þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Kilroy Realty Corporation | Maryland | 95-4598246 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
Kilroy Realty, L.P. | Delaware | 95-4612685 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
12200 W. Olympic Boulevard, Suite 200, Los Angeles, California 90064 | ||
(Address of principal executive offices) (Zip Code) | ||
(310) 481-8400 | ||
(Registrant's telephone number, including area code) | ||
N/A | ||
(Former name, former address and former fiscal year, if changed since last report) |
Kilroy Realty Corporation | |||
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) | |||
Kilroy Realty, L.P. | |||
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
(Do not check if a smaller reporting company) |
• | Combined reports better reflect how management and the analyst community view the business as a single operating unit; |
• | Combined reports enhance investors' understanding of the Company and the Operating Partnership by enabling them to view the business as a whole and in the same manner as management; |
• | Combined reports are more efficient for the Company and the Operating Partnership and result in savings in time, effort and expense; and |
• | Combined reports are more efficient for investors by reducing duplicative disclosure and providing a single document for their review. |
• | consolidated financial statements; |
• | the following notes to the consolidated financial statements: |
◦ | Note 5, Secured and Unsecured Debt of the Operating Partnership; |
◦ | Note 6, Noncontrolling Interests on the Company's Consolidated Financial Statements; |
◦ | Note 7, Preferred Stock of the Company; |
◦ | Note 8, Common Stock of the Company; |
◦ | Note 9, Preferred and Common Units in the Operating Partnership's Consolidated Financial Statements; |
◦ | Note 15, Net Income Available to Common Stockholders Per Share of the Company; |
◦ | Note 16, Net Income Available to Common Unitholders Per Unit of the Operating Partnership; |
◦ | Note 18, Pro Forma Results of the Company; |
◦ | Note 19, Pro Forma Results of the Operating Partnership; |
• | "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of the Company"; and |
• | "Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources of the Operating Partnership". |
Page | |||
PART I-FINANCIAL INFORMATION | |||
Item 1. | FINANCIAL STATEMENTS OF KILROY REALTY CORPORATION | ||
Item 1. | FINANCIAL STATEMENTS OF KILROY REALTY, L.P. | ||
Item 2. | |||
Item 3. | |||
Item 4. | CONTROLS AND PROCEDURES (KILROY REALTY CORPORATION AND KILROY REALTY, L.P.) | ||
PART II-OTHER INFORMATION | |||
Item 1. | |||
Item 1A. | |||
Item 2. | |||
Item 3. | |||
Item 4. | MINE SAFETY DISCLOSURES | ||
Item 5. | |||
Item 6. | |||
March 31, 2012 | December 31, 2011 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements (Note 2) | $ | 576,433 | $ | 537,574 | |||
Buildings and improvements | 2,970,967 | 2,830,310 | |||||
Undeveloped land and construction in progress | 446,237 | 430,806 | |||||
Total real estate held for investment | 3,993,637 | 3,798,690 | |||||
Accumulated depreciation and amortization | (770,688 | ) | (742,503 | ) | |||
Total real estate assets held for investment, net | 3,222,949 | 3,056,187 | |||||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 14) | — | 84,156 | |||||
CASH AND CASH EQUIVALENTS | 374,368 | 4,777 | |||||
RESTRICTED CASH (Note 14) | 43,140 | 358 | |||||
MARKETABLE SECURITIES (Note 12) | 6,459 | 5,691 | |||||
CURRENT RECEIVABLES, NET (Note 4) | 6,990 | 8,395 | |||||
DEFERRED RENT RECEIVABLES, NET (Note 4) | 106,309 | 101,142 | |||||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3) | 158,132 | 155,522 | |||||
DEFERRED FINANCING COSTS, NET | 19,060 | 18,368 | |||||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11) | 21,934 | 12,199 | |||||
TOTAL ASSETS | $ | 3,959,341 | $ | 3,446,795 | |||
LIABILITIES, NONCONTROLLING INTEREST AND EQUITY | |||||||
LIABILITIES: | |||||||
Secured debt, net (Notes 5 and 12) | $ | 350,219 | $ | 351,825 | |||
Exchangeable senior notes, net (Notes 5, 12 and 17) | 308,689 | 306,892 | |||||
Unsecured debt, net (Notes 5 and 12) | 1,130,651 | 980,569 | |||||
Unsecured line of credit (Notes 5, 12 and 17) | — | 182,000 | |||||
Accounts payable, accrued expenses and other liabilities | 92,574 | 81,713 | |||||
Accrued distributions (Note 17) | 26,622 | 22,692 | |||||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 2 and 3) | 90,206 | 79,781 | |||||
Rents received in advance and tenant security deposits | 30,392 | 26,917 | |||||
Liabilities and deferred revenue of real estate assets held for sale (Note 14) | — | 13,286 | |||||
7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred stock, called for redemption (Note 7) | 126,500 | — | |||||
Total liabilities | 2,155,853 | 2,045,675 | |||||
COMMITMENTS AND CONTINGENCIES (Note 11) | |||||||
NONCONTROLLING INTEREST (Note 6): | |||||||
7.45% Series A Cumulative Redeemable Preferred units of the Operating Partnership | 73,638 | 73,638 | |||||
EQUITY: | |||||||
Stockholders' Equity (Notes 7 and 8): | |||||||
Preferred stock, $.01 par value, 30,000,000 shares authorized: | |||||||
7.45% Series A Cumulative Redeemable Preferred stock, $.01 par value, 1,500,000 shares authorized, none issued and outstanding | — | — | |||||
7.80% Series E Cumulative Redeemable Preferred stock, $.01 par value, 1,610,000 shares authorized, issued and outstanding ($40,250 liquidation preference) | — | 38,425 | |||||
7.50% Series F Cumulative Redeemable Preferred stock, $.01 par value, 3,450,000 shares authorized, issued and outstanding ($86,250 liquidation preference) | — | 83,157 | |||||
6.875% Series G Cumulative Redeemable Preferred stock, $.01 par value, 4,000,000 shares authorized, issued and outstanding ($100,000 liquidation preference) | 96,155 | — | |||||
Common stock, $.01 par value, 150,000,000 shares authorized, 68,349,843 and 58,819,717 shares issued and outstanding, respectively | 683 | 588 | |||||
Additional paid-in capital | 1,827,676 | 1,448,997 | |||||
Distributions in excess of earnings | (234,199 | ) | (277,450 | ) | |||
Total stockholders' equity | 1,690,315 | 1,293,717 | |||||
Noncontrolling interest: | |||||||
Common units of the Operating Partnership (Note 6) | 39,535 | 33,765 | |||||
Total equity | 1,729,850 | 1,327,482 | |||||
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY | $ | 3,959,341 | $ | 3,446,795 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
REVENUES: | |||||||
Rental income | $ | 90,219 | $ | 76,997 | |||
Tenant reimbursements | 8,304 | 6,022 | |||||
Other property income | 887 | 754 | |||||
Total revenues | 99,410 | 83,773 | |||||
EXPENSES: | |||||||
Property expenses | 17,535 | 17,509 | |||||
Real estate taxes | 8,389 | 7,890 | |||||
Provision for bad debts | 2 | 26 | |||||
Ground leases | 802 | 339 | |||||
General and administrative expenses | 8,767 | 6,560 | |||||
Acquisition-related expenses | 1,528 | 472 | |||||
Depreciation and amortization | 36,746 | 28,441 | |||||
Total expenses | 73,769 | 61,237 | |||||
OTHER (EXPENSES) INCOME: | |||||||
Interest income and other net investment gains (Note 12) | 484 | 184 | |||||
Interest expense (Note 5) | (21,163 | ) | (20,876 | ) | |||
Total other (expenses) income | (20,679 | ) | (20,692 | ) | |||
INCOME FROM CONTINUING OPERATIONS | 4,962 | 1,844 | |||||
DISCONTINUED OPERATIONS (Note 14) | |||||||
Income from discontinued operations | 900 | 3,023 | |||||
Net gain on dispositions of discontinued operations | 72,809 | — | |||||
Total income from discontinued operations | 73,709 | 3,023 | |||||
NET INCOME | 78,671 | 4,867 | |||||
Net income attributable to noncontrolling common units of the Operating Partnership | (1,795 | ) | (34 | ) | |||
NET INCOME ATTRIBUTABLE TO KILROY REALTY CORPORATION | 76,876 | 4,833 | |||||
PREFERRED DISTRIBUTIONS AND DIVIDENDS: | |||||||
Distributions to noncontrolling cumulative redeemable preferred units of the Operating Partnership | (1,397 | ) | (1,397 | ) | |||
Preferred dividends (Note 7) | (3,021 | ) | (2,402 | ) | |||
Original issuance costs of preferred stock called for redemption (Note 7) | (4,918 | ) | — | ||||
Total preferred distributions and dividends | (9,336 | ) | (3,799 | ) | |||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 67,540 | $ | 1,034 | |||
Loss from continuing operations available to common stockholders per common share - basic (Note 15) | $ | (0.07 | ) | $ | (0.04 | ) | |
Loss from continuing operations available to common stockholders per common share - diluted (Note 15) | $ | (0.07 | ) | $ | (0.04 | ) | |
Net income available to common stockholders per share - basic (Note 15) | $ | 1.06 | $ | 0.01 | |||
Net income available to common stockholders per share - diluted (Note 15) | $ | 1.06 | $ | 0.01 | |||
Weighted average common shares outstanding - basic (Note 15) | 63,648,704 | 52,302,075 | |||||
Weighted average common shares outstanding - diluted (Note 15) | 63,648,704 | 52,302,075 | |||||
Dividends declared per common share | $ | 0.35 | $ | 0.35 |
Common Stock | Total Stock- holders' Equity | Noncontrol- ling Interests - Common Units of the Operating Partnership | Total Equity | |||||||||||||||||||||||||||
Preferred Stock | Number of Shares | Common Stock | Additional Paid-in Capital | Distributions in Excess of Earnings | ||||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2010 | $ | 121,582 | 52,349,670 | $ | 523 | $ | 1,211,498 | $ | (247,252 | ) | $ | 1,086,351 | $ | 31,379 | $ | 1,117,730 | ||||||||||||||
Net income | 4,833 | 4,833 | 34 | 4,867 | ||||||||||||||||||||||||||
Issuance of share-based compensation awards | 66,208 | 1 | 1,874 | 1,875 | 1,875 | |||||||||||||||||||||||||
Noncash amortization of share-based compensation | 1,420 | 1,420 | 1,420 | |||||||||||||||||||||||||||
Repurchase of common stock and restricted stock units | (11,485 | ) | (732 | ) | (732 | ) | (732 | ) | ||||||||||||||||||||||
Exercise of stock options | 15,000 | 395 | 395 | 395 | ||||||||||||||||||||||||||
Adjustment for noncontrolling interest | 8 | 8 | (8 | ) | — | |||||||||||||||||||||||||
Preferred distributions and dividends | (3,799 | ) | (3,799 | ) | (3,799 | ) | ||||||||||||||||||||||||
Dividends declared per common share and common unit ($0.35 per share/unit) | (18,630 | ) | (18,630 | ) | (603 | ) | (19,233 | ) | ||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2011 | $ | 121,582 | 52,419,393 | $ | 524 | $ | 1,214,463 | $ | (264,848 | ) | $ | 1,071,721 | $ | 30,802 | $ | 1,102,523 | ||||||||||||||
Common Stock | Total Stock- holders' Equity | Noncontrol- ling Interests - Common Units of the Operating Partnership | Total Equity | |||||||||||||||||||||||||||
Preferred Stock | Number of Shares | Common Stock | Additional Paid-in Capital | Distributions in Excess of Earnings | ||||||||||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2011 | $ | 121,582 | 58,819,717 | $ | 588 | $ | 1,448,997 | $ | (277,450 | ) | $ | 1,293,717 | $ | 33,765 | $ | 1,327,482 | ||||||||||||||
Net income | 76,876 | 76,876 | 1,795 | 78,671 | ||||||||||||||||||||||||||
Issuance of Series G Preferred stock (Note 7) | 96,155 | 96,155 | 96,155 | |||||||||||||||||||||||||||
Series E and Series F Preferred stock, called for redemption (Note 7) | (121,582 | ) | (4,918 | ) | (126,500 | ) | (126,500 | ) | ||||||||||||||||||||||
Issuance of common stock (Note 8) | 9,487,500 | 95 | 381,968 | 382,063 | 382,063 | |||||||||||||||||||||||||
Issuance of share-based compensation awards (Note 10) | 59,938 | 294 | 294 | 294 | ||||||||||||||||||||||||||
Noncash amortization of share-based compensation (Note 10) | 1,469 | 1,469 | 1,469 | |||||||||||||||||||||||||||
Repurchase of common stock and restricted stock units (Note 10) | (22,312 | ) | (603 | ) | (603 | ) | (603 | ) | ||||||||||||||||||||||
Exercise of stock options | 5,000 | 129 | 129 | 129 | ||||||||||||||||||||||||||
Adjustment for noncontrolling interest | (4,578 | ) | (4,578 | ) | 4,578 | — | ||||||||||||||||||||||||
Preferred distributions and dividends | (4,418 | ) | (4,418 | ) | (4,418 | ) | ||||||||||||||||||||||||
Dividends declared per common share and common unit ($0.35 per share/unit) | (24,289 | ) | (24,289 | ) | (603 | ) | (24,892 | ) | ||||||||||||||||||||||
BALANCE AS OF MARCH 31, 2012 | $ | 96,155 | 68,349,843 | $ | 683 | $ | 1,827,676 | $ | (234,199 | ) | $ | 1,690,315 | $ | 39,535 | $ | 1,729,850 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 78,671 | $ | 4,867 | |||
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations): | |||||||
Depreciation and amortization of building and improvements and leasing costs | 36,464 | 29,059 | |||||
Increase in provision for bad debts | 2 | 26 | |||||
Depreciation of furniture, fixtures and equipment | 288 | 252 | |||||
Noncash amortization of share-based compensation awards | 1,287 | 1,106 | |||||
Noncash amortization of deferred financing costs and debt discounts and premiums | 2,976 | 3,450 | |||||
Noncash amortization of net (below)/above market rents (Note 3) | (525 | ) | 653 | ||||
Net gain on dispositions of discontinued operations (Note 14) | (72,809 | ) | — | ||||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements | (2,261 | ) | (2,326 | ) | |||
Straight-line rents | (5,487 | ) | (4,340 | ) | |||
Net change in other operating assets | (3,869 | ) | (1,816 | ) | |||
Net change in other operating liabilities | 14,956 | 12,866 | |||||
Insurance proceeds received for property damage | (951 | ) | — | ||||
Net cash provided by operating activities | 48,742 | 43,797 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Expenditures for acquisition of operating properties (Note 2) | (162,380 | ) | (33,000 | ) | |||
Expenditures for operating properties | (17,307 | ) | (15,985 | ) | |||
Expenditures for development and redevelopment properties and undeveloped land | (13,477 | ) | (6,714 | ) | |||
Net proceeds received from dispositions of operating properties (Note 14) | 100,765 | — | |||||
Insurance proceeds received for property damage | 951 | — | |||||
Increase in acquisition-related deposits | (5,250 | ) | (5,000 | ) | |||
Increase in restricted cash | (386 | ) | (438 | ) | |||
Net cash used in investing activities | (97,084 | ) | (61,137 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net proceeds from issuance of Series G preferred stock (Note 7) | 96,757 | — | |||||
Net proceeds from issuance of common stock (Note 8) | 382,063 | — | |||||
Borrowings on unsecured line of credit | 30,000 | 42,000 | |||||
Repayments on unsecured line of credit | (212,000 | ) | (144,000 | ) | |||
Proceeds from issuance of secured debt | — | 135,000 | |||||
Principal payments on secured debt | (1,546 | ) | (1,598 | ) | |||
Proceeds from the issuance of unsecured debt (Note 5) | 150,000 | — | |||||
Financing costs | (1,877 | ) | (1,160 | ) | |||
Decrease in loan deposits | — | 2,027 | |||||
Repurchase of common stock and restricted stock units (Note 10) | (603 | ) | (732 | ) | |||
Proceeds from exercise of stock options | 129 | 395 | |||||
Dividends and distributions paid to common stockholders and common unitholders | (21,191 | ) | (18,925 | ) | |||
Dividends and distributions paid to preferred stockholders and preferred unitholders | (3,799 | ) | (3,799 | ) | |||
Net cash provided by financing activities | 417,933 | 9,208 | |||||
Net increase (decrease) in cash and cash equivalents | 369,591 | (8,132 | ) | ||||
Cash and cash equivalents, beginning of period | 4,777 | 14,840 | |||||
Cash and cash equivalents, end of period | $ | 374,368 | $ | 6,708 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
SUPPLEMENTAL CASH FLOWS INFORMATION: | |||||||
Cash paid for interest, net of capitalized interest of $3,251 and $1,620 as of March 31, 2012 and 2011, respectively | $ | 4,487 | $ | 6,965 | |||
NONCASH INVESTING TRANSACTIONS: | |||||||
Accrual for expenditures for operating properties and development and redevelopment properties | $ | 5,421 | $ | 4,753 | |||
Tenant improvements funded directly by tenants to third parties | $ | 95 | $ | 2,800 | |||
Assumption of other liabilities with property acquisitions (Note 2) | $ | 137 | $ | — | |||
Net disposition proceeds held by a qualified intermediary in connection with Section 1031 exchange (Note 14) | $ | 42,395 | $ | — | |||
NONCASH FINANCING TRANSACTIONS: | |||||||
