(State or other jurisdiction of incorporation or organization) | (Commission File No.) | (I.R.S. Employer Identification No.) |
(Registrant's telephone number, including area code) | ||
N/A | ||
(Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section 12(b) of the Act: | |||
Registrant | Title of each class | Name of each exchange on which registered | Ticker Symbol |
Kilroy Realty Corporation |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
(a) | Financial statements of businesses acquired: None. | |
(b) | Pro forma financial information: None. | |
(c) | Shell company transactions: None. | |
(d) | Exhibits: |
Exhibit No. | Description | |
99.1** | ||
99.2** | ||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Kilroy Realty Corporation | ||||||
Date: February 3, 2020 | ||||||
By: | /s/ Merryl E. Werber | |||||
Merryl E. Werber Senior Vice President, Chief Accounting Officer and Controller | ||||||
Page | |
Corporate Data and Financial Highlights | |
1 | |
2 | |
3 | |
4 | |
5 | |
6 | |
7 | |
8-9 | |
10 | |
Portfolio Data | |
11 | |
12-16 | |
17 | |
18 | |
19-21 | |
22 | |
23 | |
24 | |
25 | |
Development | |
26 | |
27 | |
28 | |
Debt and Capitalization Data | |
29 | |
30-31 | |
32-34 | |
35-38 |
Board of Directors | Executive Management Team | Investor Relations | ||||
John Kilroy | Chairman | John Kilroy | President and CEO | 12200 W. Olympic Blvd., Suite 200 Los Angeles, CA 90064 (310) 481-8400 Web: www.kilroyrealty.com E-mail: investorrelations@kilroyrealty.com | ||
Edward F. Brennan, PhD | Lead Independent | Jeffrey C. Hawken | Executive VP and COO | |||
Jolie Hunt | Robert Paratte | Executive VP, Leasing and Business Development | ||||
Scott S. Ingraham | Tyler H. Rose | Executive VP and CFO | ||||
Gary R. Stevenson | Heidi R. Roth | Executive VP and Chief Administrative Officer | ||||
Peter B. Stoneberg | Justin W. Smart | Executive VP, Development and Construction Services |
Equity Research Coverage | ||||
Bank of America Merrill Lynch | J.P. Morgan | |||
James Feldman | (646) 855-5808 | Anthony Paolone | (212) 622-6682 | |
BMO Capital Markets Corp. | KeyBanc Capital Markets | |||
John P. Kim | (212) 885-4115 | Craig Mailman | (917) 368-2316 | |
BTIG | RBC Capital Markets | |||
Thomas Catherwood | (212) 738-6140 | Mike Carroll | (440) 715-2649 | |
Citigroup Investment Research | Robert W. Baird & Co. | |||
Michael Bilerman | (212) 816-1383 | David B. Rodgers | (216) 737-7341 | |
Deutsche Bank Securities, Inc. | Scotiabank | |||
Derek Johnston | (210) 250-5683 | Nicholas Yulico | (212) 225-6904 | |
Evercore ISI | Stifel, Nicolaus & Company | |||
Steve Sakwa | (212) 446-9462 | John W. Guinee III | (443) 224-1307 | |
Goldman Sachs & Co. LLC | Wells Fargo | |||
Richard Skidmore | (801) 741-5459 | Blaine Heck | (443) 263-6529 | |
Green Street Advisors | ||||
Daniel Ismail | (949) 640-8780 |
Quarterly Financial Highlights | Quarterly Operating Highlights | |
• Net income available to common stockholders per share of $0.67 | • Stabilized portfolio was 94.6% occupied and 97.0% leased at quarter-end | |
• FFO per share of $1.00 | • 636,257 square feet of leases commenced in the stabilized portfolio | |
• Revenues of $220.2 million | • 244,217 square feet of leases executed in the stabilized portfolio | |
• Same Store GAAP NOI increased 4.8% compared to the prior year | - GAAP rents increased approximately 35.9% from prior levels | |
• Same Store Cash NOI increased 4.5% compared to the prior year | - Cash rents increased approximately 17.4% from prior levels | |
Capital Markets Highlights | Strategic Highlights | |
• Executed 12-month forward equity sale agreements under the ATM program for | • In October, acquired an office campus totaling approximately 152,000 square feet | |
1,945,906 shares at a weighted average sale price of $82.64. As of the date of this | that is 100% leased to creative tenants in the Culver City submarket of Los Angeles | |
report, the Company had not drawn down any portion of the shares sold under these | for $186.0 million. The Company plans to significantly increase the square footage | |
forward equity sale agreements | of the campus through redevelopment over time | |
• As of the date of this report, $315.0 million was outstanding on our unsecured | • In October, executed a 12-year lease with Stripe, Inc. for approximately 421,000 | |
revolving credit facility, and we had approximately $60.0 million of restricted and | square feet of space at Kilroy Oyster Point - Phase I, which is now 100% leased | |
unrestricted cash on hand | ||
• In October, completed the sale of a 272,000 square foot operating property, the | ||
Company’s last remaining Orange County property, for gross proceeds of $115.5 | ||
and a gain on sale of operating properties of $29.6 million | ||
• During the quarter, completed construction and commenced GAAP revenue | ||
recognition on the second phase of The Exchange on 16th, which represents | ||
approximately 30% of the 750,000 square foot development project located in San | ||
Francisco’s Mission Bay district. As a result of the completion of the first two | ||
phases of the project in 2019, the Company was recognizing GAAP revenue on 82% | ||
of the project at year-end. The office component of the project, approximately | ||
738,000 square feet, is 100% leased to Dropbox | ||
• In December, executed a long-term lease with a major technology company for | ||
100% of 9455 Towne Centre Drive, a 160,000 square foot development project in the | ||
University Towne Center submarket of San Diego | ||
• In December, completed the acquisition of a 1.4-acre land site in the central business | ||
district of Seattle for a cash purchase price of $133.0 million. The Company plans to | ||
seek entitlements to develop a mixed-use project over time | ||
Three Months Ended | |||||||||||||||||||||
12/31/2019 (1) | 9/30/2019 (1) | 6/30/2019 (1) (2) | 3/31/2019 (1) | 12/31/2018 (2) | |||||||||||||||||
INCOME ITEMS: | |||||||||||||||||||||
Revenues | $ | 220,235 | $ | 215,525 | $ | 200,492 | $ | 201,202 | $ | 190,842 | |||||||||||
Lease Termination Fees, net | — | — | 1,824 | 1,888 | 1,293 | ||||||||||||||||
Net Operating Income (3) | 154,679 | 152,170 | 141,916 | 142,442 | 137,636 | ||||||||||||||||
Capitalized Interest and Debt Costs | 20,339 | 20,585 | 20,880 | 19,437 | 19,519 | ||||||||||||||||
Net Income Available to Common Stockholders | 72,500 | 43,846 | 42,194 | 36,903 | 160,220 | ||||||||||||||||
EBITDA, as adjusted (3) (4) | 131,734 | 129,163 | 120,025 | 119,172 | 113,883 | ||||||||||||||||
Funds From Operations (4) (5) (6) (7) | 109,518 | 109,243 | 99,905 | 99,812 | 81,330 | ||||||||||||||||
Net Income Available to Common Stockholders per common share – diluted (6) | $ | 0.67 | $ | 0.41 | $ | 0.41 | $ | 0.36 | $ | 1.58 | |||||||||||
Funds From Operations per common share – diluted (4) (6) (7) | $ | 1.00 | $ | 1.01 | $ | 0.95 | $ | 0.95 | $ | 0.78 | |||||||||||
LIQUIDITY ITEMS: | |||||||||||||||||||||
Funds Available for Distribution (5) (6) (8) | $ | 65,443 | $ | 65,078 | $ | 52,369 | $ | 65,934 | $ | 51,792 | |||||||||||
Dividends per common share (6) | $ | 0.485 | $ | 0.485 | $ | 0.485 | $ | 0.455 | $ | 0.455 | |||||||||||
RATIOS: | |||||||||||||||||||||
Net Operating Income Margins | 70.2 | % | 70.6 | % | 70.8 | % | 70.8 | % | 72.1 | % | |||||||||||
Fixed Charge Coverage Ratio | 4.0x | 4.2x | 3.9x | 4.0x | 3.7x | ||||||||||||||||
FFO Payout Ratio (4) (7) | 47.8 | % | 48.0 | % | 50.0 | % | 46.9 | % | 57.5 | % | |||||||||||
FAD Payout Ratio (8) | 80.1 | % | 80.5 | % | 95.4 | % | 71.1 | % | 90.3 | % | |||||||||||
ASSETS: | |||||||||||||||||||||
Real Estate Held for Investment before Depreciation | $ | 9,628,773 | $ | 8,977,843 | $ | 8,824,558 | $ | 8,616,167 | $ | 8,426,632 | |||||||||||
Total Assets | 8,900,094 | 8,623,815 | 8,094,721 | 7,883,987 | 7,765,707 | ||||||||||||||||
CAPITALIZATION: (9) | |||||||||||||||||||||
Total Debt | $ | 3,579,502 | $ | 3,334,967 | $ | 3,210,427 | $ | 3,020,882 | $ | 2,955,811 | |||||||||||
Total Common Equity and Noncontrolling Interests in the Operating Partnership | 9,064,520 | 8,414,862 | 7,602,085 | 7,823,144 | 6,462,321 | ||||||||||||||||
Total Market Capitalization | 12,644,022 | 11,749,829 | 10,812,512 | 10,844,026 | 9,418,132 | ||||||||||||||||
Total Debt / Total Market Capitalization | 28.3 | % | 28.4 | % | 29.7 | % | 27.9 | % | 31.4 | % | |||||||||||
(1) | The Company adopted ASC 842 “Leases” effective January 1, 2019. Please refer to page 10 for a description of the impact of the adoption on our consolidated statements of operations. |
(2) | Net Income Available to Common Stockholders includes $29.6 million and $7.2 million of gains on sale of depreciable operating properties for the three months ended December 31, 2019 and June 30, 2019, respectively, and $142.9 million of gains on sales of depreciable operating properties, an $11.8 million gain on sale of land and a $12.6 million loss on early extinguishment of debt for the three months ended December 31, 2018. |
(3) | Please refer to page 10 for the calculation of Net Operating Income and pages 37-38 for reconciliations of GAAP Net Income Available to Common Stockholders to Net Operating Income and EBITDA, as adjusted. |
(4) | EBITDA, as adjusted, and Funds From Operations include a $11.8 million gain on sale of land for the three months ended December 31, 2018. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by NAREIT, as the Company does not have any unconsolidated joint ventures. |
(5) | Please refer to page 8 for reconciliations of GAAP Net Income Available to Common Stockholders to Funds From Operations available to common stockholders and unitholders and Funds Available for Distribution to common stockholders and unitholders and page 9 for a reconciliation of GAAP Net Cash Provided by Operating Activities to Funds Available for Distribution to common stockholders and unitholders. |
(6) | Reported amounts are attributable to common stockholders, common unitholders and restricted stock unit holders. |
(7) | Funds From Operations for the three months ended December 31, 2018 includes a $12.6 million loss on early extinguishment of debt. |
(8) | Funds Available for Distribution for the three months ended December 31, 2018 includes a $11.8 million cash loss on early extinguishment of debt. |
(9) | Please refer to page 29 for additional information regarding our capital structure. |
Full Year 2020 Range | ||||||||||
Low End | High End | |||||||||
Net income available to common stockholders per share - diluted | $ | 2.01 | $ | 2.21 | ||||||
Weighted average common shares outstanding - diluted (1) | 109,000 | 109,000 | ||||||||
Net income available to common stockholders | $ | 219,000 | $ | 241,000 | ||||||
Adjustments: | ||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 4,300 | 4,700 | ||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 20,500 | 23,500 | ||||||||
Depreciation and amortization of real estate assets | 233,500 | 233,500 | ||||||||
Gains on sales of depreciable real estate | — | — | ||||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (32,000 | ) | (35,000 | ) | ||||||
Funds From Operations (2) | $ | 445,300 | $ | 467,700 | ||||||
Weighted average common shares and units outstanding - diluted (3) | 111,000 | 111,000 | ||||||||
FFO per common share/unit - diluted (3) | $ | 4.01 | $ | 4.21 | ||||||
