Contact: | FOR RELEASE: |
Tyler H. Rose | July 29, 2020 |
Executive Vice President | |
and Chief Financial Officer | |
(310) 481-8484 Or | |
Michelle Ngo | |
Senior Vice President | |
and Treasurer | |
(310) 481-8581 |
• | Collected 95% of contractual second quarter rent billings across all property types, including 98% from office. Excluding rent relief provided to certain tenants, collected 97% across all property types, including 98% from office |
◦ | The collection rate for July across all property types was 95%, including 97% from office, as of the date of this release. Excluding rent relief provided to certain tenants, collected 96% across all property types, including 97% from office |
• | All stabilized properties remain open and operational with essential staff and key procedures in place to manage through the COVID-19 pandemic |
• | Limited lease expiration exposure through 2022 with an average of approximately 4% of total rentable square feet expiring per year |
• | As of the date of this release, the company had approximately $1.3 billion of total liquidity comprised of $560.0 million of cash and cash equivalents on hand and full availability under the company’s $750.0 million revolving credit facility |
• | 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 |
• | $2.0 billion of projects under development |
◦ | As of the date of this release, all in-process projects were under active construction |
◦ | Remaining spending to complete the projects of approximately $625.0 million, fully funded with cash on hand and availability under the company’s revolving credit facility |
◦ | 90% leased across office and life science space |
• | Net income available to common stockholders per share of $0.17 |
• | Funds from operations available to common stockholders and unitholders (“FFO”) per share of $0.78 |
◦ | Both net income available to common stockholders per share and FFO per share included the following on a per share basis: |
▪ | $0.17 negative impact related to severance costs, including costs associated with the previously announced departure of an executive officer |
▪ | $0.05 reversal of revenue related to the creditworthiness of certain tenants primarily as a result of the COVID-19 pandemic |
• | Revenues of $219.4 million, net of the $5.9 million reversal noted above |
• | Stabilized portfolio was 92.3% occupied and 96.0% leased at June 30, 2020 |
• | Signed approximately 286,000 square feet of new or renewing leases |
◦ | GAAP and cash rents increased approximately 30.0% and 10.7%, respectively, from prior levels |
• | At 333 Dexter in Seattle, commenced GAAP revenue recognition on 312,000 square feet or 49% of the total 635,000 square foot project in June |
• | At the One Paseo office project in San Diego, commenced GAAP revenue recognition on 22,000 square feet or 8% of the total 285,000 square foot project in June |
• | In July, commenced GAAP revenue recognition on an additional 36,000 square feet at the One Paseo office project bringing the total GAAP revenue recognition commenced on this project to approximately 20%, as of the date of this release |
• | In July, also at One Paseo, completed construction of 146 residential units, the third and final phase of the residential component of the mixed-use project. In the aggregate, the 608 units were 38% leased with the remainder in lease-up, as of the date of this release |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | $ | 219,423 | $ | 200,492 | $ | 440,751 | $ | 401,694 | |||||||
Net income available to common stockholders | $ | 19,618 | $ | 42,194 | $ | 59,435 | $ | 79,097 | |||||||
Weighted average common shares outstanding – basic | 115,085 | 100,972 | 110,980 | 100,937 | |||||||||||
Weighted average common shares outstanding – diluted | 115,540 | 101,810 | 111,465 | 101,619 | |||||||||||
Net income available to common stockholders per share – basic | $ | 0.17 | $ | 0.41 | $ | 0.53 | $ | 0.77 | |||||||