Accrual of preferred stock issuance costs | $ | 602 | $ | — | |||
Accrual of dividends and distributions payable to common stockholders and common unitholders | $ | 24,524 | $ | 18,950 | |||
Accrual of dividends and distributions payable to preferred stockholders and preferred unitholders | $ | 2,431 | $ | 1,909 | |||
Issuance of share-based compensation awards (Note 10) | $ | 29,989 | $ | 6,432 | |||
Reclassification of preferred stock called for redemption from equity to liabilities (Note 7) | $ | 126,500 | $ | — |
March 31, 2012 | December 31, 2011 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements (Note 2) | $ | 576,433 | $ | 537,574 | |||
Buildings and improvements | 2,970,967 | 2,830,310 | |||||
Undeveloped land and construction in progress | 446,237 | 430,806 | |||||
Total real estate held for investment | 3,993,637 | 3,798,690 | |||||
Accumulated depreciation and amortization | (770,688 | ) | (742,503 | ) | |||
Total real estate assets held for investment, net | 3,222,949 | 3,056,187 | |||||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 14) | — | 84,156 | |||||
CASH AND CASH EQUIVALENTS | 374,368 | 4,777 | |||||
RESTRICTED CASH (Note 14) | 43,140 | 358 | |||||
MARKETABLE SECURITIES (Note 12) | 6,459 | 5,691 | |||||
CURRENT RECEIVABLES, NET (Note 4) | 6,990 | 8,395 | |||||
DEFERRED RENT RECEIVABLES, NET (Note 4) | 106,309 | 101,142 | |||||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3) | 158,132 | 155,522 | |||||
DEFERRED FINANCING COSTS, NET | 19,060 | 18,368 | |||||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11) | 21,934 | 12,199 | |||||
TOTAL ASSETS | $ | 3,959,341 | $ | 3,446,795 | |||
LIABILITIES, NONCONTROLLING INTEREST AND CAPITAL | |||||||
LIABILITIES: | |||||||
Secured debt, net (Notes 5 and 12) | $ | 350,219 | $ | 351,825 | |||
Exchangeable senior notes, net (Notes 5, 12 and 17) | 308,689 | 306,892 | |||||
Unsecured debt, net (Notes 5 and 12) | 1,130,651 | 980,569 | |||||
Unsecured line of credit (Notes 5, 12 and 17) | — | 182,000 | |||||
Accounts payable, accrued expenses and other liabilities | 92,574 | 81,713 | |||||
Accrued distributions (Note 17) | 26,622 | 22,692 | |||||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 2 and 3) | 90,206 | 79,781 | |||||
Rents received in advance and tenant security deposits | 30,392 | 26,917 | |||||
Liabilities and deferred revenue of real estate assets held for sale (Note 14) | — | 13,286 | |||||
7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred units, called for redemption (Note 9) | 126,500 | — | |||||
Total liabilities | 2,155,853 | 2,045,675 | |||||
COMMITMENTS AND CONTINGENCIES (Note 11) | |||||||
7.45% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS | 73,638 | 73,638 | |||||
CAPITAL: | |||||||
Partners' Capital (Note 9): | |||||||
7.80% Series E Cumulative Redeemable Preferred units, 1,610,000 units issued and outstanding ($40,250 liquidation preference) | — | 38,425 | |||||
7.50% Series F Cumulative Redeemable Preferred units, 3,450,000 units issued and outstanding ($86,250 liquidation preference) | — | 83,157 | |||||
6.875% Series G Cumulative Redeemable Preferred units, 4,000,000 units issued and outstanding ($100,000 liquidation preference) | 96,155 | — | |||||
Common units, 68,349,843 and 58,819,717 held by the general partner and 1,718,131 and 1,718,131 held by common limited partners issued and outstanding, respectively | 1,631,001 | 1,203,259 | |||||
Total partners' capital | 1,727,156 | 1,324,841 | |||||
Noncontrolling interest in consolidated subsidiaries | 2,694 | 2,641 | |||||
Total capital | 1,729,850 | 1,327,482 | |||||
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND CAPITAL | $ | 3,959,341 | $ | 3,446,795 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
REVENUES: | |||||||
Rental income | $ | 90,219 | 76,997 | ||||
Tenant reimbursements | 8,304 | 6,022 | |||||
Other property income | 887 | 754 | |||||
Total revenues | 99,410 | 83,773 | |||||
EXPENSES: | |||||||
Property expenses | 17,535 | 17,509 | |||||
Real estate taxes | 8,389 | 7,890 | |||||
Provision for bad debts | 2 | 26 | |||||
Ground leases | 802 | 339 | |||||
General and administrative expenses | 8,767 | 6,560 | |||||
Acquisition-related expenses | 1,528 | 472 | |||||
Depreciation and amortization | 36,746 | 28,441 | |||||
Total expenses | 73,769 | 61,237 | |||||
OTHER (EXPENSES) INCOME: | |||||||
Interest income and other net investment gains (Note 12) | 484 | 184 | |||||
Interest expense (Note 5) | (21,163 | ) | (20,876 | ) | |||
Total other (expenses) income | (20,679 | ) | (20,692 | ) | |||
INCOME FROM CONTINUING OPERATIONS | 4,962 | 1,844 | |||||
DISCONTINUED OPERATIONS (Note 14) | |||||||
Income from discontinued operations | 900 | 3,023 | |||||
Net gain on dispositions of discontinued operations | 72,809 | — | |||||
Total income from discontinued operations | 73,709 | 3,023 | |||||
NET INCOME | 78,671 | 4,867 | |||||
Net income attributable to noncontrolling interests in consolidated subsidiaries | (53 | ) | (34 | ) | |||
NET INCOME ATTRIBUTABLE TO KILROY REALTY, L.P. | 78,618 | 4,833 | |||||
Preferred distributions (Note 9) | (4,418 | ) | (3,799 | ) | |||
Original issuance costs of preferred units called for redemption (Note 9) | (4,918 | ) | — | ||||
Total preferred distributions | (9,336 | ) | (3,799 | ) | |||
NET INCOME AVAILABLE TO COMMON UNITHOLDERS | $ | 69,282 | $ | 1,034 | |||
Loss from continuing operations available to common unitholders per common unit - basic (Note 16) | $ | (0.07 | ) | $ | (0.04 | ) | |
Loss from continuing operations available to common unitholders per common unit - diluted (Note 16) | $ | (0.07 | ) | $ | (0.04 | ) | |
Net income available to common unitholders per unit - basic (Note 16) | $ | 1.05 | $ | 0.01 | |||
Net income available to common unitholders per unit - diluted (Note 16) | $ | 1.05 | $ | 0.01 | |||
Weighted average common units outstanding - basic (Note 16) | 65,366,835 | 54,025,206 | |||||
Weighted average common units outstanding - diluted (Note 16) | 65,366,835 | 54,025,206 | |||||
Distributions declared per common unit | $ | 0.35 | $ | 0.35 |
Partners' Capital | Total Partners' Capital | Noncontrolling Interests in Consolidated Subsidiaries | ||||||||||||||||||||
Preferred Units | Number of Common Units | Common Units | Total Capital | |||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2010 | $ | 121,582 | 54,072,801 | $ | 994,511 | $ | 1,116,093 | $ | 1,637 | $ | 1,117,730 | |||||||||||
Net income | 4,833 | 4,833 | 34 | 4,867 | ||||||||||||||||||
Issuance of share-based compensation awards | 66,208 | 1,875 | 1,875 | 1,875 | ||||||||||||||||||
Noncash amortization of share-based compensation | 1,420 | 1,420 | 1,420 | |||||||||||||||||||
Repurchase of common units and restricted stock units | (11,485 | ) | (732 | ) | (732 | ) | (732 | ) | ||||||||||||||
Exercise of stock options | 15,000 | 395 | 395 | 395 | ||||||||||||||||||
Other | 1 | 1 | (1 | ) | — | |||||||||||||||||
Preferred distributions | (3,799 | ) | (3,799 | ) | (3,799 | ) | ||||||||||||||||
Distributions declared per common unit ($0.35 per unit) | (19,233 | ) | (19,233 | ) | (19,233 | ) | ||||||||||||||||
BALANCE AS OF MARCH 31, 2011 | $ | 121,582 | 54,142,524 | $ | 979,271 | $ | 1,100,853 | $ | 1,670 | $ | 1,102,523 | |||||||||||
Partners' Capital | Total Partners' Capital | Noncontrolling Interests in Consolidated Subsidiaries | ||||||||||||||||||||
Preferred Units | Number of Common Units | Common Units | Total Capital | |||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2011 | $ | 121,582 | 60,537,848 | $ | 1,203,259 | $ | 1,324,841 | $ | 2,641 | $ | 1,327,482 | |||||||||||
Net income | 78,618 | 78,618 | 53 | 78,671 | ||||||||||||||||||
Issuance of Series G Preferred units (Note 9) | 96,155 | 96,155 | 96,155 | |||||||||||||||||||
Series E and Series F Preferred units, called for redemption (Note 9) | (121,582 | ) | (4,918 | ) | (126,500 | ) | (126,500 | ) | ||||||||||||||
Issuance of common units (Note 9) | 9,487,500 | 382,063 | 382,063 | 382,063 | ||||||||||||||||||
Issuance of share-based compensation awards (Note 10) | 59,938 | 294 | 294 | 294 | ||||||||||||||||||
Noncash amortization of share-based compensation (Note 10) | 1,469 | 1,469 | 1,469 | |||||||||||||||||||
Repurchase of common units and restricted stock units (Note 10) | (22,312 | ) | (603 | ) | (603 | ) | (603 | ) | ||||||||||||||
Exercise of stock options | 5,000 | 129 | 129 | 129 | ||||||||||||||||||
Preferred distributions | (4,418 | ) | (4,418 | ) | (4,418 | ) | ||||||||||||||||
Distributions declared per common unit ($0.35 per unit) | (24,892 | ) | (24,892 | ) | (24,892 | ) | ||||||||||||||||
BALANCE AS OF MARCH 31, 2012 | $ | 96,155 | 70,067,974 | $ | 1,631,001 | $ | 1,727,156 | $ | 2,694 | $ | 1,729,850 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 78,671 | $ | 4,867 | |||
Adjustments to reconcile net income to net cash provided by operating activities (including discontinued operations): | |||||||
Depreciation and amortization of building and improvements and leasing costs | 36,464 | 29,059 | |||||
Increase in provision for bad debts | 2 | 26 | |||||
Depreciation of furniture, fixtures and equipment | 288 | 252 | |||||
Noncash amortization of share-based compensation awards | 1,287 | 1,106 | |||||
Noncash amortization of deferred financing costs and debt discounts and premiums | 2,976 | 3,450 | |||||
Noncash amortization of net (below)/above market rents (Note 3) | (525 | ) | 653 | ||||
Net gain on dispositions of discontinued operations (Note 14) | (72,809 | ) | — | ||||
Noncash amortization of deferred revenue related to tenant-funded tenant improvements | (2,261 | ) | (2,326 | ) | |||
Straight-line rents | (5,487 | ) | (4,340 | ) | |||
Net change in other operating assets | (3,869 | ) | (1,816 | ) | |||
Net change in other operating liabilities | 14,956 | 12,866 | |||||
Insurance proceeds received for property damage | (951 | ) | — | ||||
Net cash provided by operating activities | 48,742 | 43,797 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Expenditures for acquisition of operating properties (Note 2) | (162,380 | ) | (33,000 | ) | |||
Expenditures for operating properties | (17,307 | ) | (15,985 | ) | |||
Expenditures for development and redevelopment properties and undeveloped land | (13,477 | ) | (6,714 | ) | |||
Net proceeds received from dispositions of operating properties (Note 14) | 100,765 | — | |||||
Insurance proceeds received for property damage | 951 | — | |||||
Increase in acquisition-related deposits | (5,250 | ) | (5,000 | ) | |||
Increase in restricted cash | (386 | ) | (438 | ) | |||
Net cash used in investing activities | (97,084 | ) | (61,137 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Net proceeds from issuance of Series G preferred units (Note 9) | 96,757 | — | |||||
Net proceeds from issuance of common units (Note 9) | 382,063 | — | |||||
Borrowings on unsecured line of credit | 30,000 | 42,000 | |||||
Repayments on unsecured line of credit | (212,000 | ) | (144,000 | ) | |||
Proceeds from issuance of secured debt | — | 135,000 | |||||
Principal payments on secured debt | (1,546 | ) | (1,598 | ) | |||
Proceeds from the issuance of unsecured debt (Note 5) | 150,000 | — | |||||
Financing costs | (1,877 | ) | (1,160 | ) | |||
Decrease in loan deposits | — | 2,027 | |||||
Repurchase of common units and restricted stock units (Note 10) | (603 | ) | (732 | ) | |||
Proceeds from exercise of stock options | 129 | 395 | |||||
Distributions paid to common unitholders | (21,191 | ) | (18,925 | ) | |||
Distributions paid to preferred unitholders | (3,799 | ) | (3,799 | ) | |||
Net cash provided by financing activities | 417,933 | 9,208 | |||||
Net increase (decrease) in cash and cash equivalents | 369,591 | (8,132 | ) | ||||
Cash and cash equivalents, beginning of period | 4,777 | 14,840 | |||||
Cash and cash equivalents, end of period | $ | 374,368 | $ | 6,708 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
SUPPLEMENTAL CASH FLOWS INFORMATION: | |||||||
Cash paid for interest, net of capitalized interest of $3,251 and $1,620 as of March 31, 2012 and 2011, respectively | $ | 4,487 | $ | 6,965 | |||
NONCASH INVESTING TRANSACTIONS: | |||||||
Accrual for expenditures for operating properties and development and redevelopment properties | $ | 5,421 | $ | 4,753 | |||
Tenant improvements funded directly by tenants to third parties | $ | 95 | $ | 2,800 | |||
Assumption of other liabilities with property acquisitions (Note 2) | $ | 137 | $ | — | |||
Net disposition proceeds held by a qualified intermediary in connection with Section 1031 exchange (Note 14) | $ | 42,395 | $ | — | |||
NONCASH FINANCING TRANSACTIONS: | |||||||
Accrual of preferred unit issuance costs | $ | 602 | $ | — | |||
Accrual of distributions payable to common unitholders | $ | 24,524 | $ | 18,950 | |||
Accrual of distributions payable to preferred unitholders | $ | 2,431 | $ | 1,909 | |||
Issuance of share-based compensation awards (Note 10) | $ | 29,989 | $ | 6,432 | |||
Reclassification of preferred units called for redemption from equity to liabilities (Note 9) | $ | 126,500 | $ | — |
Number of Buildings | Rentable Square Feet | Number of Tenants | Percentage Occupied | ||||||||
Office Properties(1) | 111 | 11,797,818 | 440 | 90.0 | % | ||||||
Industrial Properties | 39 | 3,413,354 | 60 | 97.0 | % | ||||||
Total Stabilized Portfolio | 150 | 15,211,172 | 500 | 91.6 | % |
(1) | Includes seven office properties acquired in one transaction during the three months ended March 31, 2012 encompassing 374,139 rentable square feet (see Note 2 for additional information). |
Property | Date of Acquisition | Number of Buildings | Rentable Square Feet | Occupancy as of March 31, 2012 | Purchase Price (in millions)(1) | ||||||||
4100-4700 Bohannon Drive | |||||||||||||
Menlo Park, CA | February 29, 2012 | 7 | 374,139 | 80.1% | $ | 162.5 | |||||||
Total | 7 | 374,139 | $ | 162.5 |
(1) | Excludes acquisition-related costs. |
4100-4700 Bohannon Drive, Menlo Park, CA | |||
(in thousands) | |||
Assets | |||
Land | $ | 38,810 | |
Buildings and improvements(1) | 124,617 | ||
Deferred leasing costs and acquisition-related intangible assets(2) | 9,470 | ||
Total assets acquired | 172,897 | ||
Liabilities | |||
Deferred revenue and acquisition-related intangible liabilities(3) | 10,380 | ||
Accounts payable, accrued expenses and other liabilities | 137 | ||
Total liabilities assumed | 10,517 | ||
Net assets and liabilities acquired(4) | $ | 162,380 | |
(1) | Represents buildings, building improvements and tenant improvements. |
(2) | Represents in-place leases (approximately $5.8 million with a weighted average amortization period of 5.8 years), above-market leases (approximately $0.1 million with a weighted average amortization period of 2.6 years), and leasing commissions (approximately $3.5 million with a weighted average amortization period of 4.3 years). |
(3) | Represents below-market leases (approximately $10.4 million with a weighted average amortization period of 8.2 years). |
(4) | Reflects the purchase price net of other lease-related obligations. |
March 31, 2012 | December 31, 2011 | ||||||
(in thousands) | |||||||
Deferred Leasing Costs and Acquisition-related Intangible Assets, net(1): | |||||||
Deferred leasing costs | $ | 139,693 | $ | 142,652 | |||
Accumulated amortization | (48,131 | ) | (52,974 | ) | |||
Deferred leasing costs, net | 91,562 | 89,678 | |||||
Above-market operating leases | 26,637 | 28,143 | |||||
Accumulated amortization | (7,857 | ) | (8,101 | ) | |||
Above-market operating leases, net | 18,780 | 20,042 | |||||
In-place leases | 63,465 | 61,355 | |||||
Accumulated amortization | (15,825 | ) | (15,753 | ) | |||
In-place leases, net | 47,640 | 45,602 | |||||
Below-market ground lease obligation | 200 | 200 | |||||
Accumulated amortization | (50 | ) | — | ||||
Below-market ground lease obligation, net | 150 | 200 | |||||
Total deferred leasing costs and acquisition-related intangible assets, net | $ | 158,132 | $ | 155,522 | |||
Acquisition-related Intangible Liabilities, net(1)(2): | |||||||
Below-market operating leases | $ | 46,966 | $ | 37,582 | |||
Accumulated amortization | (7,058 | ) | (6,158 | ) | |||
Below-market operating leases, net | 39,908 | 31,424 | |||||