• | Dispositions of approximately $150.0 million to $300.0 million |
• | Same store cash net operating income growth of 6.5% to 7.5% (2) |
• | Year-end occupancy of 93.0% to 94.0% |
• | Total development spending of approximately $500.0 million to $600.0 million |
(1) | Calculated based on estimated weighted average shares outstanding including non-participating share-based awards. |
(2) | See pages 33-34 for Management Statements on Funds From Operations and Same Store Cash Net Operating Income. |
(3) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, contingently issuable shares, and shares issuable under forward equity sale agreements and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders. |
Three Months Ended | |||||||||||||||||||||
12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||||
High Price | $ | 84.50 | $ | 80.06 | $ | 78.36 | $ | 76.50 | $ | 72.34 | |||||||||||
Low Price | $ | 76.35 | $ | 74.25 | $ | 72.87 | $ | 61.44 | $ | 59.46 | |||||||||||
Closing Price | $ | 83.90 | $ | 77.89 | $ | 73.81 | $ | 75.96 | $ | 62.88 | |||||||||||
Dividends per share – annualized | $ | 1.94 | $ | 1.94 | $ | 1.94 | $ | 1.82 | $ | 1.82 | |||||||||||
Closing common shares (in 000’s) (1) | 106,016 | 106,012 | 100,972 | 100,967 | 100,747 | ||||||||||||||||
Closing common partnership units (in 000’s) (1) | 2,023 | 2,023 | 2,023 | 2,023 | 2,025 | ||||||||||||||||
108,039 | 108,035 | 102,995 | 102,990 | 102,772 | |||||||||||||||||
(1) | As of the end of the period. |
12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | 12/31/2018 | |||||||||||||||||
ASSETS: | |||||||||||||||||||||
Land and improvements | $ | 1,466,166 | $ | 1,315,448 | $ | 1,284,582 | $ | 1,184,496 | $ | 1,160,138 | |||||||||||
Buildings and improvements | 5,866,477 | 5,770,226 | 5,712,448 | 5,300,313 | 5,207,984 | ||||||||||||||||
Undeveloped land and construction in progress | 2,296,130 | 1,892,169 | 1,827,528 | 2,131,358 | 2,058,510 | ||||||||||||||||
Total real estate assets held for investment | 9,628,773 | 8,977,843 | 8,824,558 | 8,616,167 | 8,426,632 | ||||||||||||||||
Accumulated depreciation and amortization | (1,561,361 | ) | (1,505,785 | ) | (1,480,766 | ) | (1,441,506 | ) | (1,391,368 | ) | |||||||||||
Total real estate assets held for investment, net | 8,067,412 | 7,472,058 | 7,343,792 | 7,174,661 | 7,035,264 | ||||||||||||||||
Real estate assets and other assets held for sale, net | — | 77,751 | — | — | — | ||||||||||||||||
Cash and cash equivalents | 60,044 | 297,620 | 52,415 | 49,693 | 51,604 | ||||||||||||||||
Restricted cash | 16,300 | 6,300 | 6,300 | 6,300 | 119,430 | ||||||||||||||||
Marketable securities | 27,098 | 26,188 | 25,203 | 24,098 | 21,779 | ||||||||||||||||
Current receivables, net | 26,489 | 34,116 | 27,563 | 28,016 | 20,176 | ||||||||||||||||
Deferred rent receivables, net | 337,937 | 314,812 | 297,358 | 280,756 | 267,007 | ||||||||||||||||
Deferred leasing costs and acquisition-related intangible assets, net | 212,805 | 202,063 | 203,451 | 187,309 | 197,574 | ||||||||||||||||
Right of use ground lease assets | 96,348 | 83,200 | 82,647 | 82,794 | — | ||||||||||||||||
Prepaid expenses and other assets, net | 55,661 | 109,707 | 55,992 | 50,360 | 52,873 | ||||||||||||||||
TOTAL ASSETS | $ | 8,900,094 | $ | 8,623,815 | $ | 8,094,721 | $ | 7,883,987 | $ | 7,765,707 | |||||||||||
LIABILITIES AND EQUITY: | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||
Secured debt, net | $ | 258,593 | $ | 259,027 | $ | 259,455 | $ | 259,878 | $ | 335,531 | |||||||||||
Unsecured debt, net | 3,049,185 | 3,048,209 | 2,553,651 | 2,552,883 | 2,552,070 | ||||||||||||||||
Unsecured line of credit | 245,000 | — | 375,000 | 185,000 | 45,000 | ||||||||||||||||
Accounts payable, accrued expenses and other liabilities | 418,848 | 439,081 | 385,567 | 373,691 | 374,415 | ||||||||||||||||
Ground lease liabilities | 98,400 | 87,617 | 87,082 | 87,247 | — | ||||||||||||||||
Accrued dividends and distributions | 53,219 | 53,205 | 50,800 | 47,676 | 47,559 | ||||||||||||||||
Deferred revenue and acquisition-related intangible liabilities, net | 139,488 | 134,828 | 136,266 | 138,973 | 149,646 | ||||||||||||||||
Rents received in advance and tenant security deposits | 66,503 | 57,428 | 59,997 | 55,457 | 60,225 | ||||||||||||||||
Liabilities and deferred revenue of real estate assets held for sale | — | 4,911 | — | — | — | ||||||||||||||||
Total liabilities | 4,329,236 | 4,084,306 | 3,907,818 | 3,700,805 | 3,564,446 | ||||||||||||||||
Equity: | |||||||||||||||||||||
Stockholders’ Equity | |||||||||||||||||||||
Common stock | 1,060 | 1,060 | 1,010 | 1,010 | 1,007 | ||||||||||||||||
Additional paid-in capital | 4,350,917 | 4,342,296 | 3,984,867 | 3,976,204 | 3,976,953 | ||||||||||||||||
Distributions in excess of earnings | (58,467 | ) | (78,707 | ) | (70,345 | ) | (62,690 | ) | (48,053 | ) | |||||||||||
Total stockholders’ equity | 4,293,510 | 4,264,649 | 3,915,532 | 3,914,524 | 3,929,907 | ||||||||||||||||
Noncontrolling Interests | |||||||||||||||||||||
Common units of the Operating Partnership | 81,917 | 81,393 | 78,463 | 78,413 | 78,991 | ||||||||||||||||
Noncontrolling interests in consolidated property partnerships | 195,431 | 193,467 | 192,908 | 190,245 | 192,363 | ||||||||||||||||
Total noncontrolling interests | 277,348 | 274,860 | 271,371 | 268,658 | 271,354 | ||||||||||||||||
Total equity | 4,570,858 | 4,539,509 | 4,186,903 | 4,183,182 | 4,201,261 | ||||||||||||||||
TOTAL LIABILITIES AND EQUITY | $ | 8,900,094 | $ | 8,623,815 | $ | 8,094,721 | $ | 7,883,987 | $ | 7,765,707 | |||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
REVENUES | ||||||||||||||||||
Rental income (1) | $ | 217,140 | $ | 166,957 | $ | 826,472 | $ | 656,631 | ||||||||||
Tenant reimbursements (1) | — | 20,511 | — | 80,982 | ||||||||||||||
Other property income (1) | 3,095 | 3,374 | 10,982 | 9,685 | ||||||||||||||
Total revenues | 220,235 | 190,842 | 837,454 | 747,298 | ||||||||||||||
EXPENSES | ||||||||||||||||||
Property expenses (1) | 42,044 | 34,386 | 160,037 | 133,787 | ||||||||||||||
Real estate taxes (1) | 21,534 | 18,399 | 78,097 | 70,820 | ||||||||||||||
Provision for bad debts (1) | — | (1,029 | ) | — | 5,685 | |||||||||||||
Ground leases (1) | 1,978 | 1,450 | 8,113 | 6,176 | ||||||||||||||
General and administrative expenses | 22,365 | 33,872 | 88,139 | 90,471 | ||||||||||||||
Leasing costs (1) | 2,016 | — | 7,615 | — | ||||||||||||||
Depreciation and amortization | 69,513 | 64,860 | 273,130 | 254,281 | ||||||||||||||
Total expenses | 159,450 | 151,938 | 615,131 | 561,220 | ||||||||||||||
OTHER INCOME (EXPENSES) | ||||||||||||||||||
Interest income and other net investment gain (loss) | 1,436 | (1,706 | ) | 4,641 | (559 | ) | ||||||||||||
Interest expense | (13,932 | ) | (12,436 | ) | (48,537 | ) | (49,721 | ) | ||||||||||
Loss on early extinguishment of debt | — | (12,623 | ) | — | (12,623 | ) | ||||||||||||
Gain on sales of land | — | 11,825 | — | 11,825 | ||||||||||||||
Gains on sales of depreciable operating properties | 29,633 | 142,926 | 36,802 | 142,926 | ||||||||||||||
Total other income (expenses) | 17,137 | 127,986 | (7,094 | ) | 91,848 | |||||||||||||
NET INCOME | 77,922 | 166,890 | 215,229 | 277,926 | ||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | (1,343 | ) | (3,185 | ) | (3,766 | ) | (5,193 | ) | ||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,079 | ) | (3,485 | ) | (16,020 | ) | (14,318 | ) | ||||||||||
Total income attributable to noncontrolling interests | (5,422 | ) | (6,670 | ) | (19,786 | ) | (19,511 | ) | ||||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 72,500 | $ | 160,220 | $ | 195,443 | $ | 258,415 | ||||||||||
Weighted average common shares outstanding – basic | 106,013 | 100,747 | 103,201 | 99,972 | ||||||||||||||
Weighted average common shares outstanding – diluted | 106,748 | 101,380 | 103,849 | 100,482 | ||||||||||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS PER SHARE | ||||||||||||||||||
Net income available to common stockholders per share – basic | $ | 0.68 | $ | 1.59 | $ | 1.87 | $ | 2.56 | ||||||||||
Net income available to common stockholders per share – diluted | $ | 0.67 | $ | 1.58 | $ | 1.86 | $ | 2.55 | ||||||||||
(1) | Effective January 1, 2019, the Company adopted ASC 842 “Leases.” Please refer to page 10 for a description of the changes made to our 2019 consolidated statement of operations upon adoption of ASC 842 “Leases.” In accordance with the adoption of the new standard under the modified retrospective method, previously reported periods are not restated for the impact of the standard. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
FUNDS FROM OPERATIONS: (1) | ||||||||||||||||||
Net income available to common stockholders | $ | 72,500 | $ | 160,220 | $ | 195,443 | $ | 258,415 | ||||||||||
Adjustments: | ||||||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 1,343 | 3,185 | 3,766 | 5,193 | ||||||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,079 | 3,485 | 16,020 | 14,318 | ||||||||||||||
Depreciation and amortization of real estate assets | 68,078 | 63,640 | 268,045 | 249,882 | ||||||||||||||
Gains on sales of depreciable real estate | (29,633 | ) | (142,926 | ) | (36,802 | ) | (142,926 | ) | ||||||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (6,849 | ) | (6,274 | ) | (27,994 | ) | (24,391 | ) | ||||||||||
Funds From Operations (1)(2) | $ | 109,518 | $ | 81,330 | $ | 418,478 | $ | 360,491 | ||||||||||
Weighted average common shares/units outstanding – basic (3) | 109,138 | 103,892 | 106,342 | 103,167 | ||||||||||||||
Weighted average common shares/units outstanding – diluted (4) | 109,872 | 104,524 | 106,991 | 103,677 | ||||||||||||||
FFO per common share/unit – basic (1) | $ | 1.00 | $ | 0.78 | $ | 3.94 | $ | 3.49 | ||||||||||
FFO per common share/unit – diluted (1) | $ | 1.00 | $ | 0.78 | $ | 3.91 | $ | 3.48 | ||||||||||
FUNDS AVAILABLE FOR DISTRIBUTION: (1) | ||||||||||||||||||
Funds From Operations (1)(2) | $ | 109,518 | $ | 81,330 | $ | 418,478 | $ | 360,491 | ||||||||||
Adjustments: | ||||||||||||||||||
Recurring tenant improvements, leasing commissions and capital expenditures | (36,941 | ) | (35,474 | ) | (123,395 | ) | (110,540 | ) | ||||||||||
Amortization of deferred revenue related to tenant-funded tenant improvements (2)(5) | (4,243 | ) | (4,749 | ) | (19,190 | ) | (18,429 | ) | ||||||||||
Net effect of straight-line rents | (23,122 | ) | (12,199 | ) | (75,323 | ) | (26,811 | ) | ||||||||||
Amortization of net below market rents (6) | (2,965 | ) | (2,101 | ) | (9,206 | ) | (9,748 | ) | ||||||||||
Amortization of deferred financing costs and net debt discount/premium | 516 | 1,068 | 1,427 | 1,884 | ||||||||||||||
Non-cash executive compensation expense (7) | 7,180 | 21,133 | 28,503 | 40,034 | ||||||||||||||
Other lease related adjustments, net and leasing costs (8) | 9,300 | (1,494 | ) | 11,448 | 2,507 | |||||||||||||
Adjustments attributable to noncontrolling interests in consolidated property partnerships | 6,200 | 4,278 | 16,082 | 8,652 | ||||||||||||||
Funds Available for Distribution (1) | $ | 65,443 | $ | 51,792 | $ | 248,824 | $ | 248,040 | ||||||||||
(1) | See page 34 for Management Statements on Funds From Operations and Funds Available for Distribution. Reported per common share/unit amounts are attributable to common stockholders, common unitholders and restricted stock unit holders. |
