|
10.9†
|
|
|
10.10†
|
|
|
10.11†
|
|
Exhibit
Number
|
|
Description
|
10.12†
|
|
|
10.13†
|
|
|
10.14†
|
|
|
10.15†
|
|
|
10.16†
|
|
|
10.17†
|
|
|
10.18†
|
|
|
10.19†
|
|
|
10.20†
|
|
|
10.21†
|
|
Employment Agreement, as amended and restated December 27, 2018, by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr. (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 31, 2018)
|
10.22†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and John B. Kilroy, Jr., dated December 27, 2018 (with retirement as to Time-Based RSUs) (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 31, 2018)
|
10.23†
|
|
Kilroy Realty Corporation 2006 Incentive Award Plan Restricted Stock Unit Agreement by and between Kilroy Realty Corporation and John B. Kilroy, Jr., dated December 27, 2018 (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 31, 2018)
|
10.24†*
|
|
|
10.25
|
|
|
10.26
|
|
Amendment to Note Purchase Agreement dated May 11, 2018 (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 14, 2018)
|
10.27
|
|
|
10.28
|
|
Exhibit
Number
|
|
Description
|
10.29
|
|
|
10.30
|
|
|
10.31
|
|
|
10.32
|
|
|
10.33
|
|
|
10.34†
|
|
Kilroy Realty Corporation 2007 Deferred Compensation Plan, as amended and restated effective January 1, 2017 (previously filed by Kilroy Realty Corporation and Kilroy Realty, L.P., as an exhibit on Form 10-K for the year ended December 31, 2016)
|
10.35
|
|
|
10.36†
|
|
|
10.37
|
|
|
10.38
|
|
|
10.39
|
|
|
10.40
|
|
|
10.41
|
|
|
10.42
|
|
|
21.1*
|
|
|
21.2*
|
|
|
23.1*
|
|
|
23.2*
|
|
|
24.1*
|
|
|
31.1*
|
|
Exhibit
Number
|
|
Description
|
31.2*
|
|
|
31.3*
|
|
|
31.4*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
32.3*
|
|
|
32.4*
|
|
|
101.1
|
|
The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the year ended December 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Capital, (v) Consolidated Statements of Cash Flows and (vi) Notes to the Consolidated Financial Statements.
(1)
|
*
|
Filed herewith
|
†
|
Management contract or compensatory plan or arrangement.
|
(1)
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections.
|
Participant
:
|
[___________________] (the “
Participant
”)
|
Grant Date
:
|
December 27, 2018 (the “
Grant Date
”)
|
Total Number of RSUs
:
|
[_____]
|
Vesting Dates
:
|
The Time-Vest RSUs shall vest in two (2) substantially equal installments (rounded down to the nearest whole RSU until the last installment) on each of January 5, 2022 and January 5, 2023.
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
PARTICIPANT
:
____________________________________
Printed Name: ________________________
|
KILROY REALTY CORPORATION
,
a Maryland corporation
________________________________
Name: __________________________
Title: ___________________________
|
|
If the Company’s Relative TSR for the Initial Performance Period is:
|
The applicable percentage is:
|
Less than -100 basis points
|
0%
|
-100 basis points
|
50%
|
0 basis points
|
75%
|
100 basis points
|
100%
|
300 basis points or greater
|
200%
|
If the Company’s Relative TSR for the Final Performance Period is:
|
The Initial Number of PRSUs will be:
|
-100 basis points or less
|
Reduced by 25%
|
0 basis points
|
Reduced by 12.5%
|
100 basis points
|
Adjusted to equal 100% of the Target Performance-Vest RSUs
|
300 basis points or greater
|
Adjusted to equal 200% of the Target Performance-Vest RSUs
|
NAME OF SUBSIDIARY
OR ORGANIZATION
|
|
STATE OF INCORPORATION
OR FORMATION
|
Kilroy Realty, L.P.
|
|
Delaware
|
Kilroy Realty Finance, Inc.
|
|
Delaware
|
Kilroy Realty Finance Partnership, L.P.
|
|
Delaware
|
Kilroy Services, LLC
|
|
Delaware
|
Kilroy Realty TRS, Inc.
|
|
Delaware
|
Kilroy Realty Management, L.P.