Above-market ground lease obligation | 5,200 | 5,200 | |||||
Accumulated amortization | (53 | ) | (37 | ) | |||
Above-market ground lease obligation, net | 5,147 | 5,163 | |||||
Total acquisition-related intangible liabilities, net | $ | 45,055 | $ | 36,587 |
(1) | Balances and accumulated amortization amounts at March 31, 2012 reflect the write-off of the following fully amortized amounts at January 1, 2012: deferred leasing costs (approximately $9.5 million), above-market leases (approximately $1.6 million), in-place leases (approximately $3.7 million), and below-market leases (approximately $1.0 million). |
(2) | Included in deferred revenue and acquisition-related intangible liabilities, net in the consolidated balance sheets. |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(in thousands) | |||||||
Deferred leasing costs(1) | $ | 4,498 | $ | 3,768 | |||
Net (below) above-market operating leases(2) | (525 | ) | 653 | ||||
In-place leases(1) | 3,781 | 2,173 | |||||
Net below-market ground lease obligation(3) | 34 | — | |||||
Total | $ | 7,788 | $ | 6,594 |
(1) | The amortization of deferred leasing costs and in-place leases is recorded to depreciation and amortization expense in the consolidated statements of operations for the periods presented. |
(2) | The amortization of net below−market operating leases is recorded as an increase to rental income for the three months ended March 31, 2012, and the amortization of the net above-market operating leases is recorded as a decrease to rental income for the three months ended March 31, 2011 in the consolidated statements of operations. |
(3) | The amortization of the net below-market ground lease obligation is recorded as an increase to ground lease expense in the consolidated statements of operations for the period presented. |
Year Ending | Deferred Leasing Costs | Net Below-Market Operating Leases(1) | In-Place Leases | Net Below/(Above)-Market Ground Lease Obligation(2) | |||||||||||
(in thousands) | |||||||||||||||
Remaining 2012 | $ | 14,535 | $ | (2,196 | ) | $ | 11,111 | $ | 103 | ||||||
2013 | 17,541 | (3,091 | ) | 12,616 | (63 | ) | |||||||||
2014 | 15,392 | (2,897 | ) | 9,173 | (63 | ) | |||||||||
2015 | 11,828 | (2,285 | ) | 5,317 | (63 | ) | |||||||||
2016 | 9,426 | (1,393 | ) | 2,903 | (63 | ) | |||||||||
Thereafter | 22,840 | (9,266 | ) | 6,520 | (4,848 | ) | |||||||||
Total | $ | 91,562 | $ | (21,128 | ) | $ | 47,640 | $ | (4,997 | ) |
(1) | Represents estimated annual amortization related to net below-market operating leases. Amounts shown represent net below-market operating leases which will be recorded as an increase to rental income in the consolidated statements of operations. |
(2) | Represents estimated annual net amortization related to (above)/below−market ground lease obligations. Amounts shown for 2012 represent net below−market ground lease obligations which will be recorded as an increase to ground lease expense in the consolidated statements of operations. Amounts shown for 2013−2016 and for the periods thereafter represent net above−market ground lease obligations which will be recorded as a decrease to ground lease expense in the consolidated statements of operations. |
March 31, 2012 | December 31, 2011 | ||||||
(in thousands) | |||||||
Current receivables | $ | 9,574 | $ | 10,985 | |||
Allowance for uncollectible tenant receivables | (2,584 | ) | (2,590 | ) | |||
Current receivables, net | $ | 6,990 | $ | 8,395 |
March 31, 2012 | December 31, 2011 | ||||||
(in thousands) | |||||||
Deferred rent receivables | $ | 109,317 | $ | 104,548 | |||
Allowance for deferred rent receivables | (3,008 | ) | (3,406 | ) | |||
Deferred rent receivables, net | $ | 106,309 | $ | 101,142 |
3.25% Exchangeable Notes | 4.25% Exchangeable Notes | ||||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2012 | December 31, 2011 | ||||||||||||
(in thousands) | |||||||||||||||
Principal amount | $ | 148,000 | $ | 148,000 | $ | 172,500 | $ | 172,500 | |||||||
Unamortized discount | (132 | ) | (924 | ) | (11,679 | ) | (12,684 | ) | |||||||
Net carrying amount of liability component | $ | 147,868 | $ | 147,076 | $ | 160,821 | $ | 159,816 | |||||||
Carrying amount of equity component | $33,675 | $19,835 | |||||||||||||
Maturity date | April 2012 | November 2014 | |||||||||||||
Stated coupon rate (1)(2) | 3.25% | 4.25% | |||||||||||||
Effective interest rate (3) | 5.45% | 7.13% | |||||||||||||
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted (4) | 11.3636 | 27.8307 | |||||||||||||
Exchange price, as adjusted (4) | $88.00 | $35.93 | |||||||||||||
Number of shares on which the aggregate consideration to be delivered on conversion is determined (4) | 1,681,813 | 4,800,796 |
(1) | Interest on the 3.25% Exchangeable Notes is payable semi-annually in arrears on April 15th and October 15th of each year. |
(2) | Interest on the 4.25% Exchangeable Notes is payable semi-annually in arrears on May 15th and November 15th of each year. |
(3) | The rate at which we record interest expense for financial reporting purposes, which reflects the amortization of the discounts on the Exchangeable Notes. This rate represents our conventional debt borrowing rate at the date of issuance. |
(4) | The exchange rate, exchange price, and the number of shares to be delivered upon conversion are subject to adjustment under certain circumstances including increases in our common dividends. |
3.25% Exchangeable Notes(1) | 4.25% Exchangeable Notes(2) | ||||||
Referenced shares of common stock | 1,121,201 | 4,800,796 | |||||
Exchange price including effect of capped calls | $ | 102.72 | $ | 42.81 |
(1) | The capped calls mitigate the dilutive impact to us of the potential exchange of two-thirds of the 3.25% Exchangeable Notes into shares of common stock. |
(2) | The capped calls mitigate the dilutive impact to us of the potential exchange of all of the 4.25% Exchangeable Notes into shares of common stock. |
March 31, 2012 | March 31, 2011 | ||
Per share average trading price of the Company's common stock | $42.86 | $37.96 |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(in thousands) | |||||||
Contractual interest payments | $ | 3,035 | $ | 3,035 | |||
Amortization of discount | 1,797 | 1,688 | |||||
Interest expense attributable to the Exchangeable Notes | $ | 4,832 | $ | 4,723 |
March 31, 2012 | December 31, 2011 | ||||||
(in thousands) | |||||||
Outstanding borrowings(1) | $ | — | $ | 182,000 | |||
Remaining borrowing capacity | 500,000 | 318,000 | |||||
Total borrowing capacity(2) | $ | 500,000 | $ | 500,000 | |||
Interest rate(3) | 2.05 | % | |||||
Facility fee-annual rate(4) | 0.350% | ||||||
Maturity date(5) | August 2015 |
(1) | As of March 31, 2012, there were no borrowings outstanding on the Credit Facility. |
(2) | We may elect to borrow, subject to bank approval, up to an additional $200.0 million under an accordion feature under the terms of the Credit Facility. |
(3) | The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% as of both March 31, 2012 and December 31, 2011. No interest rate is shown as of March 31, 2012 because no borrowings were outstanding. |
(4) | The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred origination and legal costs of approximately $8.3 million that are currently being amortized through the maturity date of the Credit Facility. |
(5) | Under the terms of the Credit Facility, we may exercise an option to extend the maturity date by one year. |
Year Ending | (in thousands) | |||
Remaining 2012 | $ | 251,758 | (1) | |
2013 | 6,373 | |||
2014 | 262,443 | |||
2015 | 357,382 | |||
2016 | 156,551 | |||
Thereafter | 768,476 | |||
Total | $ | 1,802,983 | (2) |
(1) | Includes the 3.25% Exchangeable Notes with an aggregate principal amount of $148.0 million that we repaid in April 2012 upon maturity (see Note 17). |
(2) | Includes gross principal balance of outstanding debt before impact of all debt discounts and premiums. |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(in thousands) | |||||||
Gross interest expense | $ | 24,994 | $ | 22,855 | |||
Capitalized interest | (3,831 | ) | (1,979 | ) | |||
Interest expense | $ | 21,163 | $ | 20,876 |
March 2012 Market Measure-based RSU Grant | ||
Grant date fair value per share | $41.20 | |
Expected share price volatility | 31.00% | |
Risk-free interest rate | 1.60% | |
Dividend yield | 3.80% | |
Expected life | 7 years |
Nonvested RSUs | Vested RSUs | Total RSUs | ||||||||||
Amount | Weighted-Average Grant Date Fair Value Per Share | |||||||||||
Outstanding at January 1, 2012 | 147,961 | $ | 32.18 | 694,714 | 842,675 | |||||||
Granted (1) | 196,033 | 44.29 | — | 196,033 | ||||||||
Vested | (48,864 | ) | 36.20 | 48,864 | — | |||||||
Issuance of dividend equivalents (2) | 7,552 | 7,552 | ||||||||||
Canceled (3) | (4,181 | ) | (4,181 | ) | ||||||||
Outstanding as of March 31, 2012 | 295,130 | $ | 39.56 | 746,949 | 1,042,079 |
(1) | Includes 103,239 RSUs issued to the Company's Chief Executive Officer, as described above. |
(2) | RSUs issued as dividend equivalents are vested upon issuance. |
(3) | 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 RSUs that have vested or RSU dividend equivalents in accordance with the terms of the 2006 Plan. |
RSUs Granted | RSUs Vested | ||||||||||||
Three Months Ended March 31, | Non-Vested RSUs Issued | Weighted-Average Grant Date Fair Value Per Share | Vested RSUs | Total Vest-Date Fair Value (1) (in thousands) | |||||||||
2012 | 196,033 | $ | 44.29 | (48,864 | ) | $ | 1,961 | ||||||
2011 | 97,597 | 37.76 | (10,079 | ) | 382 |
(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. |
Nonvested Shares | Shares | Weighted-Average Grant Date Fair Value Per Share | ||||
Outstanding at January 1, 2012 | 83,966 | $ | 39.83 | |||
Granted | 59,938 | 41.71 | ||||
Vested (1) | (33,104 | ) | 37.76 | |||
Outstanding as of March 31, 2012 | 110,800 | $ | 41.46 |
(1) | The total shares vested include 22,312 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 obligations. |
Shares Granted | Shares Vested | ||||||||||||
Three Months Ended March 31, | Non-Vested Shares Issued | Weighted-Average Grant Date Fair Value Per Share | Vested Shares | Total Fair Value at Vest Date(1) (in thousands) | |||||||||
2012 | 59,938 | $ | 41.71 | (33,104 | ) | $ | 1,274 | ||||||
2011 | 66,208 | 37.76 | (5,985 | ) | 232 |
(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 day of vesting. |
February 2012 Option Grant | ||
Fair value of options granted per share | $9.20 | |
Expected stock price volatility | 33.00% | |
Risk-free interest rate | 1.35% | |
Dividend yield | 3.80% | |
Expected life of option | 6.5 years |
Number of Options | Exercise Price | Remaining Contractual Term (years) | ||||
Outstanding at January 1, 2012 (1) | 5,000 | $25.77 | ||||
Granted | 1,550,000 | 42.61 | ||||
Exercised | (5,000 | ) | 25.77 | |||
Forfeited | — | — | ||||
Outstanding at March 31, 2012 (2)(3) | 1,550,000 | $42.61 | 9.9 |
(1) | Stock options outstanding as of December 31, 2011 were granted in 2002 and exercised in 2012 prior to expiration. No stock options were granted during 2003 through 2011. |
(2) | As of March 31, 2012, none of the outstanding stock options were exercisable. |
(3) | The total intrinsic value of options outstanding at March 31, 2012 was $6.2 million. |
Fair Value (Level 1)(1) | |||||||
Description | March 31, 2012 | December 31, 2011 | |||||
(in thousands) | |||||||
Marketable securities (2) | $ | 6,459 | $ | 5,691 | |||
Deferred compensation plan liability (3) | 6,364 | 5,597 |
(1) | Based on quoted prices in active markets for identical securities. |
(2) | The marketable securities are held in a limited rabbi trust. |
(3) | The deferred compensation plan liability is reported on our consolidated balance sheets in accounts payable, accrued expenses, and other liabilities. |
Three Months Ended | |||||||
Description | March 31, 2012 | March 31, 2011 | |||||
(in thousands) | |||||||
Net gain on marketable securities | $ | 435 | $ | 187 | |||
(Increase) to compensation cost | (435 | ) | (187 | ) |
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||
March 31, 2012 | December 31, 2011 | ||||||||||||||
(in thousands) | |||||||||||||||
Liabilities | |||||||||||||||
Secured debt (1) | $ | 350,219 | $ | 367,287 | $ | 351,825 | $ | 367,402 | |||||||
Exchangeable notes (1) | 308,689 | 326,842 | 306,892 | 320,919 | |||||||||||
Unsecured debt (2) | 1,130,651 | 1,215,425 | 980,569 | 1,011,982 | |||||||||||
Unsecured line of credit (1) | — | — | 182,000 | 182,299 | |||||||||||
7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred stock, called for redemption (3) | 126,500 | 126,500 | — | — |
(1) | Fair value calculated using Level II inputs which are based on model−derived valuations in which significant inputs and significant value drivers are observable in active markets. |
(2) | Fair value calculated primarily using Level I inputs which are based on quoted prices for identical instruments in active markets. The fair value of the Series B unsecured senior notes and the Unsecured Term Loan Facility are 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. The carrying value and fair value of these Level II instruments is $233.0 million and $240.6 million, respectively, as of March 31, 2012. The carrying value and fair value of the Level II instruments, which only included the Series B unsecured senior notes at December 31,2011, was $83.0 million and $88.9 million, respectively. |
(3) | Fair value calculated using Level I inputs. |
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
(in thousands) | ||||||||
Reportable Segment - Office Properties | ||||||||
Operating revenues(1) | $ | 92,680 | $ | 77,264 | ||||
Property and related expenses | 24,799 | 22,494 | ||||||
Net Operating Income | 67,881 | 54,770 | ||||||
Non-Reportable Segment - Industrial Properties | ||||||||
Operating revenues(1) | 6,730 | 6,509 | ||||||
Property and related expenses | 1,929 | 3,270 | ||||||
Net Operating Income | 4,801 | 3,239 | ||||||
Total Segments: | ||||||||
Operating revenues(1) | 99,410 | 83,773 | ||||||
Property and related expenses | 26,728 | 25,764 | ||||||
Net Operating Income | $ | 72,682 | $ | 58,009 | ||||
Reconciliation to Consolidated Net Income: | ||||||||
Total Net Operating Income for segments | $ | 72,682 | $ | 58,009 | ||||
Unallocated (expenses) income: | ||||||||
General and administrative expenses | (8,767 | ) | (6,560 | ) | ||||
Acquisition-related expenses | (1,528 | ) | (472 | ) | ||||
Depreciation and amortization | (36,746 | ) | (28,441 | ) | ||||
Interest income and other net investment gains | 484 | 184 | ||||||
Interest expense | (21,163 | ) | (20,876 | ) | ||||
Income from continuing operations | 4,962 | 1,844 | ||||||
Income from discontinued operations(2) | 73,709 | 3,023 | ||||||
Net income | $ | 78,671 | $ | 4,867 |
(1) | All operating revenues are comprised of amounts received from third-party tenants. |
(2) | See Note 14 for the breakdown of income from discontinued operations by segment. |
Location | Property Type | Month of Disposition | Number of Buildings | Rentable Square Feet | Sales Price (in millions) | |||||||
15004 Innovation Drive and 10243 Genetic Center Drive, San Diego, CA (1) | Office | January | 2 | 253,676 | $ | 146.1 |
(1) | Properties were classified as held for sale on the consolidated balance sheets as of December 31, 2011. |
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
(in thousands) | ||||||||
Revenues: | ||||||||
Rental income | $ | 870 | $ | 3,293 | ||||
Tenant reimbursements | 133 | 400 | ||||||
Other property income | — | 659 | ||||||
Total revenues | 1,003 | 4,352 | ||||||
Expenses: | ||||||||
Property expenses | 27 | 180 | ||||||
Real estate taxes | 70 | 279 | ||||||
Depreciation and amortization | 6 | 870 | ||||||
Total expenses | 103 | 1,329 | ||||||
Income from discontinued operations before net gain on dispositions of discontinued operations | 900 | 3,023 | ||||||
Net gain on dispositions of discontinued operations | 72,809 | — | ||||||
Total income from discontinued operations | $ | 73,709 | $ | 3,023 | ||||
Three Months Ended March 31, | ||||||||
2012 | 2011 (1) | |||||||
(in thousands) | ||||||||
Reportable Segment | ||||||||
Office Properties | $ | 73,709 | $ | 2,309 | ||||
Non-Reportable Segment | ||||||||