(2) | FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.2 million and $4.7 million for the three months ended December 31, 2019 and 2018, respectively, and $19.2 million and $18.4 million for the year ended December 31, 2019 and 2018, respectively. These amounts are adjusted out of FFO in our calculation of FAD. |
(3) | Calculated based on weighted average shares outstanding including participating share-based awards and assuming the exchange of all common limited partnership units outstanding. |
(4) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, contingently issuable shares, and shares issuable under forward equity sale agreements and assuming the exchange of all common limited partnership units outstanding. |
(5) | Represents revenue recognized during the period as a result of the amortization of deferred revenue recorded for tenant-funded tenant improvements. |
(6) | Represents the non-cash adjustment related to the acquisition of buildings with above and/or below market rents. |
(7) | Includes non-cash amortization of share-based compensation and accrued potential future executive retirement benefits. |
(8) | Includes other cash and non-cash adjustments attributable to lease-related matters including GAAP revenue recognition timing differences and leasing costs. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
GAAP Net Cash Provided by Operating Activities | $ | 85,131 | $ | 104,930 | $ | 386,521 | $ | 422,145 | ||||||||||
Adjustments: | ||||||||||||||||||
Recurring tenant improvements, leasing commissions and capital expenditures | (36,941 | ) | (35,474 | ) | (123,395 | ) | (110,540 | ) | ||||||||||
Loss on early extinguishment of debt | — | (11,823 | ) | — | (11,823 | ) | ||||||||||||
Preferred dividends | — | — | — | — | ||||||||||||||
Depreciation of non-real estate furniture, fixtures and equipment | (1,435 | ) | (1,221 | ) | (5,085 | ) | (4,400 | ) | ||||||||||
Provision for uncollectible tenant receivables | — | (487 | ) | — | (5,520 | ) | ||||||||||||
Net changes in operating assets and liabilities (1) | 19,678 | (14,356 | ) | 4,427 | (29,412 | ) | ||||||||||||
Noncontrolling interests in consolidated property partnerships’ share of FFO and FAD | (649 | ) | (1,996 | ) | (11,912 | ) | (15,739 | ) | ||||||||||
Cash adjustments related to investing and financing activities | (341 | ) | 394 | (1,732 | ) | (8,496 | ) | |||||||||||
Funds Available for Distribution(2) | $ | 65,443 | $ | 51,792 | $ | 248,824 | $ | 248,040 | ||||||||||
(1) | Primarily includes changes in the following assets and liabilities: marketable securities; current receivables; prepaid expenses and other assets; accounts payable, accrued expenses and other liabilities; and rents received in advance and tenant security deposits. |
(2) | Please refer to page 34 for a Management Statement on Funds Available for Distribution. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||
2019 (2) | 2018 As Reported | 2018 As Adjusted (3) | % Change 2019 vs. 2018 As Adjusted | 2019 (2) | 2018 As Reported | 2018 As Adjusted (3) | % Change 2019 vs. 2018 As Adjusted | |||||||||||||||||||||||||
Operating Revenues: | ||||||||||||||||||||||||||||||||
Rental income | $ | 184,011 | $ | 166,957 | $ | 169,441 | 8.6 | % | $ | 710,917 | $ | 656,631 | $ | 651,465 | 9.1 | % | ||||||||||||||||
Tenant reimbursements | 33,129 | 20,511 | 24,548 | 35.0 | % | 115,555 | 80,982 | 96,692 | 19.5 | % | ||||||||||||||||||||||
Other property income | 3,095 | 3,374 | 1,919 | 61.3 | % | 10,982 | 9,685 | 9,166 | 19.8 | % | ||||||||||||||||||||||
Total operating revenues | 220,235 | 190,842 | 195,908 | 12.4 | % | 837,454 | 747,298 | 757,323 | 10.6 | % | ||||||||||||||||||||||
Operating Expenses: | ||||||||||||||||||||||||||||||||
Property expenses | 42,044 | 34,386 | 38,423 | 9.4 | % | 160,037 | 133,787 | 149,497 | 7.1 | % | ||||||||||||||||||||||
Real estate taxes | 21,534 | 18,399 | 17,952 | 20.0 | % | 78,097 | 70,820 | 68,980 | 13.2 | % | ||||||||||||||||||||||
Provision for bad debts | — | (1,029 | ) | — | — | % | — | 5,685 | — | — | % | |||||||||||||||||||||
Ground leases | 1,978 | 1,450 | 1,897 | 4.3 | % | 8,113 | 6,176 | 8,016 | 1.2 | % | ||||||||||||||||||||||
Total operating expenses | 65,556 | 53,206 | 58,272 | 12.5 | % | 246,247 | 216,468 | 226,493 | 8.7 | % | ||||||||||||||||||||||
Net Operating Income | $ | 154,679 | $ | 137,636 | $ | 137,636 | 12.4 | % | $ | 591,207 | $ | 530,830 | $ | 530,830 | 11.4 | % | ||||||||||||||||
(1) | Please refer to page 32 for Management Statements on Net Operating Income and page 37 for a reconciliation of GAAP Net Income Available to Common Stockholders to Net Operating Income. |
(2) | Effective January 1, 2019, the Company adopted ASC 842 “Leases,” which required the following changes for all periods beginning and subsequent to January 1, 2019. In accordance with the adoption of the new standard under the modified retrospective method, previously reported periods are not restated for the impact of the standard. |
(3) | The components of Net Operating Income for the three months and year ended December 31, 2018 have been presented as if we adopted ASC 842 “Leases” effective January 1, 2018 for comparison purposes. For this analysis, tenant reimbursements have been broken out from rental income for comparison purposes. For the three months and year ended December 31, 2018 as adjusted, rental income includes $3.0 million and $7.3 million, respectively, of lease termination fees. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||
2019 | 2018 | 2018 As Adjusted (2) | % Change 2019 vs. 2018 As Adjusted | 2019 | 2018 | 2018 As Adjusted (2) | % Change 2019 vs. 2018 As Adjusted | |||||||||||||||||||||||||
Total Same Store Portfolio | ||||||||||||||||||||||||||||||||
Office Portfolio | ||||||||||||||||||||||||||||||||
Number of properties | 88 | 88 | 88 | 88 | 88 | 88 | ||||||||||||||||||||||||||
Square Feet | 12,673,967 | 12,673,967 | 12,673,967 | 12,673,967 | 12,673,967 | 12,673,967 | ||||||||||||||||||||||||||
Percent of Stabilized Portfolio | 94.0 | % | 95.8 | % | 95.8 | % | 94.0 | % | 95.8 | % | 95.8 | % | ||||||||||||||||||||
Average Occupancy | 93.6 | % | 94.5 | % | 94.5 | % | 93.7 | % | 94.3 | % | 94.3 | % | ||||||||||||||||||||
Operating Revenues: (3) | ||||||||||||||||||||||||||||||||
Rental income | $ | 159,873 | $ | 152,350 | $ | 154,531 | 3.5 | % | $ | 633,758 | $ | 610,363 | $ | 605,057 | 4.7 | % | ||||||||||||||||
Tenant reimbursements | 23,398 | 18,332 | 22,025 | 6.2 | % | 93,814 | 73,083 | 87,411 | 7.3 | % | ||||||||||||||||||||||
Other property income | 2,345 | 3,163 | 1,870 | 25.4 | % | 9,051 | 9,241 | 8,886 | 1.9 | % | ||||||||||||||||||||||
Total operating revenues | 185,616 | 173,845 | 178,426 | 4.0 | % | 736,623 | 692,687 | 701,354 | 5.0 | % | ||||||||||||||||||||||
Operating Expenses: (3) | ||||||||||||||||||||||||||||||||
Property expenses | 36,653 | 31,428 | 35,121 | 4.4 | % | 144,417 | 123,235 | 137,562 | 5.0 | % | ||||||||||||||||||||||
Real estate taxes | 15,491 | 16,188 | 15,740 | (1.6 | )% | 64,441 | 63,933 | 62,094 | 3.8 | % | ||||||||||||||||||||||
Provision for bad debts | — | (889 | ) | — | — | % | — | 5,661 | — | — | % | |||||||||||||||||||||
Ground leases | 1,818 | 1,450 | 1,897 | (4.2 | )% | 7,953 | 6,176 | 8,016 | (0.8 | )% | ||||||||||||||||||||||
Total operating expenses | 53,962 | 48,177 | 52,758 | 2.3 | % | 216,811 | 199,005 | 207,672 | 4.4 | % | ||||||||||||||||||||||
GAAP Net Operating Income | $ | 131,654 | $ | 125,668 | $ | 125,668 | 4.8 | % | $ | 519,812 | $ | 493,682 | $ | 493,682 | 5.3 | % | ||||||||||||||||
Same Store Analysis (Cash Basis) (4) | ||||||||||||||||||||||||||||||||
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||||||||
2019 | 2018 | 2018 As Adjusted (2) | % Change 2019 vs. 2018 As Adjusted | 2019 | 2018 | 2018 As Adjusted (2) | % Change 2019 vs. 2018 As Adjusted | |||||||||||||||||||||||||
Total operating revenues | $ | 171,527 | $ | 161,559 | $ | 165,252 | 3.8 | % | $ | 667,366 | $ | 646,495 | $ | 660,822 | 1.0 | % | ||||||||||||||||
Total operating expenses | 53,979 | 49,067 | 52,760 | 2.3 | % | 216,859 | 193,343 | 207,670 | 4.4 | % | ||||||||||||||||||||||
Cash Net Operating Income | $ | 117,548 | $ | 112,492 | $ | 112,492 | 4.5 | % | $ | 450,507 | $ | 453,152 | $ | 453,152 | (0.6 | )% | ||||||||||||||||
(1) | Same Store is defined as all properties owned and included in our stabilized portfolio as of January 1, 2018 and still owned and included in the stabilized portfolio as of December 31, 2019. Same Store includes 100% of consolidated property partnerships as well as the residential tower at Columbia Square. |
(2) | The components of Net Operating Income for the three months and year ended December 31, 2018 have been presented as if we adopted ASC 842 “Leases” effective January 1, 2018 for comparison purposes. |
(3) | Please refer to page 10 for our Net Operating Income and a description of the changes made and their impact on our consolidated statements of operations effective January 1, 2019 upon adoption of ASC 842 “Leases.” For this analysis, tenant reimbursements have been broken out from rental income. For the three months and year ended December 31, 2019, rental income includes gross lease termination fees of $0.3 million and $5.5 million, respectively. For the three months and year ended December 31, 2018 as adjusted, rental income includes lease termination fees of $2.8 million and $7.0 million, respectively. For our same store portfolio, the gross-up presentation of property expenses paid directly by the Company and reimbursed by the tenant increased tenant reimbursements and property expenses by $3.0 million and $12.0 million for the three months and year ended December 31, 2019, respectively. The impact of all other changes from the adoption of ASC 842 was the same for our consolidated portfolio and our same store portfolio. |
(4) | Please refer to page 37 for a reconciliation of GAAP Net Income Available to Common Stockholders to Same Store GAAP Net Operating Income and Same Store Cash Net Operating Income. |
Portfolio Breakdown | Occupied at | Leased at | |||||||||||||||||||||
STABILIZED OFFICE PORTFOLIO | Buildings | YTD NOI % | SF % | Total SF | 12/31/2019 | 9/30/2019 (1) | 12/31/2019 | ||||||||||||||||
Greater Los Angeles | |||||||||||||||||||||||
Culver City | 19 | 0.5 | % | 1.1 | % | 151,908 | 100.0 | % | N/A | 100.0 | % | ||||||||||||
El Segundo | 5 | 5.0 | % | 8.1 | % | 1,093,050 | 97.6 | % | 98.0 | % | 97.6 | % | |||||||||||
Hollywood | 6 | 6.8 | % | 6.0 | % | 806,557 | 98.7 | % | 98.6 | % | 99.2 | % | |||||||||||
Long Beach | 7 | 3.1 | % | 7.1 | % | 951,617 | 93.2 | % | 93.3 | % | 97.0 | % | |||||||||||
West Hollywood | 4 | 1.8 | % | 1.3 | % | 178,699 | 95.4 | % | 92.2 | % | 98.5 | % | |||||||||||
West Los Angeles | 10 | 6.7 | % | 6.3 | % | 844,151 | 90.0 | % | 90.4 | % | 92.8 | % | |||||||||||
Total Greater Los Angeles | 51 | 23.9 | % | 29.9 | % | 4,025,982 | 95.2 | % | 95.1 | % | 96.9 | % | |||||||||||
San Diego County | |||||||||||||||||||||||
Del Mar | 14 | 7.8 | % | 10.0 | % | 1,352,289 | 92.2 | % | 93.4 | % | 94.7 | % | |||||||||||
I-15 Corridor | 5 | 1.3 | % | 4.0 | % | 540,892 | 81.3 | % | 80.8 | % | 87.3 | % | |||||||||||
Point Loma | 1 | 0.5 | % | 0.8 | % | 107,456 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
University Towne Center | 1 | 0.2 | % | 0.4 | % | 47,846 | 91.4 | % | 91.4 | % | 91.4 | % | |||||||||||