|
|
Delaware
|
Kilroy Realty 303, LLC
|
|
Delaware
|
KR Westlake Terry, LLC
|
|
Delaware
|
KR 6255 Sunset, LLC
|
|
Delaware
|
KR MML 12701, LLC
|
|
Delaware
|
KR 690 Middlefield, LLC
|
|
Delaware
|
KR Lakeview, LLC
|
|
Delaware
|
KR Tribeca West, LLC
|
|
Delaware
|
KR 331 Fairchild, LLC
|
|
Delaware
|
KR Hollywood, LLC
|
|
Delaware
|
KR 350 Mission, LLC
|
|
Delaware
|
Fremont Lake Union Center, LLC
|
|
Delaware
|
KR 555 Mathilda, LLC
|
|
Delaware
|
KR Redwood City Member, LLC
|
|
Delaware
|
Redwood City Partners, LLC
|
|
Delaware
|
KR Academy, LLC
|
|
Delaware
|
KR 401 Terry, LLC
|
|
Delaware
|
KR Mission Bay, LLC
|
|
Delaware
|
KR Flower Mart, LLC
|
|
Delaware
|
KR SFFGA, LLC
|
|
Delaware
|
KR CFM, Inc.
|
|
California
|
KR 333 Dexter, LLC
|
|
Delaware
|
KR 330 Dexter, LLC
|
|
Delaware
|
KR 400 Aurora, LLC
|
|
Delaware
|
KR 401 Dexter, LLC
|
|
Delaware
|
KR 100 Hooper, LLC
|
|
Delaware
|
100 First Street Member, LLC
|
|
Delaware
|
KR 100 First Street Owner, LLC
|
|
Delaware
|
201 Third Street Member, LLC
|
|
Delaware
|
KR 201 Third Street Owner, LLC
|
|
Delaware
|
303 Second Street Member, LLC
|
|
Delaware
|
KR 303 Second Street Owner, LLC
|
|
Delaware
|
KR Terra Bella, LLC
|
|
Delaware
|
KR Menlo Park, LLC
|
|
Delaware
|
KR WMC, LLC
|
|
Delaware
|
KR 501 Santa Monica, LLC
|
|
Delaware
|
KR 12400 High Bluff, LLC
|
|
Delaware
|
KR Chesapeake Commons, LLC
|
|
Delaware
|
KR Sunset Weho, LLC
|
|
Delaware
|
KR 1701 Page Mill, LLC
|
|
Delaware
|
KR Oyster Point Developer, LLC
|
|
Delaware
|
KR Rose Canyon, LLC
|
|
Delaware
|
KR Kettner, LLC
|
|
Delaware
|
Oyster Cove Marina Owner, LLC
|
|
Delaware
|
Oyster Cove Marina Owner Member, LLC
|
|
Delaware
|
KR OP Tech, LLC
|
|
Delaware
|
KR North PCH, LLC
|
|
Delaware
|
Kilroy Realty TRS 2, Inc.
|
|
Delaware
|
KR Oyster Point I, LLC
|
|
Delaware
|
KR Oyster Point II, LLC
|
|
Delaware
|
KR Oyster Point III, LLC
|
|
Delaware
|
NAME OF SUBSIDIARY
OR ORGANIZATION
|
|
STATE OF INCORPORATION
OR FORMATION
|
Kilroy Realty Finance Partnership, L.P.
|
|
Delaware
|
Kilroy Services, LLC
|
|
Delaware
|
Kilroy Realty TRS, Inc.
|
|
Delaware
|
Kilroy Realty Management, L.P.