Industrial Properties | — | 714 | ||||||
Total income from discontinued operations | $ | 73,709 | $ | 3,023 |
(1) | Includes two office and one industrial buildings encompassing 282,611 rentable square feet that were disposed of in 2011. |
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
(in thousands, except share and per share amounts) | ||||||||
Numerator: | ||||||||
Income from continuing operations | $ | 4,962 | $ | 1,844 | ||||
Loss from continuing operations attributable to noncontrolling common units of the Operating Partnership | 114 | 61 | ||||||
Preferred distributions and dividends | (9,336 | ) | (3,799 | ) | ||||
Allocation to participating securities (nonvested shares and time-based RSUs) | (380 | ) | (322 | ) | ||||
Numerator for basic and diluted loss from continuing operations available to common stockholders | (4,640 | ) | (2,216 | ) | ||||
Income from discontinued operations | 73,709 | 3,023 | ||||||
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership | (1,909 | ) | (95 | ) | ||||
Numerator for basic and diluted net income available to common stockholders | $ | 67,160 | $ | 712 | ||||
Denominator: | ||||||||
Basic weighted average vested shares outstanding | 63,648,704 | 52,302,075 | ||||||
Effect of dilutive securities - contingently issuable shares and stock options(1) | — | — | ||||||
Diluted weighted average vested shares and common share equivalents outstanding | 63,648,704 | 52,302,075 | ||||||
Basic earnings per share: | ||||||||
Loss from continuing operations available to common stockholders per share | $ | (0.07 | ) | $ | (0.04 | ) | ||
Income from discontinued operations per common share | 1.13 | 0.05 | ||||||
Net income available to common stockholders per share | $ | 1.06 | $ | 0.01 | ||||
Diluted earnings per share: | ||||||||
Loss from continuing operations available to common stockholders per share | $ | (0.07 | ) | $ | (0.04 | ) | ||
Income from discontinued operations per common share | 1.13 | 0.05 | ||||||
Net income available to common stockholders per share | $ | 1.06 | $ | 0.01 |
(1) | Dilutive securities were not included in the current period presentation of the 2011 weighted average shares outstanding because we reported a net loss from continuing operations attributable to common stockholders for the three months ended March 31, 2011 resulting from the reclassification of the revenues and expenses of operating properties that were sold during 2011 and 2012. |
Three Months Ended March 31, | ||||||||
2012 | 2011 | |||||||
(in thousands, except unit and per unit amounts) | ||||||||
Numerator: | ||||||||
Income from continuing operations | $ | 4,962 | $ | 1,844 | ||||
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries | (53 | ) | (34 | ) | ||||
Preferred distributions | (9,336 | ) | (3,799 | ) | ||||
Allocation to participating securities (nonvested units and time-based RSUs) | (380 | ) | (322 | ) | ||||
Numerator for basic and diluted loss from continuing operations available to common unitholders | (4,807 | ) | (2,311 | ) | ||||
Income from discontinued operations | 73,709 | 3,023 | ||||||
Numerator for basic and diluted net income available to common unitholders | $ | 68,902 | $ | 712 | ||||
Denominator: | ||||||||
Basic weighted average vested units outstanding | 65,366,835 | 54,025,206 | ||||||
Effect of dilutive securities - contingently issuable shares and stock options (1) | — | — | ||||||
Diluted weighted average vested units and common unit equivalents outstanding | 65,366,835 | 54,025,206 | ||||||
Basic earnings per unit: | ||||||||
Loss from continuing operations available to common unitholders per unit | $ | (0.07 | ) | $ | (0.04 | ) | ||
Income from discontinued operations per common unit | 1.12 | 0.05 | ||||||
Net income available to common unitholders per unit | $ | 1.05 | $ | 0.01 | ||||
Diluted earnings per unit: | ||||||||
Loss from continuing operations available to common unitholders per unit | $ | (0.07 | ) | $ | (0.04 | ) | ||
Income from discontinued operations per common unit | 1.12 | 0.05 | ||||||
Net income available to common unitholders per unit | $ | 1.05 | $ | 0.01 |
(1) | Dilutive securities were not included in the current period presentation of the 2011 weighted average units outstanding because the Operating Partnership reported a net loss from continuing operations attributable to common unitholders for the three months ended March 31, 2011 resulting from the reclassification of the revenues and expenses of operating properties that were sold during 2011 and 2012. |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(in thousands except per share amounts) | |||||||
Revenues | $ | 101,549 | $ | 86,729 | |||
Net income available to common stockholders(1)(2) | $ | 68,265 | $ | 80 | |||
Net income available to common stockholders per share - basic(1)(2) | $ | 1.07 | $ | 0.00 | |||
Net income available to common stockholders per share - diluted(1)(2) | $ | 1.07 | $ | 0.00 |
(1) | The pro forma results for the three months ended March 31, 2012 were adjusted to exclude acquisition-related expenses of approximately $0.4 million incurred in 2012 for the acquisition of 4100-4700 Bohannon Drive, Menlo Park, CA. The pro forma results for the three months ended March 31, 2011 were adjusted to include these expenses. |
(2) | The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results. |
(in thousands) | |||
Revenues | $ | 1,179 | |
Net income(1) | 213 |
(1) | Reflects the net operating income less depreciation for these properties and amortization of lease-related intangibles. |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(in thousands except per share amounts) | |||||||
Revenues | $ | 101,549 | $ | 86,729 | |||
Net income available to common unitholders(1)(2) | $ | 70,026 | $ | 49 | |||
Net income available to common unitholders per unit - basic(1)(2) | $ | 1.07 | $ | 0.00 | |||
Net income available to common unitholders per unit - diluted(1)(2) | $ | 1.07 | $ | 0.00 |
(1) | The pro forma results for the three months ended March 31, 2012 were adjusted to exclude acquisition-related expenses of approximately $0.4 million incurred in 2012 for the acquisition of 4100-4700 Bohannon Drive, Menlo Park, CA. The pro forma results for the three months ended March 31, 2011 were adjusted to include these expenses. |
(2) | The pro forma results for all periods presented includes incremental interest expense assuming the acquisitions were funded by pro forma borrowings under the Credit Facility. The pro forma interest expense estimate is calculated based on the actual interest rate in effect on the Credit Facility for each respective period. Actual funding of the acquisitions may be from different sources and the pro forma borrowings and related pro forma interest expense estimate assumed herein are not indicative of actual results. |
(in thousands) | |||
Revenues | $ | 1,179 | |
Net income(1) | 213 |
(1) | Reflects the net operating income less depreciation for these properties and amortization of lease-related intangibles. |
1st & 2nd Generation(1) | 2nd Generation(1) | ||||||||||||||||||||||
Number of Leases(2) | Rentable Square Feet(2) | Changes in Rents(3)(5) | Changes in Cash Rents(4) | Retention Rates(6) | Weighted Average Lease Term (in months) | ||||||||||||||||||
New | Renewal | New | Renewal | ||||||||||||||||||||
Office Properties | 19 | 18 | 165,329 | 190,992 | 2.8 | % | (3.1 | )% | 61.1 | % | 63 | ||||||||||||
Industrial Properties | 1 | 2 | 5,000 | 65,681 | (18.9 | )% | (22.3 | )% | 40.0 | % | 43 | ||||||||||||
Total portfolio | 20 | 20 | 170,329 | 256,673 | 0.2 | % | (5.4 | )% | 53.8 | % | 59 |
1st & 2nd Generation(1) | 2nd Generation(1) | |||||||||||||||||||
Number of Leases(2) | Rentable Square Feet(2) | Changes in Rents(3)(5) | Changes in Cash Rents(4)(5) | Weighted Average Lease Term (in months) | ||||||||||||||||
New | Renewal | New | Renewal | |||||||||||||||||
Office Properties | 17 | 13 | 166,750 | 65,570 | 9.7 | % | 0.7 | % | 65 | |||||||||||
Industrial Properties | 1 | — | 5,000 | — | (28.1 | )% | (29.5 | )% | 36 | |||||||||||
Total portfolio | 18 | 13 | 171,750 | 65,570 | 9.3 | % | 0.4 | % | 65 |
(1) | First generation leasing includes space where we have made capital expenditures that result in additional revenue generated when the space is re-leased. Second generation leasing includes space where we have made capital expenditures to maintain the current market revenue stream. |
(2) | Represents leasing activity for leases that commenced or signed during the period, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction. |
(3) | 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. |
(4) | 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. |
(5) | Excludes commenced and executed leases of approximately 18,200 and 56,000 rentable square feet, respectively, for which the space was vacant longer than one year or being leased for the first time. Space vacant for more than one year is excluded from our change in rents calculations to provide a meaningful market comparison. |
(6) | Calculated as the percentage of space either renewed or expanded into by existing tenants or subtenants at lease expiration. |
(7) | During the period, 10 leases totaling approximately 133,600 rentable square feet were signed but not commenced as of March 31, 2012. |
Year of Lease Expiration | Number of Expiring Leases | Net Rentable Area Subject to Expiring Leases (Sq. Ft.) | Percentage of Leased Square Feet Represented by Expiring Leases | Annualized Base Rental Revenue Under Expiring Leases (000's)(2) | Percentage of Annualized Base Rental Revenue Represented by Expiring Leases(2) | Average Annualized Base Rental Revenue Per Square Foot Under Expiring Leases (000's)(2) | ||||||||||||||
Office Properties: | ||||||||||||||||||||
Remainder of 2012 | 61 | 630,985 | 4.6 | % | $ | 18,556 | 5.3 | % | $ | 29.41 | ||||||||||
2013 | 94 | 1,191,434 | 8.7 | % | 34,480 | 10.1 | % | 28.94 | ||||||||||||
2014 | 87 | 1,101,931 | 8.0 | % | 30,062 | 8.7 | % | 27.28 | ||||||||||||
2015 | 126 | 1,953,698 | 14.2 | % | 59,826 | 17.3 | % | 30.62 | ||||||||||||
2016 | 63 | 712,265 | 5.2 | % | 18,317 | 5.3 | % | 25.72 | ||||||||||||
2017 | 70 | 1,648,244 | 12.0 | % | 48,854 | 14.1 | % | 29.64 | ||||||||||||
Total Office | 501 | 7,238,557 | 52.7 | % | $ | 210,095 | 60.8 | % | $ | 29.02 | ||||||||||
Industrial Properties: | ||||||||||||||||||||
Remainder of 2012 | 5 | 220,133 | 1.6 | % | $ | 1,295 | 0.4 | % | $ | 5.88 | ||||||||||
2013 | 9 | 657,357 | 4.7 | % | 4,800 | 1.3 | % | 7.30 | ||||||||||||
2014 | 20 | 610,642 | 4.4 | % | 4,828 | 1.4 | % | 7.91 | ||||||||||||
2015 | 12 | 660,351 | 4.8 | % | 4,347 | 1.3 | % | 6.58 | ||||||||||||
2016 | 5 | 139,845 | 1.0 | % | 823 | 0.2 | % | 5.89 | ||||||||||||
2017 | 4 | 149,482 | 1.1 | % | 888 | 0.3 | % | 5.94 | ||||||||||||
Total Industrial | 55 | 2,437,810 | 17.6 | % | $ | 16,981 | 4.9 | % | $ | 6.97 | ||||||||||
Total | 556 | 9,676,367 | 70.3 | % | $ | 227,076 | 65.7 | % | $ | 23.47 |
(1) | The information presented reflects leasing activity through March 31, 2012. For leases that have been renewed early or space that has been re-leased to a new tenant, the expiration date and annualized base rent information presented takes into consideration the renewed or re-leased lease terms. Excludes space leased under month-to-month leases and vacant space as of March 31, 2012. |
(2) | Reflects annualized contractual base rent calculated on a straight-line basis in accordance with GAAP excluding the amortization of deferred revenue related to tenant-funded tenant improvements 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. |
Office Properties | Industrial Properties | Total | |||||||||||||||
Number of Buildings | Rentable Square Feet | Number of Buildings | Rentable Square Feet | Number of Buildings | Rentable Square Feet | ||||||||||||
Total as of March 31, 2011 | 101 | 10,485,950 | 40 | 3,605,407 | 141 | 14,091,357 | |||||||||||
Acquisitions | 16 | 1,850,136 | 16 | 1,850,136 | |||||||||||||
Properties moved to the redevelopment portfolio | (2 | ) | (209,561 | ) | (2 | ) | (209,561 | ) | |||||||||
Dispositions | (4 | ) | (344,234 | ) | (1 | ) | (192,053 | ) | (5 | ) | (536,287 | ) | |||||
Remeasurement | 15,527 | 15,527 | |||||||||||||||
Total as of March 31, 2012 | 111 | 11,797,818 | 39 | 3,413,354 | 150 | 15,211,172 |
Region | Number of Buildings | Square Feet Total | Occupancy at(1) | |||||||||||
3/31/2012 | 12/31/2011 | 9/30/2011 | ||||||||||||
Office Properties: | ||||||||||||||
Los Angeles and Ventura Counties | 28 | 2,981,473 | 87.0 | % | 83.5 | % | 84.1 | % | ||||||
San Diego | 59 | 5,184,287 | 91.7 | 92.5 | 92.6 | |||||||||
Orange County | 5 | 540,656 | 93.3 | 93.4 | 91.4 | |||||||||
San Francisco Bay Area | 13 | 2,200,905 | 89.2 | 93.3 | 95.4 | |||||||||
Greater Seattle | 6 | 890,497 | 90.3 | 89.9 | 90.2 | |||||||||
111 | 11,797,818 | 90.0 | 90.1 | 90.6 | ||||||||||
Industrial Properties: | ||||||||||||||
Los Angeles County | — | — | — | — | 100.0 | |||||||||
Orange County | 39 | 3,413,354 | 97.0 | 100.0 | 100.0 | |||||||||
39 | 3,413,354 | 97.0 | 100.0 | 100.0 | ||||||||||
Total Stabilized Portfolio | 150 | 15,211,172 | 91.6 | % | 92.4 | % | 92.8 | % |
Average Occupancy for Three Months Ended March 31, | |||||||||||
Stabilized Portfolio(1) | Core Portfolio(2) | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
Office Properties | 89.9 | % | 88.8 | % | 90.4 | % | 90.3 | % | |||
Industrial Properties | 96.9 | 94.5 | 96.9 | 94.1 | |||||||
Total Portfolio | 91.5 | % | 90.2 | % | 92.0 | % | 91.3 | % |
(1) | Occupancy percentages reported are based on our stabilized portfolio as of the end of the period presented. |
(2) | Occupancy percentages reported are based on Office Properties and Industrial Properties owned and stabilized as of January 1, 2011 and still owned and stabilized as of March 31, 2012. |
Three Months Ended March 31, | Dollar Change | Percentage Change | ||||||||||||
2012 | 2011 | |||||||||||||
($ in thousands) | ||||||||||||||
Net Operating Income, as defined | $ | 72,682 | $ | 58,009 | $ | 14,673 | 25.3 | % | ||||||
Unallocated (expense) income: | ||||||||||||||
General and administrative expenses | (8,767 | ) | (6,560 | ) | (2,207 | ) | 33.6 | |||||||
Acquisition-related expenses | (1,528 | ) | (472 | ) | (1,056 | ) | 223.7 | |||||||
Depreciation and amortization | (36,746 | ) | (28,441 | ) | (8,305 | ) | 29.2 | |||||||
Interest income and other net investment gains | 484 | 184 | 300 | 163.0 | ||||||||||
Interest expense | (21,163 | ) | (20,876 | ) | (287 | ) | 1.4 | |||||||
Income from continuing operations | 4,962 | 1,844 | 3,118 | 169.1 | % | |||||||||
Income from discontinued operations | 900 | 3,023 | (2,123 | ) | (70.2 | )% | ||||||||
Net gain on dispositions of discontinued operations | 72,809 | — | 72,809 | 100.0 | % | |||||||||
Net income | $ | 78,671 | $ | 4,867 | $ | 73,804 | 1,516.4 | % |
2012 | 2011 | ||||||||||||||||||||||||||||||
Core Portfolio(1) | Acquisitions Portfolio(2) | Other | Total Portfolio | Core Portfolio(1) | Acquisitions Portfolio(2) | Other | Total Portfolio | ||||||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||||||||||
Operating revenues: | |||||||||||||||||||||||||||||||
Rental income | $ | 77,319 | $ | 12,133 | $ | 767 | $ | 90,219 | $ | 76,119 | $ | 510 | $ | 368 | $ | 76,997 | |||||||||||||||
Tenant reimbursements | 5,993 | 2,227 | 84 | 8,304 | 5,943 | 59 | 20 | 6,022 | |||||||||||||||||||||||
Other property income | 880 | 7 | — | 887 | 723 | — | 31 | 754 | |||||||||||||||||||||||
Total | 84,192 | 14,367 | 851 | 99,410 | 82,785 | 569 | 419 | 83,773 | |||||||||||||||||||||||
Property and related expenses: | |||||||||||||||||||||||||||||||
Property expenses | 14,786 | 2,577 | 172 | 17,535 | 17,090 | 38 | 381 | 17,509 | |||||||||||||||||||||||
Real estate taxes | 6,769 | 1,302 | 318 | 8,389 | 7,399 | 66 | 425 | 7,890 | |||||||||||||||||||||||
Provision for bad debts | 2 | — | — | 2 | 26 | — | — | 26 | |||||||||||||||||||||||
Ground leases | 225 | 196 | 381 | 802 | 302 | — | 37 | 339 | |||||||||||||||||||||||
Total | 21,782 | 4,075 | 871 | 26,728 | 24,817 | 104 | 843 | 25,764 | |||||||||||||||||||||||
Net Operating Income (Loss), as defined | $ | 62,410 | $ | 10,292 | $ | (20 | ) | $ | 72,682 | $ | 57,968 | $ | 465 | $ | (424 | ) | $ | 58,009 |