Total San Diego County | 21 | 9.8 | % | 15.2 | % | 2,048,483 | 89.7 | % | 90.4 | % | 93.0 | % | |||||||||||
San Francisco Bay Area | |||||||||||||||||||||||
Menlo Park | 7 | 3.5 | % | 2.8 | % | 378,358 | 87.1 | % | 100.0 | % | 87.1 | % | |||||||||||
Mountain View | 4 | 4.8 | % | 4.0 | % | 542,235 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Palo Alto | 2 | 1.8 | % | 1.2 | % | 165,585 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Redwood City | 2 | 4.0 | % | 2.6 | % | 347,269 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
San Francisco | 10 | 32.3 | % | 24.9 | % | 3,357,103 | 93.1 | % | 81.8 | % | 98.0 | % | |||||||||||
South San Francisco | 3 | 1.3 | % | 1.1 | % | 145,530 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Sunnyvale | 4 | 5.5 | % | 4.9 | % | 663,460 | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Total San Francisco Bay Area | 32 | 53.2 | % | 41.5 | % | 5,599,540 | 95.0 | % | 89.1 | % | 97.9 | % | |||||||||||
Greater Seattle | |||||||||||||||||||||||
Bellevue | 2 | 6.3 | % | 6.8 | % | 917,027 | 96.9 | % | 97.1 | % | 97.8 | % | |||||||||||
Lake Union | 6 | 6.8 | % | 6.6 | % | 884,763 | 98.6 | % | 97.4 | % | 100.0 | % | |||||||||||
Total Greater Seattle | 8 | 13.1 | % | 13.4 | % | 1,801,790 | 97.7 | % | 97.2 | % | 98.9 | % | |||||||||||
TOTAL STABILIZED OFFICE PORTFOLIO | 112 | 100.0 | % | 100.0 | % | 13,475,795 | 94.6 | % | 92.1 | % | 97.0 | % | |||||||||||
Total No. of Units | Average Residential Occupancy | ||||||||||||||||||||||
STABILIZED RESIDENTIAL PROPERTY | Submarket | Buildings | Quarter-to-Date | Year-to-Date | |||||||||||||||||||
Greater Los Angeles | |||||||||||||||||||||||
1550 N. El Centro Avenue | Hollywood | 1 | 200 | 95.2% | 82.4% | ||||||||||||||||||
Average Office Occupancy | ||
Quarter-to-Date | Year-to-Date | |
93.3% | 93.3% |
(1) | Represents occupancy for properties in the stabilized portfolio as of the date presented, including properties sold subsequent to the date presented. |
Submarket | Square Feet | Occupied | ||||||||
Greater Los Angeles, California | ||||||||||
3101-3243 La Cienega Boulevard | Culver City | 151,908 | 100.0 | % | ||||||
2240 E. Imperial Highway | El Segundo | 122,870 | 100.0 | % | ||||||
2250 E. Imperial Highway | El Segundo | 298,728 | 100.0 | % | ||||||
2260 E. Imperial Highway | El Segundo | 298,728 | 100.0 | % | ||||||
909 N. Pacific Coast Highway | El Segundo | 244,136 | 92.9 | % | ||||||
999 N. Pacific Coast Highway | El Segundo | 128,588 | 93.4 | % | ||||||
1500 N. El Centro Avenue | Hollywood | 104,504 | 100.0 | % | ||||||
1525 N. Gower Street | Hollywood | 9,610 | 100.0 | % | ||||||
1575 N. Gower Street | Hollywood | 251,245 | 100.0 | % | ||||||
6115 W. Sunset Boulevard | Hollywood | 26,105 | 100.0 | % | ||||||
6121 W. Sunset Boulevard | Hollywood | 91,173 | 100.0 | % | ||||||
6255 W. Sunset Boulevard | Hollywood | 323,920 | 96.8 | % | ||||||
3750 Kilroy Airport Way | Long Beach | 10,457 | 100.0 | % | ||||||
3760 Kilroy Airport Way | Long Beach | 165,278 | 92.5 | % | ||||||
3780 Kilroy Airport Way | Long Beach | 221,452 | 81.5 | % | ||||||
3800 Kilroy Airport Way | Long Beach | 192,476 | 100.0 | % | ||||||
3840 Kilroy Airport Way | Long Beach | 136,026 | 100.0 | % | ||||||
3880 Kilroy Airport Way | Long Beach | 96,035 | 100.0 | % | ||||||
3900 Kilroy Airport Way | Long Beach | 129,893 | 91.4 | % | ||||||
8560 W. Sunset Boulevard | West Hollywood | 71,875 | 100.0 | % | ||||||
8570 W. Sunset Boulevard | West Hollywood | 43,603 | 98.1 | % | ||||||
8580 W. Sunset Boulevard | West Hollywood | 7,126 | 100.0 | % | ||||||
8590 W. Sunset Boulevard | West Hollywood | 56,095 | 86.8 | % | ||||||
12100 W. Olympic Boulevard | West Los Angeles | 152,048 | 87.8 | % | ||||||
12200 W. Olympic Boulevard | West Los Angeles | 150,832 | 89.5 | % | ||||||
12233 W. Olympic Boulevard | West Los Angeles | 151,029 | 86.9 | % | ||||||
12312 W. Olympic Boulevard | West Los Angeles | 76,644 | 100.0 | % | ||||||
1633 26th Street | West Los Angeles | 43,857 | 34.9 | % | ||||||
2100/2110 Colorado Avenue | West Los Angeles | 102,864 | 100.0 | % | ||||||
3130 Wilshire Boulevard | West Los Angeles | 90,074 | 100.0 | % | ||||||
501 Santa Monica Boulevard | West Los Angeles | 76,803 | 97.8 | % | ||||||
Total Greater Los Angeles | 4,025,982 | 95.2 | % | |||||||
Submarket | Square Feet | Occupied | ||||||||
San Diego, California | ||||||||||
12225 El Camino Real | Del Mar | 58,401 | 100.0 | % | ||||||
12235 El Camino Real | Del Mar | 53,751 | 88.9 | % | ||||||
12340 El Camino Real | Del Mar | 89,272 | 50.1 | % | ||||||
12390 El Camino Real | Del Mar | 70,140 | 100.0 | % | ||||||
12348 High Bluff Drive | Del Mar | 38,806 | 80.8 | % | ||||||
12770 El Camino Real | Del Mar | 73,032 | 66.1 | % | ||||||
12780 El Camino Real | Del Mar | 140,591 | 100.0 | % | ||||||
12790 El Camino Real | Del Mar | 78,836 | 71.2 | % | ||||||
12400 High Bluff Drive | Del Mar | 209,220 | 100.0 | % | ||||||
3579 Valley Centre Drive | Del Mar | 54,960 | 100.0 | % | ||||||
3611 Valley Centre Drive | Del Mar | 129,656 | 100.0 | % | ||||||
3661 Valley Centre Drive | Del Mar | 128,364 | 100.0 | % | ||||||
3721 Valley Centre Drive | Del Mar | 115,193 | 100.0 | % | ||||||
3811 Valley Centre Drive | Del Mar | 112,067 | 100.0 | % | ||||||
13280 Evening Creek Drive South | I-15 Corridor | 41,196 | 100.0 | % | ||||||
13290 Evening Creek Drive South | I-15 Corridor | 61,180 | 100.0 | % | ||||||
13480 Evening Creek Drive North | I-15 Corridor | 154,157 | 100.0 | % | ||||||
13500 Evening Creek Drive North | I-15 Corridor | 137,658 | 43.0 | % | ||||||
13520 Evening Creek Drive North | I-15 Corridor | 146,701 | 84.4 | % | ||||||
2305 Historic Decatur Road | Point Loma | 107,456 | 100.0 | % | ||||||
4690 Executive Drive | University Towne Center | 47,846 | 91.4 | % | ||||||
Total San Diego County | 2,048,483 | 89.7 | % | |||||||
Submarket | Square Feet | Occupied | ||||||||
San Francisco Bay Area, California | ||||||||||
4100 Bohannon Drive | Menlo Park | 47,379 | 100.0 | % | ||||||
4200 Bohannon Drive | Menlo Park | 45,451 | 70.8 | % | ||||||
4300 Bohannon Drive | Menlo Park | 63,079 | 48.8 | % | ||||||
4400 Bohannon Drive | Menlo Park | 48,146 | 93.3 | % | ||||||
4500 Bohannon Drive | Menlo Park | 63,078 | 100.0 | % | ||||||
4600 Bohannon Drive | Menlo Park | 48,147 | 100.0 | % | ||||||
4700 Bohannon Drive | Menlo Park | 63,078 | 100.0 | % | ||||||
1290-1300 Terra Bella Avenue | Mountain View | 114,175 | 100.0 | % | ||||||
331 Fairchild Drive | Mountain View | 87,147 | 100.0 | % | ||||||
680 E. Middlefield Road | Mountain View | 170,090 | 100.0 | % | ||||||
690 E. Middlefield Road | Mountain View | 170,823 | 100.0 | % | ||||||
1701 Page Mill Road | Palo Alto | 128,688 | 100.0 | % | ||||||
3150 Porter Drive | Palo Alto | 36,897 | 100.0 | % | ||||||
900 Jefferson Avenue | Redwood City | 228,505 | 100.0 | % | ||||||
900 Middlefield Road | Redwood City | 118,764 | 100.0 | % | ||||||
100 Hooper Street | San Francisco | 394,340 | 87.6 | % | ||||||
100 First Street | San Francisco | 467,095 | 97.5 | % | ||||||
303 Second Street | San Francisco | 784,658 | 78.8 | % | ||||||
201 Third Street | San Francisco | 346,538 | 99.2 | % | ||||||
360 Third Street | San Francisco | 429,796 | 100.0 | % | ||||||
250 Brannan Street | San Francisco | 100,850 | 100.0 | % | ||||||
301 Brannan Street | San Francisco | 82,834 | 100.0 | % | ||||||
333 Brannan Street | San Francisco | 185,602 | 100.0 | % | ||||||
345 Brannan Street | San Francisco | 110,050 | 99.7 | % | ||||||
350 Mission Street | San Francisco | 455,340 | 99.7 | % | ||||||
345 Oyster Point Boulevard | South San Francisco | 40,410 | 100.0 | % | ||||||
347 Oyster Point Boulevard | South San Francisco | 39,780 | 100.0 | % | ||||||
349 Oyster Point Boulevard | South San Francisco | 65,340 | 100.0 | % | ||||||
505 Mathilda Avenue | Sunnyvale | 212,322 | 100.0 | % | ||||||
555 Mathilda Avenue | Sunnyvale | 212,322 | 100.0 | % | ||||||
605 Mathilda Avenue | Sunnyvale | 162,785 | 100.0 | % | ||||||
599 Mathilda Avenue | Sunnyvale | 76,031 | 100.0 | % | ||||||
Total San Francisco Bay Area | 5,599,540 | 95.0 | % | |||||||
Submarket | Square Feet | Occupied | ||||||||
Greater Seattle, Washington | ||||||||||
601 108th Avenue NE | Bellevue | 488,470 | 97.1 | % | ||||||
10900 NE 4th Street | Bellevue | 428,557 | 96.7 | % | ||||||
837 N. 34th Street | Lake Union | 112,487 | 91.8 | % | ||||||
701 N. 34th Street | Lake Union | 141,860 | 97.5 | % | ||||||
801 N. 34th Street | Lake Union | 169,412 | 100.0 | % | ||||||
320 Westlake Avenue North | Lake Union | 184,644 | 100.0 | % | ||||||
321 Terry Avenue North | Lake Union | 135,755 | 100.0 | % | ||||||
401 Terry Avenue North | Lake Union | 140,605 | 100.0 | % | ||||||
Total Greater Seattle | 1,801,790 | 97.7 | % | |||||||
TOTAL | 13,475,795 | 94.6 | % | |||||||
1st & 2nd Generation | 2nd Generation | ||||||||||||||||||||||||||||||||
# of Leases (2) | Square Feet (2) | Retention Rates | TI/LC Per Sq.Ft. (3) | TI/LC Per Sq.Ft. /Year (3) | Changes in GAAP Rents | Changes in Cash Rents | Weighted Average Lease Term (Mo.) | ||||||||||||||||||||||||||
New | Renewal | New | Renewal | ||||||||||||||||||||||||||||||
Quarter to Date | 20 | 12 | 560,794 | 75,463 | 21.7 | % | $ | 67.18 | $ | 6.55 | 35.6 | % | 19.6 | % | 123 | ||||||||||||||||||
Year to Date | 70 | 58 | 1,440,649 | 867,514 | 35.5 | % | 50.49 | 6.45 | 41.1 | % | 18.4 | % | 94 | ||||||||||||||||||||
1st & 2nd Generation | 2nd Generation | |||||||||||||||||||||||||||||
# of Leases (4) | Square Feet (4) | TI/LC Per Sq.Ft. (3) | TI/LC Per Sq.Ft. /Year (3) | Changes in GAAP Rents | Changes in Cash Rents | Weighted Average Lease Term (Mo.) | ||||||||||||||||||||||||
New | Renewal | New | Renewal | |||||||||||||||||||||||||||
Quarter to Date (5) | 18 | 12 | 168,754 | 75,463 | $ | 68.28 | $ | 10.37 | 35.9 | % | 17.4 | % | 79 | |||||||||||||||||
Year to Date (6) | 70 | 58 | 964,247 | 867,514 | 59.01 | 8.64 | 52.3 | % | 29.6 | % | 82 | |||||||||||||||||||
(1) | Includes 100% of consolidated property partnerships. |
(2) | Represents leasing activity for leases that commenced at properties in the stabilized portfolio during the three months and year ended December 31, 2019, including first and second generation space, net of month-to-month leases. |
(3) | Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements and indirect leasing costs required to be expensed under ASC 842 “Leases” effective January 1, 2019. |
(4) | Represents leasing activity for leases signed at properties in the stabilized portfolio during the three months and year ended December 31, 2019, including first and second generation space, net of month-to-month leases. Excludes leasing on new construction. |
(5) | During the three months ended December 31, 2019, 15 new leases totaling 153,574 square feet were signed but not commenced as of December 31, 2019. |
(6) | During the year ended December 31, 2019, 34 new leases totaling 644,176 square feet were signed but not commenced as of December 31, 2019. |
Total 2019 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 | |||||||||||||||||
1st Generation (Nonrecurring) Capital Expenditures: (1) | |||||||||||||||||||||
Capital Improvements | $ | 12,878 | $ | 4,698 | $ | 1,366 | $ | 5,047 | $ | 1,767 | |||||||||||
Tenant Improvements & Leasing Commissions (2) | 13,106 | 5,214 | 2,592 | 1,303 | 3,997 | ||||||||||||||||
Total | $ | 25,984 | $ | 9,912 | $ | 3,958 | $ | 6,350 | $ | 5,764 | |||||||||||
