Contact: | FOR RELEASE: |
Tyler H. Rose | April 29, 2020 |
Executive Vice President | |
and Chief Financial Officer | |
(310) 481-8484 or | |
Michelle Ngo | |
Senior Vice President | |
and Treasurer | |
(310) 481-8581 |
• | As of the date of this release, the company has approximately $1.0 billion of cash and cash equivalents on hand |
• | In March, fully physically settled equity forward sale agreements in connection with the February 2020 common stock offering and ATM transactions executed throughout 2019, resulting in the issuance of an aggregate of 8,897,110 shares of common stock for aggregate net proceeds of $722.2 million |
• | In April, completed a private placement of $350.0 million aggregate principal amount of ten-year, 4.27% unsecured senior notes |
• | Current availability under the company’s revolving credit facility totals $370.0 million |
• | No material debt maturities until 2023, excluding the company’s revolving credit facility and term loan facility, which mature in the third quarter of 2022 |
• | Weighted average debt maturity of approximately seven years |
• | All stabilized properties remain open and operational, with essential staff and key procedures in place to manage through the COVID-19 pandemic |
• | As of the date of this release, across all property types, collected approximately 96% of our April 2020 contractual rent billings, excluding a rent relief program with certain retail tenants. Adjusted for the retail rent relief program, collected 93% of contractual rent billings |
• | Limited lease expirations in 2020 and 2021, with only one expiration greater than 125,000 square feet in the fourth quarter of 2020 |
• | $2.0 billion of projects under development |
◦ | Remaining spending to complete the projects of approximately $725.0 million |
◦ | Projects fully funded with the liquidity reported under “Balance Sheet/Liquidity Highlights” |
◦ | Projects 90% leased across office and life science space |
◦ | As of the date of this release, all the projects are under active construction |
• | Net income available to common stockholders per share of $0.37 |
• | Funds from operations available to common stockholders and unitholders (“FFO”) per share of $1.00 |
• | Net income and FFO per share include a reduction in revenue of approximately $0.06 per share related to the cumulative impact of transitioning one co-working tenant and two retail tenants to a cash basis of reporting as a result of the COVID-19 pandemic |
• | Revenues of $221.3 million |
• | Stabilized portfolio was 93.5% occupied and 97.3% leased at March 31, 2020 |
• | Signed approximately 222,000 square feet of new or renewing leases |
◦ | Rents were up 57.5% on a GAAP basis and 45.3% on a cash basis |
• | In January, transferred 333 Dexter, a 635,000 square foot office development project located in the South Lake Union submarket of Seattle from the under construction phase to the tenant improvement phase. The project is 100% leased to a Fortune 50 publicly-traded company |
• | In January, transferred Netflix // On Vine, a 355,000 square foot office development project located in the Hollywood submarket of Los Angeles, from the under construction phase to the tenant improvement phase. The project is 100% leased to Netflix, Inc. |
• | In February, completed construction on 225 residential units, the second of three phases of the residential development at our One Paseo mixed-use project in the Del Mar submarket of San Diego. Together, Phases I and II were 44% leased and are in lease-up |
• | In March, added The Exchange on 16th, a $585.0 million, 750,000 square foot development project located in San Francisco’s Mission Bay district, to the stabilized portfolio. The office component of the project is 100% leased to Dropbox |
• | In March, added One Paseo Retail, a 96,000 square foot retail development project, part of the One Paseo mixed-use project located in San Diego’s Del Mar submarket, to the stabilized portfolio |
• | In March, transferred One Paseo Office, a 285,000 square foot development project located in the Del Mar submarket of San Diego from the under construction phase to the tenant improvement phase |
Three Months Ended March 31, | ||||||||
2020 | 2019 | |||||||
Revenues | $ | 221,328 | $ | 201,202 | ||||
Net income available to common stockholders | $ | 39,817 | $ | 36,903 | ||||
Weighted average common shares outstanding – basic | 106,875 | 100,901 | ||||||
Weighted average common shares outstanding – diluted | 107,390 | 101,443 | ||||||
Net income available to common stockholders per share – basic | $ | 0.37 | $ | 0.36 | ||||
Net income available to common stockholders per share – diluted | $ | 0.37 | $ | 0.36 | ||||
Funds From Operations (1)(2) | $ | 110,173 | $ | 99,812 | ||||
Weighted average common shares/units outstanding – basic (3) | 110,031 | 104,062 | ||||||
Weighted average common shares/units outstanding – diluted (4) | 110,546 | 104,603 | ||||||
Funds From Operations per common share/unit – basic (2) | $ | 1.00 | $ | 0.96 | ||||
Funds From Operations per common share/unit – diluted (2) | $ | 1.00 | $ | 0.95 | ||||
Common shares outstanding at end of period | 115,068 | 100,967 | ||||||
Common partnership units outstanding at end of period | 2,021 | 2,023 | ||||||
Total common shares and units outstanding at end of period | 117,089 | 102,990 | ||||||
March 31, 2020 | March 31, 2019 | |||||||
Stabilized office portfolio occupancy rates: (5) | ||||||||
Greater Los Angeles | 94.0 | % | 95.6 | % | ||||
Orange County | N/A | 90.3 | % | |||||
San Diego County | 88.3 | % | 90.2 | % | ||||
San Francisco Bay Area | 94.3 | % | 92.5 | % | ||||
Greater Seattle | 95.5 | % | 88.8 | % | ||||
Weighted average total | 93.5 | % | 92.5 | % | ||||
Total square feet of stabilized office properties owned at end of period: (5) | ||||||||