(1) | Properties owned and stabilized as of January 1, 2011 and still owned and stabilized as of March 31, 2012. |
(2) | Includes results, from the dates of acquisition through the periods presented, for ten office buildings we acquired during 2011 and the seven office buildings we acquired during the three months ended March 31, 2012. |
Three Months Ended March 31, 2012 as compared to the Three Months Ended March 31, 2011 | ||||||||||||||||||||
Core Portfolio | Acquisitions Portfolio | Total Portfolio | ||||||||||||||||||
Dollar Change | Percentage Change | Dollar Change | Percentage Change | Dollar Change | Percentage Change | |||||||||||||||
($ in thousands) | ||||||||||||||||||||
Operating revenues: | ||||||||||||||||||||
Rental income | $ | 1,200 | 1.6 | % | $ | 11,623 | 2,279.0 | % | $ | 13,222 | 17.2 | % | ||||||||
Tenant reimbursements | 50 | 0.8 | 2,168 | 3,674.6 | 2,282 | 37.9 | ||||||||||||||
Other property income | 157 | 21.7 | 7 | 100.0 | 133 | 17.6 | ||||||||||||||
Total | 1,407 | 1.7 | 13,798 | 2,425.0 | 15,637 | 18.7 | ||||||||||||||
Property and related expenses: | ||||||||||||||||||||
Property expenses | (2,304 | ) | (13.5 | ) | 2,539 | 6,681.6 | 26 | 0.1 | ||||||||||||
Real estate taxes | (630 | ) | (8.5 | ) | 1,236 | 1,872.7 | 499 | 6.3 | ||||||||||||
Provision for bad debts | (24 | ) | 92.3 | — | — | (24 | ) | 92.3 | ||||||||||||
Ground leases | (77 | ) | (25.5 | ) | 196 | 100.0 | 463 | 136.6 | ||||||||||||
Total | (3,035 | ) | (12.2 | ) | 3,971 | 3,818.3 | 964 | 3.7 | ||||||||||||
Net Operating Income, as defined | $ | 4,442 | 7.7 | % | $ | 9,827 | 2,113.3 | % | $ | 14,673 | 25.3 | % |
• | An increase of $9.8 million attributable to ten office buildings we acquired during 2011 and the seven office buildings we acquired during the three months ended March 31, 2012 (the “Acquisitions Portfolio”); |
• | An increase of $4.4 million attributable to the properties owned and stabilized as of January 1, 2011 and still owned and stabilized as of March 31, 2012 (the “Core Portfolio”) primarily comprised of: |
▪ | An increase in rental income of $1.2 million primarily resulting from an increase in average occupancy of 0.7%, from 91.3% for the three months ended March 31, 2011, to 92.0% for the three months ended March 31, 2012; and |
• | A decrease in property and related expenses of $3.0 million primarily resulting from: |
• | Higher legal fees and consulting costs of $1.3 million incurred during the three months ended March 31, 2011 as compared to the three months ended March 31, 2012, primarily related to a dispute with a |
• | Receipt of approximately $1.0 million in insurance proceeds during the three months ended March 31, 2012 which were recorded as a reduction of property expenses since the charge for the related property damage was recorded as property expenses in prior periods; and |
• | A decrease in real estate taxes of $0.6 million as a result of successful property tax appeals; and |
• | A net operating loss of $0.4 million for the three months ended March 31, 2011 generated by two buildings that were moved from the stabilized portfolio to the redevelopment portfolio in 2011 (the “Redevelopment Properties”). This net operating loss represented the operating expenses for the Redevelopment Properties for the three months ended March 31, 2011. Operating expenses for the Redevelopment Properties during the three months ended March 31, 2012 were capitalized and included as a cost of redevelopment. |
2012 | 2011 | Dollar Change | Percentage Change | |||||||||||
($ in thousands) | ||||||||||||||
Gross interest expense | $ | 24,994 | $ | 22,855 | $ | 2,139 | 9.4 | % | ||||||
Capitalized interest | (3,831 | ) | (1,979 | ) | (1,852 | ) | 93.6 | % | ||||||
Interest expense | $ | 21,163 | $ | 20,876 | $ | 287 | 1.4 | % |
Shares/Units at March 31, 2012 | Aggregate Principal Amount or $ Value Equivalent | % of Total Market Capitalization | |||||||
($ in thousands) | |||||||||
Debt: | |||||||||
Credit Facility | $ | — | — | % | |||||
Unsecured Term Loan Facility | 150,000 | 2.9 | |||||||
4.25% Unsecured Exchangeable Notes due 2014(2) | 172,500 | 3.4 | |||||||
Unsecured Senior Notes due 2014 | 83,000 | 1.6 | |||||||
Unsecured Senior Notes due 2015(2) | 325,000 | 6.4 | |||||||
Unsecured Senior Notes due 2018(2) | 325,000 | 6.4 | |||||||
Unsecured Senior Notes due 2020(2) | 250,000 | 4.9 | |||||||
Secured debt(2) | 349,483 | 6.9 | |||||||
Total debt | $ | 1,654,983 | 32.5 | % | |||||
Equity and Noncontrolling Interests: | |||||||||
7.450% Series A Cumulative Redeemable Preferred units(3) | 1,500,000 | $ | 75,000 | 1.5 | % | ||||
6.875% Series G Cumulative Redeemable Preferred stock(4) | 4,000,000 | 100,000 | 2.0 | ||||||
Common units outstanding(5)(6) | 1,718,131 | 79,849 | 1.6 | ||||||
Common shares outstanding(6) | 68,349,843 | 3,185,786 | 62.4 | ||||||
Total equity and noncontrolling interests | 3,440,635 | 67.5 | |||||||
Total Market Capitalization (1) | $ | 5,095,618 | 100.0 | % |
(1) | Excludes the 7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred Stock with a redemption value of $126.5 million that were redeemed on April 16, 2012. Also excludes the 3.25% Exchangeable Notes due April 2012 (the "3.25% Exchangeable Notes") with an aggregate principal amount of $148.0 million at March 31, 2012 which we repaid in April 2012 upon maturity. |
(2) | Represents gross aggregate principal amount due at maturity before the effect of the unamortized discounts and premiums as of March 31, 2012. |
(3) | Value based on $50.00 per unit liquidation preference. |
(4) | Value based on $25.00 per share liquidation preference. |
(5) | Represents common units not owned by the Company. |
(6) | Value based on closing price per share of our common stock of $46.61 as of March 31, 2012. |
• | Net cash flow from operations; |
• | Borrowings under the Credit Facility; |
• | Proceeds from additional secured or unsecured debt financings; |
• | Proceeds from public or private issuance of debt or equity securities; and |
• | Proceeds from the disposition of nonstrategic assets through our capital recycling program. |
• | Property or undeveloped land acquisitions; |
• | Property operating and corporate expenses; |
• | Capital expenditures, tenant improvement and leasing costs; |
• | Debt service and principal payments, including debt maturities; |
• | Distributions to common and preferred security holders; |
• | Development and redevelopment costs; and |
• | Outstanding debt repurchases. |
• | In March 2012, the Operating Partnership entered into a new $150.0 million unsecured term loan facility (the "Unsecured Term Loan Facility"). The Unsecured Term Loan Facility bears interest at an annual rate of LIBOR plus 1.750% and has a term of four years plus a one year extension at our option (see Note 5 to our consolidated financial statements included in this report for additional information). |
• | In March 2012, the Company issued 4,000,000 shares of its Series G Preferred Stock at a public offering price of $25.00 per share. The net proceeds, after deducting the underwriting discount and other accrued offering-related costs, of $96.2 million were contributed to the Operating Partnership (see Notes 7 and 9 to our consolidated financial statements included in this report for additional information). |
• | In February 2012, the Company completed an underwritten public offering of 9,487,500 shares of its common stock. The net offering proceeds, after deducting underwriting discounts and commissions and offering expenses, of approximately $382.1 million were contributed to the Operating Partnership (see Notes 8 and 9 to our consolidated financial statements included in this report for additional information). |
• | In January 2012, the Company completed the sale of two office buildings to an unrelated third party for a cash sales price of approximately $146.1 million (see Note 14 to our consolidated financial statements included in this report for additional information). |
• | In April 2012, the Operating Partnership repaid its 3.25% Exchangeable Notes with an aggregate principal amount of $148.0 million. |
• | In April 2012, the Company redeemed all 1,610,000 outstanding shares of its Series E Preferred Stock and all 3,450,000 outstanding shares of its Series F Preferred Stock at a redemption price of $25.00 per share plus all accumulated and unpaid dividends up to and including the redemption date of April 16, 2012, for total payment of $129.4 million. |
March 31, 2012 | December 31, 2011 | ||||||
(in thousands) | |||||||
Outstanding borrowing(1) | $ | — | $ | 182,000 | |||
Remaining borrowing capacity | 500,000 | 318,000 | |||||
Total borrowing capacity(2) | $ | 500,000 | $ | 500,000 | |||
Interest rate(3) | 2.05 | % | |||||
Facility fee - annual rate(4) | 0.350% | ||||||
Maturity date(5) | August 2015 |
(1) | As of March 31, 2012, there were no borrowings outstanding on the Credit Facility. |
(2) | We may elect to borrow, subject to bank approval, up to an additional $200.0 million under an accordion feature under the terms of the Credit Facility. |
(3) | The Credit Facility interest rate was calculated based on an annual rate of LIBOR plus 1.750% as of both March 31, 2012 and December 31, 2011. No interest rate is shown as of March 31, 2012 because no borrowings were outstanding. |
(4) | The facility fee is paid on a quarterly basis and is calculated based on the total borrowing capacity. In addition to the facility fee, we also incurred origination and legal costs of approximately $8.3 million that are currently being amortized through the maturity date of the Credit Facility. |
(5) | Under the terms of the Credit Facility, we may exercise an option to extend the maturity date by one year. |
Aggregate Principal Amount Outstanding | |||
(in thousands) | |||
3.25% Exchangeable Notes due 2012 (1)(2) | $ | 148,000 | |
4.25% Exchangeable Notes due 2014 (1) | 172,500 | ||
Unsecured Senior Notes due 2014 | 83,000 | ||
Unsecured Term Loan Facility due 2016 | 150,000 | ||
Unsecured Senior Notes due 2015 (1) | 325,000 | ||
Unsecured Senior Notes due 2018 (1) | 325,000 | ||
Unsecured Senior Notes due 2020 (1) | 250,000 | ||
Secured Debt (1) | 349,483 | ||
Total Exchangeable Notes, Unsecured Debt, and Secured Debt | $ | 1,802,983 |
(1) | Represents gross aggregate principal amount before the effect of the unamortized discounts and premiums as of March 31, 2012. |
(2) | The 3.25% Exchangeable Notes were repaid in April 2012 upon maturity. |
Percentage of Total Debt | Weighted Average Interest Rate | ||||||||||
March 31, 2012 (1) | December 31, 2011 | March 31, 2012 (1) | December 31, 2011 | ||||||||
Secured vs. unsecured: | |||||||||||
Unsecured(2) | 78.9 | % | 80.9 | % | 4.9 | % | 4.7 | % | |||
Secured | 21.1 | 19.1 | 5.2 | 5.2 | |||||||
Variable-rate vs. fixed-rate: | |||||||||||
Variable-rate | 9.1 | 9.9 | 2.0 | 2.0 | |||||||
Fixed-rate(2) | 90.9 | 90.1 | 5.3 | 5.1 | |||||||
Stated rate(2) | 5.0 | 4.8 | |||||||||
GAAP effective rate(3) | 5.3 | 5.2 | |||||||||
GAAP effective rate including debt issuance costs | 5.6 | % | 5.6 | % |
(1) | Excludes the impact of the 3.25% Exchangeable Notes with an aggregate principal amount of $148.0 million at March 31,2012 which we repaid in April 2012 upon maturity. |
(2) | Excludes the impact of the amortization of any debt discounts/premiums. |
(3) | Includes the impact of the amortization of any debt discounts/premiums, excluding debt issuance costs. |
Payment Due by Period | |||||||||||||||||||
Less than 1 Year (Remainder of 2012) | 1–3 Years (2013-2014) | 3–5 Years (2015-2016) | More than 5 Years (After 2016) | Total | |||||||||||||||
(in thousands) | |||||||||||||||||||
Principal payments—secured debt (1) | $ | 103,758 | $ | 13,316 | $ | 38,933 | $ | 193,476 | $ | 349,483 | |||||||||
Principal payments—Exchangeable Notes (2)(3) | 148,000 | 172,500 | — | — | 320,500 | ||||||||||||||
Principal payments—unsecured debt (4) | — | 83,000 | 475,000 | 575,000 | 1,133,000 | ||||||||||||||
Principal payments—Credit Facility (5) | — | — | — | — | — | ||||||||||||||
Interest payments—fixed-rate debt (6) | 57,362 | 144,135 | 99,980 | 90,471 | 391,948 | ||||||||||||||
Interest payments—variable-rate debt (7) | 2,250 | 6,000 | 3,750 | — | 12,000 | ||||||||||||||
Ground lease obligations (8) | 29,757 | 3,660 | 3,660 | 131,382 | 168,459 | ||||||||||||||
Lease and contractual commitments (9) | 39,319 | 4,308 | 1,835 | — | 45,462 | ||||||||||||||
Redevelopment commitments (10) | 52,000 | 17,000 | — | — | 69,000 | ||||||||||||||
Series E Preferred Stock and Series F Preferred Stock, called for redemption (11) | 126,500 | — | — | — | 126,500 | ||||||||||||||
Total | $ | 558,946 | $ | 443,919 | $ | 623,158 | $ | 990,329 | $ | 2,616,352 |
(1) | Represents gross aggregate principal amount before the effect of the unamortized premium of approximately $0.7 million as of March 31, 2012. |
(2) | Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $11.8 million as of March 31, 2012. |
(3) | The 3.25% Exchangeable Notes with an aggregate principal amount outstanding of $148.0 million were repaid in April 2012 upon maturity. |
(4) | Represents gross aggregate principal amount before the effect of the unamortized discount of approximately $2.3 million as of March 31, 2012. |
(5) | There were no borrowings outstanding under the Credit Facility at March 31, 2012. |
(6) | As of March 31, 2012, 90.9% of our debt was contractually fixed. The information in the table above reflects our projected interest rate obligations for these fixed−rate payments based on the contractual interest rates, interest payment dates, and scheduled maturity dates. |
(7) | As of March 31, 2012, 9.1% of our debt bore interest at variable rates all of which was incurred under the Unsecured Term Loan Facility. The variable interest rate payments are based on LIBOR plus a spread of 1.750% as of March 31, 2012. The information in the table above reflects our projected interest rate obligations for these variable−rate payments based on outstanding principal balances as of March 31, 2012, the scheduled interest payment dates, and the contractual maturity dates. |
(8) | 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 |
(9) | Amounts represent commitments under signed leases and contracts for operating properties, excluding tenant-funded tenant improvements. The timing of these expenditures may fluctuate. |
(10) | Amounts represent contractual commitments for redevelopment contracts and projects under construction at March 31, 2012. The timing of these expenditures may fluctuate based on the ultimate progress of construction. |
(11) | In March 2012, all 1,610,000 outstanding shares of our Series E Preferred Stock and all 3,450,000 outstanding shares of our Series F Preferred Stock were called for redemption. The shares of Series E Preferred Stock and Series F Preferred Stock were redeemed at a redemption price of $25.00 per share on April 16, 2012. |
• | Decreases in our cash flows from operations, which could create further dependence on our Credit Facility; |
• | An increase in the proportion of variable-rate debt, which could increase our sensitivity to interest rate fluctuations in the future; and |
• | A decrease in the value of our properties, which could have an adverse effect on the Operating Partnership's ability to incur additional debt, refinance existing debt at competitive rates, or comply with its existing debt obligations. |
Credit Facility and Unsecured Term Loan Facility (as defined per Credit Agreements): | Covenant Level | Actual Performance at March 31, 2012 (1) | ||
Total debt to total asset value | less than 60% | 34% | ||
Fixed charge coverage ratio | greater than 1.5x | 2.3x | ||
Unsecured debt ratio | greater than 1.67x | 2.37x | ||
Unencumbered asset pool debt service coverage | greater than 2.0x | 3.3x | ||
Unsecured Senior Notes due 2015, 2018 and 2020 (as defined per Indentures): | ||||
Total debt to total asset value | less than 60% | 40% | ||
Interest coverage | greater than 1.5x | 3.0x | ||
Secured debt to total asset value | less than 40% | 8% | ||
Unencumbered asset pool value to unsecured debt | greater than 150% | 264% |