Total 2019 | Q4 2019 | Q3 2019 | Q2 2019 | Q1 2019 | |||||||||||||||||
2nd Generation (Recurring) Capital Expenditures: (1) | |||||||||||||||||||||
Capital Improvements | $ | 16,715 | $ | 5,740 | $ | 4,526 | $ | 2,447 | $ | 4,002 | |||||||||||
Tenant Improvements & Leasing Commissions (2) | 106,680 | 31,201 | 26,912 | 30,986 | 17,581 | ||||||||||||||||
Total | $ | 123,395 | $ | 36,941 | $ | 31,438 | $ | 33,433 | $ | 21,583 | |||||||||||
(1) | Includes 100% of capital expenditures of consolidated property partnerships. |
(2) | Includes tenant improvement costs and third-party leasing commissions. Amounts exclude tenant-funded tenant improvements. |
Year of Expiration | # of Expiring Leases | Total Square Feet | % of Total Leased Sq. Ft. | Annualized Base Rent (1) | % of Total Annualized Base Rent | Annualized Rent per Sq. Ft. | ||||||||||||||||
2020 (2) | 82 | 965,896 | 7.7 | % | $ | 42,648 | 6.6 | % | $ | 44.15 | ||||||||||||
2021 (2) | 80 | 843,494 | 6.8 | % | 36,461 | 5.6 | % | 43.23 | ||||||||||||||
2022 | 62 | 749,273 | 6.0 | % | 32,488 | 5.1 | % | 43.36 | ||||||||||||||
2023 | 77 | 1,227,648 | 9.7 | % | 64,992 | 10.1 | % | 52.94 | ||||||||||||||
2024 | 56 | 998,249 | 8.0 | % | 47,378 | 7.4 | % | 47.46 | ||||||||||||||
2025 | 40 | 595,671 | 4.8 | % | 28,654 | 4.4 | % | 48.10 | ||||||||||||||
2026 | 29 | 1,472,010 | 11.8 | % | 64,970 | 10.1 | % | 44.14 | ||||||||||||||
2027 | 26 | 1,213,390 | 9.7 | % | 49,585 | 7.7 | % | 40.86 | ||||||||||||||
2028 | 19 | 913,920 | 7.3 | % | 57,213 | 8.9 | % | 62.60 | ||||||||||||||
2029 | 9 | 735,331 | 5.9 | % | 41,517 | 6.4 | % | 56.46 | ||||||||||||||
2030 and beyond | 35 | 2,811,792 | 22.3 | % | 178,569 | 27.7 | % | 63.51 | ||||||||||||||
Total (3) | 515 | 12,526,674 | 100.0 | % | $ | 644,475 | 100.0 | % | $ | 51.45 | ||||||||||||
(1) | Includes 100% of annualized base rent of consolidated property partnerships. |
(2) | Adjusting for leasing transactions executed as of December 31, 2019 but not yet commenced, the 2020 and 2021 expirations would be reduced by 267,449 and 173,267 square feet, respectively. |
(3) | For leases that have been renewed early with existing tenants, the expiration date and annualized base rent information presented takes into consideration the renewed lease terms. Excludes leases not commenced as of December 31, 2019, space leased under month-to-month leases, storage leases, vacant space and future lease renewal options not executed as of December 31, 2019. |
Year | Region | # of Expiring Leases | Total Square Feet | % of Total Leased Sq. Ft. | Annualized Base Rent (1) | % of Total Annualized Base Rent | Annualized Rent per Sq. Ft. | |||||||||||||||||
2020 | Greater Los Angeles | 49 | 434,475 | 3.5 | % | $ | 18,226 | 2.8 | % | $ | 41.95 | |||||||||||||
San Diego | 16 | 203,510 | 1.6 | % | 8,266 | 1.3 | % | 40.62 | ||||||||||||||||
San Francisco Bay Area | 14 | 241,096 | 1.9 | % | 13,662 | 2.1 | % | 56.67 | ||||||||||||||||
Greater Seattle | 3 | 86,815 | 0.7 | % | 2,494 | 0.4 | % | 28.73 | ||||||||||||||||
Total | 82 | 965,896 | 7.7 | % | $ | 42,648 | 6.6 | % | $ | 44.15 | ||||||||||||||
2021 | Greater Los Angeles | 46 | 285,425 | 2.4 | % | $ | 11,636 | 1.8 | % | $ | 40.77 | |||||||||||||
San Diego | 14 | 289,457 | 2.3 | % | 11,635 | 1.8 | % | 40.20 | ||||||||||||||||
San Francisco Bay Area | 11 | 239,259 | 1.9 | % | 12,245 | 1.9 | % | 51.18 | ||||||||||||||||
Greater Seattle | 9 | 29,353 | 0.2 | % | 945 | 0.1 | % | 32.19 | ||||||||||||||||
Total | 80 | 843,494 | 6.8 | % | $ | 36,461 | 5.6 | % | $ | 43.23 | ||||||||||||||
2022 | Greater Los Angeles | 43 | 364,157 | 2.9 | % | $ | 16,471 | 2.6 | % | $ | 45.23 | |||||||||||||
San Diego | 8 | 204,237 | 1.7 | % | 7,024 | 1.1 | % | 34.39 | ||||||||||||||||
San Francisco Bay Area | 6 | 115,111 | 0.9 | % | 6,551 | 1.0 | % | 56.91 | ||||||||||||||||
Greater Seattle | 5 | 65,768 | 0.5 | % | 2,442 | 0.4 | % | 37.13 | ||||||||||||||||
Total | 62 | 749,273 | 6.0 | % | $ | 32,488 | 5.1 | % | $ | 43.36 | ||||||||||||||
2023 | Greater Los Angeles | 39 | 356,235 | 2.8 | % | $ | 18,775 | 2.9 | % | $ | 52.70 | |||||||||||||
San Diego | 12 | 194,032 | 1.5 | % | 8,097 | 1.3 | % | 41.73 | ||||||||||||||||
San Francisco Bay Area | 20 | 583,769 | 4.7 | % | 34,870 | 5.4 | % | 59.73 | ||||||||||||||||
Greater Seattle | 6 | 93,612 | 0.7 | % | 3,250 | 0.5 | % | 34.72 | ||||||||||||||||
Total | 77 | 1,227,648 | 9.7 | % | $ | 64,992 | 10.1 | % | $ | 52.94 | ||||||||||||||
2024 | Greater Los Angeles | 31 | 432,410 | 3.5 | % | $ | 19,537 | 3.0 | % | $ | 45.18 | |||||||||||||
San Diego | 6 | 120,426 | 1.0 | % | 4,283 | 0.7 | % | 35.57 | ||||||||||||||||
San Francisco Bay Area | 11 | 239,751 | 1.9 | % | 15,807 | 2.5 | % | 65.93 | ||||||||||||||||
Greater Seattle | 8 | 205,662 | 1.6 | % | 7,751 | 1.2 | % | 37.69 | ||||||||||||||||
Total | 56 | 998,249 | 8.0 | % | $ | 47,378 | 7.4 | % | $ | 47.46 | ||||||||||||||
2025 and Beyond | Greater Los Angeles | 51 | 1,820,884 | 14.5 | % | $ | 79,401 | 12.3 | % | $ | 43.61 | |||||||||||||
San Diego | 26 | 797,132 | 6.4 | % | 37,815 | 5.8 | % | 47.44 | ||||||||||||||||
San Francisco Bay Area | 51 | 3,855,673 | 30.8 | % | 251,931 | 39.1 | % | 65.34 | ||||||||||||||||
Greater Seattle | 30 | 1,268,425 | 10.1 | % | 51,361 | 8.0 | % | 40.49 | ||||||||||||||||
Total | 158 | 7,742,114 | 61.8 | % | $ | 420,508 | 65.2 | % | $ | 54.31 | ||||||||||||||
(1) | Includes 100% of annualized base rent of consolidated property partnerships. |
# of Expiring Leases | Total Square Feet | % of Total Leased Sq. Ft. | Annualized Base Rent (1) | % of Total Annualized Base Rent | Annualized Rent per Sq. Ft. | |||||||||||||||||
2020: | ||||||||||||||||||||||
Q1 2020 | 22 | 267,266 | 2.1 | % | $ | 11,884 | 1.8 | % | $ | 44.47 | ||||||||||||
Q2 2020 | 14 | 149,409 | 1.2 | % | 7,121 | 1.1 | % | 47.66 | ||||||||||||||
Q3 2020 | 23 | 195,045 | 1.6 | % | 6,871 | 1.1 | % | 35.23 | ||||||||||||||
Q4 2020 | 23 | 354,176 | 2.8 | % | 16,772 | 2.6 | % | 47.35 | ||||||||||||||
Total 2020 (2) | 82 | 965,896 | 7.7 | % | $ | 42,648 | 6.6 | % | $ | 44.15 | ||||||||||||
2021: | ||||||||||||||||||||||
Q1 2021 | 19 | 178,569 | 1.4 | % | $ | 7,094 | 1.1 | % | $ | 39.73 | ||||||||||||
Q2 2021 | 20 | 107,172 | 0.9 | % | 4,038 | 0.6 | % | 37.68 | ||||||||||||||
Q3 2021 | 21 | 388,235 | 3.1 | % | 18,950 | 2.9 | % | 48.81 | ||||||||||||||
Q4 2021 | 20 | 169,518 | 1.4 | % | 6,379 | 1.0 | % | 37.63 | ||||||||||||||
Total 2021 (2) | 80 | 843,494 | 6.8 | % | $ | 36,461 | 5.6 | % | $ | 43.23 | ||||||||||||
(1) | Includes 100% of annualized base rent of consolidated property partnerships. |
(2) | Adjusting for leasing transactions executed as of December 31, 2019 but not yet commenced, the 2020 and 2021 expirations would be reduced by 267,449 and 173,267 square feet, respectively. |
Tenant Name | Region | Annualized Base Rental Revenue (2) | Rentable Square Feet | Percentage of Total Annualized Base Rental Revenue | Percentage of Total Rentable Square Feet | ||||||||||||
Dropbox, Inc.(3) | San Francisco Bay Area | $ | 45,709 | 606,507 | 7.1 | % | 4.5 | % | |||||||||
GM Cruise, LLC | San Francisco Bay Area | 36,337 | 374,618 | 5.6 | % | 2.8 | % | ||||||||||
LinkedIn Corporation / Microsoft Corporation | San Francisco Bay Area | 29,752 | 663,460 | 4.6 | % | 4.9 | % | ||||||||||
Adobe Systems, Inc. | San Francisco Bay Area / Greater Seattle | 27,897 | 513,111 | 4.3 | % | 3.8 | % | ||||||||||
salesforce.com, inc. | San Francisco Bay Area | 24,076 | 451,763 | 3.7 | % | 3.4 | % | ||||||||||
DIRECTV, LLC | Greater Los Angeles | 23,152 | 684,411 | 3.6 | % | 5.1 | % | ||||||||||
Box, Inc. | San Francisco Bay Area | 22,441 | 371,792 | 3.5 | % | 2.8 | % | ||||||||||
Okta, Inc. | San Francisco Bay Area | 17,122 | 207,066 | 2.7 | % | 1.5 | % | ||||||||||
Riot Games, Inc. | Greater Los Angeles | 15,514 | 251,509 | 2.4 | % | 1.9 | % | ||||||||||
Synopsys, Inc. | San Francisco Bay Area | 15,492 | 340,913 | 2.4 | % | 2.5 | % | ||||||||||
Viacom International, Inc. | Greater Los Angeles | 13,718 | 211,343 | 2.1 | % | 1.6 | % | ||||||||||
DoorDash, Inc. | San Francisco Bay Area | 13,531 | 135,137 | 2.1 | % | 1.0 | % | ||||||||||
Amazon.com | Greater Seattle | 12,397 | 277,399 | 1.9 | % | 2.1 | % | ||||||||||
Nektar Therapeutics, Inc. | San Francisco Bay Area | 12,297 | 135,350 | 1.9 | % | 1.0 | % | ||||||||||
Concur Technologies | Greater Seattle | 10,643 | 288,322 | 1.7 | % | 2.1 | % | ||||||||||
Total Top Fifteen Tenants | $ | 320,078 | 5,512,701 | 49.6 | % | 41.0 | % | ||||||||||
(1) | The information presented is as of December 31, 2019. |
(2) | Includes 100% of annualized base rental revenues of consolidated property partnerships. |
(3) | During the year ended December 31, 2019, the Company completed construction and commenced revenue recognition on its lease with Dropbox, Inc. for the first two phases of The Exchange on 16th, which represent approximately 80% of the 750,000 square foot development project located in San Francisco’s Mission Bay district. |
COMPLETED OPERATING PROPERTY ACQUISITIONS | Submarket | Month of Acquisition | Number of Buildings | Rentable Square Feet | Purchase Price (1) | ||||||||||
1st Quarter | |||||||||||||||
None | |||||||||||||||
2nd Quarter | |||||||||||||||
None | |||||||||||||||
3rd Quarter | |||||||||||||||
None | |||||||||||||||
4th Quarter | |||||||||||||||
3101-3243 La Cienega Boulevard, Culver City, CA (2) | Culver City | October | 19 | 151,908 | $ | 186.0 | |||||||||
TOTAL | 19 | 151,908 | $ | 186.0 | |||||||||||
(1) | Excludes acquisition-related costs. |
(2) | This office campus is 100% leased to creative tenants. The Company plans to significantly increase the square footage of the campus through redevelopment over time. |
COMPLETED OPERATING PROPERTY DISPOSITIONS | ||||||||||||||
Property | Submarket | Month of Disposition | No. of Buildings | Rentable Square Feet | Sales Price (1) | |||||||||
1st Quarter | ||||||||||||||
None | ||||||||||||||
2nd Quarter | ||||||||||||||
2829 Townsgate Road, Thousand Oaks, CA | 101 Corridor | May | 1 | 84,098 | $ | 18.3 | ||||||||
3rd Quarter | ||||||||||||||
None | ||||||||||||||
4th Quarter | ||||||||||||||
2211 Michelson Drive, Irvine, CA | Orange County | October | 1 | 271,556 | 115.5 | |||||||||
TOTAL DISPOSITIONS | 2 | 355,654 | $ | 133.8 | ||||||||||
(1) | Represents gross sales price before the impact of commissions and closing costs. |
Property (1) | Venture Partner | Submarket | Rentable Square Feet | KRC Ownership % | ||||||
100 First Street, San Francisco, CA | Norges Bank Real Estate Management | San Francisco | 467,095 | 56% | ||||||
303 Second Street, San Francisco, CA | Norges Bank Real Estate Management | San Francisco | 784,658 | 56% | ||||||
900 Jefferson Avenue and 900 Middlefield Road, Redwood City, CA (2) | Local developer | Redwood City | 347,269 | 93% | ||||||
(1) | For breakout of Net Operating Income by partnership, refer to page 37, Reconciliation of Net Income Available to Common Stockholders to Same Store Net Operating Income. |
(2) | Reflects the KRC ownership percentage at time of agreement. Actual percentage may vary depending on cash flows or promote structure. |
STABILIZED OFFICE DEVELOPMENT PROJECTS | Location | Start Date | Completion Date | Total Estimated Investment | Rentable Square Feet | Office % Occupied | |||||||||||
1st Quarter | |||||||||||||||||
None | |||||||||||||||||
2nd Quarter | |||||||||||||||||