Greater Los Angeles | 4,027 | 3,956 | ||||||
Orange County | N/A | 272 | ||||||
San Diego County | 2,145 | 2,046 | ||||||
San Francisco Bay Area | 6,350 | 5,160 | ||||||
Greater Seattle | 1,802 | 1,802 | ||||||
Total | 14,324 | 13,236 |
(1) | 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. |
(2) | Reported amounts are attributable to common stockholders, common unitholders, and restricted stock unitholders. |
(3) | 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. |
(4) | Calculated based on weighted average shares outstanding including participating and non-participating share-based awards, dilutive impact of stock options, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding. |
(5) | 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 March 31, 2019 include the office properties that were sold subsequent to March 31, 2019. |
March 31, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements | $ | 1,506,357 | $ | 1,466,166 | |||
Buildings and improvements | 5,997,523 | 5,866,477 | |||||
Undeveloped land and construction in progress | 2,318,236 | 2,296,130 | |||||
Total real estate assets held for investment | 9,822,116 | 9,628,773 | |||||
Accumulated depreciation and amortization | (1,622,369 | ) | (1,561,361 | ) | |||
Total real estate assets held for investment, net | 8,199,747 | 8,067,412 | |||||
Cash and cash equivalents | 762,134 | 60,044 | |||||
Restricted cash | 16,300 | 16,300 | |||||
Marketable securities | 19,984 | 27,098 | |||||
Current receivables, net | 16,534 | 26,489 | |||||
Deferred rent receivables, net | 352,352 | 337,937 | |||||
Deferred leasing costs and acquisition-related intangible assets, net | 204,392 | 212,805 | |||||
Right of use ground lease assets | 96,145 | 96,348 | |||||
Prepaid expenses and other assets, net | 67,559 | 55,661 | |||||
TOTAL ASSETS | $ | 9,735,147 | $ | 8,900,094 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES: | |||||||
Secured debt, net | $ | 257,359 | $ | 258,593 | |||
Unsecured debt, net | 3,050,103 | 3,049,185 | |||||
Unsecured line of credit | 380,000 | 245,000 | |||||
Accounts payable, accrued expenses and other liabilities | 417,547 | 418,848 | |||||
Ground lease liabilities | 98,247 | 98,400 | |||||
Accrued dividends and distributions | 57,620 | 53,219 | |||||
Deferred revenue and acquisition-related intangible liabilities, net | 130,843 | 139,488 | |||||
Rents received in advance and tenant security deposits | 65,913 | 66,503 | |||||
Total liabilities | 4,457,632 | 4,329,236 | |||||
EQUITY: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,151 | 1,060 | |||||
Additional paid-in capital | 5,067,181 | 4,350,917 | |||||
Distributions in excess of earnings | (76,182 | ) | (58,467 | ) | |||
Total stockholders’ equity | 4,992,150 | 4,293,510 | |||||
Noncontrolling Interests | |||||||
Common units of the Operating Partnership | 87,655 | 81,917 | |||||
Noncontrolling interests in consolidated property partnerships | 197,710 | 195,431 | |||||
Total noncontrolling interests | 285,365 | 277,348 | |||||
Total equity | 5,277,515 | 4,570,858 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 9,735,147 | $ | 8,900,094 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
REVENUES | |||||||
Rental income | $ | 218,633 | $ | 199,382 | |||
Other property income | 2,695 | 1,820 | |||||
Total revenues | 221,328 | 201,202 | |||||
EXPENSES | |||||||
Property expenses | 38,983 | 38,149 | |||||
Real estate taxes | 22,202 | 18,639 | |||||
Ground leases | 2,317 | 1,972 | |||||
General and administrative expenses | 19,010 | 23,341 | |||||
Leasing costs | 1,456 | 1,757 | |||||
Depreciation and amortization | 74,370 | 66,135 | |||||
Total expenses | 158,338 | 149,993 | |||||
OTHER (EXPENSES) INCOME | |||||||
Interest income and other net investment (loss) gain | (3,128 | ) | 1,828 | ||||
Interest expense | (14,444 | ) | (11,243 | ) | |||
Total other (expenses) income | (17,572 | ) | (9,415 | ) | |||
NET INCOME | 45,418 | 41,794 | |||||
Net income attributable to noncontrolling common units of the Operating Partnership | (705 | ) | (700 | ) | |||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,896 | ) | (4,191 | ) | |||
Total income attributable to noncontrolling interests | (5,601 | ) | (4,891 | ) | |||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 39,817 | $ | 36,903 | |||
Weighted average common shares outstanding – basic | 106,875 | 100,901 | |||||
Weighted average common shares outstanding – diluted | 107,390 | 101,443 | |||||
Net income available to common stockholders per share – basic | $ | 0.37 | $ | 0.36 | |||
Net income available to common stockholders per share – diluted | $ | 0.37 | $ | 0.36 |
Three Months Ended March 31, | |||||||
2020 | 2019 | ||||||
Net income available to common stockholders | $ | 39,817 | $ | 36,903 | |||
Adjustments: | |||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 705 | 700 | |||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,896 | 4,191 | |||||
Depreciation and amortization of real estate assets | 72,438 | 64,971 | |||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (7,683 | ) | (6,953 | ) | |||
Funds From Operations(1)(2)(3) | $ | 110,173 | $ | 99,812 | |||
Weighted average common shares/units outstanding – basic (4) | 110,031 | 104,062 | |||||
Weighted average common shares/units outstanding – diluted (5) | 110,546 | 104,603 | |||||
Funds From Operations per common share/unit – basic (2) | $ | 1.00 | $ | 0.96 | |||
Funds From Operations per common share/unit – diluted (2) | $ | 1.00 | $ | 0.95 |
(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 $5.0 million and $3.8 million for the three months ended March 31, 2020 and 2019, 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, and contingently issuable shares and assuming the exchange of all common limited partnership units outstanding. |