(1) | In March 2012, we amended the Credit Facility to reduce the FMV Cap Rate (as defined in the Credit Facility), which is used to calculate the fair value of our assets for certain covenants under the Credit Facility, from 7.50% to 6.75%. |
Three Months Ended March 31, | ||||||||||||||
2012 | 2011 | Dollar Change | Percentage Change | |||||||||||
($ in thousands) | ||||||||||||||
Net cash provided by operating activities | $ | 48,742 | $ | 43,797 | $ | 4,945 | 11.3 | % | ||||||
Net cash used in investing activities | (97,084 | ) | (61,137 | ) | (35,947 | ) | 58.8 | % | ||||||
Net cash provided by financing activities | 417,933 | 9,208 | 408,725 | 4,438.8 | % |
Three Months Ended March 31, | |||||||
2012 | 2011 | ||||||
(in thousands) | |||||||
Net income available to common stockholders | $ | 67,540 | $ | 1,034 | |||
Adjustments: | |||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 1,795 | 34 | |||||
Depreciation and amortization of real estate assets | 36,464 | 29,059 | |||||
Net gain on dispositions of discontinued operations | (72,809 | ) | — | ||||
Funds From Operations(1) | $ | 32,990 | $ | 30,127 |
(1) | Reported amounts are attributable to common stockholders and common unitholders. |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Period | (a) Total number of shares (or units) purchased | (b) Average price paid per share (or unit) | (c) Total number of shares (or units) purchased as part of publicly announced plans or programs | (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs | |||||
January 1 - January 31, 2012 | 22,312(1) | $ | 38.30 | — | — | ||||
February 1 - February 29, 2012 | — | — | — | — | |||||
March 1 - March 31, 2012 | — | — | — | — | |||||
Total | 22,312 | $ | 38.30 | — | — |
(1) | In January 2012, a total of 22,282 shares were tendered to satisfy minimum statutory tax withholding obligations related to the vesting of restricted shares and a total of 30 fractional shares were repurchased in connection with the termination of the Dividend Reinvestment and Direct Purchase Plan. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES-None |
ITEM 4. | MINE SAFETY DISCLOSURES-None |
ITEM 5. | OTHER INFORMATION-None |
ITEM 6. | EXHIBITS |
Exhibit Number | Description | |
3.(i)1 | Kilroy Realty Corporation Articles of Restatement(1) | |
3.(i)2 | Certificate of Limited Partnership of Kilroy Realty, L.P.(2) | |
3.(i)3 | Amendment to the Certificate of Limited Partnership of Kilroy Realty, L.P.(2) | |
3.(i)4 | Articles Supplementary designating Kilroy Realty Corporation's 6.875% Series G Cumulative Redeemable Preferred Stock(6) | |
3.(ii)1 | Second Amended and Restated Bylaws of Kilroy Realty Corporation(3) | |
3.(ii)2 | Amendment No. 1 to Second Amended and Restated Bylaws of Kilroy Realty Corporation(4) | |
3.(ii)3 | Sixth Amendment and Restated Agreement of Limited Partnership of Kilroy Realty, L.P., dated March 27, 2012(7) | |
4.1 | Kilroy Realty Corporation Form of Stock Option Grant Notice and Stock Option Agreement(5) | |
4.2 | Specimen Certificate for Kilroy Realty Corporation's 6.875% Series G Cumulative Redeemable Preferred Stock(6) | |
10.1 | Term Loan Agreement dated March 29, 2012(7) | |
10.2 | Guaranty of Payment of Kilroy Realty Corporation dated March 29, 2012(7) | |
10.3† | Amended and Restated Employment Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr.(8) | |
10.4† | Noncompetition Agreement by and between Kilroy Realty Corporation, Kilroy Realty, L.P. and John B. Kilroy, Jr.(8) | |
31.1* | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty Corporation | |
31.2* | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty Corporation | |
31.3* | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer of Kilroy Realty, L.P. | |
31.4* | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer of Kilroy Realty, L.P. | |
32.1* | Section 1350 Certification of Chief Executive Officer of Kilroy Realty Corporation | |
32.2* | Section 1350 Certification of Chief Financial Officer of Kilroy Realty Corporation | |
32.3* | Section 1350 Certification of Chief Executive Officer of Kilroy Realty, L.P. | |
32.4* | Section 1350 Certification of Chief Financial Officer of Kilroy Realty, L.P. | |
101.1 | The following Kilroy Realty Corporation and Kilroy Realty, L.P. financial information for the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Operations (unaudited), (iii) Consolidated Statements of Equity (unaudited), (iv) Consolidated Statements of Capital (unaudited), (v) Consolidated Statements of Cash Flows (unaudited) and (vi) Notes to the Consolidated Financial Statements (unaudited).(9) |
* | Filed herewith |
† | Management contract or compensatory plan or arrangement |
(1) | Previously filed by Kilroy Realty Corporation as an exhibit on Form 10-K for the year ended December 31, 2009. |
(2) | Previously filed by Kilroy Realty, L.P. as an exhibit to the General Form for Registration of Securities on Form 10 as filed with the Securities and Exchange Commission on August 18, 2010. |
(3) | Previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on December 12, 2008. |
(4) | Previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on May 27, 2009. |
(5) | Previously filed by Kilroy Realty Corporation as an exhibit on Form 8-K as filed with the Securities and Exchange Commission on February 24, 2012. |
(6) | Previously filed by Kilroy Realty Corporation on Form 8-A as filed with the Securities and Exchange Commission on March 22, 2012. |
(7) | Previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 2, 2012. |
(8) | Previously filed by Kilroy Realty Corporation on Form 8-K as filed with the Securities and Exchange Commission on April 4, 2012. |
(9) | Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under these sections. |
KILROY REALTY CORPORATION | ||
By: | /s/ John B. Kilroy, Jr. | |
John B. Kilroy, Jr. President and Chief Executive Officer (Principal Executive Officer) | ||
By: | /s/ Tyler H. Rose | |
Tyler H. Rose Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
By: | /s/ Heidi R. Roth | |
Heidi R. Roth Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) |
KILROY REALTY, L.P. | ||
BY: | KILROY REALTY CORPORATION | |
Its general partner | ||
By: | /s/ John B. Kilroy, Jr. | |
John B. Kilroy, Jr. President and Chief Executive Officer (Principal Executive Officer) | ||
By: | /s/ Tyler H. Rose | |
Tyler H. Rose Executive Vice President and Chief Financial Officer (Principal Financial Officer) | ||
By: | /s/ Heidi R. Roth | |
Heidi R. Roth Senior Vice President, Chief Accounting Officer and Controller (Principal Accounting Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ John B. Kilroy, Jr. |
John B. Kilroy, Jr. |
President and Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kilroy Realty Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Tyler H. Rose |
Tyler H. Rose |
Executive Vice President and Chief Financial Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P. ; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ John B. Kilroy, Jr. |
John B. Kilroy, Jr. |
President and Chief Executive Officer |
Kilroy Realty Corporation, sole general partner of |
Kilroy Realty, L.P. |
1. | I have reviewed this quarterly report on Form 10-Q of Kilroy Realty, L.P. ; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Tyler H. Rose |
Tyler H. Rose |
Executive Vice President and Chief Financial Officer |
Kilroy Realty Corporation, sole general partner of |
Kilroy Realty, L.P. |
(i) | the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2012 (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 B. Kilroy, Jr. |
John B. Kilroy, Jr. |
President and Chief Executive Officer |
Date: May 1, 2012 |
(i) | the accompanying Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2012 (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: May 1, 2012 |
(i) | the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended March 31, 2012 (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 B. Kilroy, Jr. |
John B. Kilroy, Jr. |
President and Chief Executive Officer |
Kilroy Realty Corporation, sole general partner of |
Kilroy Realty, L.P. |
Date: May 1, 2012 |
(i) | the accompanying Quarterly Report on Form 10-Q of the Operating Partnership for the quarter ended March 31, 2012 (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: May 1, 2012 |
Receivables (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Current Receivables, net | Current receivables, net is primarily comprised of contractual rents and other lease-related obligations due from tenants. The balance consisted of the following as of March 31, 2012 and December 31, 2011:
|
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Deferred Rent Receivables, net | Deferred rent receivables, net consisted of the following as of March 31, 2012 and December 31, 2011:
|
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net (Details 1) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | ||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | $ 7,788 | $ 6,594 | ||||||||||||
Deferred Leasing Costs [Member]
|
||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | ||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | 4,498 | [1] | 3,768 | [1] | ||||||||||
Estimated annual amortization related to acquisition-related intangibles | ||||||||||||||
Remaining 2012 | 14,535 | |||||||||||||
2013 | 17,541 | |||||||||||||
2014 | 15,392 | |||||||||||||
2015 | 11,828 | |||||||||||||
2016 | 9,426 | |||||||||||||
Thereafter | 22,840 | |||||||||||||
Total | 91,562 | |||||||||||||
Net (Below) Above-Market Leases [Member]
|
||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | ||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | (525) | [2] | 653 | [2] | ||||||||||
Estimated annual amortization related to acquisition-related intangibles | ||||||||||||||
Remaining 2012 | (2,196) | |||||||||||||
2013 | (3,091) | |||||||||||||
2014 | (2,897) | |||||||||||||
2015 | (2,285) | |||||||||||||
2016 | (1,393) | |||||||||||||
Thereafter | (9,266) | |||||||||||||
Total | (21,128) | [3] | ||||||||||||
In-Place Leases [Member]
|
||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | ||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | 3,781 | [1] | 2,173 | [1] | ||||||||||
Estimated annual amortization related to acquisition-related intangibles | ||||||||||||||
Remaining 2012 | 11,111 | |||||||||||||
2013 | 12,616 | |||||||||||||
2014 | 9,173 | |||||||||||||
2015 | 5,317 | |||||||||||||
2016 | 2,903 | |||||||||||||
Thereafter | 6,520 | |||||||||||||
Total | 47,640 | |||||||||||||
Net Below (Above)-Market Ground Lease Obligation [Member]
|
||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | ||||||||||||||
Amortization for the period related to deferred leasing costs and acquisition-related intangibles | 34 | [4] | 0 | [4] | ||||||||||
Estimated annual amortization related to acquisition-related intangibles | ||||||||||||||
Remaining 2012 | 103 | |||||||||||||
2013 | (63) | |||||||||||||
2014 | (63) | |||||||||||||
2015 | (63) | |||||||||||||
2016 | (63) | |||||||||||||
Thereafter | (4,848) | |||||||||||||
Total | $ (4,997) | [5] | ||||||||||||
|
Pro Forma Results of the Operating Partnership (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
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Pro forma results of the operating partnership | The following pro forma consolidated results of operations of the Company for the three months ended March 31, 2012 and 2011 assumes that the acquisition of 4100-4700 Bohannon Drive, Menlo Park, CA, was completed as of January 1, 2011. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2011, nor does it intend to be a projection of future results.
|
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Actual results for certain operating data for the property | The following table summarizes the results of operations for the property at 4100-4700 Bohannon Drive, Menlo Park, CA, from February 29, 2012, the date of acquisition, through March 31, 2012:
|
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Kilroy Realty, L.P. [Member]
|
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Pro forma results of the operating partnership | The following pro forma consolidated results of operations of the Operating Partnership for the three months ended March 31, 2012 and 2011 assumes that the acquisition of 4100-4700 Bohannon Drive, Menlo Park, CA, was completed as of January 1, 2011. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2011, nor does it intend to be a projection of future results.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual results for certain operating data for the property | The following table summarizes the results of operations for the property at 4100-4700 Bohannon Drive, Menlo Park, CA, from February 29, 2012, the date of acquisition, through March 31, 2012:
|
Commitments and Contingencies (Details 1) (USD $)
In Millions, unless otherwise specified |
Mar. 31, 2012
|
---|---|
Commitments and Contingencies (Textuals) [Abstract] | |
Non-refundable escrow deposits related to potential future acquisitions | $ 10.0 |
Deferred Leasing Costs and Acquisition-related Intangible Assets and Liabilities, net (Details Textuals) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2012
|
|
Deferred Leasing Costs [Member]
|
|
Finite-Lived Intangible Assets [Line Items] | |
Fully amortized deferred leasing costs and intangibles | $ 9.5 |
Above-Market Leases [Member]
|
|
Finite-Lived Intangible Assets [Line Items] | |
Fully amortized deferred leasing costs and intangibles | 1.6 |
In-Place Leases [Member]
|
|
Finite-Lived Intangible Assets [Line Items] | |
Fully amortized deferred leasing costs and intangibles | 3.7 |
Below-Market Leases [Member]
|
|
Finite-Lived Intangible Assets [Line Items] | |
Fully amortized deferred leasing costs and intangibles | $ 1.0 |
Pro Forma Results of the Company (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
1 Months Ended | 3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2012
|
Mar. 31, 2011
|
||||||||||
Pro forma Results of the Company | ||||||||||||
Revenues | $ 101,549 | $ 86,729 | ||||||||||
Net income available to common stockholders | 68,265 | [1],[2] | 80 | [1],[2] | ||||||||
Net income available to common stockholders per share - basic | $ 1.07 | [1],[2] | $ 0.00 | [1],[2] | ||||||||
Net income available to common stockholders per share - diluted | $ 1.07 | [1],[2] | $ 0.00 | [1],[2] | ||||||||
Actual results for material acquisitions | ||||||||||||
Revenues | 1,179 | |||||||||||
Net income | 213 | [3] | ||||||||||
Pro Forma Results of the Company (Textuals) [Abstract] | ||||||||||||
Acquisition-related expenses | 1,528 | 472 | ||||||||||
Bohannon Drive Menlo Park, CA [Member]
|
||||||||||||
Pro Forma Results of the Company (Textuals) [Abstract] | ||||||||||||
Acquisition-related expenses | $ 400 | |||||||||||
|
Net Income Available to Common Unitholders Per Unit of the Operating Partnership (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
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Net Income Available To Common Unitholders [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available to common unitholders | The following table reconciles the numerator and denominator in computing the Company's basic and diluted per-share computations for net income available to common stockholders for the three months ended March 31, 2012 and 2011:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kilroy Realty, L.P. [Member]
|
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Net Income Available To Common Unitholders [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income available to common unitholders | The following table reconciles the numerator and denominator in computing the Operating Partnership's basic and diluted per-unit computations for net income available to common unitholders for the three months ended March 31, 2012 and 2011:
|
Pro Forma Results of the Company
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Results of the Company | Pro Forma Results of the Company The following pro forma consolidated results of operations of the Company for the three months ended March 31, 2012 and 2011 assumes that the acquisition of 4100-4700 Bohannon Drive, Menlo Park, CA, was completed as of January 1, 2011. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2011, nor does it intend to be a projection of future results.