100 Hooper (1) | San Francisco | 4Q 2016 | 2Q 2018 | $ | 275.0 | 394,340 | 100% | ||||||||||
3rd Quarter | |||||||||||||||||
None | |||||||||||||||||
4th Quarter | |||||||||||||||||
None | |||||||||||||||||
TOTAL: | $ | 275.0 | 394,340 | 100% | |||||||||||||
COMPLETED RESIDENTIAL DEVELOPMENT PROJECTS | Location | Start Date | Completion Date | Total Estimated Investment | Number of Units | % Leased (2) | |||||||||||
1st Quarter | |||||||||||||||||
None | |||||||||||||||||
2nd Quarter | |||||||||||||||||
None | |||||||||||||||||
3rd Quarter | |||||||||||||||||
One Paseo - Residential Phase I (3) | Del Mar | 4Q 2016 | 3Q 2019 | $ | 145.0 | 237 | 63% | ||||||||||
4th Quarter | |||||||||||||||||
None | |||||||||||||||||
TOTAL: | $ | 145.0 | 237 | 63% | |||||||||||||
(1) | The project is comprised of 311,859 square feet of office and 82,481 square feet of PDR space. The office component is 100% occupied by Adobe and the PDR component is 86% leased and 41% occupied. |
(2) | Represents the % leased as of the date of this report. |
(3) | Phase I of the project was completed mid-September 2019. |
Location | Construction Start Date | Estimated Stabilization Date (2) | Estimated Rentable Square Feet | Total Estimated Investment | Total Cash Costs Incurred as of 12/31/2019 (3) | Total Project % Leased | Total Project % Occupied | ||||||||||||||||
TENANT IMPROVEMENT (1) | |||||||||||||||||||||||
Office | |||||||||||||||||||||||
San Francisco Bay Area | |||||||||||||||||||||||
The Exchange on 16th (4) | San Francisco | 2Q 2015 | 3Q 2020 | 750,000 | $ | 585.0 | $ | 534.7 | 100% | 82% | |||||||||||||
Mixed-Use | |||||||||||||||||||||||
San Diego County | |||||||||||||||||||||||
One Paseo - Retail | Del Mar | 4Q 2016 | 1Q 2020 | 96,000 | 100.0 | 98.2 | 100% | 89% | |||||||||||||||
TOTAL: | 846,000 | $ | 685.0 | $ | 632.9 | 100% | 83% | ||||||||||||||||
UNDER CONSTRUCTION | Location | Construction Start Date | Estimated Stabilization Date (2) | Estimated Rentable Square Feet | Total Estimated Investment | Total Cash Costs Incurred as of 12/31/2019 (3) | Office % Leased | ||||||||||||||
Office / Life Science | |||||||||||||||||||||
San Francisco Bay Area | |||||||||||||||||||||
Kilroy Oyster Point - Phase I | South San Francisco | 1Q 2019 | 4Q 2021 | 656,000 | $ | 570.0 | $ | 151.1 | 100% | ||||||||||||
San Diego County | |||||||||||||||||||||
9455 Towne Centre Drive (5) | University Towne Center | 1Q 2019 | 1Q 2021 | 160,000 | 110.0 | 52.6 | 100% | ||||||||||||||
Greater Seattle | |||||||||||||||||||||
333 Dexter | South Lake Union | 2Q 2017 | 3Q 2022 | 635,000 | 410.0 | 274.8 | 100% | ||||||||||||||
Mixed-Use | |||||||||||||||||||||
Greater Los Angeles | |||||||||||||||||||||
Netflix // On Vine - Office | Hollywood | 1Q 2018 | 1Q 2021 | 355,000 | 300.0 | 195.7 | 100% | ||||||||||||||
Living // On Vine - Residential | Hollywood | 4Q 2018 | 4Q 2020 | 193 Resi Units | 195.0 | 126.2 | N/A | ||||||||||||||
San Diego County | |||||||||||||||||||||
2100 Kettner | Little Italy | 3Q 2019 | 1Q 2022 | 200,000 | 140.0 | 37.2 | —% | ||||||||||||||
One Paseo - Residential Phases II and III (6) | Del Mar | 4Q 2016 | 2Q 2020 | 371 Resi Units | 230.0 | 221.6 | N/A | ||||||||||||||
One Paseo - Office | Del Mar | 4Q 2018 | 2Q 2021 | 285,000 | 205.0 | 154.6 | 80% | ||||||||||||||
TOTAL: | $ | 2,160.0 | $ | 1,213.8 | 89% | ||||||||||||||||
(1) | Represents projects that have reached cold shell condition and are ready for tenant improvements, which may require additional major base building construction before being placed in service. |
(2) | For office and retail, represents the earlier of anticipated 95% occupancy date or one year from substantial completion of base building components. For multi-phase projects, interest and carry cost capitalization may cease and recommence driven by various factors, including tenant improvement construction and other tenant related timing or project scope. |
(3) | Represents costs incurred as of December 31, 2019, excluding accrued liabilities recorded in accordance with GAAP. Upon adoption of ASC 842 “Leases” effective January 1, 2019, also excludes leasing overhead. |
(4) | During the fourth quarter of 2019, the Company delivered and commenced revenue recognition on Phase II of the project, representing approximately 30% of the project, including retail space. |
(5) | In December 2019, the Company executed a long-term lease with a major technology company for 100% of the project. |
(6) | Phase I of the project, comprised of 237 units, was completed mid-September 2019. |
FUTURE DEVELOPMENT PIPELINE | Location | Approx. Developable Square Feet (1) | Total Cash Costs Incurred as of 12/31/2019 (2) | |||||||||
San Diego County | ||||||||||||
Santa Fe Summit – Phases II and III | 56 Corridor | 600,000 - 650,000 | $ | 78.7 | ||||||||
1335 Broadway & 901 Park Boulevard | East Village | TBD | 45.0 | |||||||||
San Francisco Bay Area | ||||||||||||
Kilroy Oyster Point - Phases II - IV | South San Francisco | 1,750,000 - 1,900,000 | 312.5 | |||||||||
Flower Mart | SOMA | 2,300,000 | 357.6 | |||||||||
Greater Seattle | ||||||||||||
Seattle CBD Project | Seattle CBD | TBD | 131.0 | |||||||||
TOTAL: | $ | 924.7 | ||||||||||
(1) | The developable square feet and scope of projects could change materially from estimated data provided due to one or more of the following: any significant changes in the economy, market conditions, our markets, tenant requirements and demands, construction costs, new supply, regulatory and entitlement processes or project design. |
(2) | Represents costs incurred as of December 31, 2019, excluding accrued liabilities recorded in accordance with GAAP. |
Shares/Units December 31, 2019 | Aggregate Principal Amount or $ Value Equivalent | % of Total Market Capitalization | |||||||||
DEBT: (1)(2) | |||||||||||
Unsecured Line of Credit | $ | 245,000 | 1.9 | % | |||||||
Unsecured Term Loan Facility | 150,000 | 1.2 | % | ||||||||
Unsecured Senior Notes due 2023 | 300,000 | 2.4 | % | ||||||||
Unsecured Senior Notes due 2024 | 425,000 | 3.4 | % | ||||||||
Unsecured Senior Notes due 2025 | 400,000 | 3.1 | % | ||||||||
Unsecured Senior Notes Series A & B due 2026 | 250,000 | 2.0 | % | ||||||||
Unsecured Senior Notes due 2028 | 400,000 | 3.1 | % | ||||||||
Unsecured Senior Notes due 2029 | 400,000 | 3.1 | % | ||||||||
Unsecured Senior Notes Series A & B due 2027 & 2029 | 250,000 | 2.0 | % | ||||||||
Unsecured Senior Notes due 2030 | 500,000 | 4.0 | % | ||||||||
Secured Debt | 259,502 | 2.1 | % | ||||||||
Total Debt | $ | 3,579,502 | 28.3 | % | |||||||
EQUITY AND NONCONTROLLING INTEREST IN THE OPERATING PARTNERSHIP: (3) | |||||||||||
Common limited partnership units outstanding (4) | 2,023,287 | $ | 169,754 | 1.3 | % | ||||||
Shares of common stock outstanding (5) | 106,016,287 | 8,894,766 | 70.4 | % | |||||||
Total Equity and Noncontrolling Interests in the Operating Partnership | $ | 9,064,520 | 71.7 | % | |||||||
TOTAL MARKET CAPITALIZATION | $ | 12,644,022 | 100.0 | % | |||||||
(1) | Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts. |
(2) | As of December 31, 2019, there was no outstanding balance on the unsecured revolving credit facility. |
(3) | Value based on closing share price of $83.90 as of December 31, 2019. |
(4) | Includes common units of the Operating Partnership not owned by the Company; does not include noncontrolling interests in consolidated property partnerships. |
(5) | Shares of common stock outstanding exclude 3,147,110 shares of common stock sold under forward equity sale agreements under our ATM program that remained to be settled as of December 31, 2019. |
TOTAL DEBT COMPOSITION | ||||||||
Percent of Total Debt | Weighted Average | |||||||
Interest Rate | Years to Maturity | |||||||
Secured vs. Unsecured Debt | ||||||||
Unsecured Debt | 92.8% | 3.8% | 6.8 | |||||
Secured Debt | 7.2% | 3.9% | 7.1 | |||||
Floating vs. Fixed-Rate Debt | ||||||||
Floating-Rate Debt | 11.0% | 2.8% | 2.6 | |||||
Fixed-Rate Debt | 89.0% | 3.9% | 7.3 | |||||
Stated Interest Rate | 3.8% | 6.8 | ||||||
GAAP Effective Rate | 3.8% | |||||||
GAAP Effective Rate Including Debt Issuance Costs | 4.0% | |||||||
KEY DEBT COVENANTS | ||||||
Covenant | Actual Performance as of December 31, 2019 | |||||
Unsecured Credit and Term Loan Facility and Private Placement Notes (as defined in the Credit Agreements): | ||||||
Total debt to total asset value | less than 60% | 31% | ||||
Fixed charge coverage ratio | greater than 1.5x | 3.3x | ||||
Unsecured debt ratio | greater than 1.67x | 2.90x | ||||
Unencumbered asset pool debt service coverage | greater than 1.75x | 3.95x | ||||
Unsecured Senior Notes due 2023, 2024, 2025, 2028, 2029 and 2030 (as defined in the Indentures): | ||||||
Total debt to total asset value | less than 60% | 37% | ||||
Interest coverage | greater than 1.5x | 10.8x | ||||
Secured debt to total asset value | less than 40% | 3% | ||||
Unencumbered asset pool value to unsecured debt | greater than 150% | 279% | ||||
DEBT MATURITY SCHEDULE | ||||||||||||||||||||||||||||||||||
Floating/ Fixed Rate | Stated Rate | Maturity Date | 2020 | 2021 | 2022 | 2023 | 2024 | After 2024 | Total (1) | |||||||||||||||||||||||||
Unsecured Debt: | ||||||||||||||||||||||||||||||||||
Floating | 2.76% | 7/31/2022 | $ | 245,000 | $ | 245,000 | ||||||||||||||||||||||||||||
Floating | 2.85% | 7/31/2022 | 150,000 | 150,000 | ||||||||||||||||||||||||||||||
Fixed | 3.80% | 1/15/2023 | 300,000 | 300,000 | ||||||||||||||||||||||||||||||
Fixed | 3.45% | 12/15/2024 | 425,000 | 425,000 | ||||||||||||||||||||||||||||||
Fixed | 4.38% | 10/1/2025 | 400,000 | 400,000 | ||||||||||||||||||||||||||||||
Fixed | 4.30% | 7/18/2026 | 50,000 | 50,000 | ||||||||||||||||||||||||||||||
Fixed | 4.35% | 10/18/2026 | 200,000 | 200,000 | ||||||||||||||||||||||||||||||
Fixed | 3.35% | 2/17/2027 | 175,000 | 175,000 | ||||||||||||||||||||||||||||||
Fixed | 4.75% | 12/15/2028 | 400,000 | 400,000 | ||||||||||||||||||||||||||||||
Fixed | 3.45% | 2/17/2029 | 75,000 | 75,000 | ||||||||||||||||||||||||||||||
Fixed | 4.25% | 8/15/2029 | 400,000 | 400,000 | ||||||||||||||||||||||||||||||
Fixed | 3.05% | 2/15/2030 | 500,000 | 500,000 | ||||||||||||||||||||||||||||||
Total unsecured debt | 3.77% | — | — | 395,000 | 300,000 | 425,000 | 2,200,000 | 3,320,000 | ||||||||||||||||||||||||||
Secured Debt: | ||||||||||||||||||||||||||||||||||
Fixed | 3.57% | 12/1/2026 | 3,224 | 3,341 | 3,462 | 3,587 | 3,718 | 152,668 | 170,000 | |||||||||||||||||||||||||
Fixed | 4.48% | 7/1/2027 | 1,913 | 2,001 | 2,092 | 2,188 | 2,288 | 79,020 | 89,502 | |||||||||||||||||||||||||
Total secured debt | 3.88% | 5,137 | 5,342 | 5,554 | 5,775 | 6,006 | 231,688 | 259,502 | ||||||||||||||||||||||||||
Total | 3.78% | $ | 5,137 | $ | 5,342 | $ | 400,554 | $ | 305,775 | $ | 431,006 | $ | 2,431,688 | $ | 3,579,502 | |||||||||||||||||||
(1) | Represents the gross aggregate principal amount due at maturity before the effect of unamortized deferred financing costs and premiums and discounts. |
Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
Net Income Available to Common Stockholders | $ | 72,500 | $ | 160,220 | $ | 195,443 | $ | 258,415 | ||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 1,343 | 3,185 | 3,766 | 5,193 | ||||||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,079 | 3,485 | 16,020 | 14,318 | ||||||||||||||
Net Income | 77,922 | 166,890 | 215,229 | 277,926 | ||||||||||||||