Net income available to common stockholders per share – diluted | $ | 0.17 | $ | 0.41 | $ | 0.52 | $ | 0.77 | |||||||
Funds From Operations (1)(2) | $ | 93,089 | $ | 99,905 | $ | 203,262 | $ | 199,717 | |||||||
Weighted average common shares/units outstanding – basic (3) | 118,218 | 104,115 | 114,125 | 104,088 | |||||||||||
Weighted average common shares/units outstanding – diluted (4) | 118,673 | 104,952 | 114,609 | 104,770 | |||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 0.79 | $ | 0.96 | $ | 1.78 | $ | 1.92 | |||||||
Funds From Operations per common share/unit – diluted (2) | $ | 0.78 | $ | 0.95 | $ | 1.77 | $ | 1.91 | |||||||
Common shares outstanding at end of period | 115,177 | 100,972 | |||||||||||||
Common partnership units outstanding at end of period | 1,935 | 2,023 | |||||||||||||
Total common shares and units outstanding at end of period | 117,112 | 102,995 | |||||||||||||
June 30, 2020 | June 30, 2019 | ||||||||||||||
Stabilized office portfolio occupancy rates: (5) | |||||||||||||||
Greater Los Angeles | 91.2 | % | 94.8 | % | |||||||||||
Orange County | N/A | 66.4 | % | ||||||||||||
San Diego County | 87.4 | % | 90.2 | % | |||||||||||
San Francisco Bay Area | 93.7 | % | 94.5 | % | |||||||||||
Greater Seattle | 95.9 | % | 97.6 | % | |||||||||||
Weighted average total | 92.3 | % | 93.8 | % | |||||||||||
Total square feet of stabilized office properties owned at end of period: (5) | |||||||||||||||
Greater Los Angeles | 4,030 | 3,872 | |||||||||||||
Orange County | N/A | 272 | |||||||||||||
San Diego County | 2,146 | 2,046 | |||||||||||||
San Francisco Bay Area | 6,350 | 5,555 | |||||||||||||
Greater Seattle | 1,802 | 1,802 | |||||||||||||
Total | 14,328 | 13,547 |
(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 June 30, 2019 include the office properties that were sold subsequent to June 30, 2019. |
June 30, 2020 | December 31, 2019 | ||||||
ASSETS | |||||||
REAL ESTATE ASSETS: | |||||||
Land and improvements | $ | 1,546,209 | $ | 1,466,166 | |||
Buildings and improvements | 6,289,816 | 5,866,477 | |||||
Undeveloped land and construction in progress | 2,109,196 | 2,296,130 | |||||
Total real estate assets held for investment | 9,945,221 | 9,628,773 | |||||
Accumulated depreciation and amortization | (1,684,837 | ) | (1,561,361 | ) | |||
Total real estate assets held for investment, net | 8,260,384 | 8,067,412 | |||||
Cash and cash equivalents | 605,012 | 60,044 | |||||
Restricted cash | 16,300 | 16,300 | |||||
Marketable securities | 23,175 | 27,098 | |||||
Current receivables, net | 20,925 | 26,489 | |||||
Deferred rent receivables, net | 358,914 | 337,937 | |||||
Deferred leasing costs and acquisition-related intangible assets, net | 209,637 | 212,805 | |||||
Right of use ground lease assets | 95,940 | 96,348 | |||||
Prepaid expenses and other assets, net | 68,378 | 55,661 | |||||
TOTAL ASSETS | $ | 9,658,665 | $ | 8,900,094 | |||
LIABILITIES AND EQUITY | |||||||
LIABILITIES: | |||||||
Secured debt, net | $ | 256,113 | $ | 258,593 | |||
Unsecured debt, net | 3,399,105 | 3,049,185 | |||||
Unsecured line of credit | — | 245,000 | |||||
Accounts payable, accrued expenses and other liabilities | 401,378 | 418,848 | |||||
Ground lease liabilities | 98,093 | 98,400 | |||||
Accrued dividends and distributions | 57,600 | 53,219 | |||||
Deferred revenue and acquisition-related intangible liabilities, net | 129,264 | 139,488 | |||||
Rents received in advance and tenant security deposits | 63,523 | 66,503 | |||||
Total liabilities | 4,405,076 | 4,329,236 | |||||
EQUITY: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,152 | 1,060 | |||||
Additional paid-in capital | 5,084,362 | 4,350,917 | |||||
Distributions in excess of earnings | (113,223 | ) | (58,467 | ) | |||
Total stockholders’ equity | 4,972,291 | 4,293,510 | |||||
Noncontrolling Interests | |||||||
Common units of the Operating Partnership | 83,502 | 81,917 | |||||
Noncontrolling interests in consolidated property partnerships | 197,796 | 195,431 | |||||