The following table summarizes the results of operations for the property at 4100-4700 Bohannon Drive, Menlo Park, CA, from February 29, 2012, the date of acquisition, through March 31, 2012:
|
Pro Forma Results of the Operating Partnership (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
1 Months Ended | 3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2012
|
Mar. 31, 2011
|
||||||||||
Pro Forma Results of the Operating Partnership | ||||||||||||
Revenues | $ 101,549 | $ 86,729 | ||||||||||
Net income available to common unitholders | 68,265 | [1],[2] | 80 | [1],[2] | ||||||||
Net income available to common stockholders per share - basic | $ 1.07 | [1],[2] | $ 0.00 | [1],[2] | ||||||||
Net income available to common stockholders per share - diluted | $ 1.07 | [1],[2] | $ 0.00 | [1],[2] | ||||||||
Actual results for material acquisitions | ||||||||||||
Revenues | 1,179 | |||||||||||
Net income | 213 | [3] | ||||||||||
Pro Forma Results of the Operating Partnership (Textuals) [Abstract] | ||||||||||||
Acquisition-related expenses | 1,528 | 472 | ||||||||||
Kilroy Realty, L.P. [Member]
|
||||||||||||
Pro Forma Results of the Operating Partnership | ||||||||||||
Revenues | 101,549 | 86,729 | ||||||||||
Net income available to common unitholders | 70,026 | [1],[2] | 49 | [1],[2] | ||||||||
Net income available to common stockholders per share - basic | $ 1.07 | [1],[2] | $ 0.00 | [1],[2] | ||||||||
Net income available to common stockholders per share - diluted | $ 1.07 | [1],[2] | $ 0.00 | [1],[2] | ||||||||
Actual results for material acquisitions | ||||||||||||
Revenues | 1,179 | |||||||||||
Net income | 213 | [3] | ||||||||||
Pro Forma Results of the Operating Partnership (Textuals) [Abstract] | ||||||||||||
Acquisition-related expenses | 1,528 | 472 | ||||||||||
Bohannon Drive Menlo Park, CA [Member]
|
||||||||||||
Pro Forma Results of the Operating Partnership (Textuals) [Abstract] | ||||||||||||
Acquisition-related expenses | 400 | |||||||||||
Bohannon Drive Menlo Park, CA [Member] | Kilroy Realty, L.P. [Member]
|
||||||||||||
Pro Forma Results of the Operating Partnership (Textuals) [Abstract] | ||||||||||||
Acquisition-related expenses | $ 400 | |||||||||||
|
Secured and Unsecured Debt of the Operating Partnership (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
Mar. 31, 2012
Kilroy Realty, L.P. [Member]
|
Dec. 31, 2011
Kilroy Realty, L.P. [Member]
|
Mar. 31, 2012
Kilroy Realty, L.P. [Member]
Exchangeable Notes [Member]
|
Mar. 31, 2011
Kilroy Realty, L.P. [Member]
Exchangeable Notes [Member]
|
Mar. 31, 2012
Kilroy Realty, L.P. [Member]
Exchangeable Notes [Member]
3.25% Exchangeable Notes [Member]
|
Dec. 31, 2011
Kilroy Realty, L.P. [Member]
Exchangeable Notes [Member]
3.25% Exchangeable Notes [Member]
|
Mar. 31, 2012
Kilroy Realty, L.P. [Member]
Exchangeable Notes [Member]
4.25% Exchangeable Notes [Member]
|
Dec. 31, 2011
Kilroy Realty, L.P. [Member]
Exchangeable Notes [Member]
4.25% Exchangeable Notes [Member]
|
|||||||||||||||||
Balance and significant terms of the Exchangeable Notes outstanding | |||||||||||||||||||||||||||
Principal amount | $ 148,000 | $ 148,000 | $ 172,500 | $ 172,500 | |||||||||||||||||||||||
Unamortized discount | (132) | (924) | (11,679) | (12,684) | |||||||||||||||||||||||
Net carrying amount of liability component | 308,689 | 306,892 | 308,689 | 306,892 | 147,868 | 147,076 | 160,821 | 159,816 | |||||||||||||||||||
Carrying amount of equity component | 33,675 | 33,675 | 19,835 | 19,835 | |||||||||||||||||||||||
Maturity Date | Apr. 15, 2012 | Apr. 15, 2012 | Nov. 15, 2014 | Nov. 15, 2014 | |||||||||||||||||||||||
Stated coupon rate | 3.25% | [1] | 3.25% | [1] | 4.25% | [2] | 4.25% | [2] | |||||||||||||||||||
Effective interest rate | 5.45% | [3] | 5.45% | [3] | 7.13% | [3] | 7.13% | [3] | |||||||||||||||||||
Exchange rate per $1,000 principal value of the Exchangeable Notes, as adjusted | 11.3636 | [4] | 11.3636 | [4] | 27.8307 | [4] | 27.8307 | [4] | |||||||||||||||||||
Exchange price, as adjusted | $ 88 | [4] | $ 88 | [4] | $ 35.93 | [4] | $ 35.93 | [4] | |||||||||||||||||||
Number of Shares on which aggregate consideration to be delivered upon conversion is determined | 1,681,813 | [4] | 1,681,813 | [4] | 4,800,796 | [4] | 4,800,796 | [4] | |||||||||||||||||||
Capped call transactions | |||||||||||||||||||||||||||
Referenced shares of common stock | 1,121,201 | [5] | 1,121,201 | [5] | 4,800,796 | [6] | 4,800,796 | [6] | |||||||||||||||||||
Exchange price including effect of capped calls | $ 102.72 | [5] | $ 102.72 | [5] | $ 42.81 | [6] | $ 42.81 | [6] | |||||||||||||||||||
Per Share Average Trading Price Of Companys Common Stock On Stock Exchange Abstract | |||||||||||||||||||||||||||
Average trading price of the Companys stock | $ 42.86 | $ 37.96 | |||||||||||||||||||||||||
Interest Expense for the Exchangeable Notes | |||||||||||||||||||||||||||
Contractual interest payments | 3,035 | 3,035 | |||||||||||||||||||||||||
Amortization of discount | 1,797 | 1,688 | |||||||||||||||||||||||||
Interest expense attributable to the Exchangeable Notes | $ 4,832 | $ 4,723 | |||||||||||||||||||||||||
|
Net Income Available to Common Unitholders Per Unit of the Operating Partnership (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
||||||||||||||||||
Numerator: | ||||||||||||||||||||
Income from continuing operations | $ 4,962 | $ 1,844 | ||||||||||||||||||
Total preferred distributions | (9,336) | (3,799) | ||||||||||||||||||
Allocation to participating securities (nonvested units and time-based RSUs) | (380) | (322) | ||||||||||||||||||
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders | (4,640) | (2,216) | ||||||||||||||||||
Income from discontinued operations | 73,709 | [1] | 3,023 | [1],[2] | ||||||||||||||||
Numerator for basic and diluted net income available to common unitholders | 67,160 | 712 | ||||||||||||||||||
Denominator: | ||||||||||||||||||||
Weighted average common units outstanding - basic (Note 16) | 63,648,704 | 52,302,075 | ||||||||||||||||||
Effect of dilutive securities - contingently issuable shares and stock options | 0 | 0 | [3] | |||||||||||||||||
Weighted average common units outstanding - diluted (Note 16) | 63,648,704 | 52,302,075 | ||||||||||||||||||
Basic earnings per unit: | ||||||||||||||||||||
Loss from continuing operations available to common unitholders per common unit-basic (Note 16) | $ (0.07) | $ (0.04) | ||||||||||||||||||
Income from discontinued operations per common unit | $ 1.13 | $ 0.05 | ||||||||||||||||||
Net income available to common unitholders per unit-basic (Note 16) | $ 1.06 | $ 0.01 | ||||||||||||||||||
Diluted earnings per unit: | ||||||||||||||||||||
Loss from continuing operations available to common unitholders per common unit-diluted (Note 16) | $ (0.07) | $ (0.04) | ||||||||||||||||||
Income from discontinued operations per common unit | $ 1.13 | $ 0.05 | ||||||||||||||||||
Net income available to common unitholders per unit-diluted (Note 16) | $ 1.06 | $ 0.01 | ||||||||||||||||||
Stock options outstanding | 1,550,000 | [4],[5] | 5,000 | [6] | ||||||||||||||||
Kilroy Realty, L.P. [Member]
|
||||||||||||||||||||
Numerator: | ||||||||||||||||||||
Income from continuing operations | 4,962 | 1,844 | ||||||||||||||||||
Income from continuing operations attributable to noncontrolling interests in consolidated subsidiaries | (53) | (34) | ||||||||||||||||||
Total preferred distributions | (9,336) | (3,799) | ||||||||||||||||||
Allocation to participating securities (nonvested units and time-based RSUs) | (380) | (322) | ||||||||||||||||||
Numerator for basic and diluted (loss) income from continuing operations available to common unitholders | (4,807) | (2,311) | ||||||||||||||||||
Income from discontinued operations | 73,709 | 3,023 | ||||||||||||||||||
Numerator for basic and diluted net income available to common unitholders | $ 68,902 | $ 712 | ||||||||||||||||||
Denominator: | ||||||||||||||||||||
Weighted average common units outstanding - basic (Note 16) | 65,366,835 | 54,025,206 | ||||||||||||||||||
Effect of dilutive securities - contingently issuable shares and stock options | 0 | 0 | [7] | |||||||||||||||||
Weighted average common units outstanding - diluted (Note 16) | 65,366,835 | 54,025,206 | ||||||||||||||||||
Basic earnings per unit: | ||||||||||||||||||||
Loss from continuing operations available to common unitholders per common unit-basic (Note 16) | $ (0.07) | $ (0.04) | ||||||||||||||||||
Income from discontinued operations per common unit | $ 1.12 | $ 0.05 | ||||||||||||||||||
Net income available to common unitholders per unit-basic (Note 16) | $ 1.05 | $ 0.01 | ||||||||||||||||||
Diluted earnings per unit: | ||||||||||||||||||||
Loss from continuing operations available to common unitholders per common unit-diluted (Note 16) | $ (0.07) | $ (0.04) | ||||||||||||||||||
Income from discontinued operations per common unit | $ 1.12 | $ 0.05 | ||||||||||||||||||
Net income available to common unitholders per unit-diluted (Note 16) | $ 1.05 | $ 0.01 | ||||||||||||||||||
Stock options outstanding | 1,550,000 | [4] | ||||||||||||||||||
Market Measure-Based Restricted Stock Units (RSUs) [Member]
|
||||||||||||||||||||
Diluted earnings per unit: | ||||||||||||||||||||
Market measure-based RSUs | 103,238 | |||||||||||||||||||
Market Measure-Based Restricted Stock Units (RSUs) [Member] | Kilroy Realty, L.P. [Member]
|
||||||||||||||||||||
Diluted earnings per unit: | ||||||||||||||||||||
Market measure-based RSUs | 103,238 | |||||||||||||||||||
|
Subsequent Events (Details) (USD $)
|
3 Months Ended | 3 Months Ended | 0 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
Dec. 31, 2010
|
Mar. 31, 2012
Kilroy Realty, L.P. [Member]
|
Mar. 31, 2011
Kilroy Realty, L.P. [Member]
|
Dec. 31, 2011
Kilroy Realty, L.P. [Member]
|
Dec. 31, 2010
Kilroy Realty, L.P. [Member]
|
Apr. 17, 2012
Cumulative Preferred Stock Subject to Mandatory Redemption [Member]
|
Apr. 17, 2012
Dividend Paid [Member]
|
Apr. 30, 2012
Acquisition [Member]
|
Apr. 27, 2012
Cash and Cash Equivalents [Member]
|
Apr. 27, 2012
Restricted cash [Member]
|
Apr. 27, 2012
Line of Credit [Member]
Kilroy Realty, L.P. [Member]
|
Apr. 16, 2012
Exchangeable Notes [Member]
Repayment of Debt [Member]
Kilroy Realty, L.P. [Member]
|
Mar. 31, 2012
Exchangeable Note One [Member]
Exchangeable Notes [Member]
Kilroy Realty, L.P. [Member]
|
Dec. 31, 2011
Exchangeable Note One [Member]
Exchangeable Notes [Member]
Kilroy Realty, L.P. [Member]
|
Apr. 16, 2012
Exchangeable Note One [Member]
Exchangeable Notes [Member]
Repayment of Debt [Member]
Kilroy Realty, L.P. [Member]
|
Mar. 31, 2012
Series E Cumulative Redeemable Preferred Stock [Member]
|
Dec. 31, 2011
Series E Cumulative Redeemable Preferred Stock [Member]
|
Apr. 17, 2012
Series E Cumulative Redeemable Preferred Stock [Member]
Cumulative Preferred Stock Subject to Mandatory Redemption [Member]
|
Apr. 16, 2012
Series E Cumulative Redeemable Preferred Stock [Member]
Cumulative Preferred Stock Subject to Mandatory Redemption [Member]
|
Mar. 31, 2012
Series F Cumulative Redeemable Preferred Stock [Member]
|
Dec. 31, 2011
Series F Cumulative Redeemable Preferred Stock [Member]
|
Apr. 17, 2012
Series F Cumulative Redeemable Preferred Stock [Member]
Cumulative Preferred Stock Subject to Mandatory Redemption [Member]
|
Apr. 16, 2012
Series F Cumulative Redeemable Preferred Stock [Member]
Cumulative Preferred Stock Subject to Mandatory Redemption [Member]
|
|||||
Subsequent Events (Textuals) [Abstract] | ||||||||||||||||||||||||||||||
Stated coupon rate | 3.25% | [1] | 3.25% | [1] | 3.25% | |||||||||||||||||||||||||
Principal amount | $ 148,000,000 | $ 148,000,000 | $ 148,000,000 | |||||||||||||||||||||||||||
Preferred Stock, Shares Outstanding | 1,610,000 | 1,610,000 | 1,610,000 | 3,450,000 | 3,450,000 | 3,450,000 | ||||||||||||||||||||||||
Preferred stock dividend rate percentage | 7.80% | 7.80% | 7.80% | 7.50% | 7.50% | 7.50% | ||||||||||||||||||||||||
Payments for Repurchase of Preferred Stock and Preference Stock | 126,500,000 | |||||||||||||||||||||||||||||
Aggregate dividends, distributions, and dividend equivalents paid to common stockholders and common unitholders | 21,191,000 | 18,925,000 | 21,191,000 | 18,925,000 | 24,900,000 | |||||||||||||||||||||||||
Non-refundable escrow deposits related to potential future acquisitions | 10,000,000 | 15,000,000 | ||||||||||||||||||||||||||||
Cash and cash equivalents | 374,368,000 | 6,708,000 | 4,777,000 | 14,840,000 | 374,368,000 | 6,708,000 | 4,777,000 | 14,840,000 | 44,236,000 | |||||||||||||||||||||
Net proceeds from disposition held by a qualified intermediary in connection wtih Section 1031 exchange | 42,395,000 | 0 | 42,395,000 | 0 | 42,395,000 | |||||||||||||||||||||||||
Credit Facility | $ 0 | $ 182,000,000 | $ 0 | $ 182,000,000 | $ 0 | |||||||||||||||||||||||||
|
Fair Value Measurements and Disclosures (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
|||||||||
Assets and Liabilities Reported at Fair Value | |||||||||||
Marketable securities | $ 6,459 | $ 5,691 | |||||||||
Fair value adjustment of marketable securities and deferred compensation plan liability | |||||||||||
Net gain on marketable securities | 435 | 187 | |||||||||
(Increase) to compensation cost | (435) | (187) | |||||||||
Fair Value (Level 1) [Member]
|
|||||||||||
Assets and Liabilities Reported at Fair Value | |||||||||||
Marketable securities | 6,459 | [1],[2] | 5,691 | [1],[2] | |||||||
Deferred compensation plan liability | $ 6,364 | [1],[3] | $ 5,597 | [1],[3] | |||||||
|
Share-Based Compensation
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation Stockholder Approved Equity Compensation Plans As of March 31, 2012, we had one share-based incentive compensation plan, the Kilroy Realty 2006 Incentive Award Plan as amended (the “2006 Plan”). As of March 31, 2012, 703,177 shares were available for grant under the 2006 Plan. The number of shares that remains available for grant is calculated using the weighted share counting provisions set forth in the 2006 Plan, which are based on the type of awards that are granted. The maximum number of shares available for grant subject to full value awards (which generally include equity awards other than options and stock appreciation rights) was 240,814 shares as of March 31, 2012. On March 30, 2012, the Executive Compensation Committee of the Company's Board of Directors granted 206,477 restricted stock units ("RSU") to the Company's Chief Executive Officer. Fifty-percent of the RSUs granted will vest ratably over a seven-year period, subject to continued employment through the applicable vesting date. The grant date fair value of these time-based RSUs was $4.8 million, which was based on the $46.61 closing share price of the Company's common stock on the New York Stock Exchange on the grant date. Compensation expense will be recognized on a straight-line basis over the service vesting period for these time-based RSUs. The remaining fifty-percent of the RSUs granted will vest ratably over a seven-year period, subject to the achievement of certain absolute and relative total shareholder return goals measured annually and, in the case of the absolute goals, cumulatively over the performance period, as well as continued employment through the applicable vesting date. The grant date fair value of these market measure-based RSUs was $4.3 million and was calculated using a Monte Carlo simulation pricing model based on the assumptions in the table below. The grant date fair value is allocated among each of the seven annual vesting tranches for these market measure-based RSUs and compensation expense will be recognized over the service vesting period using the accelerated expense attribution method.
The computation of expected volatility is based on a blend of the historical volatility of our common shares over 14 years as that is expected to be most consistent with future volatility and equates to a time period twice as long as the seven-year term of the RSUs and implied volatility data based on the observed pricing of six-month publicly traded options on our common shares. The risk-free interest rate is based on the yield curve on zero-coupon U.S. Treasury STRIP securities in effect at the grant date. The expected dividend yield is estimated by examining the average of the historical dividend yield levels over the seven-year term of the RSUs and our current annualized dividend yield as of the grant date. The expected life of the RSUs is equal to the seven-year vesting period. Summary of Time-Based RSUs A summary of our time-based RSU activity from January 1, 2012 through March 31, 2012 is presented below:
________________________
A summary of our time-based RSU activity for the three months ended March 31, 2012 and 2011 is presented below:
Summary of Nonvested Shares A summary of our nonvested shares activity from January 1, 2012 through March 31, 2012 is presented below:
________________________
A summary of our nonvested and vested shares activity for the three months ended March 31, 2012 and 2011 is presented below:
Summary of Stock Options On February 22, 2012, the Executive Compensation Committee of the Company granted non-qualified stock options to certain key members of our senior management team, including our executive officers, to purchase an aggregate 1,550,000 shares of the Company's common stock at an exercise price per share equal to $42.61, the closing price of the Company's common stock on the grant date. The options will vest ratably in annual installments over a five-year period, subject to continued employment through the applicable vesting date. The term of each option is ten years from the date of the grant. Dividends will not be paid on vested or unvested options. The options were granted pursuant to the 2006 Plan. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model based on the following assumptions for the February 2012 grant.