Adjustments: | ||||||||||||||||||
General and administrative expenses | 22,365 | 33,872 | 88,139 | 90,471 | ||||||||||||||
Leasing costs | 2,016 | — | 7,615 | — | ||||||||||||||
Depreciation and amortization | 69,513 | 64,860 | 273,130 | 254,281 | ||||||||||||||
Interest income and other net investment (gain) loss | (1,436 | ) | 1,706 | (4,641 | ) | 559 | ||||||||||||
Interest expense | 13,932 | 12,436 | 48,537 | 49,721 | ||||||||||||||
Loss on early extinguishment of debt | — | 12,623 | — | 12,623 | ||||||||||||||
Gain on sales of land | — | (11,825 | ) | — | (11,825 | ) | ||||||||||||
Gains on sales of depreciable operating properties | (29,633 | ) | (142,926 | ) | (36,802 | ) | (142,926 | ) | ||||||||||
Net Operating Income, as defined (1) | 154,679 | 137,636 | 591,207 | 530,830 | ||||||||||||||
Wholly-Owned Properties | 135,460 | 119,984 | 512,281 | 460,669 | ||||||||||||||
Consolidated property partnerships: (2) | ||||||||||||||||||
100 First Street (3) | 5,914 | 3,696 | 23,890 | 15,306 | ||||||||||||||
303 Second Street (3) | 7,568 | 8,312 | 31,787 | 31,943 | ||||||||||||||
Crossing/900 (4) | 5,737 | 5,644 | 23,249 | 22,912 | ||||||||||||||
Net Operating Income, as defined (1) | 154,679 | 137,636 | 591,207 | 530,830 | ||||||||||||||
Non-Same Store GAAP Net Operating Income (5) | (23,025 | ) | (11,968 | ) | (71,395 | ) | (37,148 | ) | ||||||||||
Same Store GAAP Net Operating Income | 131,654 | 125,668 | 519,812 | 493,682 | ||||||||||||||
GAAP to Cash Adjustments: | ||||||||||||||||||
GAAP Operating Revenues Adjustments, net (6) | (14,089 | ) | (12,286 | ) | (69,257 | ) | (46,192 | ) | ||||||||||
GAAP Operating Expenses Adjustments, net (7) | (17 | ) | (890 | ) | (48 | ) | 5,662 | |||||||||||
Same Store Cash Net Operating Income | $ | 117,548 | $ | 112,492 | $ | 450,507 | $ | 453,152 | ||||||||||
(1) | Please refer to pages 32-33 for Management Statements on Net Operating Income, Same Store Net Operating Income and Same Store Cash Net Operating Income. |
(2) | Reflects GAAP Net Operating Income for all periods presented. |
(3) | For all periods presented, an unrelated third party entity owned approximately 44% common equity interests in two properties located at 100 First Street and 303 Second Street in San Francisco, CA. |
(4) | For all periods presented, an unrelated third party entity owned an approximate 7% common equity interest in two properties located at 900 Jefferson Avenue and 900 Middlefield Road in Redwood City, CA. |
(5) | Includes the results of three office properties we acquired in the first quarter of 2018, one office property we acquired in the fourth quarter of 2018, eleven properties disposed of during the fourth quarter of 2018, one office property disposed of during the second quarter of 2019, one office property we acquired in the third quarter of 2019, our completed residential development that is not yet stabilized and our in-process and future development projects. |
(6) | Includes the net effect of straight-line rents, amortization of deferred revenue related to tenant-funded tenant improvements and amortization of above and below market lease intangibles. |
(7) | Includes the amortization of above and below market lease intangibles for ground leases and the provision for bad debts. |
Three Months Ended December 31, | ||||||||||
2019 | 2018 | |||||||||
Net Income Available to Common Stockholders | $ | 72,500 | $ | 160,220 | ||||||
Interest expense | 13,932 | 12,436 | ||||||||
Depreciation and amortization | 69,513 | 64,860 | ||||||||
Loss on early extinguishment of debt | — | 12,623 | ||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 1,343 | 3,185 | ||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,079 | 3,485 | ||||||||
Gains on sales of depreciable operating properties | (29,633 | ) | (142,926 | ) | ||||||
EBITDA, as adjusted (1) | $ | 131,734 | $ | 113,883 | ||||||
(1) | Please refer to page 33 for a Management Statement on EBITDA, as adjusted. The Company’s calculation of EBITDA, as adjusted, is the same as EBITDAre, as defined by NAREIT, as the Company does not have any unconsolidated joint ventures. |
Contact: | FOR RELEASE: |
Tyler H. Rose | February 3, 2020 |
Executive Vice President | |
and Chief Financial Officer | |
(310) 481-8484 or | |
Michelle Ngo | |
Senior Vice President | |
and Treasurer | |
(310) 481-8581 |
• | Net income available to common stockholders per share of $0.67 |
• | Funds from operations available to common stockholders and unitholders (“FFO”) per share of $1.00 |
• | Revenues of $220.2 million |
• | Stabilized portfolio was 94.6% occupied and 97.0% leased at December 31, 2019 |
• | Signed approximately 244,000 square feet of new or renewing leases, bringing the full year total to 1.8 million square feet |
• | In October, acquired an office campus totaling approximately 152,000 square feet that is 100% leased to creative tenants and is located at 3103-3243 La Cienega Blvd. in the Culver City submarket of Los Angeles for $186.0 million. The company plans to significantly increase the square footage of the campus through redevelopment over time |
• | In October, completed the sale of a 272,000 square foot operating property located at 2211 Michelson, the company’s last remaining Orange County property, for gross proceeds of $115.5 million and a gain on sale of operating properties of $29.6 million |
• | In October, executed a 12-year lease with Stripe, Inc. for approximately 421,000 square feet of space at Kilroy Oyster Point - Phase I, which is now 100% leased |
• | During the quarter, completed construction and commenced GAAP revenue recognition on the second phase of The Exchange on 16th, which represents approximately 30% of the 750,000 square foot development project located in San Francisco’s Mission Bay district. As a result of the completion of the first two phases of the project in 2019, the company was recognizing GAAP revenue on 82% of the project at year-end. The office component of the project, approximately 738,000 square feet, is 100% leased to Dropbox |
• | In December, executed a long-term lease with a major technology company for 100% of 9455 Towne Centre Drive, a 160,000 square foot development project in the University Towne Center submarket of San Diego |
• | In December, completed the acquisition of a 1.4-acre land site, located at 500 and 600 Olive Way, 601 Stewart Street, 1825 7th Avenue and 1818 16th Avenue, in the central business district of Seattle for a cash purchase price of $133.0 million. The company plans to seek entitlements to develop a mixed-use project over time |
• | During the fourth quarter, executed 12-month forward equity sale agreements under the ATM program for 1,945,906 shares at a weighted average sales price of $82.64. As of the date of this release, the company had not drawn down any portion of the shares sold under these forward equity sale agreements |
• | Achieved a company record in annual leasing, signing 3.5 million square feet of leases, including just over 1.8 million square feet of new or renewal leases in the stabilized portfolio and 1.7 million square feet in the in-process development pipeline |
• | Fully leased 333 Dexter, a 635,000 square foot office project in Seattle |
• | Fully leased Kilroy Oyster Point, Phase 1, a 656,000 square foot office and life science project in South San Francisco |
• | Fully leased 9455 Towne Centre Drive, a 160,000 square foot office project in San Diego |
• | Completed construction on 237 of 608 residential units, the first of three phases of the residential development at the company’s One Paseo mixed-use project in the Del Mar submarket of San Diego. Phase I of the residential development was 63% leased as of the date of this release |
• | Acquired approximately $359.0 million of operating properties and land |
• | Generated gross proceeds of approximately $133.8 million from the company’s capital recycling program through the disposition of non-core assets |
• | Issued $500.0 million of 10-year, 3.05% senior unsecured notes |
• | Executed 12-month forward equity sale agreements under the ATM program for 3,147,110 shares at a weighted average sales price of $80.08 |
• | Increased the annual dividend on the company’s common stock by 6.6% to $1.94 per share |
• | Maintained industry leadership position in sustainability, including repeat awards from GRESB, NAREIT and the EPA |
• | First North American REIT to have made commitment to be carbon neutral operations by year end 2020 |
• | Selected for inclusion in the 2020 Bloomberg Gender-Equality Index (GEI). The GEI is currently comprised of 325 companies headquartered across 42 countries with a combined market capitalization of over $14 trillion. The GEI measures gender equality across five pillars: female leadership and talent |
Full Year 2020 Range | |||||||||
Low End | High End | ||||||||
Net income available to common stockholders per share - diluted | $ | 2.01 | $ | 2.21 | |||||
Weighted average common shares outstanding - diluted (1) | 109,000 | 109,000 | |||||||
Net income available to common stockholders | $ | 219,000 | $ | 241,000 | |||||
Adjustments: | |||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 4,300 | 4,700 | |||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 20,500 | 23,500 | |||||||
Depreciation and amortization of real estate assets | 233,500 | 233,500 | |||||||
Gains on sales of depreciable real estate | — | — | |||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (32,000 | ) | (35,000 | ) | |||||
Funds From Operations (2) | $ | 445,300 | $ | 467,700 | |||||
Weighted average common shares/units outstanding – diluted (3) | 111,000 | 111,000 | |||||||
Funds From Operations per common share/unit – diluted (2)(3) | $ | 4.01 | $ | 4.21 | |||||
• | Dispositions of approximately $150.0 million to $300.0 million |
• | Same store cash net operating income growth of 6.5% to 7.5% |
• | Year-end occupancy of 93.0% to 94.0% |
• | Total development spending of approximately $500.0 million to $600.0 million |
(1) | Calculated based on estimated weighted average shares outstanding including non-participating share-based awards. |
(2) | See management statement for FFO at end of release. |
(3) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, contingently issuable shares, and shares issuable under forward equity sale agreements and assuming the exchange of all common limited partnership units outstanding. Reported amounts are attributable to common stockholders, common unitholders and restricted stock unitholders. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues (1) | $ | 220,235 | $ | 190,842 | $ | 837,454 | $ | 747,298 | |||||||
Net income available to common stockholders (1) | $ | 72,500 | $ | 160,220 | $ | 195,443 | $ | 258,415 | |||||||
Weighted average common shares outstanding – basic | 106,013 | 100,747 | 103,201 | 99,972 | |||||||||||
Weighted average common shares outstanding – diluted | 106,748 | 101,380 | 103,849 | 100,482 | |||||||||||
Net income available to common stockholders per share – basic (1) | $ | 0.68 | $ | 1.59 | $ | 1.87 | $ | 2.56 | |||||||
Net income available to common stockholders per share – diluted (1) | $ | 0.67 | $ | 1.58 | $ | 1.86 | $ | 2.55 | |||||||
Funds From Operations (1)(2)(3) | $ | 109,518 | $ | 81,330 | $ | 418,478 | $ | 360,491 | |||||||
Weighted average common shares/units outstanding – basic (4) | 109,138 | 103,892 | 106,342 | 103,167 | |||||||||||