|
|
Delaware
|
Kilroy Realty 303, LLC
|
|
Delaware
|
KR Westlake Terry, LLC
|
|
Delaware
|
KR 6255 Sunset, LLC
|
|
Delaware
|
KR MML 12701, LLC
|
|
Delaware
|
KR 690 Middlefield, LLC
|
|
Delaware
|
KR Lakeview, LLC
|
|
Delaware
|
KR Tribeca West, LLC
|
|
Delaware
|
KR 331 Fairchild, LLC
|
|
Delaware
|
KR Hollywood, LLC
|
|
Delaware
|
KR 350 Mission, LLC
|
|
Delaware
|
Fremont Lake Union Center, LLC
|
|
Delaware
|
KR 555 Mathilda, LLC
|
|
Delaware
|
KR Redwood City Member, LLC
|
|
Delaware
|
Redwood City Partners, LLC
|
|
Delaware
|
KR Academy, LLC
|
|
Delaware
|
KR 401 Terry, LLC
|
|
Delaware
|
KR Mission Bay, LLC
|
|
Delaware
|
KR Flower Mart, LLC
|
|
Delaware
|
KR SFFGA, LLC
|
|
Delaware
|
KR 333 Dexter, LLC
|
|
Delaware
|
KR 330 Dexter, LLC
|
|
Delaware
|
KR 400 Aurora, LLC
|
|
Delaware
|
KR 401 Dexter, LLC
|
|
Delaware
|
KR 100 Hooper, LLC
|
|
Delaware
|
100 First Street Member, LLC
|
|
Delaware
|
KR 100 First Street Owner, LLC
|
|
Delaware
|
201 Third Street Member, LLC
|
|
Delaware
|
KR 201 Third Street Owner, LLC
|
|
Delaware
|
303 Second Street Member, LLC
|
|
Delaware
|
KR 303 Second Street Owner, LLC
|
|
Delaware
|
KR Terra Bella, LLC
|
|
Delaware
|
KR Menlo Park, LLC
|
|
Delaware
|
KR WMC, LLC
|
|
Delaware
|
KR 501 Santa Monica, LLC
|
|
Delaware
|
KR 12400 High Bluff, LLC
|
|
Delaware
|
KR Chesapeake Commons, LLC
|
|
Delaware
|
KR Sunset Weho, LLC
|
|
Delaware
|
KR 1701 Page Mill, LLC
|
|
Delaware
|
KR Oyster Point Developer, LLC
|
|
Delaware
|
KR Rose Canyon, LLC
|
|
Delaware
|
KR Kettner, LLC
|
|
Delaware
|
Oyster Cove Marina Owner, LLC
|
|
Delaware
|
Oyster Cove Marina Owner Member, LLC
|
|
Delaware
|
KR OP Tech, LLC
|
|
Delaware
|
KR North PCH, LLC
|
|
Delaware
|
Kilroy Realty TRS 2, Inc.
|
|
Delaware
|
KR Oyster Point I, LLC
|
|
Delaware
|
KR Oyster Point II, LLC
|
|
Delaware
|
KR Oyster Point III, LLC
|
|
Delaware
|
1.
|
I have reviewed this annual report on Form 10-K of Kilroy Realty Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ John Kilroy
|
John Kilroy
|
President and Chief Executive Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Kilroy Realty Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Tyler H. Rose
|
Tyler H. Rose
|
Executive Vice President and Chief Financial Officer
|
1.
|
I have reviewed this annual report on Form 10-K of Kilroy Realty, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ John Kilroy
|
John Kilroy
|
President and Chief Executive Officer
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
1.
|
I have reviewed this annual report on Form 10-K of Kilroy Realty, L.P.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Tyler H. Rose
|
Tyler H. Rose
|
Executive Vice President and Chief Financial Officer
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
(i)
|
the accompanying Annual Report on Form 10-K of the Company for the year ended
December 31, 2018
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John Kilroy
|
|
John Kilroy
|
|
President and Chief Executive Officer
|
|
|
|
Date:
|
February 14, 2019
|
(i)
|
the accompanying Annual Report on Form 10-K of the Company for the year ended
December 31, 2018
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Tyler H. Rose
|
|
Tyler H. Rose
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
Date:
|
February 14, 2019
|
(i)
|
the accompanying Annual Report on Form 10-K of the Operating Partnership for the year ended
December 31, 2018
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
|
/s/ John Kilroy
|
|
John Kilroy
|
|
President and Chief Executive Officer
|
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
|
|
|
Date:
|
February 14, 2019
|
(i)
|
the accompanying Annual Report on Form 10-K of the Operating Partnership for the year ended
December 31, 2018
(the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
|
(ii)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Operating Partnership.
|
/s/ Tyler H. Rose
|
|
Tyler H. Rose
|
|
Executive Vice President and Chief Financial Officer
|
|
Kilroy Realty Corporation, sole general partner of
Kilroy Realty, L.P.
|
|
|
|
Date:
|
February 14, 2019
|