The computation of expected volatility is based on a blend of the historical volatility of our common shares over a time period longer than the expected life of the option and implied volatility data based on the observed pricing of six-month publicly traded options on our common shares. The risk-free interest rate is based on the yield curve on zero-coupon U.S. Treasury STRIP securities in effect at the grant date. The expected dividend yield is estimated by examining the average of the historical dividend yield levels over the expected life of the option and the current dividend yield as of the grant date. The expected life of the options is calculated as the average of the vesting term and the contractual term. A summary of our stock option activity from January 1, 2012 through March 31, 2012 is presented below:
________________________
Share-based Compensation Cost Recorded During the Period The total compensation cost for all share-based compensation programs was $1.5 million and $1.4 million for the three months ended March 31, 2012 and 2011. Of the total share-based compensation cost, $0.2 million and $0.3 million was capitalized as part of real estate assets for the three months ended March 31, 2012 and 2011, respectively. As of March 31, 2012, there was approximately $32.5 million of total unrecognized compensation cost related to nonvested incentive awards granted under share-based compensation arrangements that is expected to be recognized over a weighted-average period of 2.8 years. The remaining compensation cost related to these nonvested incentive awards had been recognized in periods prior to March 31, 2012. |
Organization and Basis of Presentation (Details Textuals) (USD $)
In Millions, unless otherwise specified |
3 Months Ended | 3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 31, 2012
NumberofTradingDays
RSF
NumberofBuildings
VIE
|
Dec. 31, 2011
VIE
|
Mar. 31, 2011
|
Mar. 31, 2012
Office Properties [Member]
RSF
numberofaquisitiontransactions
NumberofBuildings
|
Mar. 31, 2012
Redevelopment Properties [Member]
RSF
NumberofBuildings
|
Mar. 31, 2012
Lease Up Properties [Member]
NumberofBuildings
|
Dec. 31, 2011
Assets Held-for-sale [Member]
RSF
NumberofBuildings
|
|
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | |||||||
Number of properties of the company in Washington | 6 | ||||||
Number of Buildings | 7 | 7 | 4 | 0 | 2 | ||
Number of acquisition transactions | 1 | ||||||
Rentable square feet | 374,139 | 374,139 | 918,000 | 254,000 | |||
Stabilized Occupancy | 95.00% | ||||||
Percentage of general partnership interest owned by the company in the Operating Partnership | 97.50% | 97.20% | 96.80% | ||||
Percentage of Common limited partnership interest owned by certain non-affiliated investors and certain directors and officers of the Company in the Operating Partnership | 2.50% | 2.80% | 3.20% | ||||
Percentage of General partnership interest owned by wholly-owned subsidiary of the Company | 1.00% | ||||||
Percentage of limited partnership interest owned by Operating Partnership | 99.00% | ||||||
Number of consolidated variable interest entities | 1 | 1 | |||||
Number of days to complete Section 1031 Exchange | 180 | ||||||
Variable Interest Entity, Consolidated, Carrying Amount, Assets | $ 172.2 | $ 108.5 | |||||
Variable Interest Entity, Consolidated, Carrying Amount, Liabilities | $ 10.4 | $ 7.3 |
Fair Value Measurements and Disclosures (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value of the company's marketable securities | The following table sets forth the fair value of our marketable securities and related deferred compensation plan liability as of March 31, 2012 and December 31, 2011:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value adjustment of marketable securities and deferred compensation plan liability | The following table sets forth the related amounts recorded during the three months ended March 31, 2012 and 2011:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Carrying value and fair value of company's remaining financial assets and liabilities | The following table sets forth the carrying value and the fair value of our other financial instruments as of March 31, 2012 and December 31, 2011:
|
Net Income Available to Common Stockholders Per Share of the Company (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
||||||||||||||||
Numerator: | ||||||||||||||||||
Income from continuing operations | $ 4,962 | $ 1,844 | ||||||||||||||||
Loss from continuing operations attributable to noncontrolling common units of the Operating Partnership | 114 | 61 | ||||||||||||||||
Preferred distributions and dividends | (9,336) | (3,799) | ||||||||||||||||
Allocation to participating securities (nonvested shares and time-based RSUs) | (380) | (322) | ||||||||||||||||
Numerator for basic and diluted (loss) income from continuing operations available to common stockholders | (4,640) | (2,216) | ||||||||||||||||
Income from discontinued operations | 73,709 | [1] | 3,023 | [1],[2] | ||||||||||||||
Income from discontinued operations attributable to noncontrolling common units of the Operating Partnership | (1,909) | (95) | ||||||||||||||||
Numerator for basic and diluted net income available to common stockholders | $ 67,160 | $ 712 | ||||||||||||||||
Denominator: | ||||||||||||||||||
Weighted average common shares outstanding-basic (Note 15) | 63,648,704 | 52,302,075 | ||||||||||||||||
Effect of dilutive securities - contingently issuable shares and stock options | 0 | 0 | [3] | |||||||||||||||
Weighted average common shares outstanding-diluted | 63,648,704 | 52,302,075 | ||||||||||||||||
Basic earnings per share: | ||||||||||||||||||
Loss from continuing operations available to common stockholders per common share-basic (Note 15) | $ (0.07) | $ (0.04) | ||||||||||||||||
Income from discontinued operations per common share | $ 1.13 | $ 0.05 | ||||||||||||||||
Net income available to common stockholders per share-basic | $ 1.06 | $ 0.01 | ||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||
Loss from continuing operations available to common stockholders per common share-diluted (Note 15) | $ (0.07) | $ (0.04) | ||||||||||||||||
Income from discontinued operations per common share | $ 1.13 | $ 0.05 | ||||||||||||||||
Net income available to common stockholders per share-diluted | $ 1.06 | $ 0.01 | ||||||||||||||||
Stock options outstanding | 1,550,000 | [4],[5] | 5,000 | [6] | ||||||||||||||
Market Measure-Based Restricted Stock Units (RSUs) [Member]
|
||||||||||||||||||
Diluted earnings per share: | ||||||||||||||||||
Market measure-based RSUs | 103,238 | |||||||||||||||||
|
Acquisitions (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquired operating properties from unrelated third parties | During the three months ended March 31, 2012, we acquired the seven office properties listed below from an unrelated third party. The acquisition was funded with proceeds from the Company's public offering of common stock in February 2012 (see Note 8).
________________________
|
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Fair values of assets acquired and liabilities assumed | The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date:
________________________
|
Acquisitions (Details Textuals) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2012
Years
|
|
Aquisitions (Textuals) [Abstract] | |
Number of Buildings | 7 |
In-Place Leases [Member]
|
|
Aquisitions (Textuals) [Abstract] | |
Deferred leasing costs and acquisition-related intangible assets | $ 5,800 |
Weighted average amortization period in years | 5.8 |
Above-Market Leases [Member]
|
|
Aquisitions (Textuals) [Abstract] | |
Deferred leasing costs and acquisition-related intangible assets | 100 |
Weighted average amortization period in years | 2.6 |
Deferred Leasing Costs [Member]
|
|
Aquisitions (Textuals) [Abstract] | |
Deferred leasing costs and acquisition-related intangible assets | 3,500 |
Weighted average amortization period in years | 4.3 |
Below-Market Leases [Member]
|
|
Aquisitions (Textuals) [Abstract] | |
Deferred revenue and acquisition-related intangible liabilities | $ 10,400 |
Weighted average amortization period in years | 8.2 |
Share-Based Compensation (Details 2) (Restricted Stock [Member], USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
|||||||
Restricted Stock [Member]
|
||||||||
Summary of Nonvested Shares | ||||||||
Outstanding at January 1, 2012 , Shares | 83,966 | |||||||
Outstanding at January 1, 2012, Weighted Average Grant Date Fair Value Per Share | $ 39.83 | |||||||
Granted, Shares | 59,938 | 66,208 | ||||||
Granted, Weighted Average Grant Date Fair Value Per Share | $ 41.71 | $ 37.76 | ||||||
Vested, Shares | (33,104) | [1] | (5,985) | |||||
Vested, Weighted Average Grant Date Fair Value Per Share | $ 37.76 | |||||||
Outstanding as of March 31, 2012, Shares | 110,800 | |||||||
Outstanding as of March 31, 2012, Weighted Average Grant Date Fair Value Per Share | $ 41.46 | |||||||
Summary of Granted and Vested Shares | ||||||||
Granted, Shares | 59,938 | 66,208 | ||||||
Granted, Weighted Average Grant Date Fair Value Per Share | $ 41.71 | $ 37.76 | ||||||
Vested, Shares | (33,104) | [1] | (5,985) | |||||
Vested shares, total fair value | $ 1,274 | [2] | $ 232 | [2] | ||||
|
Noncontrolling Interests on the Company's Consolidated Financial Statements (Details) (USD $)
|
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2012
|
Mar. 31, 2011
|
Dec. 31, 2011
|
|
Noncontrolling Interest (Textuals) [Abstract] | |||
Percentage of general partnership interest owned by the company in the Operating Partnership | 97.50% | 96.80% | 97.20% |
Percentage of Common limited partnership interest owned by certain non-affiliated investors and certain directors and officers of the Company in the Operating Partnership | 2.50% | 3.20% | 2.80% |
Common units outstanding held by common limited partners | 1,718,131 | 1,723,131 | 1,718,131 |
Conversion ratio of common units for common stock | 1 | ||
Common stock, par value | $ 0.01 | $ 0.01 | |
Number of trading days | 10 | ||
Aggregate value upon redemption of outstanding noncontrolling common units | $ 78,900,000 | $ 64,700,000 | |
Series A Cumulative Redeemable Preferred Unit [Member]
|
|||
Temporary Equity [Line Items] | |||
7.45% Series A cumulative redeemable preferred units of the Operating Partnership outstanding | 1,500,000 | 1,500,000 | |
Preferred units redemption value per unit | $ 50 | $ 50 | |
Changes to noncontrolling interest | $ 0 | $ 0 |
Pro Forma Results of the Company (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2012
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro forma consolidated results of operations of the company | The following pro forma consolidated results of operations of the Company for the three months ended March 31, 2012 and 2011 assumes that the acquisition of 4100-4700 Bohannon Drive, Menlo Park, CA, was completed as of January 1, 2011. Pro forma data may not be indicative of the results that would have been reported had the acquisitions actually occurred as of January 1, 2011, nor does it intend to be a projection of future results.
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Actual results for certain operating data for the property | The following table summarizes the results of operations for the property at 4100-4700 Bohannon Drive, Menlo Park, CA, from February 29, 2012, the date of acquisition, through March 31, 2012:
|
Consolidated Balance Sheets (KILROY REALTY, L.P.) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2012
|
Dec. 31, 2011
|
|||
---|---|---|---|---|---|
REAL ESTATE ASSETS: | |||||
Land and improvements (Note 2) | $ 576,433 | $ 537,574 | |||
Buildings and improvements | 2,970,967 | 2,830,310 | |||
Undeveloped land and construction in progress | 446,237 | 430,806 | |||
Total real estate held for investment | 3,993,637 | 3,798,690 | |||
Accumulated depreciation and amortization | (770,688) | (742,503) | |||
Total real estate assets held for investment, net | 3,222,949 | 3,056,187 | |||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 14) | 0 | 84,156 | |||
CASH AND CASH EQUIVALENTS | 374,368 | 4,777 | |||
RESTRICTED CASH (Note 14) | 43,140 | 358 | |||
MARKETABLE SECURITIES (Note 12) | 6,459 | 5,691 | |||
CURRENT RECEIVABLES, NET (Note 4) | 6,990 | 8,395 | |||
DEFERRED RENT RECEIVABLES, NET (Note 4) | 106,309 | 101,142 | |||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3) | 158,132 | [1] | 155,522 | ||
DEFERRED FINANCING COSTS, NET | 19,060 | 18,368 | |||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11) | 21,934 | 12,199 | |||
Total Assets | 3,959,341 | 3,446,795 | |||
LIABILITIES: | |||||
Secured debt, net (Notes 5 and 12) | 350,219 | 351,825 | |||
Exchangeable senior notes, net (Notes 5, 12 and 17) | 308,689 | 306,892 | |||
Unsecured debt, net (Notes 5 and 12) | 1,130,651 | 980,569 | |||
Unsecured line of credit (Notes 5, 12 and 17) | 0 | 182,000 | |||
Accounts payable, accrued expenses and other liabilities | 92,574 | 81,713 | |||
Accrued distributions (Note 17) | 26,622 | 22,692 | |||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 2 and 3) | 90,206 | 79,781 | |||
Rents received in advance and tenant security deposits | 30,392 | 26,917 | |||
Liabilities and deferred revenue of real estate assets held for sale (Note 14) | 0 | 13,286 | |||
7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred units, called for redemption (Note 9) | 126,500 | 0 | |||
Total liabilities | 2,155,853 | 2,045,675 | |||
COMMITMENTS AND CONTINGENCIES (Note 11) | |||||
7.45% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS | 73,638 | 73,638 | |||
Partners' Capital (Note 9): | |||||
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY/CAPITAL | 3,959,341 | 3,446,795 | |||
Kilroy Realty, L.P. [Member]
|
|||||
REAL ESTATE ASSETS: | |||||
Land and improvements (Note 2) | 576,433 | 537,574 | |||
Buildings and improvements | 2,970,967 | 2,830,310 | |||
Undeveloped land and construction in progress | 446,237 | 430,806 | |||
Total real estate held for investment | 3,993,637 | 3,798,690 | |||
Accumulated depreciation and amortization | (770,688) | (742,503) | |||
Total real estate assets held for investment, net | 3,222,949 | 3,056,187 | |||
REAL ESTATE ASSETS AND OTHER ASSETS HELD FOR SALE, NET (Note 14) | 0 | 84,156 | |||
CASH AND CASH EQUIVALENTS | 374,368 | 4,777 | |||
RESTRICTED CASH (Note 14) | 43,140 | 358 | |||
MARKETABLE SECURITIES (Note 12) | 6,459 | 5,691 | |||
CURRENT RECEIVABLES, NET (Note 4) | 6,990 | 8,395 | |||
DEFERRED RENT RECEIVABLES, NET (Note 4) | 106,309 | 101,142 | |||
DEFERRED LEASING COSTS AND ACQUISITION-RELATED INTANGIBLE ASSETS, NET (Notes 2 and 3) | 158,132 | 155,522 | |||
DEFERRED FINANCING COSTS, NET | 19,060 | 18,368 | |||
PREPAID EXPENSES AND OTHER ASSETS, NET (Note 11) | 21,934 | 12,199 | |||
Total Assets | 3,959,341 | 3,446,795 | |||
LIABILITIES: | |||||
Secured debt, net (Notes 5 and 12) | 350,219 | 351,825 | |||
Exchangeable senior notes, net (Notes 5, 12 and 17) | 308,689 | 306,892 | |||
Unsecured debt, net (Notes 5 and 12) | 1,130,651 | 980,569 | |||
Unsecured line of credit (Notes 5, 12 and 17) | 0 | 182,000 | |||
Accounts payable, accrued expenses and other liabilities | 92,574 | 81,713 | |||
Accrued distributions (Note 17) | 26,622 | 22,692 | |||
Deferred revenue and acquisition-related intangible liabilities, net (Notes 2 and 3) | 90,206 | 79,781 | |||
Rents received in advance and tenant security deposits | 30,392 | 26,917 | |||
Liabilities and deferred revenue of real estate assets held for sale (Note 14) | 0 | 13,286 | |||
7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred units, called for redemption (Note 9) | 126,500 | 0 | |||
Total liabilities | 2,155,853 | 2,045,675 | |||
COMMITMENTS AND CONTINGENCIES (Note 11) | |||||
7.45% SERIES A CUMULATIVE REDEEMABLE PREFERRED UNITS | 73,638 | 73,638 | |||
Partners' Capital (Note 9): | |||||
Common units, 68,349,843 and 58,819,717 held by the general partner and 1,718,131 and 1,718,131 held by common limited partners issued and outstanding, respectively | 1,631,001 | 1,203,259 | |||
Total Partners' Capital | 1,727,156 | 1,324,841 | |||
Noncontrolling interests in consolidated subsidiaries | 2,694 | 2,641 | |||
Total capital | 1,729,850 | 1,327,482 | |||
TOTAL LIABILITIES, NONCONTROLLING INTEREST AND EQUITY/CAPITAL | 3,959,341 | 3,446,795 | |||
Kilroy Realty, L.P. [Member] | Series E Cumulative Redeemable Preferred Unit [Member]
|
|||||
Partners' Capital (Note 9): | |||||
Cumulative Redeemable Preferred stock | 0 | 38,425 | |||
Kilroy Realty, L.P. [Member] | Series F Cumulative Redeemable Preferred Unit [Member]
|
|||||
Partners' Capital (Note 9): | |||||
Cumulative Redeemable Preferred stock | 0 | 83,157 | |||
Kilroy Realty, L.P. [Member] | Series G Cumulative Redeemable Preferred Unit [Member]
|
|||||
Partners' Capital (Note 9): | |||||
Cumulative Redeemable Preferred stock | $ 96,155 | $ 0 | |||
|
Preferred Stock of the Company (Details) (USD $)
In Thousands, except Share data, unless otherwise specified |
3 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | 3 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
Quarters
|
Mar. 31, 2011
|
Dec. 31, 2011
|
Mar. 31, 2012
Series E Cumulative Redeemable Preferred Stock [Member]
|
Dec. 31, 2011
Series E Cumulative Redeemable Preferred Stock [Member]
|
Mar. 31, 2012
Series F Cumulative Redeemable Preferred Stock [Member]
|
Dec. 31, 2011
Series F Cumulative Redeemable Preferred Stock [Member]
|
Mar. 31, 2012
Series G Cumulative Redeemable Preferred Stock [Member]
NumberofTradingDays
|
Dec. 31, 2011
Series G Cumulative Redeemable Preferred Stock [Member]
|
Mar. 31, 2012
Cumulative Preferred Stock Subject to Mandatory Redemption [Member]
|
|
Preferred Stock of the Company [Abstract] | ||||||||||
Preferred stock dividend rate percentage | 7.80% | 7.80% | 7.50% | 7.50% | 6.875% | |||||
Preferred Stock, Shares Outstanding | 1,610,000 | 1,610,000 | 3,450,000 | 3,450,000 | 4,000,000 | 0 | ||||
Preferred Stock, Redemption Price Per Share | $ 25 | $ 25 | $ 25 | $ 25 | ||||||
7.80% Series E and 7.50% Series F Cumulative Redeemable Preferred stock, called for redemption (Note 7) | $ 126,500 | $ 0 | ||||||||
Dividends Payable | 26,622 | 22,692 | 2,900 | |||||||
Original issuance costs of preferred stock called for redemption (Note 7) | 4,918 | 0 | ||||||||
Preferred Stock, Shares Issued | 1,610,000 | 1,610,000 | 3,450,000 | 3,450,000 | 4,000,000 | 0 | ||||
Preferred Stock, Liquidation Preference Per Share | $ 25 | |||||||||
Net proceeds from Issuance of Series G preferred stock (Note 7) | $ 96,155 | $ 96,155 | ||||||||
Number of quarters | 6 | |||||||||
Number of days within a change in control in which preferred stock may be redeemed | 120 | |||||||||
Redeemable Preferred Stock Shares Issued Upon Conversion Maximum | 4,390,000 |