Weighted average common shares/units outstanding – diluted (5) | 109,872 | 104,524 | 106,991 | 103,677 | |||||||||||
Funds From Operations per common share/unit – basic (1)(3) | $ | 1.00 | $ | 0.78 | $ | 3.94 | $ | 3.49 | |||||||
Funds From Operations per common share/unit – diluted (1)(3) | $ | 1.00 | $ | 0.78 | $ | 3.91 | $ | 3.48 | |||||||
Common shares outstanding at end of period | 106,016 | 100,747 | |||||||||||||
Common partnership units outstanding at end of period | 2,023 | 2,025 | |||||||||||||
Total common shares and units outstanding at end of period | 108,039 | 102,772 | |||||||||||||
December 31, 2019 | December 31, 2018 | ||||||||||||||
Stabilized office portfolio occupancy rates: (6) | |||||||||||||||
Greater Los Angeles | 95.2 | % | 95.1 | % | |||||||||||
Orange County | N/A | 89.6 | % | ||||||||||||
San Diego County | 89.7 | % | 89.3 | % | |||||||||||
San Francisco Bay Area | 95.0 | % | 96.4 | % | |||||||||||
Greater Seattle | 97.7 | % | 93.6 | % | |||||||||||
Weighted average total | 94.6 | % | 94.4 | % | |||||||||||
Total square feet of stabilized office properties owned at end of period: (6) | |||||||||||||||
Greater Los Angeles | 4,026 | 3,956 | |||||||||||||
Orange County | N/A | 272 | |||||||||||||
San Diego County | 2,048 | 2,046 | |||||||||||||
San Francisco Bay Area | 5,600 | 5,161 | |||||||||||||
Greater Seattle | 1,802 | 1,798 | |||||||||||||
Total | 13,476 | 13,233 |
(1) | Effective January 1, 2019, the company adopted ASC 842 “Leases.” Please refer to our consolidated statements of operations for a description of the changes made to our consolidated financial statements. In accordance with the adoption of the new standard, previously reported periods are not restated for the impact of the standard. |
(2) | Reconciliation of Net income available to common stockholders to Funds From Operations available to common stockholders and unitholders and management statement on Funds From Operations are included after the Consolidated Statements of Operations. |
(3) | Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders. |
(4) | Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding. |
(5) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, contingently issuable shares, and shares issuable under forward equity sale agreements and assuming the exchange of all common limited partnership units outstanding. |
(6) | Occupancy percentages and total square feet reported are based on the company’s stabilized office portfolio for the periods presented. Occupancy percentages and total square feet shown for December 31, 2018 include the office properties that were sold subsequent to December 31, 2018. |
December 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements | $ | 1,466,166 | $ | 1,160,138 | |||
Buildings and improvements | 5,866,477 | 5,207,984 | |||||
Undeveloped land and construction in progress | 2,296,130 | 2,058,510 | |||||
Total real estate assets held for investment | 9,628,773 | 8,426,632 | |||||
Accumulated depreciation and amortization | (1,561,361 | ) | (1,391,368 | ) | |||
Total real estate assets held for investment, net | 8,067,412 | 7,035,264 | |||||
Real estate assets and other assets held for sale, net | — | — | |||||
Cash and cash equivalents | 60,044 | 51,604 | |||||
Restricted cash | 16,300 | 119,430 | |||||
Marketable securities | 27,098 | 21,779 | |||||
Current receivables, net | 26,489 | 20,176 | |||||
Deferred rent receivables, net | 337,937 | 267,007 | |||||
Deferred leasing costs and acquisition-related intangible assets, net | 212,805 | 197,574 | |||||
Right of use ground lease assets (1) | 96,348 | — | |||||
Prepaid expenses and other assets, net | 55,661 | 52,873 | |||||
TOTAL ASSETS | $ | 8,900,094 | $ | 7,765,707 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES: | |||||||
Secured debt, net | $ | 258,593 | $ | 335,531 | |||
Unsecured debt, net | 3,049,185 | 2,552,070 | |||||
Unsecured line of credit | 245,000 | 45,000 | |||||
Accounts payable, accrued expenses and other liabilities | 418,848 | 374,415 | |||||
Ground lease liabilities (1) | 98,400 | — | |||||
Accrued dividends and distributions | 53,219 | 47,559 | |||||
Deferred revenue and acquisition-related intangible liabilities, net | 139,488 | 149,646 | |||||
Rents received in advance and tenant security deposits | 66,503 | 60,225 | |||||
Liabilities and deferred revenue of real estate assets held for sale | — | — | |||||
Total liabilities | 4,329,236 | 3,564,446 | |||||
EQUITY: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,060 | 1,007 | |||||
Additional paid-in capital | 4,350,917 | 3,976,953 | |||||
Distributions in excess of earnings | (58,467 | ) | (48,053 | ) | |||
Total stockholders’ equity | 4,293,510 | 3,929,907 | |||||
Noncontrolling Interests | |||||||
Common units of the Operating Partnership | 81,917 | 78,991 | |||||
Noncontrolling interests in consolidated property partnerships | 195,431 | 192,363 | |||||
Total noncontrolling interests | 277,348 | 271,354 | |||||
Total equity | 4,570,858 | 4,201,261 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 8,900,094 | $ | 7,765,707 |
(1) | Effective January 1, 2019, the company adopted ASC 842 “Leases,” which requires right of use assets and liabilities for leases in which the company is the lessee to be presented on the company’s consolidated balance sheets. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
REVENUES (1) | |||||||||||||||
Rental income | $ | 217,140 | $ | 166,957 | $ | 826,472 | $ | 656,631 | |||||||
Tenant reimbursements | — | 20,511 | — | 80,982 | |||||||||||
Other property income | 3,095 | 3,374 | 10,982 | 9,685 | |||||||||||
Total revenues | 220,235 | 190,842 | 837,454 | 747,298 | |||||||||||
EXPENSES | |||||||||||||||
Property expenses (1) | 42,044 | 34,386 | 160,037 | 133,787 | |||||||||||
Real estate taxes (1) | 21,534 | 18,399 | 78,097 | 70,820 | |||||||||||
Provision for bad debts (1) | — | (1,029 | ) | — | 5,685 | ||||||||||
Ground leases (1) | 1,978 | 1,450 | 8,113 | 6,176 | |||||||||||
General and administrative expenses | 22,365 | 33,872 | 88,139 | 90,471 | |||||||||||
Leasing costs (1) | 2,016 | — | 7,615 | — | |||||||||||
Depreciation and amortization | 69,513 | 64,860 | 273,130 | 254,281 | |||||||||||
Total expenses | 159,450 | 151,938 | 615,131 | 561,220 | |||||||||||
OTHER INCOME (EXPENSES) | |||||||||||||||
Interest income and other net investment gain (loss) | 1,436 | (1,706 | ) | 4,641 | (559 | ) | |||||||||
Interest expense | (13,932 | ) | (12,436 | ) | (48,537 | ) | (49,721 | ) | |||||||
Loss on early extinguishment of debt | — | (12,623 | ) | — | (12,623 | ) | |||||||||
Gain on sales of land | — | 11,825 | — | 11,825 | |||||||||||
Gains on sales of depreciable operating properties | 29,633 | 142,926 | 36,802 | 142,926 | |||||||||||
Total other income (expenses) | 17,137 | 127,986 | (7,094 | ) | 91,848 | ||||||||||
NET INCOME | 77,922 | 166,890 | 215,229 | 277,926 | |||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | (1,343 | ) | (3,185 | ) | (3,766 | ) | (5,193 | ) | |||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,079 | ) | (3,485 | ) | (16,020 | ) | (14,318 | ) | |||||||
Total income attributable to noncontrolling interests | (5,422 | ) | (6,670 | ) | (19,786 | ) | (19,511 | ) | |||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 72,500 | $ | 160,220 | $ | 195,443 | $ | 258,415 | |||||||
Weighted average common shares outstanding – basic | 106,013 | 100,747 | 103,201 | 99,972 | |||||||||||
Weighted average common shares outstanding – diluted | 106,748 | 101,380 | 103,849 | 100,482 | |||||||||||
Net income available to common stockholders per share – basic | $ | 0.68 | $ | 1.59 | $ | 1.87 | $ | 2.56 | |||||||
Net income available to common stockholders per share – diluted | $ | 0.67 | $ | 1.58 | $ | 1.86 | $ | 2.55 |
(1) | Effective January 1, 2019, the company adopted ASC 842 “Leases,” which required the following changes for all periods beginning and subsequent to January 1, 2019. In accordance with the adoption of the new standard under the modified retrospective method, previously reported periods are not restated for the impact of the standard. |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income available to common stockholders | $ | 72,500 | $ | 160,220 | $ | 195,443 | $ | 258,415 | |||||||
Adjustments: | |||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 1,343 | 3,185 | 3,766 | 5,193 | |||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,079 | 3,485 | 16,020 | 14,318 | |||||||||||
Depreciation and amortization of real estate assets | 68,078 | 63,640 | 268,045 | 249,882 | |||||||||||
Gains on sales of depreciable real estate | (29,633 | ) | (142,926 | ) | (36,802 | ) | (142,926 | ) | |||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (6,849 | ) | (6,274 | ) | (27,994 | ) | (24,391 | ) | |||||||
Funds From Operations(1)(2)(3) | $ | 109,518 | $ | 81,330 | $ | 418,478 | $ | 360,491 | |||||||
Weighted average common shares/units outstanding – basic (4) | 109,138 | 103,892 | 106,342 | 103,167 | |||||||||||
Weighted average common shares/units outstanding – diluted (5) | 109,872 | 104,524 | 106,991 | 103,677 | |||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 1.00 | $ | 0.78 | $ | 3.94 | $ | 3.49 | |||||||
Funds From Operations per common share/unit – diluted (2) | $ | 1.00 | $ | 0.78 | $ | 3.91 | $ | 3.48 |
(1) | We calculate Funds From Operations available to common stockholders and common unitholders (“FFO”) in accordance with the 2018 Restated White Paper on FFO approved by the Board of Governors of NAREIT. The White Paper defines FFO as net income or loss calculated in accordance with GAAP, excluding extraordinary items, as defined by GAAP, gains and losses from sales of depreciable real estate and impairment write-downs associated with depreciable real estate, plus real estate-related depreciation and amortization (excluding amortization of deferred financing costs and depreciation of non-real estate assets) and after adjustment for unconsolidated partnerships and joint ventures. Our calculation of FFO includes the amortization of deferred revenue related to tenant-funded tenant improvements and excludes the depreciation of the related tenant improvement assets. We also add back net income attributable to noncontrolling common units of the Operating Partnership because we report FFO attributable to common stockholders and common unitholders. |
(2) | Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders. |
(3) | FFO available to common stockholders and unitholders includes amortization of deferred revenue related to tenant-funded tenant improvements of $4.2 million and $4.7 million for the three months ended December 31, 2019 and 2018, respectively, and $19.2 million and $18.4 million for the twelve months ended December 31, 2019 and 2018, respectively. |
(4) | Calculated based on weighted average shares outstanding including participating share-based awards (i.e. nonvested stock and certain time based restricted stock units) and assuming the exchange of all common limited partnership units outstanding. |
(5) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, contingently issuable shares, and shares issuable under forward equity sale agreements and assuming the exchange of all common limited partnership units outstanding. |
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