Total noncontrolling interests | 281,298 | 277,348 | |||||
Total equity | 5,253,589 | 4,570,858 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 9,658,665 | $ | 8,900,094 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
REVENUES | |||||||||||||||
Rental income | $ | 218,356 | $ | 197,629 | $ | 436,989 | $ | 397,011 | |||||||
Other property income | 1,067 | 2,863 | 3,762 | 4,683 | |||||||||||
Total revenues | 219,423 | 200,492 | 440,751 | 401,694 | |||||||||||
EXPENSES | |||||||||||||||
Property expenses | 37,829 | 38,536 | 76,812 | 76,685 | |||||||||||
Real estate taxes | 21,854 | 17,926 | 44,056 | 36,565 | |||||||||||
Ground leases | 2,330 | 2,114 | 4,647 | 4,086 | |||||||||||
General and administrative expenses | 38,597 | 19,857 | 57,607 | 43,198 | |||||||||||
Leasing costs | 1,330 | 2,650 | 2,786 | 4,407 | |||||||||||
Depreciation and amortization | 80,085 | 68,252 | 154,455 | 134,387 | |||||||||||
Total expenses | 182,025 | 149,335 | 340,363 | 299,328 | |||||||||||
OTHER (EXPENSES) INCOME | |||||||||||||||
Interest income and other net investment gain (loss) | 2,838 | 616 | (290 | ) | 2,444 | ||||||||||
Interest expense | (15,884 | ) | (11,727 | ) | (30,328 | ) | (22,970 | ) | |||||||
Gains on sales of depreciable operating properties | — | 7,169 | — | 7,169 | |||||||||||
Total other (expenses) income | (13,046 | ) | (3,942 | ) | (30,618 | ) | (13,357 | ) | |||||||
NET INCOME | 24,352 | 47,215 | 69,770 | 89,009 | |||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | (367 | ) | (871 | ) | (1,072 | ) | (1,571 | ) | |||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | (4,367 | ) | (4,150 | ) | (9,263 | ) | (8,341 | ) | |||||||
Total income attributable to noncontrolling interests | (4,734 | ) | (5,021 | ) | (10,335 | ) | (9,912 | ) | |||||||
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS | $ | 19,618 | $ | 42,194 | $ | 59,435 | $ | 79,097 | |||||||
Weighted average common shares outstanding – basic | 115,085 | 100,972 | 110,980 | 100,937 | |||||||||||
Weighted average common shares outstanding – diluted | 115,540 | 101,810 | 111,465 | 101,619 | |||||||||||
Net income available to common stockholders per share – basic | $ | 0.17 | $ | 0.41 | $ | 0.53 | $ | 0.77 | |||||||
Net income available to common stockholders per share – diluted | $ | 0.17 | $ | 0.41 | $ | 0.52 | $ | 0.77 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income available to common stockholders | $ | 19,618 | $ | 42,194 | $ | 59,435 | $ | 79,097 | |||||||
Adjustments: | |||||||||||||||
Net income attributable to noncontrolling common units of the Operating Partnership | 367 | 871 | 1,072 | 1,571 | |||||||||||
Net income attributable to noncontrolling interests in consolidated property partnerships | 4,367 | 4,150 | 9,263 | 8,341 | |||||||||||
Depreciation and amortization of real estate assets | 75,981 | 67,011 | 148,419 | 131,982 | |||||||||||
Gains on sales of depreciable real estate | — | (7,169 | ) | — | (7,169 | ) | |||||||||
Funds From Operations attributable to noncontrolling interests in consolidated property partnerships | (7,244 | ) | (7,152 | ) | (14,927 | ) | (14,105 | ) | |||||||
Funds From Operations(1)(2)(3) | $ | 93,089 | $ | 99,905 | $ | 203,262 | $ | 199,717 | |||||||
Weighted average common shares/units outstanding – basic (4) | 118,218 | 104,115 | 114,125 | 104,088 | |||||||||||
Weighted average common shares/units outstanding – diluted (5) | 118,673 | 104,952 | 114,609 | 104,770 | |||||||||||
Funds From Operations per common share/unit – basic (2) | $ | 0.79 | $ | 0.96 | $ | 1.78 | $ | 1.92 | |||||||
Funds From Operations per common share/unit – diluted (2) | $ | 0.78 | $ | 0.95 | $ | 1.77 | $ | 1.91 |
(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 $8.0 million and $4.4 million for the three months ended June 30, 2020 and 2019, respectively, and $13.0 million and $8.2 million for the six months ended June 30, 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. |